CHAPTER 421

FORMERLY HOUSE BILL

NO. 681

AN ACT TO AMEND TITLE 5, DELAWARE CODE BY REPEALING CHAPTER 23 AS IT APPEARS THEREIN AND ADDING A NEW CHAPTER 23 THERETO, TO PROVIDE FOR THE LICENSING AND REGULATION OF THE BUSINESS OF SELLING, ISSUING OR DELIVERING CHECKS, DRAFTS OR MONEY ORDERS AND THE TRANSMISSION OF MONEY AND PROVIDING FOR THE SUBMISSION OF PROOF OF FINANCIAL RESPONSIBILITY AND THE POSTING OF SECURITY.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Title 5 of the Delaware Code of 1953 is amended by repealing Chapter 23 as it appears therein and inserting in lieu thereof a new Chapter 23 to read as follows:

CHAPTER 23. SALE OF CHECKS,

DRAFTS AND MONEY ORDERS.

§ 2301. Citation

This act may be cited as "The Sale of Checks Act."

§ 2302. Definitions

For the purposes of this act:

(a) "Person" means any individual, partnership, association, joint stock association, or corporation, but does not include the United States Government or the Government of this State.

(b) "Licensee" means a person duly licensed by the State Bank Commissioner pursuant to this act.

(c) "Check" means any check, draft, money order, personal money order, or other instrument for the transmission or payment of money.

(d) "Personal money order" means any instrument for the transmission or payment of money in relation to which the purchase or remitter appoints or purports to appoint the seller thereof as his agent for the receipt, transmission, or handling of money, whether such instrument be signed by the seller or by the purchaser or remitter or some other person.

(e) "Sell" means to sell, to issue, or to deliver a check.

(f) "Deliver" means to deliver a check to the first person who in payment for same makes or purports to make a remittance of or against the face amount thereof, whether or not the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer signs the check.

(g) "Commissioner" means the State Bank Commissioner.

§ 2303. License Required

No person, except those specified in § 2304 or agents of a licensee as provided in § 2311 shall engage in the business of selling checks, or issuing checks or engage in the business of receiving money for transmission or transmitting the same without having first obtained a license hereunder.

§ 2304. Exemption from Licensing

(a) No license to sell checks as aforesaid shall be required hereunder of any of the following:

(i) State banks and trust companies, national banks, building and loan associations, and savings and loan associations, organized under the laws of this state or authorized to do business in this state.

(ii) Incorporated telegraph companies insofar as they receive money at any of their respective offices or agencies for immediate transmission by telegraph.

(b) Nothing contained in this section or any other section of this act shall be construed to enlarge or limit the rights which any of the above named organizations have under any existing law.

§ 2305. Qualifications

To qualify for a license hereunder an applicant shall meet the following requirements:

(a) The applicant shall have a net worth of at least $100,000.00 computed according to generally accepted accounting principles.

(b) The financial responsibility, financial condition, financial and business experience, character and general fitness of the applicant shall be such as reasonably to warrant the belief that applicant's business will be conducted honestly, carefully and efficiently. To the extent deemed advisable by the Commissioner, the Commissioner may investigate and consider the qualifications of the applicant including principals, officers and directors of an applicant in determining whether this qualification has been met.

§ 2306. Applications

Each application for a license shall be made in writing and under oath to the Commissioner in such form and containing such information as he may prescribe including the name and business and residence address:

(a) Of the proprietor, if the applicant is an individual;

(b) Of every member, if the applicant is a partnership or unincorporated association;

(c) Of the corporation and each officer and director thereof, if the applicant is a corporation, stating the date and the state of incorporation.

§ 2307. Accompanying Fee and Statements

Each application for a license shall be accompanied by:

(a) An investigation fee of $150.00 which shall not be subject to refund.

(b) The annual license fee as specified in § 2310.

(c) Financial statements reasonably satisfactory to the Commissioner.

