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Duties And Requirements Of Licensees

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(240 ILCS 40/Art. 10 heading)

ARTICLE 10. DUTIES AND REQUIREMENTS OF LICENSEES

(240 ILCS 40/10-5)

Sec. 10-5. Duties and requirements of licensees.

(a) Each licensee shall have adequate property insurance covering grain in its possession or custody and adequate liability, property, theft, hazard, and workers' compensation insurance.

(1) Every insurance policy shall contain a provision that it will not be cancelled by the principal or the insurance company except on 60 days prior written notice to the Director and the principal insured. Cancellation of the policy does not affect the liability accrued or that may accrue under the policy before the expiration of the 60 days. The notice shall contain the termination date.
(2) Each licensee shall keep a general insurance account showing the policy number, issuing company, amount, binding date, and expiration date of insurance coverage and the property covered by insurance.
(3) In reference to a warehouseman, notwithstanding any provision to the contrary contained in the warehouse receipts involved, a warehouseman is not obligated to provide property insurance on Commodity Credit Corporation grain ("CCC-owned grain"). The warehouseman, however, shall continue to carry the insurance required on loan grain that becomes CCC-owned grain until the date stated in a written notice from CCC or its agent instructing the warehouseman to cancel the insurance on the grain as of that date. If CCC-owned grain is not covered by property insurance, recovery by the Commodity Credit Corporation from the Fund shall be reduced by the amount of property insurance proceeds that would have been available to cover any loss to CCC-owned grain had the CCC-owned grain been covered by property insurance.

(b) A licensee shall immediately notify the Department when there is a change of management or cessation of operations or change in fiscal year end.

(c) All grain trades, grain merchandising transactions, grain origination plans and programs, and transactions or arrangements that represent or reflect rights and obligations in grain must be clearly identified and disclosed in the books and records of the licensee, for audit and examination purposes.

(Source: P.A. 93-225, eff. 7-21-03.)

(240 ILCS 40/10-10)

Sec. 10-10. Duties and requirements of grain dealers.

(a) Long and short market position.

(1) Grain dealers shall at all times maintain an accurate and current long and short market position record for each grain commodity. The position record shall at a minimum contain the net position of all grain owned, wherever located, grain purchased and sold, and any grain option contract purchased or sold.
(2) Grain dealers, except grain dealers regularly and continuously reporting to the Commodity Futures Trading Commission or grain dealers who have obtained the permission of the Department to have different open long or short market positions, may maintain an open position in the grain commodity of which the grain dealer buys the greatest number of bushels per fiscal year not to exceed one bushel for each $10 of adjusted equity at fiscal year end up to a maximum open position of 50,000 bushels and one-half that number of bushels up to 25,000 bushels for all other grain commodities that the grain dealer buys. A grain dealer, however, may maintain an open position of up to 5,000 bushels for each grain commodity the grain dealer buys.

(b) The license issued by the Department to a grain dealer shall be posted in the principal office of the licensee in this State. A certificate shall be posted in each location where the licensee engages in business as a grain dealer. In the case of a licensee operating a truck or tractor trailer unit for the purpose of purchasing grain, the licensee shall have a certificate carried in each truck or tractor trailer unit used in connection with the licensee's grain dealer business.

(c) The licensee must have at all times sufficient financial resources to pay producers on demand for grain purchased from them.

(d) A licensee that is solely a grain dealer shall on a daily basis maintain an accurate and current daily grain transaction report.

(e) A licensee that is both a grain dealer and a warehouseman shall at all times maintain an accurate and current daily position record.

(f) In the case of a change of ownership of a grain dealer, the obligations of a grain dealer do not cease until the grain dealer has surrendered all unused price later contracts to the Department and the successor has executed a successor's agreement that is acceptable to the Department, or the successor has otherwise provided for the grain obligations of its predecessor in a manner that is acceptable to the Department.

