§145-4  Bonding of commission merchant andbroker.  Before any license is issued to any commission merchant or broker,the applicant shall execute and deliver to the department a surety bond in theamount specified in the rules of the department, but not to exceed $10,000,executed by the applicant as principal and by a surety company qualified andauthorized to do business in this State as surety.  The bond shall beconditioned upon compliance with this chapter and upon the faithful and honesthandling or negotiation of the purchase or sale of farm products in accordancewith this chapter.  The bond shall be to the State in favor of everyproducer-consignor of farm products grown within the State.  Anyproducer-consignor of farm products grown within the State claiming to beinjured by the fraud, deceit, or wilful negligence of any commission merchantor broker may bring action upon the bond against both principal and surety inany court of competent jurisdiction to recover the damages caused by such fraud,deceit, or wilful negligence, or the failure to comply with this chapter.  Incase of failure by a commission merchant to pay producer-consignor creditorsfor farm products received from the consignors to be sold or failure by abroker to pay producer-consignor creditors for farm products delivered to andpaid for by a buyer as a result of a negotiated sale by the broker on behalf ofthe producer, the department shall proceed forthwith to ascertain the names andaddresses of all producer-consignor creditors of the commission merchant orbroker, together with the amounts due and owing to them and each of them by thecommission merchant or broker, and shall request all the producer-consignorcreditors to file a verified statement of their respective claims with thedepartment.  The request shall be addressed to each known producer-consignorcreditor at its last known address.  If a producer-consignor creditor soaddressed fails, refuses, or neglects to file in the office of the departmentits verified claim as requested by the department within ninety days from thedate of such request, the department shall thereupon be relieved of furtherduty or action hereunder on behalf of the producer-consignor creditor.

Upon ascertaining all claims and statements inthe manner herein set forth, the department may then make demand upon the bondon behalf of those claimants whose statements have been filed, and shall havethe power to settle or compromise the claims with the surety company on thebond, and is empowered in such cases to execute and deliver a release anddischarge of the bond involved.  Upon the refusal of the surety company to paydemand, the department shall thereupon bring an action on the bond in behalf ofthe producer-consignor creditors.  Upon any action being commenced on the bond,the department may require the filing of a new bond and immediately upon therecovery in any action on the bond such commission merchant or broker shallfile a new bond and upon failure to file the same within ten days in eithercase, such failure shall constitute ground for the suspension or revocation ofthe commission merchant's or broker's license. [L 1951, c 74, pt of §1; RL1955, §23-4; am L Sp 1959 2d, c 1, §22; am L 1961, c 132, §2; HRS §145-4; am L1983, c 258, §3; am L 1984, c 116, §2; gen ch 1985]