H.B. 17

1

AGRICULTURAL PRODUCTS DEALER'S ACT
2 AMENDMENTS
3 2003 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Craig W. Buttars
6 Eli H. Anderson
7 Glenn A. DonnelsonJames R. Gowans
Darin G. PetersonPeggy Wallace 8 This act modifies the Agricultural Products Dealer's Act by increasing the floor and
9 ceiling on the amount of the surety bond or other security agreement required before a
10 license is issued to a dealer. The act allows the commissioner of the Department of
11 Agriculture and Food to increase original bond requirements for a dealer's license if the
12 original bond is inadequate. The act gives the commissioner the authority to call a bond
13 if renewal is not made. The act requires the filing of annual reports by dealers with the
14 department and disallows a packer buyer to be double licensed or double bonded.
15 This act affects sections of Utah Code Annotated 1953 as follows:
16 AMENDS:
17 4-7-8, as last amended by Chapter 79, Laws of Utah 1996
18 4-7-9, as last amended by Chapter 25, Laws of Utah 1990
19 4-7-14, as last amended by Chapter 41, Laws of Utah 1995
20 Be it enacted by the Legislature of the state of Utah:
21 Section 1. Section 4-7-8 is amended to read:
22 4-7-8. Applicant for dealer's license to post security -- Increase in amount of
23 security posted -- Action on security authorized -- Duties of commissioner -- Option to
24 require posting new security if action filed -- Effect of failure to post new security --
25 Commissioner's authority to call bond if not renewed.
26 (1) (a) Before a license is issued to a dealer, the applicant must post a corporate surety
27 bond, irrevocable letter of credit, trust fund agreement, or any other security agreement

28 considered reasonable in an amount not less than [$10,000] $20,000 nor more than [$100,000]
29 $200,000, as determined by the commissioner or as required by the Packers and Stockyards
30 Act, 1921, 7 U.S.C. Section 181 et seq.
31 (b) Any bond shall be written by a surety licensed under the laws of Utah and name the
32 state, as obligee, for the use and benefit of producers.
33 (c) The bond or other security posted shall be conditioned upon:
34 [(a)] (i) the faithful performance of contracts and the faithful accounting for and
35 handling of any product of agriculture consigned to the dealer;
36 [(b)] (ii) the performance of the obligations imposed under this chapter; and
37 [(c)] (iii) the payment of court costs and attorney's fees to the prevailing party incident
38 to any suit upon the bond or other security posted.
39 (2) (a) The commissioner may require a dealer who is issued a license to increase the
40 amount of the bond or other security posted under Subsection (1)(a) if the commissioner
41 determines the bond or other security posted is inadequate to secure performance of the dealer's
42 obligations.
43 (b) The commissioner shall notify the Packers and Stockyards Administration of an
44 increase made under Subsection (2)(a).
45 (c) The commissioner may suspend a dealer's license for failure to comply with
46 Subsection (2)(a) within ten days after notice is given to the dealer.
47 [(2)] (3) A consignor claiming damages, as a result of fraud, deceit, or willful
48 negligence by a dealer or as a result of the dealer's failure to comply with this chapter, may
49 bring an action upon the bond or other security posted for damages against both the principal
50 and surety.
51 [(3)] (4) (a) If it is reported to the department by a consignor that a dealer has failed to
52 pay in a timely manner for any product of agriculture received for sale, the commissioner shall:
53 (i) ascertain the name and address of each consignor who is a creditor of the dealer;
54 and
55 (ii) request a verified written statement setting forth the amount claimed due from the
56 dealer.
57 (b) Upon receipt of the verified statements, the commissioner shall bring an action
58 upon the bond or other security posted on behalf of the consignors who claim amounts due

