Minnesota Session Laws - 1990, Regular Session

  

                         Laws of Minnesota 1990 

                        CHAPTER 530-S.F.No. 2037 
           An act relating to agriculture; amending the 
          definition of farm products; changing provisions 
          related to wholesale produce dealers; imposing fees; 
          providing for a wholesale dealers' trust; requiring 
          mediation and arbitration in certain produce 
          contracts; providing parent company liability; 
          authorizing seizure of vehicles; imposing penalties; 
          regulating livestock packers and stockyards; 
          appropriating money; amending Minnesota Statutes 1988, 
          sections 17.14, subdivision 3; 27.01, subdivisions 2, 
          5, 8, and by adding a subdivision; 27.03, subdivision 
          1, and by adding subdivisions; 27.04; 27.041; 27.06; 
          and 27.19; proposing coding for new law in Minnesota 
          Statutes, chapters 17A; and 27; proposing coding for 
          new law as Minnesota Statutes, chapter 31B; repealing 
          Minnesota Statutes 1988, section 27.05. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:  
    Section 1.  Minnesota Statutes 1988, section 17.14, 
subdivision 3, is amended to read:  
    Subd. 3.  [FARM PRODUCTS.] The term "Farm products" means 
and includes butter, milk, cream, butterfat, cheese, other dairy 
products, honey, eggs, poultry, poultry products, perishable 
fresh fruits and vegetables, and all livestock and products of 
livestock such as wool, mohair, hides, and meats.  
    Sec. 2.  Minnesota Statutes 1988, section 27.01, 
subdivision 2, is amended to read:  
    Subd. 2.  [PRODUCE.] The term "Produce" includes means:  
    (a) (1) perishable fresh fruits and vegetables; 
    (b) (2) milk and cream and products manufactured therefrom 
from milk and cream; and 
    (c) (3) poultry and poultry products; 
    (d) Wool and perishable unmatured feedstuffs.  
    Sec. 3.  Minnesota Statutes 1988, section 27.01, 
subdivision 5, is amended to read:  
    Subd. 5.  [DUE DATE.] The term "Due date" means ten days 
from the date of delivery of produce by the seller to the 
licensee in the case of a sale; in all cases where if the due 
date is not specified in the contract.  For purposes of this 
definition a signed invoice with a due date is a contract.  
    If produce is consigned, "due date" means ten days from the 
date the sale is made by the broker or handler, except as to 
milk processing plants, where the due date means 15 days 
following the monthly day of accounting subsequent to deliveries 
following the date fixed by each milk processing plant for such 
that accounting.  
    Sec. 4.  Minnesota Statutes 1988, section 27.01, 
subdivision 8, is amended to read:  
    Subd. 8.  [WHOLESALE PRODUCE DEALER.] (a) The term 
"Wholesale produce dealer" or "dealer at wholesale" includes 
means:  
    (1) Any a person who buys or contracts to buy produce in 
wholesale lots for resale; 
    (2) Any a person engaging in the business of a broker or 
agent, who handles or deals in produce for a commission or fee; 
    (3) Any a truck owner or operator who buys produce in 
wholesale lots for resale; and 
    (4) Any a person engaged in the business of a cannery, food 
manufacturer, or food processor, and who purchases produce in 
wholesale lots as a part of such that business.  
    (b) The term For purposes of paragraph (a), "wholesale lots"
means purchases from Minnesota sellers must total more than 
$12,000 annually. 
    (c) "Wholesale produce dealer" or "dealer at wholesale" 
does not include:  
    (1) Any a truck owner and operator who regularly engages in 
the business of transporting freight, including produce, for a 
transportation fee only, and who does not purchase, contract to 
purchase, or sell produce; 
    (2) Any a marketing cooperative association in which 
substantially all of the voting stock is held by patrons who 
patronize the association and in which at least 75 percent of 
the business of the association is transacted with member or 
stockholder patrons; 
    (3) Any a person who purchases, and pays cash in full at 
the time of purchase, Minnesota seasonally grown produce defined 
in subdivision 2, clause (a) perishable fresh fruits and 
vegetables, and pays cash, including lawful money of the United 
States, a cashier's check, a certified check, or a bank draft; 
    (4) Any a person who handles and deals in only canned, 
packaged, or processed produce or packaged dairy products, all 
of which that are no longer deemed to be perishable as 
determined by the commissioner by rule; or 
    (5) retail merchants who purchase produce, defined in 
subdivision 2, directly from farmers, which in the aggregate 
does not exceed $500 per month.  
