SENATE, No. 1364

 

STATE OF NEW JERSEY

 

INTRODUCED JUNE 24, 1996

 

 

By Senator HAINES

 

 

An Act concerning security requirements of licensed dealers in milk or cream and amending R.S.4:12-4 and 4:12-11.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. R.S.4:12-4 is amended to read as follows:

    4:12-4. A license shall not be issued unless and until the applicant shall file with the secretary a good and sufficient surety bond, executed by a surety company duly authorized to transact business in this State, in a sum not less than one and one-half times the estimated maximum monthly value of the milk or cream to be purchased or received or which may have been purchased or received by the applicant from a producer or producers during the preceding 12 months. The maximum amount of the bond or deposit required from any applicant under the provisions of this section shall not exceed [$100,000.00] $500,000.

    The bond shall be approved as to form and sufficiency by the secretary, shall be given to the secretary in his official capacity and shall be conditioned for the faithful compliance by the licensee with the provisions of this article and for the payment of all amounts due to producers who have sold milk or cream to the licensee, during the period that the license is in force.

    The applicant may, in lieu of such bond, deposit with the secretary money, or transferable United States Treasury bonds, notes, certificates, bills or other obligations issued or fully and unconditionally guaranteed by the United States Government both as to principal and interest in transferable bearer form in an amount equal to the sum secured by the bond required to be filed.

    The money or securities so deposited shall constitute a separate fund and shall be held in trust for, and applied exclusively to, the payment of claims against the licensee making the deposit, arising from the sale of milk or cream to him, and all proceeds from the surety


bonds, money or securities shall be distributed to the producer-creditors by the secretary.

(cf: P.L.1971, c.83, s.1)

 

    2. R.S.4:12-11 is amended to read as follows:

    4:12-11. A licensee shall make a verified statement of his disbursements during a period to be prescribed by the secretary, containing the names of the producers from whom such products were purchased and the amount due to [said] the producers.

    The statement shall be submitted to the secretary when requested by him and shall be in form as prescribed by him.

    If it appears from such statement or other facts ascertained by him, upon inspection or investigation of the books and papers of the licensee as authorized by sections 4:12-14 and 4:12-15 of this Title, that the security afforded to producers selling milk or cream to the licensee, by the bond executed or deposit made as provided in this article, does not adequately protect [said] the producers, the secretary may require the licensee to give an additional bond or to deposit additional money or securities, to be executed or deposited as provided in this article, in a sum to be determined by the secretary but, such additional requirement as provided under this section shall not exceed [$100,000.00] $500,000. Before making a determination on the requirement of an additional bond, money or securities as provided in this section, the secretary shall hold a hearing if requested in writing by the licensee. In making such determination, the secretary shall consider the volume of milk currently being purchased; indebtedness; assets; accounts payable and receivable; sales trends; and other factors he may consider relevant in determining the financial condition of the licensee.

    The licensee may in lieu of additional bond or deposit of additional money or securities, as provided under this section, offer and the secretary may approve payment to producers on a more frequent schedule than that provided by law.

(cf: P.L.1971, c.83, s.2)

 

    3. This act shall take effect immediately.

 

 

STATEMENT

 

    Currently, an applicant for a milk dealer license must file a surety bond of up to $100,000 and, in certain cases, an additional bond of up to $100,000. This amount has not been adjusted in more than 20 years and is no longer adequate. This bill would increase the maximum amount of the initial bond or any additional bond to $500,000.


 

Increases the bonding requirement for milk dealers to $500,000.