§145-4 Bonding of commission merchant and broker.
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§145-4 Bonding of commission merchant and broker. Before any license is issued to any commission merchant or broker, the applicant shall execute and deliver to the department a surety bond in the amount specified in the rules of the department, but not to exceed $10,000, executed by the applicant as principal and by a surety company qualified and authorized to do business in this State as surety. The bond shall be conditioned upon compliance with this chapter and upon the faithful and honest handling or negotiation of the purchase or sale of farm products in accordance with this chapter.
The bond shall be to the State in favor of every producer-consignor of farm products grown within the State. Any producer-consignor of farm products grown within the State claiming to be injured by the fraud, deceit, or wilful negligence of any commission merchant or broker may bring action upon the bond against both principal and surety in any court of competent jurisdiction to recover the damages caused by such fraud, deceit, or wilful negligence, or the failure to comply with this chapter.
In case of failure by a commission merchant to pay producer-consignor creditors for farm products received from the consignors to be sold or failure by a broker to pay producer-consignor creditors for farm products delivered to and paid for by a buyer as a result of a negotiated sale by the broker on behalf of the producer, the department shall proceed forthwith to ascertain the names and addresses of all producer-consignor creditors of the commission merchant or broker, together with the amounts due and owing to them and each of them by the commission merchant or broker, and shall request all the producer-consignor creditors to file a verified statement of their respective claims with the department.
The request shall be addressed to each known producer-consignor creditor at its last known address. If a producer-consignor creditor so addressed fails, refuses, or neglects to file in the office of the department its verified claim as requested by the department within ninety days from the date of such request, the department shall thereupon be relieved of further duty or action hereunder on behalf of the producer-consignor creditor.
Upon ascertaining all claims and statements in the manner herein set forth, the department may then make demand upon the bond on behalf of those claimants whose statements have been filed, and shall have the power to settle or compromise the claims with the surety company on the bond, and is empowered in such cases to execute and deliver a release and discharge of the bond involved. Upon the refusal of the surety company to pay demand, the department shall thereupon bring an action on the bond in behalf of the producer-consignor creditors.
Upon any action being commenced on the bond, the department may require the filing of a new bond and immediately upon the recovery in any action on the bond such commission merchant or broker shall file a new bond and upon failure to file the same within ten days in either case, such failure shall constitute ground for the suspension or revocation of the commission merchant's or broker's license. [L 1951, c 74, pt of §1; RL 1955, §23-4; am L Sp 1959 2d, c 1, §22; am L 1961, c 132, §2;
HRS §145-4; am L 1983, c 258, §3; am L 1984, c 116, §2; gen ch 1985]