1. Every distributor, before purchasing any fluid milk or fluid cream directly from a producer, must execute and deliver to the Director a surety bond in an amount specified by the Director by regulation and executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as surety.

2. The bond must be upon a form approved by the Director and must be conditioned upon the payment in the manner required by NRS 584.325 to 584.670, inclusive, of all amounts due to producers for fluid milk and fluid cream directly purchased by such licensee or applicant during the license year. The bond must be to the State in favor of every producer of fluid milk and fluid cream who sells directly to a distributor.

3. In case of failure by a distributor to pay any producer for fluid milk or fluid cream directly purchased by the distributor in the manner required by NRS 584.325 to 584.670, inclusive, the Director shall proceed forthwith to ascertain the names and addresses of all producer-creditors of the distributor who sell directly to the distributor, together with the amounts due and owing to them and each of them by the distributor, and shall request all such producer-creditors to file a verified statement of their respective claims with the Director. Thereupon, the Director shall bring an action on the bond on behalf of the producer-creditors who sell directly to the distributor.

4. Upon any action being commenced upon the bond, the Director may require the filing of a new bond and immediately upon a recovery in any action upon such bond, such distributor shall file a new bond, and upon failure to file the same within 10 days in either case, such failure constitutes grounds for the revocation or suspension of the license of such distributor.

5. In the event that recovery upon the bond is not sufficient to pay all of the claims as finally determined and adjudged by the court, any such amount recovered must be divided pro rata among the producer-creditors.

[60:387:1955] — (NRS A 2013, 613)