(g) If a grain dealer proposes to cease doing business as a grain dealer and there is no successor, it is the duty of the grain dealer to surrender all unused price later contracts to the Department, together with an affidavit accounting for all grain dealer obligations setting forth the arrangements made with producers for final disposition of the grain dealer obligations and indicating the procedure for payment in full of all outstanding grain obligations. It is the duty of the Department to give notice by publication that a grain dealer has ceased doing business without a successor. After payment in full of all outstanding grain obligations, it is the duty of the grain dealer to surrender its license.

(Source: P.A. 93-225, eff. 7-21-03.)

(240 ILCS 40/10-15)

Sec. 10-15. Price later contracts.

(a) Price later contracts shall contain provisions prescribed or authorized by the Department and shall be in either written or electronic form. If in written form, price later contract forms shall be printed by a person authorized to print those contracts by the Department after that person has agreed to comply with each of the following:

(1) That all price later contracts shall be printed as prescribed by the Department and shall be printed only for a licensed grain dealer.
(2) That all price later contracts shall be numbered consecutively and a complete record of these contracts shall be retained showing for whom printed and the consecutive numbers printed on the contracts.
(3) That a duplicate copy of all invoices rendered for printing price later contracts that will show the consecutive numbers printed on the contracts, and the number of contracts printed, shall be promptly forwarded to the Department.
(4) that the person shall register with the Department and pay an annual registration fee of $100 to print price later contracts.

Price later contracts that are in electronic form shall be numbered consecutively.

(b) A grain dealer purchasing grain by price later contract shall at all times own grain, rights in grain, proceeds from the sale of grain, and other assets acceptable to the Department as set forth in this Code totaling 90% of the unpaid balance of the grain dealer's obligations for grain purchased by price later contract. That amount shall at all times remain unencumbered and shall be represented by the aggregate of the following:

(1) Grain owned by the grain dealer valued by means of the hedging procedures method that includes marking open contracts to market.
(2) Cash on hand.
(3) Cash held on account in federally or State licensed financial institutions.
(4) Investments held in time accounts with federally or State licensed financial institutions.
(5) Direct obligations of the U.S. government.
(6) Funds on deposit in grain margin accounts.
(7) Balances due or to become due to the licensee on price later contracts.
(8) Marketable securities, including mutual funds.
(9) Irrevocable letters of credit in favor of the Department and acceptable to the Department.
(10) Price later contract service charges due or to become due to the licensee.
(11) Other evidence of proceeds from or of grain that is acceptable to the Department.

(c) For the purpose of computing the dollar value of grain and the balance due on price later contract obligations, the value of grain shall be figured at the current market price.

(d) Title to grain sold by price later contract shall transfer to a grain dealer at the time of delivery of the grain. Therefore, no storage charges shall be made with respect to grain purchased by price later contract. A service charge for handling the contract, however, may be made.

(e) Subject to subsection (f) of this Section, if a price later contract is not signed by all parties within 30 days of the last date of delivery of grain intended to be sold by price later contract, then the grain intended to be sold by price later contract shall be priced on the next business day after 30 days from the last date of delivery of grain intended to be sold by price later contract at the market price of the grain at the close of the next business day after the 29th day. When the grain is priced under this subsection, the grain dealer shall send notice to the seller of the grain within 10 days. The notice shall contain the number of bushels sold, the price per bushel, all applicable discounts, the net proceeds, and a notice that states that the Grain Insurance Fund shall provide protection for a period of only 160 days from the date of pricing of the grain.

In the event of a failure, if a price later contract is not signed by all the parties to the transaction, the Department may consider the grain to be sold by price later contract if a preponderance of the evidence indicates the grain was to be sold by price later contract.

(f) If grain is in storage with a warehouseman and is intended to be sold by price later contract, that grain shall be considered as remaining in storage and not be deemed sold by price later contract until the date the price later contract is signed by all parties.

(g) Scale tickets or other approved documents with respect to grain purchased by a grain dealer by price later contract shall contain the following: "Sold Grain; Price Later".

(h) Price later contracts shall be issued consecutively and recorded by the grain dealer as established by rule.

