2023 Texas Statutes › Agriculture Code › Title 2 - Department of Agriculture › Chapter 14 - Regulation of Public Grain Warehouse Operators › Subchapter I. Enforcement › Section 14.082. Discovery of Shortage; Refusal of Inspection

Sec. 14.082.  DISCOVERY OF SHORTAGE;  REFUSAL OF INSPECTION.  (a)  If the department determines that a warehouse operator does not possess sufficient grain to cover outstanding receipts and outstanding scale weight tickets issued or assumed by the warehouse operator, or if a warehouse operator refuses or is unable to submit records or property for lawful inspection or the department is unable to conduct an inspection of the warehouse due to the condition of the warehouse or grain stored in the warehouse, the department may seal the warehouse to prevent delivery or receipt of grain except as authorized by the department, suspend the license of the warehouse operator, and give notice to the warehouse operator requiring the warehouse operator to submit records or property for lawful inspection, to correct any condition interfering with the department's inspection of the warehouse or grain, or to cover a shortage of a particular type of grain by:
(1)  storing to the credit of or delivering to each depositor affected by the shortage grain of the same type and quality that is stored at any of the warehouse operator's licensed warehouses in this state and that has been designated as company-owned grain by the warehouse operator;
(2)  purchasing and storing to the credit of or delivering to each depositor affected by the shortage grain of the same type and quality;
(3)  selling company-owned grain of a different type and paying to each depositor affected by the shortage, on a pro rata basis, the market value of the depositor's grain as determined on the day the shortage was discovered by the department; or
(4)  using any combination of the remedies described by Subdivisions (1)-(3) or another fair and reasonable method for meeting the shortage approved by the department.
(b)  A warehouse operator shall comply with the requirements of a notice issued under Subsection (a) within 24 hours of notification by the department or within a longer time allowed by the department.  If the warehouse operator fails to comply, the department may petition the district court for the county where the warehouse operator's principal place of business is located, as shown by the license application, for a court order authorizing the department to take possession of:
(1)  all or a portion of the grain located in the public grain warehouse or warehouses;  and
(2)  all relevant records and property of the warehouse operator.
(c)  If the department takes possession of grain under Subsection (b), the department shall give written notice of its action to the surety on the bond of the warehouse operator and may notify the holders of all receipts and scale weight tickets issued for grain, as shown by the warehouse operator's records, to present their receipts or scale weight tickets for inspection or account for the absence of the receipts or scale weight tickets.  The department may then audit and investigate the affairs of the public grain warehouse, especially with respect to the grain of which there is an apparent shortage.  The purpose of the audit and investigation is to determine the amount of the shortage and, if practicable, to compute the shortage as to each depositor, as shown by the warehouse operator's records.  The department shall notify the warehouse operator and the surety on the warehouse operator's bond of the approximate amount of the shortage.  The department shall notify each depositor affected by the shortage by sending notice to the depositor's last known address, as shown by the warehouse operator's records.
(d)  The department shall retain possession of grain obtained under this section until:
(1)  the warehouse operator or surety on the bond satisfies the claims of all depositors, within the limitations on liability imposed by this chapter;  or
(2)  the court orders the department to surrender possession.
(e)  If, during or after an audit or investigation authorized by this section or at any other time, the department has evidence that the warehouse operator is insolvent or unable to satisfy the claims of all depositors, the department may petition the district court for appointment of a receiver to operate or liquidate the business of the warehouse operator in accordance with law.
(f)  A license suspension issued under this section remains in effect until lifted by the department through written notice to the warehouse operator or as provided by Section 14.066.
Renumbered from Sec. 14.024 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. 4, eff. September 1, 2011.