    Sec. 5.  Minnesota Statutes 1988, section 27.01, is amended 
by adding a subdivision to read:  
    Subd. 10.  [SELLER.] "Seller" means a farmer or wholesale 
produce dealer, whether the person is the owner of the produce 
or produces it for another person who holds title to it.  
    Sec. 6.  Minnesota Statutes 1988, section 27.03, 
subdivision 1, is amended to read:  
    Subdivision 1.  [LICENSE.] No A person except a wool dealer 
shall may not engage in, or purport to be engaged in, or hold 
out as being engaged in, the business of a dealer at wholesale, 
or as being a dealer at wholesale, unless licensed and bonded to 
carry on such business by the commissioner.  
    Sec. 7.  Minnesota Statutes 1988, section 27.03, is amended 
by adding a subdivision to read:  
    Subd. 3.  [BROKERS.] (a) A wholesale produce dealer 
operating as a broker, upon negotiating the sale of farm 
products, shall issue to both buyer and seller a written 
memorandum of sale before the close of the next business day 
showing price, date of delivery, quality, and other details of 
the transaction.  
    (b) The memorandum required in paragraph (a) must have an 
individual identifying number printed upon it.  Numbers must be 
organized and printed on the memoranda so that each memorandum 
can be identified and accounted for sequentially.  Unused or 
damaged memoranda must be retained by the broker for accounting 
purposes.  
    (c) A wholesale produce dealer operating as a broker may 
not alter the terms of a transaction specified on the original 
memorandum of sale required in paragraph (a) without the consent 
of both parties to the transaction.  Upon making a change, the 
broker is required to issue a clearly marked corrected 
memorandum of sale indicating the date and time when the 
adjustment or change was made.  The broker shall transmit the 
corrected memorandum to both the buyer and seller before the 
close of the next business day. 
    Sec. 8.  Minnesota Statutes 1988, section 27.03, is amended 
by adding a subdivision to read: 
    Subd. 4.  [PAYMENTS FOR PRODUCE.] If there is a contract 
between a seller and a wholesale produce dealer to buy produce, 
the wholesale produce dealer must pay for the produce that is 
delivered to the wholesale produce dealer at the time and in the 
manner specified in the contract with the seller.  If the due 
date is not set by the contract, the wholesale produce dealer 
shall pay for the produce by ten days after delivery or taking 
possession of the produce.  A payment received after the due 
date must include payment of 12 percent annual interest prorated 
for the number of days past the due date.  
    Sec. 9.  Minnesota Statutes 1988, section 27.04, is amended 
to read:  
    27.04 [APPLICATION FOR LICENSE.] 
     Subdivision 1.  [ISSUANCE.] The commissioner shall issue a 
wholesale produce dealer's license to engage in the business of 
a dealer at wholesale within the state shall be issued by the 
commissioner to such reputable persons as apply 
therefor submitting an application, pay paying the prescribed 
fee, and comply complying with the conditions herein specified 
in this section. 
    Subd. 2.  [APPLICATION CONTENTS.] (a) The application shall 
must be in writing, accompanied by the prescribed fee and under 
oath, and shall set forth state: 
    (1) the place or places where the applicant intends to 
carry on the business for which the license is desired,; 
    (2) the estimated amount of business to be done monthly,; 
    (3) the amount of business done during the preceding year, 
if any,; 
    (4) the full names of the persons constituting the firm, in 
case the applicant is a copartnership, for a partnership, and 
for a corporation the names of the officers of the corporation 
and where incorporated, if a corporation, and; 
    (5) a financial statement showing the value and character 
of the assets and the amount of liabilities of the applicant.; 
    (6) the income and expenses for the most recent year; 
    (7) the names and addresses of all shareholders who own at 
least five percent of a corporate applicant's shares of stock; 
    (8) whether the applicant or any of its officers, partners, 
or agents have been involved in any litigation relating to the 
business of a wholesale produce dealer in the previous five 
years; and 
    (9) any other information relevant to the conduct of its 
business as a wholesale produce dealer in the previous five 
years, as the commissioner may require.  