(i) A licensee shall not issue a collateral warehouse receipt on grain purchased by a price later contract to the extent the purchase price has not been paid by the licensee.

(j) Failure to comply with the requirements of this Section may result in suspension of the privilege to purchase grain by price later contract for up to one year.

(k) When a producer with a price later contract selects a price for all or any part of the grain represented by that contract, then within 5 business days after that price selection, the licensee shall mail to that producer a confirmation of the price selection, clearly and succinctly indicating the price selected. If the price later contract is in electronic form, the licensee shall, within 5 business days after that price selection, e-mail to that producer a confirmation of the price selection, clearly and succinctly indicating the price selected, in full satisfaction of the mailing requirement in the previous sentence.

(l) The issuance and use of price later contracts in electronic form pursuant to the rules promulgated by the Department are specifically authorized by this Code, and any such price later contracts shall have the same validity and enforceability, for all purposes, as those in non-electronic form. For purposes of this Code, the word "written", and derivatives thereof, when used in relation to price later contracts, shall include price later contracts created or displayed electronically.

(Source: P.A. 96-464, eff. 8-14-09.)

(240 ILCS 40/10-20)

Sec. 10-20. Duties and requirements of warehouseman.

(a) It is the duty of every warehouseman to receive for storage any grain that may be tendered to it in the ordinary course of business so far as the licensed storage capacity of the warehouse permits and if the grain is of a kind customarily stored by the warehouseman and is in suitable condition for storage.

(1) If the condition of grain offered for storage might adversely affect the condition of grain in the warehouse, a warehouseman need not receive the grain for storage, but if a warehouseman does receive the grain, then it must be stored in a manner that will not lower the grade of other grain in the warehouse.
(2) A warehouseman shall provide competent personnel and equipment to weigh and grade all grain in and out of storage.
(3) A warehouseman shall maintain all licensed warehouse facilities in a manner suitable to preserve the quality and quantity of grain stored.

(b) For the purposes of the Department's examinations, a warehouseman shall provide and maintain safe and adequate means of ingress and egress to the various and surrounding areas of the facilities, storage bins, and compartments of the warehouse.

(c) Except as provided in this item (c), a warehouseman shall at all times have a sufficient quantity of grain of like kind and quality to meet its outstanding storage obligations. For purposes of this Section, "like kind and quality" means the type of commodity and a combination of grade, specialty traits, if any, and class or sub-class as applicable.

(d) A warehouseman shall not store grain in excess of the capacity for which it is licensed.

(e) A warehouseman may redeposit grain from its warehouse with another warehouseman or a federal warehouseman in an additional quantity not to exceed the licensed storage capacity of its own warehouse.

(1) If grain is redeposited as provided in this Section, a warehouseman must retain the receipt it obtains from the second warehouseman as proof of the redeposit and retain sufficient control over the redeposited grain as is necessary to comply with directions of the original depositor regarding disposition of the redeposited grain.
(2) While grain is en route from the redepositing warehouseman to the second warehouseman, a redepositing warehouseman must retain an original or a duplicate bill of lading instead of and until such time as it obtains possession of the warehouse receipt as proof of disposition of the redeposited grain.

(f) Schedule of rates and licenses.

(1) A warehouseman shall file its schedule of rates with the Department and shall post its warehouse license and a copy of the schedule of rates on file with the Department in a conspicuous place in each location of the warehouseman where grain is received.
(2) The schedule of rates shall be on a form prescribed by the Department and shall include the names and genuine signatures of all persons authorized to sign warehouse receipts issued by the warehouseman.
(3) To change the schedule of rates or the name of any person authorized to sign warehouse receipts, a warehouseman must file with the Department a revised schedule of rates and, thereafter, post the revised schedule of rates at each location of the warehouseman where grain is received. The revised schedule of rates shall be deemed filed with the Department on the earlier of the date it is delivered to the Department or mailed to the Department by certified mail properly addressed with sufficient postage attached. The revised schedule of rates shall be effective on the date the schedule of rates is posted after delivery or mailing to the Department in accordance with this Section. Revised schedules of rates shall apply only to grain delivered for storage after the effective date of the revised schedule of rates. No grain in storage at the time of the effective date of a revised schedule of rates shall be subject to a revised schedule of rates until one year after the date of delivery of grain, unless otherwise provided by a written contract.
(4) The schedule of rates may provide for the negotiation of different rates for large deliveries of grain if those rates are applied on a uniform basis to all depositors under the same circumstances.

