CHAPTER 376

STATE BOARD OF AGRICULTURE BONDS OF MILK DEALERS OR HANDLERS

AN ACT TO AMEND CHAPTER 21 OF THE REVISED CODE OF DELAWARE, 1935, AS AMENDED, ENTITLED "STATE BOARD OF AGRICULTURE" WITH REFERENCE TO BONDS OF MILK DEALERS OR HANDLERS.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Chapter 21 of the Revised Code of Delaware, 1935, as amended, be and the same is hereby further amended by adding after 654. Sec. 87. thereof the following Sections to be known as 654A. Sec. 87A. to 654K. Sec. 87K., inclusive:

654A. Sec. 87A. MILK DEALERS OR HANDLERS REQUIRED TO FILE BONDS:--It shall be unlawful for a milk dealer or handler to purchase, acquire or receive on consignment or otherwise, milk from producers unless the milk dealer or handler shall file with the State Board of Agriculture a corporate surety, individual surety, or collateral bond, approved by the State Board of Agriculture. Except as otherwise herein provided, the bond shall be in a sum equal to the value of the highest aggregate amount of milk purchased, acquired or received by the dealer or handler from producers in any one month during the preceding calendar year, which value shall be computed according to such milk dealer's or handler's posted prices for such month, and shall not in any event exceed One Hundred Thousand Dollars ($100,000.00). The bond shall be upon a form prescribed by the State Board of Agriculture, conditioned for the payment by the milk dealer or handler of all amounts due, including amounts due under this Act and the orders of the State Board of Agriculture, for milk purchased or otherwise acquired from producers by the milk dealer or handler during the license year, upon such terms and conditions as the State Board of Agriculture may prescribe.

In the case of a milk dealer or handler who pays producers in full each week for milk purchased, acquired or received by him from such producers, the bond shall be in a sum equal to fifty per centum of the value of the highest aggregate amount of milk purchased, acquired or received by the dealer or handler from producers in any one month during the preceding calendar year, which value shall be computed according to such milk dealer's or handler's posted prices for such month, and shall not in any event exceed Fifty Thousand Dollars ($50,000.00).

654B. Sec. 87B. COMPUTATION OF AMOUNT OF CERTAIN BONDS:--Milk purchased, acquired or received by a milk dealer or handler from producers outside the State and sold or distributed by such dealers or handlers as fluid milk within the State, shall be included in computing the amount of such dealer's or handler's bond, except where such dealer or handler has filed a bond for the protection of such producers with the state wherein the milk is purchased, acquired or received or with such producers. In such computation, the amount due for such milk shall be determined according to any applicable official prices or any lawful contract price.

A milk dealer or handler purchasing or acquiring or receiving or intending to purchase, acquire or receive milk from producers, but not so engaged during any month of the preceding calendar year, shall file a bond in a reasonable sum to be fixed by the State Board of Agriculture, and within the time for filing his application such dealer or handler shall request the State Board of Agriculture to fix such sum.

654C. Sec. 87C. TIME OF FILING; EFFECTIVE PERIOD OF BOND:--The bond herein required shall be filed with the dealer's or handler's application for a license, and shall be filed within the time for filing such application. The bond shall become effective upon its being filed with the State Board of Agriculture for the entire license year, or for that part of the license year in which the milk dealer or handler became engaged in the milk business. Any bond filed with the State Board of Agriculture shall become effective upon being filed, whether or not it is approved by the State Board of Agriculture, and shall no longer be of effect during the license year only when it has been replaced by a bond approved by the State Board of Agriculture to be substituted therefor. The bond herein required shall be an obligation independent of the granting of a license and shall remain in full force and effect for and during the license year designated, as long as the dealer or handler purchases or receives milk from producers or is indebted to pay producers for any milk delivered during said license year, whether or not a license is granted the milk dealer or handler or a license granted the milk dealer or handler remains in force. The State Board of Agriculture shall determine within a reasonable time after the close of a license year which milk dealers or handlers have paid all amounts protected by their bonds filed with the State Board of Agriculture, and if the State Board of Agriculture finds that all amounts protected by the bond of a milk dealer or handler have been paid, it shall thereafter return the bond for said past license year to each such milk dealer or handler.

654D. Sec. 87D. REQUISITES OF BONDS; SUBSTITUTION:--A corporate surety bond shall be executed to the State by the milk dealer, as principal, and by a corporate surety company. The State Board of Agriculture shall have no power to reject any corporate surety bond which is so executed by a corporate surety company authorized to do business in this State as surety. An individual surety bond shall be executed to the State by the milk dealer, as principal, and by one or more individuals, as surety or sureties, who shall have sole title to real estate, the fair valuation of which, free and clear, or in excess, of all encumbrances, shall be at least equal to the amount of the bond. A collateral bond shall be executed to the State by the milk dealer, as principal, shall set forth therein the collateral posted with such bond, and shall have attached thereto the collateral properly assigned and transferred to the State of Delaware. The collateral posted with such bond shall be cash in an amount equal to the amount of the bond; or such bond shall be secured by an actual deposit with the State Board of Agriculture, or with a bank, bank and trust company, or national bank within the State, of money to the full amount of the bond; or by securities to such amount, consisting of interest-bearing obligations of the United States Government, of this State, or of any political subdivision of this State, or by any other security or securities approved by the State Board of Agriculture. The security or securities deposited therewith shall constitute a trust fund for producers from whom the dealer purchases milk.

The State Board of Agriculture may likewise grant to any milk dealer or handler the authority to substitute for any bond, surety or any collateral, another bond, surety or other collateral, provided that such other bond, surety or collateral meets all the requirements of this Act.