    (b) If a contract is used in a transaction, a copy of the 
contract must also be filed with the commissioner.  
    (c) Financial data required of an applicant under this 
section is classified as private data with regard to data on 
individuals and as nonpublic data with regard to data not on 
individuals under section 13.02.  
    Subd. 3.  [FILING.] Applications shall be filed annually to 
be reviewed semiannually.  Upon special order, the commissioner 
may require persons engaged in the business of a dealer at 
wholesale to file at the time and in the manner the commissioner 
directs, sworn or unsworn reports or answers in writing to 
specific questions on any matter which the commissioner may 
investigate.  
    For the purposes of this section, the commissioner or the 
commissioner's authorized agents shall have authority to audit 
and review any records relating to the financial condition of 
any dealer at wholesale or any transactions between such dealer 
and those entitled to the protections of this chapter, if such 
records are in the possession of or under the case, custody, or 
control of such dealer or the dealer's authorized agent.  No 
person shall willfully make any false entries or statements or 
fail to make full and true entries and statements in any report, 
answer required, document demanded under this section.  No 
person shall remove from the state, mutilate, or alter any 
document relevant to any investigation, hearing, or proceeding 
conducted under chapter 27.  
     Sec. 10.  [27.0405] [INVESTIGATIONS.] 
    Subdivision 1.  [PRODUCTION AND REVIEW OF INFORMATION.] (a) 
Upon special order, the commissioner may require persons engaged 
in the business of a dealer at wholesale to file at the time and 
in the manner the commissioner directs, sworn or unsworn reports 
or answers in writing to specific questions on any matter which 
the commissioner may investigate.  
    (b) For the purposes of this section, the commissioner or 
the commissioner's authorized agents may audit and review any 
records relating to the financial condition of any dealer at 
wholesale and any transactions between the dealer and persons 
entitled to the protections of this chapter, if the records are 
in the possession of or under the case, custody, or control of 
the dealer or the dealer's authorized agent.  
    Subd. 2.  [FALSE AND INCOMPLETE INFORMATION.] A person may 
not willfully make any false entries or statements or fail to 
make full and true entries and statements in a report, answer 
required, or document demanded under this chapter.  
    Subd. 3.  [PRESERVATION OF DOCUMENTS.] A person may not 
remove from the state, mutilate, or alter a document relevant to 
an investigation, hearing, or proceeding conducted under chapter 
27. 
    Sec. 11.  Minnesota Statutes 1988, section 27.041, is 
amended to read:  
    Subdivision 1.  [BONDS.] (a) The applicant required to be 
bonded shall execute and file with the commissioner a surety 
bond to the state of Minnesota to be approved by the 
commissioner, the amount, form, and effective date to be fixed 
determined by the commissioner with the maximum not to exceed 
$500,000 $1,000,000.  In lieu of said the surety bond the 
commissioner may accept a duly executed letter of credit.  Said 
The bond or letter of credit shall be conditioned on the 
faithful performance of the applicant's duties as a dealer at 
wholesale including:  
    (1) the observance of all laws relating to the carrying on 
of the business of a dealer at wholesale; 
    (2) the payment when due of the purchase price of produce 
purchased by the applicant when notice of default is given the 
commissioner within 40 days after the due date, unless it 
appears to the commissioner that a voluntary extension of credit 
has been given on the produce by the seller to the licensee 
beyond the due date; 
    (3) the prompt settlement and payment of all claims and 
charges due the state for services rendered or otherwise; 
    (4) the prompt reporting of sales as required by law to all 
persons consigning produce to the licensee for sale on 
commission, and; 
    (5) the prompt payment to the persons entitled thereto of 
the proceeds of the sales, less lawful charges, disbursements, 
and commissions.  