(g) A warehouseman may refuse to accept grain if the identity of the grain is to be preserved. If a warehouseman accepts grain and the identity of the grain is to be preserved, the evidence of storage shall state on its face that the grain is stored with its identity preserved and the location of that grain.

(h) A warehouseman shall at all times maintain an accurate and current daily position record on a daily basis.

(i) In the case of a change of ownership of a warehouse, the obligations of a warehouseman do not cease until its successor is properly licensed under this Code or the United States Warehouse Act, it has surrendered all unused warehouse receipts to the Department and has executed a successor's agreement, or the successor has otherwise provided for the obligations of its predecessor.

(j) If a warehouseman proposes to cease doing business as a warehouseman and there is no successor, it is the duty of the warehouseman to surrender all unused warehouse receipts to the Department, together with an affidavit accounting for all warehouse receipts setting forth the arrangements made with depositors for final disposition of the grain in storage and indicating the procedure for payment in full of all outstanding obligations. After payment in full of all outstanding obligations, it is the duty of the warehouseman to surrender its license.

(k) Requests by a warehouseman for special examinations, grain inventory computation, or verification of grain quantity or quality shall be accompanied by a fee of $200.

(l) Nothing in this Section is deemed to prohibit a warehouseman from entering into agreements with depositors of grain relating to allocation or reservation of storage space.

(Source: P.A. 93-225, eff. 7-21-03.)

(240 ILCS 40/10-25)

Sec. 10-25. Warehouse receipts and storage of grain.

(a) When grain is delivered to a warehouseman at a location where grain is also purchased, the licensee shall give written evidence of delivery of grain and that written evidence shall be marked to indicate whether the grain is delivered for storage or for sale. In the absence of adequate evidence of sale, the grain shall be construed to be in storage.

(b) Upon demand by a depositor, a warehouseman shall issue warehouse receipts for grain delivered into storage.

(c) There shall be no charge for the first warehouse receipt issued to a depositor for a given lot of grain. Charges for any additional warehouse receipts for grain previously covered by a warehouse receipt must be commensurate with the cost of issuance of the additional warehouse receipt.

(d) A warehouseman shall issue warehouse receipts only in accordance with the following requirements:

(1) Warehouse receipts shall be consecutively numbered in a form prescribed by the Department and issued consecutively by the warehouseman.
(2) In the case of a lost or destroyed warehouse receipt, the new warehouse receipt shall bear the same date as the original and shall be plainly marked on its face "duplicate in lieu of lost or destroyed warehouse receipt number .......", and the warehouseman shall duly fill in the blank with the appropriate warehouse receipt number.
(3) Warehouse receipts shall be printed by a person authorized by the Department. The person shall register with the Department and pay an annual registration fee of $100 to print warehouse receipts.
(4) Negotiable warehouse receipts shall be issued only for grain actually in storage with the warehouseman from which it is issued or redeposited by that warehouseman as provided in subsection (e) of Section 10-20.
(5) A warehouseman shall not insert in any negotiable warehouse receipt issued by it any language that in any way limits or modifies its liability or responsibility.

(e) Upon delivery of grain covered by a negotiable warehouse receipt, the holder of the negotiable warehouse receipt must surrender the warehouse receipt for cancellation, and a warehouseman must cancel and issue a new negotiable warehouse receipt for the balance of grain in storage.

(f) When all grain, the storage of which is evidenced by a warehouse receipt, is delivered from storage, the warehouse receipt shall be plainly marked across its face with the word "cancelled" and shall have written on it the date of cancellation, the name of the person canceling the warehouse receipt, and such other information as required by rule, and is thereafter void.