654E. Sec. 87E. FINANCIAL STATEMENT: -- A milk dealer or handler shall, from time to time, when required by the State Board of Agriculture, make and file with the State Board of Agriculture a verified statement of his disbursements, or of any other facts in connection with his business, during a period to be prescribed by the State Board of Agriculture, which financial statement shall contain the names of the producers from whom milk was purchased, acquired, received or handled on consignment or otherwise, the amount due to the producers, and any other relevant facts required by the State Board of Agriculture pertinent to the dealer or handler or the dealer's or handler's surety or sureties.

In lieu of, and notwithstanding any and all provisions hereinbefore or hereinafter contained in this Act to the contrary, and in particular any and all provisions requiring a milk dealer or handler to file a corporate surety, or individual surety, or collateral bond, the State Board of Agriculture may accept of and from any milk dealer or handler who has been continuously engaged in such business in this State for a period of seven (7) years prior thereto a complete current financial statement of all the assets and liabilities of such dealer or handler, verified under oath by such dealer or handler or an authorized agent thereof; which financial statement shall be in such form and hi such detail as the State Board of Agriculture shall prescribe from time to time. Any person who shall willfully falsify any such financial statement, in whole or in part, shall be guilty of the crime of perjury and punished accordingly. In the event the State Board of Agriculture shall determine from such financial statement that the fair net worth of such milk dealer or handler is at least equal to the amount of corporate surety, or individual surety, or collateral bond which such milk dealer or handler would otherwise be required to file, then in any such event the State Board of Agriculture is hereby authorized and empowered, in its discretion, to accept such milk dealer's or handler's bond and financial statement without requiring any corporate or individual surety thereon or collateral to be posted therewith.

654F. Sec. 87F. INCREASE OR DECREASE OF BOND:--If it shall appear from the dealer's or handler's financial statement, or from facts otherwise ascertained by the State Board of Agriculture, that the bond afforded to producers selling, supplying or making available on consignment or otherwise milk to such milk dealer or handler does not adequately protect such producers, the State Board of Agriculture may require such milk dealer or handler to procure an additional surety, or to give an additional bond or additional security for the collateral bond, in a sum to be determined by the State Board of Agriculture, which (1) shall not exceed more than fifty per centum of the value of the highest aggregate amount of milk purchased, acquired or received on consignment or otherwise by the dealer or handler from producers in any one month during the preceding or current year, which value shall be computed according to the prices applicable, or which (2) shall be a sum not exceeding by more than fifty per centum the amount found to be due and owing producers by such dealer on a particular date determined by the State Board of Agriculture, whichever sum is greater, but the total increase shall not in any event exceed Fifty Thousand Dollars ($50,000.00). In the case of a milk dealer or handler who pays producers in full each week for milk purchased, acquired or received or handled on consignment or otherwise by him from such producers, any increase required hereunder shall not exceed more than twenty-five per centum of such value or amount, but the total increase in any event shall not exceed Twenty-five Thousand Dollars ($25,000.00).

The State Board of Agriculture may grant a reduction of the bond or the collateral, or release an additional surety, if it shall appear that owing to a decrease in the milk purchased, received or handled by the dealer or handler, or to other causes, a bond in a lesser amount or with fewer sureties will protect producers selling, supplying or making available milk to such milk dealer or handler.

654G. Sec. 87G. DUTY OF STATE TREASURER:--All bonds, together with any moneys, or securities given as collateral therefor, received by the State Board of Agriculture from milk dealers pursuant to the provisions of this Section, shall be transmitted by the State Board of Agriculture to the State Treasurer for safekeeping subject to withdrawal in whole or in part at any time by the State Board of Agriculture.

654H. Sec. 8711. INTEREST OR DIVIDENDS UPON SECURITIES:--The milk dealer or handler shall be entitled to all moneys received by the State Treasurer as interest or dividends upon any security or securities deposited by such milk dealer or handler with the State Board of Agriculture and transmitted by the State Board of Agriculture to the State Treasurer for safekeeping, in accordance with the provisions of this Act; provided, however, that the milk dealer or handler shall not be entitled to interest or dividends if there is on file with the State Board of Agriculture a valid unpaid claim of a producer against the milk dealer or handler, based on milk sold, supplied or made available by such producer to the milk dealer or handler.

6541. Sec. 871. SUIT BY STATE BOARD OF AGRICULTURE:--The State Board of Agriculture shall have the power, in its discretion, to sue on the bond on behalf of producers. Suit may be brought in the name of the State upon relation of the State Board of Agriculture or of the Attorney General, in such manner as debts are now by law recoverable.

654J. Sec. 87J. EFFECT OF ORDER BY STATE BOARD OF AGRICULTURE:--If, by valid formal order refusing, suspending or revoking a license, after hearing with due notice to all those liable on the bond, the State Board of Agriculture has found a milk dealer or handler to be indebted thereunder, such order and the findings of fact in support thereof shall be conclusive evidence of the amount due under such bond in a suit thereon by the State Board of Agriculture, unless an appeal therefrom is pending and a supersedes granted.

654J. 654K. Sec. 87K. PROCEDURE FOR DISBURSING PROCEEDS:--The State Board of Agriculture shall prescribe the procedure for the payment, out of the proceeds of any bond or collateral required by this article, of the amounts found due to producers or handlers or dealers, based on sales or deliveries of milk by them to a milk dealer or handler who has posted a bond or collateral; provided, however, that if the proceeds of a bond or of collateral which has been posted by a milk dealer or handler shall be insufficient to pay in full the amounts due to producers who have sold or supplied milk to such milk dealer or handler, the moneys available shall be divided pro rata among such producers.

Approved June 21, 1951.