    (b) The bond shall cover all wholesale produce business 
subject to the protection outlined in section 27.001 which is:  
    (1) transacted within this state; or 
    (2) transacted in part within this state and in part within 
the states and provinces contiguous with this state and sold by 
Minnesota sellers.  
     Subd. 1a.  [ADDITIONAL BONDS.] (a) The commissioner, after 
determining a bond given by a licensee is inadequate for the 
proper protection of the public, may require the licensee to 
give additional bonds in amounts as determined by the 
commissioner, with sureties to be approved by the commissioner, 
and conditioned as provided in section 27.041.  
    (b) To set or change the amount of a bond, the commissioner 
may require a licensee to provide verified statements of the 
licensee's business.  
    (c) Failure of the licensee to furnish the information or 
to give a new or additional bond is cause for: 
    (1) suspension of the licensee's license for as long as the 
failure continues; or 
    (2) revocation of the license, on ten days' notice to the 
licensee and opportunity to be heard.  
    (d) If the commissioner determines it is in the public's 
interest the commissioner may suspend the license after giving 
notice and holding a hearing. 
    Subd. 2.  [LICENSES.] (a) The license, or a certified copy 
of the license, must be kept posted in the office of the 
licensee at each place within the state where the licensee 
transacts business.  Every A wholesale produce dealer may not 
appoint, delegate, or authorize a person, firm, or company to 
purchase produce unless a certified copy, identification card, 
or truck decal has been issued at the request of the wholesale 
produce dealer to that person, firm, or company acting as the 
buyer or agent.  
    (b) A license shall expire expires June 30 following its 
issuance and thereafter must be renewed July 1 of each year.  
Any 
    (c) A license issued under this subdivision is 
automatically void upon the termination of the surety bond 
covering the licensed operation.  
    (d) The fee for each license shall be based on the 
following schedule:  
   
               Penalty for 
  License Fee  Late Renewal       Dollar Volume of Business 
     $30          $10                  $10,000 or less per month 
     $60          $15          Over $10,000 to $50,000 per month 
    $300          $75         Over $50,000 to $100,000 per month 
    $400         $100                    Over $100,000 per month 
must include a $50 registration fee and an additional fee of 
.025 percent of the total annual dollar amount of produce 
purchased the previous year from sellers within the state of 
Minnesota subject to this chapter.  Fees may not exceed $1,500 
per license.  In addition, a fee of $20 shall be charged for 
each certified copy of a license, $5 for each license 
identification card, and $5 $10 for each license identification 
truck decal.  The commissioner shall make appropriate license 
fee adjustments for up to one year from July 1, 1975, for 
persons required to be licensed hereunder, who hold validly 
issued licenses as of the effective date of Laws 1975, chapter 
227 under the provisions of law amended or repealed herein.  
    (e) A penalty amounting to ten percent of the fees due may 
be imposed by the commissioner for each month for which the fees 
are delinquent.  
    (f) A licensee who sells, disposes of, or discontinues the 
licensee's business during the lifetime of a license shall at 
the time the action is taken, notify the commissioner in 
writing, and upon demand produce before the commissioner a full 
statement of all assets and liabilities as of the date of 
transfer or discontinuance of the business.  
    Money collected from license fees shall be deposited in the 
state treasury.  
    Sec. 12.  Minnesota Statutes 1988, section 27.06, is 
amended to read:  
    27.06 [COMPLAINTS TO COMMISSIONER, HEARING; ACTION ON 
BOND.] 
    Any A person claiming to be damaged by any a breach of the 
conditions of a bond given by a licensee, as herein provided, 
may enter submit a complaint thereof to the commissioner within 
40 days after the due date, which.  The complaint shall must 
be a written statement of the facts constituting the complaint.  
Upon filing the After receiving a filed complaint in the manner 
herein provided, the commissioner shall investigate the charges 
made and may have the matter heard as a contested case pursuant 
to chapter 14.  No hearing shall be required if all affected 
parties to a bond claim proceeding waive their right to a 
hearing and agree to accept the commissioner's determination as 
to the validity of the claims and the allocation of the proceeds 
of the bond, if an affected party requests a hearing.  