§ 2308. Action by Commissioner; Conditional Approval

Upon the filing of the application and the payment of the investigation fee and the annual license fee, the Commissioner shall, to the extent he deems advisable, investigate the financial responsibility, financial condition, financial and business experience, character and general fitness of the applicant, and if he finds these qualities are such as to warrant the belief that the applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes of the intent of this Act and in the manner commanding the confidence and trust of the community, the Commissioner shall advise the applicant in writing of his conditional approval of the application, and thereafter, upon compliance by the applicant with the provisions of § 2309 of this Chapter, shall issue to the applicant a license to engage in the business of selling and issuing checks, subject to the provisions of this Act. If the Commissioner determines on the basis of his investigation that the applicant does not comply with the purposes of this Chapter as set forth in the preceding sentence of this section he shall notify the applicant of the denial of the conditional approval of the license stating the reasons therefor in writing.

§ 2309. License; bond; securities

(a) After the applicant receives a written notice of the conditional approval by the Commissioner of an application for original license as provided in § 2308 hereof, the applicant shall file with the Commissioner a corporate surety bond in the principal sum of $25,000 and in an additional principal sum of $5,000 for each location, in excess of one, at which the applicant proposes to conduct a business licensed by this Chapter, but in no event shall the bond be required to be in excess of $250,000. Such bond shall be in a form satisfactory to the Commissioner and shall be issued by a surety company authorized by the laws of the State of Delaware to conduct business in this state. The bond shall run to the state and shall be conditioned that the licensee will pay any and all monies that may become due and owing any claimant or creditor of or against the licensee arising out of the licensee's business subject to this Chapter of selling or issuing checks, or of

receiving money for transmission or transmitting the same. The aggregate liability of the surety on the bond shall, in no event, exceed the amount of the bond. The surety on the bond shall have the right to cancel such bond upon giving 30 days written notice to the Commissioner and thereafter shall be relieved of liability for any breach of condition occuring after the effective date of said cancellation. In any event the bonds shall continue to be in effect as a condition for the continuance or renewal of the license issued hereunder.

(b) In lieu of such corporate surety bond the applicant may make deposits with any federally insured banking institution or savings and loan association in this state as such applicant shall designate and the Commissioner shall approve. Such deposits may include, subject to the Commissioner's approval, cash, securities, interest bearing stocks and bonds, notes debentures, or other obligations of the United States or agency or instrumentality thereof or guaranteed by the United States or of this State of any subdivision thereof, of an aggregate amount, based upon principal amount or market value whichever is lower, of not less than the amount of the required corporate surety bond at all times. The deposits as aforesaid shall be held to secure the same obligations as would the corporate surety bond, but the depositor shall be entitled to receive all interest and dividends thereon and shall have the right with the approval of the Commissioner to substitute other securities for those deposited.

(c) A license issued under this Chapter shall remain in full force and effect until surrendered, suspended or revoked pursuant to this Chapter.

(d) If the Commissioner shall at any time reasonably determine that the bond or deposits of the aforesaid are insecure, deficient in amount, or exhausted in whole or in part, or if the surety on the bond shall have notified the Commissioner of its intention to cancel the bond, he shall by written order require the filing of a new or supplemental bond or the depositing of a new or additional securities in order to secure compliance with this Act, such order to be compiled with within 20 days following service thereof upon the licensee.

§ 2310. Annual license fee

After applicant receives notice of conditional approval by the

Commissioner of the application for an original license and annually thereafter on or before January 1, applicant shall file with the Commissioner a statement listing the locations in the State of Delaware of the offices of the applicant and the names and locations of his agents. The licensee shall pay to the Commissioner with such list a license fee of $4.00 for each such location in excess of one. The fee shall cover the remainder of the calendar year in which license is granted. Thereafter each licensee shall submit a current list on or before each January 1 and pay a licensee fee of $200.00 plus $4.00 for each location on the list submitted. The requirements of this section shall not apply to any agent of a licensee who is exempt from the provisions of this Chapter pursuant to paragraph (a) of. § 2304 hereof.

§ 2311. Agents

A licensee may conduct his business at one or more locations within the state and through or by means of such agents as the licensee may from time to time designate or appoint. No license under this Act shall be required of any agent of a licensee. In order for an agent to be authorized to act for the licensee in this state, the licensee shall have on file with the Commissioner the name and address of the agent, and the licensee shall notify the Commissioner within 30 days of the change of name or address of an agent or of the termination of any such agent. If the bond deposited by the licensee under § 2309 of this Chapter is less than the maximum provided thereunder, the licensee shall submit and deposit a supplementary bond in the amount required by § 2309 for the additional location or locations that are added. In the event that the licensee shall have made deposits in lieu of a surety bond under § 2309 (b) the amount of such securities shall be increased accordingly. The requirements of this section shall not apply to any agent of a licensee who is exempt from the provisions of this Chapter pursuant to paragraph (a) of § 2304 hereof.

