Section 69-236 - NONCOMPLIANCE - FAILURE - REMEDIES OF DEPARTMENT(1) Whenever it appears, after any investigation, that a warehouseman does not have in his possession sufficient agricultural commodities to cover the outstanding warehouse receipts, scale weight tickets, or other evidence of storage liability issued or assumed by him, or the ability to pay producers for contract obligations, or when the warehouseman refuses to submit his books, papers, or property to lawful inspection, the department shall give notice to the warehouseman to comply with all or any of the following requirements:(b) Give an additional bond as requested by the department; or(c) Submit to such inspection as the department may deem necessary.(2) If the warehouseman fails to comply with the terms of such notice within twenty-four (24) hours from the date of issuance of the notice, or within such further time as the department may allow, not to exceed ten (10) working days, the department shall petition the district court in the county where the licensee's principal place of business is located (as shown by the license application) for an order:(a) Authorizing the department to seize and take possession of any or all agricultural commodities in the warehouse or warehouses owned, operated, or controlled by the warehouseman, and of all books, papers and property of all kinds used in connection with the conduct or the operation of the warehouse business, and any materials which pertain in any way to that business; and(b) Enjoining the warehouseman from interfering with the department in the discharge of its duties as required by the provisions of this section.(3) Upon taking possession, the department shall give written notice of its action to the surety on the bond of the warehouseman and shall notify the holders or producers of record, as shown by the warehouseman's records, of all negotiable or nonnegotiable warehouse receipts, scale weight tickets, or contracts issued for agricultural commodities, to present their warehouse receipt or other evidence of deposits or obligation for inspection or to account for the same. The department shall thereupon cause an audit to be made of the affairs of such warehouse including, but not limited to, the agricultural commodities in which there is an apparent shortage, to determine the amount of such shortage and compute the shortage as to each depositor as shown by the warehouseman's records, if possible. The department shall notify the warehouseman and the surety on his bond of the approximate amount of such shortage and notify each depositor thereby affected by sending notices to the depositor's last known address as shown by the records of the warehouseman.(4) The department shall retain possession of the agricultural commodities in the warehouse or warehouses, and the books, papers, and property of the warehouseman, until such time as the warehouseman or the surety on the bond shall have satisfied the claims of all holders of warehouse receipts or other evidence of deposits or obligations, in case the obligations exceed the amount of the bond, the surety on the bond shall have satisfied such claims pro rata, or until such time as the department is ordered by the court to surrender possession.(5) If during or after the audit provided for in this section, or at any other time the department has evidence that the warehouseman is insolvent or is unable to satisfy the claims of all holders of warehouse receipts or other evidence of obligations, the department shall petition the district court for the appointment of a receiver to operate or liquidate the business of the warehouseman in accordance with the law.(6) At any time within ten (10) days after the department takes possession of any agricultural commodities, or the books, papers, or property of any warehouse, the warehouseman may serve notice on the department to appear in the district court of the county in which the warehouse is located, at a time to be fixed by the court, and show cause why the agricultural commodities, books, papers and other property should not be restored to his possession.(7) All court costs, attorney's fees, other professional fees and necessary expenses incurred by the department in carrying out the provisions of this section may be recovered in any civil action brought by the department in district court or recovered at the same time and as part of the receivership or seizure action filed under the provisions of this chapter.(8) As a part of the expenses so incurred, the department or the receiver is authorized to include the cost of adequate liability insurance necessary to protect the department, its officers, and others engaged in carrying out the provisions of this section.(9) The provisions and remedies of this section are not limited to a warehouse shortage.[69-236, added 1982, ch. 25, sec. 26, p. 44; am. 1983, ch. 44, sec. 12, p. 111; am. 1985, ch. 138, sec. 6, p. 379; am. 1988, ch. 350, sec. 3, p. 1046; am. 2002, ch. 259, sec. 26, p. 770.]