H*4591 Session 108 (1989-1990)
H*4591(Rat #0518, Act #0436 of 1990) General Bill, By
House Agriculture and Natural Resources
A Bill to amend Title 39, Code of Laws of South Carolina, 1976, by adding
Chapter 22 so as to regulate the state warehouse system; by adding Section
39-22-35 so as to exempt grist mills and their products from regulation of the
state warehouse system; and to repeal Chapter 21 of Title 39 relating to the
State's agricultural warehouses.-amended title
02/07/90 House Introduced, read first time, placed on calendar
without reference HJ-13
02/08/90 House Read second time HJ-14
02/13/90 House Read third time and sent to Senate HJ-14
02/14/90 Senate Introduced and read first time SJ-6
02/14/90 Senate Referred to Committee on Agriculture and Natural
Resources SJ-6
03/20/90 Senate Committee report: Favorable with amendment
Agriculture and Natural Resources SJ-10
03/29/90 Senate Amended SJ-37
03/29/90 Senate Read second time SJ-40
03/29/90 Senate Unanimous consent for third reading on next
legislative day SJ-40
03/30/90 Senate Read third time and returned to House with
amendments SJ-1
04/11/90 House Senate amendment amended HJ-29
04/11/90 House Returned to Senate with amendments HJ-29
04/12/90 Senate Concurred in House amendment and enrolled SJ-163
04/19/90 Ratified R 518
04/24/90 Signed By Governor
04/24/90 Effective date 04/24/90
04/24/90 Act No. 436
05/22/90 Copies available
(A436, R518, H4591)
AN ACT TO AMEND TITLE 39, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING
CHAPTER 22 SO AS TO REGULATE THE STATE WAREHOUSE SYSTEM; BY ADDING
SECTION 39-22-35 SO AS TO EXEMPT GRIST MILLS AND THEIR PRODUCTS FROM
REGULATION OF THE STATE WAREHOUSE SYSTEM; AND TO REPEAL CHAPTER 21 OF
TITLE 39 RELATING TO THE STATE'S AGRICULTURAL WAREHOUSES.
Be it enacted by the General Assembly of the State of South Carolina:
State warehouse system
SECTION 1. Title 39 of the 1976 Code is amended by adding:
"CHAPTER 22
State Warehouse System
Section 39-22-10. The department may license a qualified warehouse
facility for the storage of cotton and grain or other nonperishable
agricultural products as defined by regulation. A license must be
granted only to those applicants who have met the minimum requirements
of this chapter and whose warehouse facility is suitable for the storage
of agricultural commodities for which it is intended. A license may be
revoked or suspended at any time the warehouseman does not meet the
minimum standards as required by this chapter.
Section 39-22-20. To safeguard the interest of holders of
warehouse receipts issued under this chapter, Chapter 19 of this title,
and Chapter 7 of Title 36, the department shall require a surety bond or
equivalent security from the applicant for a warehouse license for the
faithful performance of his duties. The bond or other security must be
in an amount of twenty-five thousand dollars for each warehouse. The
bond must provide that the warehouseman personally shall account for and
pay over, according to law, all money and property received by him and,
in cases of default, the surety shall pay all damages, costs, and
expenses resulting from the default. In the event of a default, the
holder of the warehouse receipt may proceed directly against the
warehouseman or surety or both on the bond to recover the loss and a
surety or other insurer who has been required to respond financially upon
the action must be subrogated to all rights of the holder of the
warehouse receipt.
The department shall assist the warehousemen in obtaining their
individual bonds at the best available rate under a group plan, when
possible.
Section 39-22-30. The department shall promulgate regulations to
implement the provisions of this chapter.
Section 39-22-40. The provisions of this chapter referring to cotton
also refer to all nonperishable farm products as defined by the
Commissioner of Agriculture.
Section 39-22-50. Cotton designated as 'linters' may not be received
for storage under the provisions of this chapter.
Section 39-22-60. The Department of Agriculture shall accept as
authoritative the standards and classifications of cotton established by
the federal government.
Section 39-22-70. A receipt for lint cotton must be issued under the
seal and signature of the Commissioner of Agriculture or his deputy in
the name of the State, stating the location of the warehouse, the name
of the manager, the tag number on the bale and the weight, grade, and
staple to enable delivery on surrender of the receipt of the identical
cotton for which it was given. The grade and staple may be omitted at
the request of the depositor. The receipt may be issued in bearer or
order form.
Section 39-22-80. The warehouse receipt forms must be designed
or otherwise approved by the commissioner. All orders for the printing
of warehouse receipts and bale tags must be preapproved by the
department. The receipts must be numbered and the warehouse receiving
the forms shall account for each receipt. The receipts may have the
lithographed or engraved signature of the commissioner but they must be
signed with pen and ink, indelible pencil, or mechanical device approved
by the commissioner, by the authorized manager of the licensed warehouse.
