1. Every person licensed as a grain dealer shall have filed with the director a surety bond executed and signed by the grain dealer as principal and issued by a responsible corporate surety licensed to execute surety bonds in the state of Missouri. It is a violation of sections 276.401 to 276.582 for any person to engage in the business of being a grain dealer without a sufficient surety bond on file with the department, on a form prescribed and furnished by the director.

2. Such bond shall be in favor of the state of Missouri, except as authorized by section 276.581, with the director as trustee for the benefit of all persons selling grain to the grain dealer, and their legal representatives, attorneys or assigns, and shall be conditioned upon the following:

(1) The dealer as a buyer paying to the seller the agreed-upon purchase price of the grain purchased from the seller where title to said grain transferred from the seller to the buyer within the state of Missouri;

(2) The grain dealer’s faithful performance of his duties as a licensed grain dealer and his compliance with sections 276.401 to 276.582 and regulations promulgated hereunder. This section applies to purchases made from the effective date of the bond until the bond is cancelled, except as otherwise provided in sections 276.401 to 276.582;

(3) The bond required by this section shall cover the agreed-upon minimum price of any valid minimum price contract;

(4) The bond required by this section shall not cover payment for any promissory note accepted by the seller of grain. To be considered a promissory note, the note must contain the signature of both seller and buyer, date the note was executed, dollar amount of the note, payment terms and interest rate.

3. A surety bond required or allowed by sections 276.401 to 276.582 shall be effective on the date of issue, shall not be affected by the expiration of the license period, and shall continue in full force and effect until cancelled. The continuous nature of a bond, however, shall in no event be construed to allow the liability of the surety under a bond to accumulate for each successive license period during which the bond is in force, but shall be limited in the aggregate to the amount stated on the bond or as changed, from time to time, by appropriate endorsement or rider.

4. The required bond shall be kept in force at all times while the dealer is conducting business as a licensed grain dealer. Failure to keep such bond in force is cause for revocation of the license, and the dealer is subject to the penalties provided in this chapter. No dealer may cancel an approved bond without the prior written approval of the director and the director’s approval of a substitute bond.

5. A grain dealer filing bonds required under sections 276.401 to 276.582, or regulations promulgated thereunder who is also licensed under chapter 411 shall utilize the same corporate surety for all bonds required to be licensed under chapter 411 and as a grain dealer.

6. Upon written demand of the director for payment, the surety shall either pay over to the director 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 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 surety, and the validity of claims against the bond, and upon the conclusion thereof, the director shall distribute the bond proceeds accordingly. The determination of the director shall be final, subject to the surety’s or a claimant’s right to appeal to the circuit court pursuant to the provisions of chapter 536. Refusal or failure of the surety to pay the sum demanded to the director within ten days of receipt of the director’s demand letter or the refusal or failure to deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available, shall be grounds for withdrawal of the surety’s license and authorization to conduct business in this state, and grounds for the court to penalize the surety, for refusal to pay or to deposit within the ten days of demand, in the amount of twenty-five percent of the full face amount of the bond, plus interest at the rate of nine percent, or at the rate that the director can establish he would have received had the money been paid or deposited by the surety, whichever rate of interest is higher. In the event that the surety pays as demanded and the director or court determines the surety is not liable, the director shall return to the surety the sum paid to the director 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. In the event that the surety elects to deposit the demanded sum in an interest-bearing escrow account and the director holds an administrative hearing determining the liability of the surety and the validity of claims, and upon the exhaustion of appeals, if any, the surety immediately shall pay to the director for distribution to claimants the amount for which the surety has been determined to be liable plus accumulated interest on that amount.

7. Every bond filed shall contain a provision that it may not be cancelled by the principal or surety company except upon ninety days’ prior notice in writing, by certified mail, to the director at his Jefferson City office. In the case of a surety giving notice of cancellation, a copy of such notice shall be mailed, by certified mail, on the same day to the principal. The cancellation does not affect the liability accrued or which may accrue under such bond before the expiration of the ninety days. The notice shall contain the termination date. In the event such notice procedures are not followed, the bond shall remain in full force and effect until properly cancelled.

8. Whenever the director receives notice from a surety that it intends to cancel the bond of a dealer, the director shall automatically suspend the dealer’s license if a new bond is not received by the director within thirty days of receipt of the notice of intent to cancel. If a new bond is not received within sixty days of receipt of the notice of intent to cancel, the director shall revoke the dealer’s license. The director may cause an inspection of the grain dealer at the end of this sixty-day period. Such inspection may include an attempt to identify all possible grain sellers and related claimants of the dealer by advertising for same in local news media.

9. Verbal or written surety bond binders issued by a surety on behalf of a grain dealer for original or replacement bonds are hereby recognized as legally effective in the state of Missouri as if the bond were fully executed when such binders meet the following conditions:

(1) The dealer or principal has paid, or has promised to pay, the surety an agreed upon or tentatively agreed upon premium or other consideration;

(2) The surety provides the department, either in writing or verbally:

(a) A bond number;

(b) The amount of the bond;

(c) The effective date of the bond;

(d) Either verbal or written assurance that the person providing the preceding information has authority to commit the surety. Such binders may be cancelled only in the manner provided in subsection 8 of this section. The director may or may not accept such a binder depending on the particular circumstances involved and consistent with the orderly administration of this chapter.