     Sec. 13.  [27.131] [MEDIATION AND ARBITRATION.] 
    A contract for produce between a buyer and a seller must 
contain language providing for resolution of contract disputes 
by either mediation or arbitration.  If there is a contract 
dispute, either party may make a written request to the 
department for mediation or arbitration, as specified in the 
contract to facilitate resolution of the dispute. 
    Sec. 14.  [27.133] [PARENT COMPANY LIABILITY.] 
    If a wholesale produce dealer is a subsidiary of another 
corporation, partnership, or association, the parent 
corporation, partnership, or association is liable to a seller 
for the amount of any unpaid claim or contract performance claim 
if the wholesale produce dealer fails to pay or perform 
according to the terms of the contract and this chapter.  
     Sec. 15.  [27.137] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to this section and section 16.  
    Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
commissioner of agriculture.  
    Subd. 3.  [DUE DATE.] "Due date" has the definition given 
in section 27.01, subdivision 5.  
    Subd. 4.  [PERSON.] "Person" means an individual, 
partnership, corporation, firm, or association.  
    Subd. 5.  [PROCEEDS.] "Proceeds" means whatever is received 
upon the sale, exchange, collection, or transfer of produce, 
products of produce, or proceeds from the produce or products of 
produce.  
    Subd. 6.  [PRODUCE.] "Produce" means perishable fruits and 
vegetables, milk and cream and products manufactured from milk 
and cream, and poultry and poultry products.  
    Subd. 7.  [PRODUCTS OF PRODUCE.] "Products of produce" 
means products derived from produce through manufacturing, 
processing, or packaging.  
    Subd. 8.  [SELLER.] "Seller" means a farmer or wholesale 
produce dealer, whether the person is the owner of the produce 
or produces it for another person who holds title to the produce.
    Subd. 9.  [TRUST ASSETS.] "Trust assets" means produce, 
products of produce, and proceeds from the produce or products 
of produce.  
    Subd. 10.  [WHOLESALE PRODUCE DEALER.] "Wholesale produce 
dealer" has the meaning given in section 27.01, subdivision 8, 
and includes the person whether or not the person is licensed.  
    Sec. 16.  [27.138] [WHOLESALE PRODUCE DEALERS' TRUST.] 
    Subdivision 1.  [TRUST ESTABLISHMENT AND MAINTENANCE.] (a) 
The produce and products of produce of a wholesale produce 
dealer and proceeds are held in trust for the benefit of unpaid 
sellers.  
    (b) The trust assets are to be maintained as a 
nonsegregated floating trust.  Commingling of the trust assets 
is contemplated.  
    (c) The wholesale produce dealer must maintain the trust 
assets in a manner that makes the trust assets freely available 
to satisfy the amounts owed to unpaid sellers and may not divert 
trust assets in a manner that impairs the ability of unpaid 
sellers to recover amounts due.  
    (d) A wholesale produce dealer must maintain the trust 
assets in trust until payment has been made in full to unpaid 
sellers.  Payment is not made if a seller receives a payment 
instrument that is dishonored.  
    (e) A wholesale produce dealer holds trust assets in trust 
for the seller except that the wholesale produce dealer may 
transfer title to trust assets if the proceeds of the transfer 
are maintained as trust assets.  Until a seller is paid, a 
wholesale produce dealer does not transfer title to trust assets:
     (1) in a transaction made to another wholesale produce 
dealer; 
     (2) in a transaction intended to impair the ability of 
unpaid sellers to recover amounts due; or 
    (3) for which the value is inadequate to satisfy filed 
beneficiaries notices.  
    Subd. 2.  [SELLERS' RIGHTS TO TRUST ASSETS.] (a) An unpaid 
seller may recover trust assets for the net amount unpaid after 
the due date after allowing deductions of contemplated expenses 
or advances made in connection with the transaction.  An amount 
is considered unpaid if a seller receives a payment instrument 
that is dishonored.  
