Sec. 14.031. BOND. (a) In accordance with this section, each applicant for a license shall file or have on file a bond with the department.
(b) The bond must:
(1) be payable to the State of Texas;
(2) be executed by the applicant as principal;
(3) be issued by a corporate surety licensed to do business as surety in the State of Texas; and
(4) be in a form and contain terms and conditions prescribed by the department.
(c) The bond must be conditioned on faithful performance of:
(1) each obligation of a warehouse operator as to receipted grain and open storage grain under this chapter and rules adopted under this chapter, from the effective date of the bond until the license is revoked or the bond is canceled, whichever occurs first, whether or not the warehouse remains licensed; and
(2) except for a contract for the purchase of grain or to act as broker for the grain, each obligation of a warehouse operator under any contract with a depositor that exists on the effective date of the bond or is assumed after the effective date of the bond and before the license is revoked or the bond is canceled, whichever occurs first and whether or not the warehouse remains licensed.
(d) The bond must be in an amount of not less than $35,000 and be based on 10 cents per bushel of storage capacity, not to exceed a maximum of $500,000.
(e) If the actual net worth of an applicant equals less than the greater of either 25 cents per bushel of storage capacity or $200,000, the applicant shall file a deficiency bond in an amount equal to the difference between the actual net worth and the greater of either $200,000 or the amount determined by multiplying 25 cents times each bushel of storage capacity in the applicant's warehouse. A deficiency bond is in addition to the bond required of an applicant by this section.
(f) Except as provided by department rule, the applicant must give a single bond meeting the requirements of this section to cover warehouses licensed as a single facility or combination. A single bond may not be used to cover more than one individually licensed facility, more than one combination, or one or more individually licensed facilities and one or more combinations.
(g) The liability of the surety of a bond required by this chapter is limited to the face amount of the bond and does not accumulate for each successive license period during which the bond is in force.
(h) Subject to the approval of the department, a warehouse operator may deposit the following with the department, for the term of the license plus two years, in lieu of a bond required by this section:
(1) cash;
(2) an irrevocable letter of credit, payable to the State of Texas; or
(3) a certificate of deposit from a federally insured bank or savings and loan institution authorized to do business in this state, assigned to the State of Texas.
(i) The cash, letter of credit, or certificate of deposit under Subsection (h) must be in the same amount or have a value in the same amount as required for the warehouse bond.
(j) Any interest or income earned on an assigned certificate of deposit accrues to the owner of the certificate during the time of the assignment.
Acts 1981, 67th Leg., p. 1048, ch. 388, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1987, 70th Leg., ch. 50, Sec. 2, eff. April 30, 1987. Renumbered from Sec. 14.009 and amended by Acts 2001, 77th Leg., ch. 1124, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 168 (S.B. 248), Sec. 2, eff. September 1, 2011.