§ 2312. Liability of licensees

Each licensee shall be liable for the payment of all checks which he sells in this state, in whatever form and whether directly or through an agent, as the maker or drawer thereof according to the negotiable instrument laws of this state; and a licensee who sells a check, whether directly or through an agent, upon which he is not designated as maker or drawer shall nevertheless have the

same liabilities with respect therto as if he had signed the same as the maker or drawer thereof.

§ 2313. Disclosure of responsibility and evidence of receipt

(a) Every check sold by a licensee, directly or through an agent, shall bear the name of the licensee clearly imprinted thereon.

(b) Every licensee shall furnish a customer with a receipt or other acknowledgement upon receiving funds from such customer. Such receipt or other acknowledgement shall be numbered serially and shall bear the name and address of the licensee. Each licensee who receives money for transmission abroad shall forward such money to the person or bank designated to receive the same within five days after receipt thereof, and shall immediately give the person delivering the money for transmission a receipt and his name with the name and address of the licensee printed thereon. The receipt shall state the date when such money was received, the amount thereof, its equivalent in the currency of the country to which it is to be forwarded, and the name and address of the payee.

§ 2314. Revocation of license; examination

The Commissioner may revoke any license on any ground on which he may refuse to grant a license or for violation of any provision of this Chapter. In furtherance of the foregoing the Commissioner may examine the business, books and records of the licensee at any time, the reasonable cost of such examination to be paid by licensee.

§ 2315. Hearings

(a) No license shall be denied or revoked except after a hearing thereon. An applicant denied a conditional approval for license as set forth in § 2305 may demand in writing within 20 days after receipt of the notice of the denial o_f such conditional approval, a hearing on said refusal.

(b) The Commissioner shall give the applicant or licensee at least 20 days written notice of the time and place of such hearing by registered or certified mail addressed to the principal place of business of such applicant or licensee.

(c)
Any order by the Commissioner denying or revoking such license shall state the grounds upon which it is based and shall not be effective until 20 days after written notice thereof has been sent by registered or certified mail to the applicant or licensee at such principal place of business or unless the Commissioner deems that it is in the public interest that the revocation take place sooner than the 20 day period in which event he shall so notify the licensee and shall grant the licensee an immediate hearing if the same has been demanded in writing.

(d) Any hearing required by this section shall be conducted on the record, witnesses shall be sworn and evidence presented to the Commissioner which shall be appropriately identified and preserved. The Commissioner is hereby granted subpoena powers to compel the attendance of witnesses.

§ 2316. Appeal from Commissioner

(a) Any applicant or licensee aggrieved by any order or decision of the Commissioner shall have the right to appeal to the Superior Court of the State of Delaware in and for such county as the appellant may determine. Any such appeal shall be filed in the Superior Court within 30 days after the order or decision of the Commissioner is rendered.

(b) The appeal shall not be a trial de novo but shall be based upon the record before the Commissioner.

(c) The scope of review before the Superior Court shall be that the Commissioner's finding shall be upheld if they are supported by sufficient evidence, free of error of law and not arbitrary or capricious.

§ 2317. Penalties

Any person who violates any provision of this Chapter shall be guilty of a misdemeanor, and shall be fined not less than $100.00 nor more than $500.00 or imprisioned for not more than 90 days, or both for each such offense.

§ 2318. Rules and regulations

The Commissioner may adopt rules and regulations necessary for the administration of this Chapter.

Section 2. Severability. Should any provision, sentence, clause, section or part of this Chapter for any reason be held unconstitutional, illegal or invalid, such unconstitutionality, illegality, or invalidity shall not affect or impair any of the remaining provisions, sentences, clauses, sections or parts of this Chapter.

Section 3. Effective Date. This act shall become effective on January 1, 1973. Any person engaged in said business on the effective date, of this Act may continue to engage therein without a license until the Commissioner shall have acted upon his application for a license, provided that such application be filed within 60 days after the effective date of this Act.

Approved June 11, 1972.