4-7-8 - Applicant for dealer's license to post security -- Increase in amount of security posted -- Action on security authorized -- Duties of commissioner -- Option to require posting new securit
4-7-8. Applicant for dealer's license to post security -- Increase in amount ofsecurity posted -- Action on security authorized -- Duties of commissioner -- Option torequire posting new security if action filed -- Effect of failure to post new security --Commissioner's authority to call bond if not renewed.
(1) (a) Before a license is issued to a dealer, the applicant shall post a corporate suretybond, irrevocable letter of credit, trust fund agreement, or any other security agreementconsidered reasonable in an amount not less than $10,000 nor more than $200,000, as determinedby the commissioner or as required by the Packers and Stockyards Act, 1921, 7 U.S.C. Section181 et seq.
(b) Any bond shall be written by a surety licensed under the laws of Utah and name thestate, as obligee, for the use and benefit of producers.
(c) The bond or other security posted shall be conditioned upon:
(i) the faithful performance of contracts and the faithful accounting for and handling ofany product of agriculture consigned to the dealer;
(ii) the performance of the obligations imposed under this chapter; and
(iii) the payment of court costs and attorney's fees to the prevailing party incident to anysuit upon the bond or other security posted.
(2) (a) The commissioner may require a dealer who is issued a license to increase theamount of the bond or other security posted under Subsection (1)(a) if the commissionerdetermines the bond or other security posted is inadequate to secure performance of the dealer'sobligations.
(b) The commissioner shall notify the Packers and Stockyards Administration of anincrease made under Subsection (2)(a).
(c) The commissioner may suspend a dealer's license for failure to comply withSubsection (2)(a) within 10 days after notice is given to the dealer.
(3) A consignor claiming damages, as a result of fraud, deceit, or willful negligence by adealer or as a result of the dealer's failure to comply with this chapter, may bring an action uponthe bond or other security posted for damages against both the principal and surety.
(4) (a) If it is reported to the department by a consignor that a dealer has failed to pay in atimely manner for any product of agriculture received for sale, the commissioner shall:
(i) ascertain the name and address of each consignor who is a creditor of the dealer; and
(ii) request a verified written statement setting forth the amount claimed due from thedealer.
(b) Upon receipt of the verified statements, the commissioner shall bring an action uponthe bond or other security posted on behalf of the consignors who claim amounts due from thedealer.
(5) (a) If an action is filed upon the bond or other security posted, the commissioner mayrequire the filing of new security.
(b) Immediately upon recovery in the action, the commissioner shall require the dealer tofile a new bond or other security.
(c) Failure, in either case, to file the bond or other security within 10 days after demandis cause for suspension of the license until a new bond or other security is filed.
(d) If the bond or other security posted under this section is not renewed within 10 daysof its expiration date, unless the commissioner states in writing that this is unnecessary, thecommissioner may obtain, after a hearing, the full amount of the bond or other security before it
expires.
Amended by Chapter 378, 2010 General Session