Section 39-22-90. (A) It is unlawful for:
(1) the manager or owner of a warehouse or an agent or
employee to issue or aid in issuing a receipt for a commodity, knowing
that the commodity has not been actually placed in the warehouse under
the control of the manager or owner of the commodity;
(2) a person to induce a warehouseman to issue a receipt for
a commodity, knowing that the commodity has not been actually placed in
the warehouse under the control of the manager or owner of the commodity;
(3) a person to knowingly issue a warehouse receipt in a name
other than that of the lawful owner of the commodity, or his designee,
for which the receipt is given;
(4) a person to knowingly deliver an agricultural commodity
to a warehouse or dealer on which a lien is outstanding without giving
written notice to the warehouseman or dealer of the lien;
(5) a person to induce a warehouseman to deliver a commodity
without first obtaining warehouse receipts issued for it;
(6) a manager, owner, or employee of a warehouse to knowingly
deliver a commodity without first obtaining warehouse receipts issued for
it;
(7) a warehouse auditor who, upon the auditing of a warehouse
in the state warehouse system, finds items (2) and (5) of this section
to have been violated to fail to report the violation on his regular
report of the inspection, regardless of whether or not the violation is
corrected before the report is filed;
(8) a person to issue or aid in issuing a duplicate or
additional receipt for cotton or other commodity, knowing that the former
receipt or any part of it is outstanding unless a receipt has become lost
or destroyed and the goods are delivered or a duplicate receipt is issued
in accordance with the provisions of law covering those cases.
(B) A person violating the provisions of item (1), (2), (3), or
(4) of this section is guilty of a misdemeanor and, upon conviction, must
be fined not more than five thousand dollars or imprisoned for not less
than one year nor more than five years, or both.
A person violating the provisions of item (5) or (6) of this section
is guilty of a misdemeanor and, upon conviction, must be fined not more
than five thousand dollars or imprisoned for not more than one year, or
both.
A person violating the provisions of item (7) of this section is
guilty of a misdemeanor and, upon conviction, must be fined not more than
one thousand dollars or imprisoned for not more than one year, or both,
for each violation.
A person violating the provisions of item (8) of this section is
guilty of forgery and, upon conviction, must receive the penalty provided
for a conviction of that crime.
Section 39-22-100. The weights, classes, and grades of cotton,
if shown on a warehouse receipt issued for the cotton, or other
nonperishable farm products on storage are guaranteed by the State under
this chapter only in favor of those who loan money on or buy cotton
stored in warehouses. The State is not responsible for fluctuations in
weight resulting from ordinary climatic conditions.
Section 39-22-110. Each bale of cotton accepted for storage in a
warehouse operated under the state warehouse system must be identified
by a numbered tag affixed to the bale. The tag must be designed so that
the brand 'South Carolina' may be unmistakably visible. The palmetto
tree, with a bale of cotton lying at the roots, and the shield of the
State must be printed on the tag. The county of origin may appear on the
tag.
Section 39-22-120. Each licensed warehouseman shall insure and keep
insured against loss or damage by fire, theft, burglary, and other
hazards which are commonly insured against, under 'extended coverage'
provisions, for its full value, all cotton and other products on storage
unless requested by the depositor in writing not to insure the cotton or
other products and in that instance when the cotton or other products are
not insured a statement to that effect must be plainly and conspicuously
inserted on the face of the receipt. In case of loss, the warehouseman
shall collect the insurance due and pay it ratably to those lawfully
entitled to payment. The warehouseman may accept contracts for the
storage of cotton submitted by the Commodity Credit Corporation and other
United States governmental agencies without being required to carry
insurance on the cotton. As a condition of license, each warehouseman
shall maintain on file with the department a current certificate of
insurance setting forth the policy number, the agent and underwriter, the
provisions and limits of coverage, and the date the policy expires.
Section 39-22-130. Each warehouse must be inspected, the
inventory taken, and the records checked at least once in every three
months.
Section 39-22-140. All sums collected under this chapter must be
transferred annually to a special account in the State Treasury according
to the provisions of Section 39-22-150.
Section 39-22-150. All net revenues derived from operation of the
state warehouse system must be transferred annually to a special account
in the State Treasury until the sum of three million dollars accrues.
