Effective - 28 Aug 1987
276.431. Provisions and rules relating to bonds to apply to certificates of deposit — irrevocable letters of credit may be accepted, conditions, demand by director, procedure — failure by bank to pay, when, penalty — funds returned to bank, when. — 1. Sections 276.401 to 276.581 and all regulations promulgated hereunder that apply to surety bonds shall also apply to certificates of deposit. Any certificate of deposit submitted in lieu of a surety bond required under sections 276.401 to 276.581 shall be filed with the director as trustee for the benefit of all persons selling grain to the grain dealer. The certificate of deposit will be kept in the custody of the director.
2. A grain dealer may, in lieu of the bond required under this chapter, submit an irrevocable letter of credit, payable to the director for the benefit of claimants, and issued by a federally or state chartered bank. The director may refuse to accept a letter of credit in lieu of the bond required by this chapter if the director finds that the issuing bank is or may become insolvent, or for any other reason may be unable to honor the terms of the letter of credit. The director may require an issuing bank to submit evidence of its financial condition, and the director may seek the cooperation of the division of finance in evaluating the financial condition of an issuing bank. The director shall promulgate all necessary regulations pertaining to certificates of deposit, and irrevocable letters of credit.
3. Upon written demand of the director for payment, the bank shall either pay over to the director the sum demanded, up to the full face amount of the irrevocable letter of credit, or shall deposit the sum demanded in an escrow account at the highest rate of interest available. When a bank pays the director upon demand, the director shall either interplead the sum in court or hold an administrative hearing for the determination of the liability of the bank and the validity of the claims against the irrevocable letter of credit, and upon the conclusion thereof, the director shall distribute the irrevocable letter of credit proceeds accordingly. The determination of the director shall be final, subject to the licensee's or claimant's right to appeal to the circuit court pursuant to the provisions of chapter 536. Refusal or failure of the issuing bank to pay the sum demanded to the director within three days of the bank's receipt of such written demand shall result in a penalty assessment of ten percent of the amount demanded, up to the full face amount of the irrevocable letter of credit, per week until the amount demanded and the penalty are paid. When funds have been received, and the director or court determines that the bank is not liable for claims against the irrevocable letter of credit, the director shall return to the bank the sum paid to the director and all accumulated interest earned, minus any penalties due or paid. In the event that the liability is less than the sum demanded, the director shall return the appropriate pro rata portion of the funds received, and interest earned as applicable.
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(L. 1980 H.B. 1627 § 7, A.L. 1986 H.B. 1578, A.L. 1987 H.B. 751)