(g) When a warehouseman delivers grain out of storage but fails to collect and cancel the negotiable warehouse receipt, the warehouseman shall be liable to any purchaser of the negotiable warehouse receipt for value in good faith for failure to deliver the grain to the purchaser, whether the purchaser acquired the negotiable warehouse receipt before or after the delivery of the grain by the warehouseman. If, however, grain has been lawfully sold by a warehouseman to satisfy its warehouseman's lien, the warehouseman shall not be liable for failure to deliver the grain pursuant to the demands of a holder of a negotiable warehouse receipt to the extent of the amount of grain sold.

(h) Except as otherwise provided by this Code or other applicable law, a warehouseman shall deliver the grain upon demand made by the holder of a warehouse receipt pertaining to that grain if the demand is accompanied by:

(1) satisfaction of the warehouseman's lien;
(2) in the case of a negotiable warehouse receipt, a properly endorsed negotiable warehouse receipt; or
(3) in the case of a non-negotiable warehouse receipt, written evidence that the grain was delivered to the warehouseman and that the depositor is entitled to it.

(i) If no warehouse receipt is issued to a depositor, a warehouseman shall deliver grain upon the demand of a depositor if the demand is accompanied by satisfaction of the warehouseman's lien and written evidence that the grain was delivered to the warehouseman and the depositor is entitled to it.

(j) If a warehouseman refuses or fails to deliver grain in compliance with a demand by a holder of a warehouse receipt or a depositor, the burden is on the warehouseman to establish the existence of a lawful excuse for the refusal.

(k) If a warehouse receipt has been lost or destroyed, a warehouseman may issue a substitute warehouse receipt, as provided for in this Section, upon delivery to the warehouseman of an affidavit under oath stating that the applicant for the substitute warehouse receipt is entitled to the original warehouse receipt and setting forth the circumstances that resulted in the loss or destruction of the original warehouse receipt. The warehouseman may request from the depositor a bond in double the value of the grain represented by the original warehouse receipt at the time of issuance of the substitute warehouse receipt so as to protect the warehouseman from any liability or expense that it, or any person injured by the delivery, may incur by reason of the original warehouse receipt remaining outstanding.

(l) A warehouse receipt that is to be used for collateral purposes by a warehouseman must be first issued by the warehouseman to itself.

(m) The Department shall approve temporary storage space in an amount to be determined by the Department if all the following conditions are met:

(1) The warehouseman pays all fees and assessments associated with the temporary storage space.
(2) The warehouseman demonstrates that there is a need for additional storage on a temporary basis due to a bumper crop or otherwise.
(3) The structure for the storage of grain meets all of the following requirements:

(A) The grain storage area has a permanent base made of concrete, asphalt, or a material having similar structural qualities.
(B) Hot spot detectors, aeration fans, and ducts are provided to assure that the quality of grain in storage is maintained.
(C) The grain storage structure has rigid sidewalls made of concrete, wood, metal, or a material having similar structural qualities.
(D) The grain storage structure is equipped with a waterproof covering of sufficient strength to support a person's weight and with inlets to allow airflow.
(E) Access to the grain is provided for the purpose of sampling and making examinations.

(4) Temporary storage space shall be considered an increase in the licensed storage capacity of the licensee and shall be subject to Section 5-30.
(5) The authorization to use temporary storage space for the storage of grain shall expire at the end of 6 months after the date of approval by the Department or May 15th, whichever comes first.

(n) The Department may approve emergency storage space at the request of the licensee according to rule.

(o) The issuance and transfer of the warehouse receipts in electronic form pursuant to rules promulgated by the Department are specifically authorized by this Code, and any such warehouse receipts shall have the same validity and enforceability, for all purposes, as those in non-electronic form. For purposes of this Code, the words "written" and "printed", and derivatives thereof, when used in relation to warehouse receipts, shall include warehouse receipts created or displayed electronically.

(Source: P.A. 96-464, eff. 8-14-09.)

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