59 from the dealer.
60 [(4)] (5) (a) If an action is filed upon the bond or other security posted, the
61 commissioner may require the filing of new security.
62 (b) Immediately upon recovery in the action, the commissioner shall require the dealer
63 to file a new bond or other security.
64 (c) Failure, in either case, to file the bond or other security within ten days after
65 demand is cause for suspension of the license until a new bond or other security is filed.
66 (d) If the bond or other security posted under this section is not renewed within ten
67 days of its expiration date, unless the commissioner states in writing that this is unnecessary,
68 the commissioner shall obtain the full amount of the bond or other security before it expires.
69 Section 2. Section 4-7-9 is amended to read:
70 4-7-9. Dealers -- Records mandated -- Records subject to inspection.
71 (1) [Each] A dealer who receives any product of agriculture for sale shall promptly
72 record:
73 (a) the name and address of the consignor;
74 (b) the date received;
75 (c) the condition and quantity upon arrival;
76 (d) the date of sale for account of the producer-consignor;
77 (e) the sale price;
78 (f) an itemized statement of the charges to be paid by the producer-consignor;
79 (g) the lot number or other means used for identification of the product;
80 (h) the nature and amount of any claims the dealer has against third persons for
81 overcharges or damages; and
82 (i) if the dealer has a direct or indirect financial interest in the business of the
83 purchaser, or, if the purchaser has a similar financial interest in the business of the dealer, the
84 name and address of the purchaser.
85 (2) (a) The records required by this section shall be retained for a period of one year
86 following the date of consignment and shall be available during business hours for inspection
87 by the department.
88 (b) A consignor involved in a consignment subject to inquiry may inspect relevant
89 records.

90 (3) (a) A dealer shall file an annual report of the records required under Subsection (1)
91 with the department on a form prescribed and furnished by it.
92 (b) The dealer shall file the report by April 15 following the end of a calendar year, or
93 if the records are kept on a fiscal year basis, by 90 days after the close of the fiscal year.
94 (c) The commissioner may, for good cause shown or by the commissioner's own
95 motion, grant an extension to the filing deadline under Subsection (3)(b).
96 (d) For purposes of this Subsection (3), "dealer" does not include a packer buyer
97 registered to purchase livestock for slaughter only.
98 (e) The department shall accept reports as required by the Packers and Stockyards
99 Administration for livestock under the Packers and Stockyards Act, 9 C.F.R. Sec. 201.97.
100 (f) The reports required under this Subsection (3) may be subject to audit and establish
101 the basis for bond adequacy.
102 Section 3. Section 4-7-14 is amended to read:
103 4-7-14. Prohibited acts.
104 (1) A person licensed under this chapter may not:
105 (a) make false charges incident to the sale, handling, or storage of products of
106 agriculture;
107 (b) wilfully fail to comply with the requirements of Section 4-7-9 or 4-7-10 ;
108 (c) fail to file a schedule of commissions and charges;
109 (d) reconsign products of agriculture without the consent of the producer-consignor for
110 the purpose of charging more than one commission;
111 (e) make any false statement to the detriment of the producer regarding current market
112 conditions for products of agriculture or about the condition or quantity of the products
113 consigned for the account of the producer;
114 (f) engage in fraud or misrepresentation in the procurement or attempted procurement
115 of a license; or
116 (g) act as a dealer or agent and, with intent to defraud, make, draw, utter, or deliver any
117 check, draft, or order for the payment of money from any bank or other depository to the owner
118 for the purchase price of any farm products or any part thereof, when at the time of the making,
119 drawing, uttering, or delivery the maker or drawer does not have sufficient funds in or credit
120 with the bank or other depository for the payment of the check, draft, or order in full upon its

121 presentation.
122 (2) (a) The making, drawing, uttering, or delivery of a check, draft, or order in the
123 circumstances specified in this section shall be evidence of an intent to defraud.
124 (b) As used in [this section] Subsection (1)(g), "credit" means an arrangement or
125 understanding with the bank or depository for the payment of the check, draft, or order.
126 (3) (a) A packer buyer, registered with the department to purchase livestock for
127 slaughter only, or livestock fed with intent to slaughter, may not hold any other license or bond
128 regarding the purchase of livestock.
129 (b) (i) For purposes of this Subsection (3), a packer buyer is considered a salaried
130 employee of a packer and can purchase only on orders for that packer.
131 (ii) The packer buyer may not purchase livestock for slaughter or livestock fed with
132 intent for slaughter for any other person while in the employ of the packer.
133 (c) If a packer buyer chooses to purchase livestock other than as prescribed by this
134 Subsection (3), the individual shall:
135 (i) terminate employment with the packer; and
136 (ii) obtain a license as a dealer under this chapter.




Legislative Review Note
as of 11-20-02 4:25 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Interim Committee Note
as of 12-12-02 3:35 PM

The Natural Resources, Agriculture, and Environment Interim Committee recommended this
bill.

Mixed Membership Committee Note
as of 12-12-02 3:35 PM

The Agricultural Sustainability Task Force recommended this bill.
Membership: 12 legislators 9 non-legislators
Legislative Vote: 8 voting for 0 voting against 4 absent