When the fund reaches three million dollars, these transfers shall cease;
however, all interest and investment revenue shall accrue solely to the
fund and be returned annually to the fund. In order to support the
increase of this fund, the funds must be invested at interest by the
State Treasurer who shall credit the interest earned on the funds to the
increase of the fund up to and above three million dollars. In addition
to the interest, the commissioner shall assess an amount ratably against
each warehouseman in this State issuing warehouse receipts a special
additional fee not to exceed ten cents a bale of cotton or one cent a
bushel of soybeans and one-half cent a bushel of any other stored feed
grains or oil seeds for which warehouse receipts have been issued. The
additional assessment may be charged not more than once for each receipt
issued on a bale of cotton or bushel of grain. When the fund has reached
the total sum of one million, five hundred thousand dollars, the special
additional assessment must be discontinued. If the fund is reduced to
below one million dollars, the assessment must be resumed. The funds
must be used to guarantee state warehouse receipts in excess of an amount
recovered from the bonds required by this chapter. If there is an
insufficient amount of money in the fund to cover all claims against the
fund, payments must be made on a pro rata basis up to one hundred percent
of the total loss of each claimant. If payment is not received in the
amount of one hundred percent then additional amounts must be paid as
funds become available until payment of one hundred percent of the total
is attained. The state's guarantee of warehouse receipts is based on
monies available through the required bonds and the fund. Upon approval
of a claim to the fund and before payment from the fund, the claimant
shall subrogate his interest, if any, to the department in a cause of
action against all parties relating to the claim. In no event may the
funds be available for the reimbursement of an insurer or surety on the
bonds required by this chapter, Chapter 19 of this title, or Chapter 7
of Title 36, who has paid a loss under this chapter. All income,
interest or otherwise, derived from this guaranty fund must be reinvested
in the fund. Fifty thousand dollars of the income must be paid into the
general fund of the State. Any of the funds not appropriated for the
employment of additional auditors for the warehousemen and Dealers and
Handlers Division of the Department of Agriculture must be returned to
the fund.
Section 39-22-160. The Commissioner of Agriculture shall make an
annual report to the General Assembly setting forth (1) the number and
location of each warehouse where cotton has been received for storage,
(2) the cotton on storage and that delivered on presentation of receipts,
and (3) monies received and disbursed.
Section 39-22-170. The extent of the state's liability is limited
to the amount of monies available through the guaranty fund and,
therefore, no debt or other liability may be created against the State
by reason of the licensing of a warehouse under this chapter except as
provided by this chapter.
Section 39-22-180. It is lawful for a warehouseman licensed by the
commissioner to operate a state warehouse to execute and enter into an
agreement or contract required by the Commodity Credit Corporation or
other agency of the United States government when the agreement or
contract is necessary to secure the support price for certain stored
commodities. Whenever the contract or agreement conflicts with the
provisions of the state warehouse system or the Uniform Commercial Code
- Documents of Title the conflicting provisions are suspended, but only
to the extent that the suspension of the conflicting provisions is a
minimum requirement of the agency of the United States government.
Section 39-22-190. All warehousemen licensed to store grain shall
maintain current and complete records at all times with respect to all
feed grains and oil seeds on forms approved by the Department of
Agriculture pursuant to regulations promulgated by the department
including grain owned by him as well as other feed grains or oil seeds
not subject to the terms of the state warehouse system, stored in or
handled through the warehouse. The records must include, but not be
limited to, a daily record showing:
(1) the total quantity of each kind and class of feed grains or
oil seeds received and delivered and the quantity of each kind and class
of feed grains or oil seeds remaining in the warehouse at the close of
each business day;
(2) the warehouseman's total storage obligations for each kind and
class of feed grains or oil seeds at the close of each business day.
Incoming feed grains or oil seeds must be documented as to ownership
and as to whether the feed grains or oil seeds are owned by the
warehouseman or someone else. Feed grains or oil seeds received may be
purchased by the warehouse before or upon arrival at the elevator or
warehouse and after they have been in storage for a time. All operations
must be documented properly to reflect ownership, quantity of feed
grains, or oil seeds received, quantity delivered, and quantity in
storage in the warehouse.
Section 39-22-200. A state warehouse receipt must be issued by the
warehouseman to a person storing commodities who requests it. If no
receipt is issued to the storing party directly, one must be written to
show ownership and held at the warehouse office properly locked and
secured. No receipt may be issued in the name of the storing warehouse,
or its owners, on commodities being purchased by the warehouse until the
commodity has been paid for in full, even if a contract has been executed
establishing that the title to the commodity has passed to the warehouse
or its owners unless the buyer and seller execute an affidavit within the
contract stating that the seller conveys title and ownership of the
commodity and forfeits all of his rights under the Dealer and Handler
Guaranty Fund. The affidavit must be in bold print on the face of the
contract and must further state that the seller has read the contract in
full, understands it, and waives all rights to contest his knowledge of
any part of the contract. Those provisions do not reduce the
responsibility of the warehouseman to keep proper records as required by
Section 39-22-190."
Repeal
SECTION 2. Chapter 21, Title 39 of the 1976 Code is repealed.
Exemption
SECTION 3. The 1976 Code is amended by adding:
"Section 39-25-35. The provisions of Section 39-25-30 do
not apply to water-powered grist mills or their products."
Time effective
SECTION 4. This act takes effect upon approval by the Governor.
Approved the 24th day of April, 1990.
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