34-229. Bond or letter of credit; amount; conditions; multiple warehouses; actions thereon; certificate of information, penalty for failure to post.
34-229
34-229. Bond or letter of credit; amount;conditions; multiple warehouses; actions thereon; certificate of information,penalty for failure to post.(a) Every applicant for a public warehouse license uponnotification by the secretary of the amount of bond or letter of creditrequired, shall promptlyfile withthe secretary a bond with good corporate surety qualifiedunder the laws ofthe state of Kansas or letter of credit pursuant to subsection (d).The amount of thebond or letter of credit to be furnished for each warehouse shall be$.20 per bushel for the first1,000,000 bushels of licensed capacity; $.15 per bushel for the next 1,000,000of licensed capacity; and $.10 per bushel for all licensed capacity over2,000,000 bushels. Except as provided further, in no event shall thebond or letter of credit be for an amount less than $10,000 nor morethan $500,000.
(b) If an applicant for a license or a licensee at any time does nothave the total net worth required by K.S.A. 34-228 and amendments thereto,an amount equal to the deficiency shall be added to the amount of the bondrequired by subsection (a) or letter of credit required by subsection(d).
(c) The bond shall be in favor of the state of Kansas for the benefit ofall persons interested, their legal representatives, attorneys or assignsand shall be conditioned on the faithful performance of all the licensee'sduties as a public warehouseman and such additional obligations as assumedby the warehouseman under contracts with a federal agency relating tostorage of grain in each warehouse. Any person injured by the breach of anyobligation of the warehouseman may commence suit on the bond or letter ofcredit in any courtof competent jurisdiction to recover damages that the person has sustained,but any suit commenced shall either be a class action or shall join asparties plaintiff or parties defendant or other persons who may be affectedby such suit on the bond or letter of credit. No bond shall be canceledby the surety on lessthan 60 days' notice by mail to the secretary and theprincipal except thatno such notice shall be required for cancellation of any bond by reason ofnonpayment of the premium thereon. The liability of the surety on the bondmay continue for each successive license period the bondcovers. The total liability of the surety shall be limited to the amountstated on the current bond or on an appropriate rider or endorsement tothe current bond. It is the intent of this statute that the bonds benonaccumulative, that stacking of bonds not occur in excess of the facevalue of the current bond.
(d) In lieu of a bond, a warehouseman may file with the secretary anirrevocable letter of credit in the amount equal to or greater than the amountof bond required in subsection (a). Such irrevocable letter of credit shall:(1) Be issued by a financial institution which is insured by the federaldeposit insurance corporation or issued by farm credit institutions charteredby the farm credit administration; (2) be issued for a period at least sixmonths longer than the expiration date of the underlying license; (3) providefor payment to the state of Kansas for the security liability of thewarehouseman; and (4) be on a form approved by the secretary.
(e) If a person applies for licenses fortwo or more separate publicwarehouses in this state, the person may give a single bond or letter ofcredit covering allthe applications, and the amount of the bond or letter of credit shallbe the total amountswhich would be required for the applications if separate bonds or letters ofcredit were given.In computing the amount of the single bond or letter of credit thewarehouseman may addtogether the capacity of all warehouses to be covered by the bond or letterof credit and usethe aggregate capacity for the purpose of computing the bond or letter ofcredit. If awarehouseman elects to provide a single bond or letter of credit for anumber of warehouses,the total assets of all the warehouses shall be subject to liabilities ofeach individual warehouse.
(f) Whenever the director determines that any bond orletter of credit given by anywarehouseman is inadequate and insufficient security against any loss thatmight arise under the terms of the bond or letter of credit, thesecretary shallrequire anyadditional bond or letter of credit that the secretary considersnecessary toprovide adequatesecurity. If the secretary considers the financial conditionof the suretyupon any warehouseman and the warehouseman's bond or letter of credit tobe impaired, the secretaryshall require any substituted or additional bond or letter of creditthat the secretaryconsiders necessary.
(g) In all actions hereafter commenced in which judgment isrenderedagainst any surety company on any surety bond furnished or any financialinstitution on any letter of credit issued under theprovisions of this section, if it appears from the evidence that the suretycompany or financial institution has refused without just cause to paythe loss upon demand, thecourt shall allow the plaintiff a reasonable sum as attorney feesto be recovered and collected as a part of the costs. When a tender is madeby the surety company or financial institution before the commencementof the action in whichjudgment is rendered and the amount recovered is not in excess of thetender, no such costs shall be allowed.
(h) Each licensed public warehouseman shall obtain acertificate settingforth the amount and terms of the bond or letter of credit filed withthesecretary pursuantto this section, the name of the corporate surety or financialinstitution therefor and such otherinformation as the secretary may prescribe by rules andregulations. Thecertificate of bond or letter of credit information shall be posted in aconspicuous place inthe office room of the licensed warehouse, adjacent to the licenseposted as required by K.S.A. 34-230 and amendments thereto, at all timesduring the operation of the warehouse.
(i) Transaction of any public warehouse business at anypublic warehousewithout having the certificate of bond or letter of credit informationdisplayed in the officeroom of the public warehouse as required by this section is a class Cnonperson misdemeanor.
History: L. 1931, ch. 194, § 7;L. 1955, ch. 232, § 6;L. 1957, ch. 253, § 2;L. 1963, ch. 251, § 2;L. 1983, ch. 137, § 2;L. 1984, ch. 151, § 2;L. 1985, ch. 137, § 4;L. 1986, ch. 153, § 1;L. 1987, ch. 147, § 3;L. 1993, ch. 159, § 1;L. 1997, ch. 160, § 19;L. 2000, ch. 30, § 2; Mar. 30.