Effective 02 Apr 1997, see footnote

411.519. Insufficient inventory, procedure to correct — insolvency, director may modify, suspend or revoke license or request order to be named trustee, procedure, order — warehouseman may appeal, how. — 1. Whenever it appears to the satisfaction of the director that a warehouseman does not have in his inventory sufficient grain to cover the outstanding receipts and scale tickets issued or assumed by him, or when the warehouseman refuses to submit his records or property to lawful examination, the director may give notice to the warehouseman to comply with any of the following requirements:

(1) Immediately cease all grain-related operations and transactions such as, but not limited to, shipping, receiving, handling, processing or selling of grain on his own account or the account of others;

(2) Cover the shortage by supplying the grain or evidence of ownership of the grain;

(3) Submit to such examination as the director may deem necessary;

(4) Immediately purchase and make actual payment for a sufficient quantity and quality of grain to fully cover the shortage. If the warehouseman fails to comply with the requirements contained in the notice within the time period which the director may allow, the director may petition the circuit court of the county where the warehouse is located for an ex parte order authorizing the director or his authorized agent to seize and take possession, as trustee, of any grain located in the warehouse of such warehouseman, and of all pertinent records and property, as provided in subsection 4 of this section.

2. If at any time the director has evidence that a grain warehouseman is insolvent or is unable to satisfy the claims of all depositors as they become due, or the warehouseman does not have in his inventory sufficient grain to cover the outstanding receipts and scale tickets issued or assumed by him, the director may modify, suspend or revoke the warehouseman's license or petition the circuit court in the county where the warehouse is located for an ex parte order authorizing the director or his authorized agent to seize and take title possession, as trustee, of any grain and grain-related assets in the warehouse or under the warehouseman's control, and of all pertinent records and property as provided for in subsection 4 of this section.

3. Whenever the director shall modify, suspend or revoke any license, he shall prepare an order so providing which shall be signed by the director or some person designated by him, and the order shall state the reason or reasons for the modification, suspension or revocation of the license. The order shall be sent by certified mail to the licensee or applicant at the address of the grain warehouseman licensed or applying for a license. Within thirty days after the mailing of the order, the licensee, if aggrieved by the order of the director, may appeal as provided in chapter 536. At the time of the filing of the appeal, the party appealing shall give a bond for costs conditioned on his prosecuting the appeal without delay and paying all costs assessed against him. In addition, the licensee shall post a bond which shall remain in effect pending final disposition of all appeals, including review by the Missouri court of appeals or Missouri supreme court, or federal review, in an amount sufficient to cover all grain storage, and other grain-related obligations of the licensee as identified by the director. The posting of such bond is jurisdictional to the circuit court's authority to entertain the appeal.

4. Upon receipt of the director's verified petition setting forth the circumstances of the warehouseman's failure to comply with this chapter and further stating reasons why immediate possession by the director or his authorized agent is necessary for the protection of depositors, warehouse receipt holders or sureties, the court is authorized to issue an ex parte order and shall issue such an order authorizing the director or his authorized agent to take immediate possession for the purposes stated in this section. A copy of the petition and order shall be sent to the warehouseman. If appropriate, the court may order the director's taking possession of only grain-related assets and not the entire business of the warehouseman. Such order may include, but is not limited to, the following:

(1) The director locking down and securing, by padlocks or other appropriate means, the grain storage bins, scales, offices, equipment and rolling stock of the warehouseman;

(2) Removing and excluding the warehouseman, or any and all of the warehouseman's employees, from the facility;

(3) Prohibiting the warehouseman from engaging in any grain-related business transactions whatever during the director's possession of the grain-related assets of the warehouseman's business;

(4) Authorizing all financial institutions to place all business accounts of the warehouseman under the director's authority and to freeze all transactions involving such accounts except to honor outstanding checks written previous to the issuance of the court's order. If it appears that the warehouseman has conducted, in part, his grain storage business through the use of personal accounts as opposed to business accounts, or intermingled two or more such accounts, the court may authorize the applicable financial institutions to place such personal accounts, as well as the business accounts, under the authority of the director in order to allow the director to accurately determine the extent of all grain-related obligations incurred by the warehouseman, the correct status of same and the warehouseman's resources to pay his grain-related obligations;

(5) Authorizing the director to redeliver or sell depositor or company-owned grain, as appropriate in the circumstances and setting forth the conditions for doing such;

(6) Authorizing the director to deposit all grain-related assets and proceeds therefrom in an interest-bearing escrow account to be disbursed only upon orders of the court;

(7) Directing the warehouseman to furnish the director with all grain-related business documents which come into his possession subsequent to the director's possession of the grain-related assets, as well as any other grain-related documents which the warehouseman may have knowledge of and which are not at the warehouse facility.

5. At any time within ten days after the director or his authorized agent takes possession, the warehouseman may file with the court a response to the petition of the director stating reasons why the director or his authorized agent should not be allowed to retain possession. The court shall set the matter for hearing on a date not more than fifteen days from the date of the filing of the warehouseman's response. The order placing the director or his authorized agent in possession shall not be stayed nor set aside until such time as the court, after hearing, determines that possession should be restored to the warehouseman.

6. Upon taking possession, the director shall give written notice of his action to the surety on the bond of the warehouseman and may notify the holders of record, as shown by the warehouseman's records, of all receipts and tickets issued for grain to present their receipts or tickets for examination or to account for the same. The director may thereupon cause an audit and other investigation to be made of the affairs of the warehouse to determine the amount of the shortage and compute the shortage as to each depositor as shown by the warehouseman's records, if practicable. The director shall notify the warehouseman and the surety on his bond of the approximate amount of the shortage and may notify each depositor thereby affected by sending notice to the depositor's last known address as shown by the records of the warehouseman.

7. The director or his authorized agent shall retain possession obtained under this section until such time as the warehouseman or the surety on the bond shall have satisfied the claims of all depositors, or until such time as the director or his authorized agent is ordered by the court to surrender possession. At no time while the director or his authorized agent is in possession of a warehouse, as authorized by this section, shall the director or his authorized agent be required to operate the warehouse; nor will the director or his authorized agent be liable for any claims which have arisen or could arise from the nonoperation of the warehouse.

8. If at any time, the director, whether or not he or his authorized agent has possession as authorized by this section, has evidence that a warehouseman is insolvent or is unable to satisfy the claims of all depositors, the director may petition the circuit court for the appointment of a receiver to operate or liquidate the business of the warehouseman in accordance with law.

9. All necessary expenses incurred by the director, his authorized agents or any receiver appointed under this section, in carrying out the provisions of this section may be recovered from the warehouseman in a separate civil action brought by the director in the circuit court or as part of the seizure or receivership action filed under this section. If the director or any of his authorized agents seize and take possession of the grain, records or property at the warehouse facility, the warehouseman shall be assessed and shall pay as part of the necessary expenses incurred a fee of fifty dollars per person for each day or part thereof that each such person performs such activities. The cost of liability insurance necessary to protect the director, the receiver and others engaged in carrying out the provisions of this section may be recovered as part of the necessary expenses.

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(L. 1977 S.B. 75 § 7, A.L. 1986 H.B. 1578, A.L. 1997 H.B. 211)

Effective 4-02-97