Section 2-15-133

Bonds or bond equivalents; financial statements and reports; liability for payments.

(a) No license as required under Section 2-15-132 shall be issued or renewed until the applicant therefor shall make, execute, and thereafter maintain on file with the commissioner a bond or a bond equivalent as provided in subsection (f) in favor of the State of Alabama or a trustee to be approved by the commissioner to secure the performance of obligations incurred in the State of Alabama and the payment thereof to persons from whom such dealer purchases livestock. Except as otherwise provided in this subsection, the amount of each bond shall be not less than the next multiple of two thousand dollars ($2,000) above the average amount of purchases of livestock purchased either as a dealer or on an agency basis in Alabama during a period equivalent to two business days based on the total number of business days and the total amount of such transactions during the preceding 12 months or in such substantial part thereof in which the applicant did business. For the purpose of this computation, 260 shall be deemed the number of business days in any year. Bonds above twenty-six thousand dollars ($26,000) shall not be less than the next multiple of five thousand dollars ($5,000) above the average amount of livestock purchased either as a dealer or on an agency basis in Alabama, computed as set out in this subsection. When the amount of a bond, calculated as required in this subsection, exceeds fifty thousand dollars ($50,000), the amount of the bond shall not exceed fifty thousand dollars ($50,000) plus 10 percent of the excess, unless the commissioner has reason to believe that a bond in that amount is inadequate because of the volume of business conducted on a seasonal or otherwise irregular basis, in which event the commissioner shall determine and specify the amount of the bond to be required.

(b) In no case shall a bond covering the buying operations of a dealer be less than ten thousand dollars ($10,000).

(c) If the applicant is a successor in business to a dealer subject to the requirements of this article, the bond of such applicant shall be in an amount not less than that required of the prior dealer, unless the commissioner finds that the amount of such a bond will be excessive and unnecessary. If the applicant has not been previously engaged in the business of a dealer subject to the requirements of this article, the bond of such applicant shall be in an amount equivalent to the estimated value of livestock purchases which it is anticipated such applicant will make during any two business days during the succeeding 12 months. The amount of such bond shall be subject to adjustment from time to time in accordance with subsection (e).

(d) Bonds required by subsection (a) shall be conditioned that the dealer or principal shall pay, when due to the person or persons entitled thereto, the purchase price of all livestock purchased in the State of Alabama by the dealer-principal for his or her own account or for the accounts of others and that the dealer-principal shall safely keep and properly disburse all funds, if any, which come into his or her hands for the purpose of paying for livestock purchased for the account of others. Bonds required by subsection (a) shall be written by a surety company qualified to do business in Alabama. Any person having a cause of action against a dealer for breach of the condition of the bond may bring a civil action against the principal and surety of such bond in any court of competent jurisdiction for recovery of the loss resulting from such breach of the condition of the bond. The aggregate liability of the surety for all such losses shall not exceed the amount of the bond. The bond shall contain a provision requiring not less than 15 days' written notice to the commissioner by the party terminating such bond in order to effect its termination.

(e) Whenever the commissioner finds that any bond required under this section is inadequate, such bond, upon notice from the commissioner, shall be increased to meet the requirements of this section or, in like manner, may be reduced if found to be in excess of the requirements of this section. The amount of such bond shall not be increased or reduced by the commissioner, nor shall the amount of any bond be increased under authority of subsection (a) unless and until the board adopts rules prescribing the conditions under which bond increases or reductions will be required by the commissioner. The rules shall prescribe a uniform method and procedure to be followed by the commissioner in determining the amount of any bond increases or reductions that may be ordered by the commissioner because of being inadequate or excessive. All such bond increases and reductions as ordered by the commissioner as authorized under this subsection shall be reviewed by the board at its next quarterly or special call meeting for the purpose of determining whether the action of the commissioner in requiring an increase or reduction in the amount thereof is in compliance with the rules as prescribed by the board for this purpose.

(f) A bond equivalent may be filed or maintained in lieu of a bond. A bond equivalent shall be in the form of a trust fund agreement based upon cash or fully negotiable bonds of the United States government or of the State of Alabama. All provisions of this section relating to making, executing, filing, and maintaining bonds on file with the commissioner shall be applicable to such trust fund agreements.

(g) The above requirements for a bond or bond equivalent may be waived provided the dealer, "at the time of purchase," pays for all livestock purchased with United States currency (cash), money orders, or cashier's or certified checks. The dealer may also be required to submit verified statements to this effect.

(h) Every person engaged in the business of a dealer shall furnish annually and at such other times as the commissioner may designate or request verified financial statements and reports showing the volume and value of livestock purchased in Alabama and the names and addresses of all employees authorized to purchase livestock for such person and shall keep such books and records as the commissioner may require as being reasonably necessary to carry out the provisions and requirements of this section, and the commissioner or his or her duly authorized agent or agents shall have access to such books and records during the regular business hours of any business day for the purpose of examination, inspection, audit, or investigation of such dealer's operations. Any person who submits false information in making any report required under this subsection or who refuses the commissioner or his or her authorized agent access to such books and records as are required to be kept under this subsection shall be subject to Section 2-15-136.

(i) Every person engaged in the business of a dealer shall make full payment of the amount of each purchase of livestock to the person from whom such purchase was made not later than the close of the next business day following the date of the purchase; however, dealers engaged in the business of buying catfish shall make such payment not later than the close of 10 business days following the date of the purchase.

(j) Every person engaged in the business of a dealer, with regard to any purchase of livestock made by such dealer at a livestock market regulated by Sections 2-15-60 through 2-15-71, shall be liable for the payment of the amount of the livestock purchase made by the dealer whether the purchase was made by the dealer on his or her own account or as an agent for another, and with respect to such livestock purchases made as an agent for another, such liability shall exist without regard to the fact that the other party for whom the purchase was made shall also be liable for the payment of the amount of such purchase.

(Acts 1969, No. 568, p. 1049, §4; Acts 1979, No. 79-822, p. 1535; Acts 1984, No. 84-190, p. 297; Acts 1984, 1st Ex. Sess., No. 84-797, p. 207, §1; Act 2017-226, §1.)