2 CSR 30-6.030 - Bonding (Surety) Requirements for Livestock Market Licensees
(1) Bonding
Requirements. Every person subject to the provisions of Chapter 277, RSMo shall
provide proof of a satisfactory bond in the amount specified by the United
States Department of Agriculture (USDA) Packers and Stockyards Administration
or the state veterinarian before receiving a license. In lieu of any bond,
persons may substitute any instrument of financial security approved by the
USDA Packers and Stockyards Administration.
(2) All surety bonds and certificates of
deposit shall name the state veterinarian as trustee or beneficiary. Letters of
credit shall name the state veterinarian and the issuing financial institution
as co-trustees. For livestock markets or sales whose corporate headquarters are
located in another state, it is not required that the state veterinarian act as
beneficiary or trustee, although proof of adequate bonding must be submitted
with the application for a license. These bonds shall be in favor of Missouri
with the director as trustee for the benefit of all persons selling livestock
to the livestock market/sale and their legal representatives, attorneys or
assigns, and shall be dependent upon the following:
(A) The livestock market/sale as a buyer must
pay to the seller the agreed upon purchase price of the livestock purchased
from the seller;
(B) The livestock
markets/sales must faithfully perform their duties as licensed livestock
markets/sales and comply with Chapter 277, RSMo and its corresponding rules.
This rule applies to purchases made from the effective date of the bond until
official cancellation of the bond;
(C) A surety bond required by section
277.080, RSMo shall be effective
on the date of issue, not affected by the expiration of the license, and shall
continue in effect until cancelled. The continuous nature of a bond however, in
no event shall allow the liability of a surety under a bond to accumulate for
each successive license period during which the bond is in force, but limited
in the aggregate to the amount stated on the bond, or as changed, from
time-to-time, by appropriate endorsement or rider;
(D) The required bond shall be kept in force
at all times while conducting business as a licensed livestock market or sale.
Failure to keep that bond in force is cause for revocation of the license and
the market/sale is subject to the penalties provided in this chapter. No
market/sale shall cancel an approved bond without the prior written approval of
the state veterinarian and the state veterinarian's approval of a substitute
bond;
(E) Upon written demand of
the state veterinarian for payment, either the surety shall pay over to the
state veterinarian the sum demanded up to the full face amount of the bond or
shall deposit the sum demanded in an interest-bearing escrow account at the
highest rate of interest available. When a surety pays the state veterinarian
upon demand, the state veterinarian shall set a date for an informal conference
to allow the parties to discuss the claim. If the surety pays as demanded and
the parties or a court of law determines the surety is not liable, the state
veterinarian shall return to the surety the sum paid to the state veterinarian
plus all accumulated interest, or any pro rata part of the
sum, plus interest, as applicable in the event of liability less than the sum
demanded. If the surety chooses to deposit the demanded sum in an
interest-bearing escrow account and upon the exhaustion of appeals, if any, the
surety immediately shall pay to the state veterinarian for distribution to
claimants the amount for which the surety is determined to be liable plus
accumulated interest on that amount;
(F) Every bond filed shall contain a
provision that the principal or surety company cannot cancel the bond except
upon ninety (90) days' prior notice in writing, by certified mail, to the state
veterinarian at the Jefferson City office. When a surety gives notice of
cancellation, a copy of that notice shall be mailed to the principal by
certified mail on the same day. The cancellation does not affect the liability
accumulated or which may accumulate under that bond before the expiration of
the ninety (90) days. The notice shall contain the termination date. If notice
procedures are not followed, the bond shall remain in effect until properly
cancelled;
(G) Whenever the state
veterinarian receives notice from a surety that it intends to cancel the bond
of a livestock market or sale, the state veterinarian shall automatically
suspend the market/sale license if a new bond is not submitted to the state
veterinarian within forty-five (45) days of receipt of the notice of intent to
cancel. If a new bond is not received within eighty (80) days of receipt of the
notice of intent to cancel, the state veterinarian shall revoke the market/sale
license. The state veterinarian may cause an inspection of the livestock
market/sale at the end of the eighty (80)-day period. That inspection may
include an attempt to identify all possible livestock sellers and related
claimants of the market/sale by advertising for the same in local news media;
and
(H) Verbal or written surety
bond binders issued by a surety on behalf of a livestock market/sale for
original or replacement bonds are recognized as legally effective in Missouri
when those binders meet the following conditions:
1. The licensee or principal has paid, or has
promised to pay, the surety a tentatively agreed upon premium or other
consideration; and
2. A surety
provides the state veterinarian, either in writing or verbally-
A. A bond number;
B. The amount of the bond;
C. The effective date of the bond; and D.
Assurance that the person providing the preceding information has authority to
commit the surety. The state veterinarian may or may not accept this binder,
depending on the particular circumstances involved and consistent with the
orderly administration of this rule.
(3) Provisions and rules on bonds will also
apply to certificates of deposit and irrevocable letters of credit, with the
exception that a letter of credit may only be cancelled on its natural
termination date.
(A) Any certificate of
deposit submitted instead of a surety bond required under section
277.080, RSMo shall be filed
with the state veterinarian as trustee for the benefit of all persons selling
livestock to the livestock market/sale. The certificate of deposit shall be
kept in the custody of the state veterinarian.
(B) A licensee may submit instead of a bond,
an irrevocable letter of credit, payable to the state veterinarian or the
issuing financial institution for the benefit of claimants and issued by a
federally- or state-chartered bank. If the state veterinarian 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 state veterinarian may refuse
to accept a letter of credit instead of the bond required by this rule if the
state veterinarian 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 state veterinarian may require an issuing bank to submit evidence of its
financial condition and the state veterinarian may seek the cooperation of the
Division of Finance in checking the financial condition of an issuing bank. The
state veterinarian shall promulgate all necessary rules regarding certificates
of deposit and irrevocable letters of credit.
(C) On written demand of the state
veterinarian for payment, the bank either shall pay over to the state
veterinarian the sum demanded, up to the full face value of the irrevocable
letter of credit, or shall deposit the sum demanded in an escrow account at the
highest rate of interest available. Upon receipt of funds and the determination
that the bank is not liable for claims against the irrevocable letter of
credit, the state veterinarian shall return to the bank the sum paid to the
state veterinarian and all accumulated interest earned, minus any penalties due
or paid. If the liability is less than the sum demanded, the state veterinarian
shall return the proper pro rata portion of the funds received
and interest earned as applicable.
(4) Amount of bond or surety will vary based
upon the following criteria:
(A) Each
market/sale licensed under Chapter 277, RSMo that does not meet USDA Packers
and Stockyards Administration criteria either in volume or type of livestock
sold must carry a minimum ten thousand dollar ($10,000) surety bond or like
security; and
(B) Those
markets/sales which exceed two hundred thousand dollars ($200,000) of business
in the preceding year shall add to the ten thousand dollar ($10,000) bond with
an amount to equal two and one-half percent (2.5%) of the dollar volume over
two hundred thousand dollars ($200,000), rounded to the nearest ten thousand
dollars ($10,000).
Notes
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