     (b) An unpaid seller may recover trust assets after filing 
a beneficiaries notice with the wholesale produce dealer to whom 
the produce was transferred, the commissioner, and the 
appropriate filing office under section 336.9-401 as if the 
trust were a security interest in the trust assets by 40 days 
after the due date for the payment to the seller or 40 days 
after a payment instrument to the seller for the produce is 
dishonored, whichever is later.  
    Subd. 3.  [BENEFICIARIES NOTICE.] (a) A beneficiaries 
notice must be in writing and in a form prescribed by the 
commissioner after consultation with the secretary of state.  
    (b) The beneficiaries notice must contain:  
    (1) the name and address of the seller; 
    (2) the name and address of the wholesale produce dealer 
maintaining the trust assets; 
    (3) the produce, amount of produce, amount to be paid the 
seller, and the due date of transactions that are unpaid or, if 
appropriate, the date a payment instrument was dishonored; and 
    (4) a description of the trust assets.  
    (c) The filing officer shall enter on the beneficiaries 
notice the time of day and date of filing.  The filing officer 
shall accept filings, amendments, and terminations of a 
beneficiaries notice and charge the same filing fees as provided 
in section 336.9-403 for a financing statement.  A beneficiaries 
notice is void and may be removed from the filing system 18 
months after the date of filing.  The beneficiaries notice may 
be physically destroyed 30 months after the date of filing.  
    Subd. 4.  [PRIORITY OF UNPAID SELLERS' INTERESTS IN TRUST 
ASSETS.] (a) The unpaid sellers' interest in trust assets is 
paramount to all other liens, security interests, and 
encumbrances in the trust assets.  An unpaid seller who recovers 
trust assets recovers them free of any liens, security 
interests, or encumbrances.  
     (b) If the trust assets are inadequate to pay unpaid 
sellers the amount due, the unpaid sellers shall share 
proportionately in the trust assets.  
    Subd. 5.  [RECOVERY ACTIONS.] An action to recover trust 
assets may be brought in district court in a county where trust 
assets are located after the beneficiaries notice is filed.  The 
beneficiaries notice may be amended, except the amount due, by 
leave of the court in furtherance of justice.  An action to 
recover trust assets is barred if it is not brought by 18 months 
after the date the beneficiaries notice is filed.  
    Subd. 6.  [TERMINATIONS OF BENEFICIARIES NOTICE.] A seller 
must terminate a beneficiaries notice by ten days after the 
amount due for the wholesale produce dealer is paid.  The 
commissioner may terminate a beneficiaries notice upon request 
and demonstration by the wholesale produce dealer that the 
amounts due under the beneficiaries notice have been paid. 
    Sec. 17.  [27.185] [SEIZURE AND CONFISCATION OF MOTOR 
VEHICLES.] 
    Subdivision 1.  [SEIZURE.] (a) A sheriff on request of the 
commissioner must seize all motor vehicles in the name of the 
state that are used to sell or transport produce in violation of 
this chapter.  
    Subd. 2.  [PROCEDURE FOR CONFISCATION OF PROPERTY SEIZED.] 
The sheriff must hold the seized property, subject to the order 
of the court having jurisdiction where the offense was 
committed.  The property held is confiscated when the 
commissioner complies with this section and the person from whom 
it was seized is convicted of the offense.  
    Subd. 3.  [COMPLAINT AGAINST PROPERTY.] The commissioner 
shall file with the court a separate complaint against the 
property held.  The complaint must identify the property, 
describe its use in the violation, and specify the time and 
place of the violation.  A copy of the complaint must be served 
upon the defendant or the owner of the property.  
    Subd. 4.  [RELEASE OF PROPERTY AFTER POSTING BOND.] At any 
time after seizure of the property specified in this section, 
the property must be returned to the owner or person having the 
legal right to possession upon execution of a valid bond to the 
state with a corporate surety.  The bond must be approved by a 
judge of the court of jurisdiction, conditioned to abide by an 
order and judgment of the court and to pay the full value of the 
property at the time of seizure.  The bond must be for $100 or 
for a greater amount not more than twice the value of the 
property seized.  
    Subd. 5.  [COURT ORDER.] (a) If the person arrested is 
acquitted, the court shall dismiss the complaint against the 
property and order it returned to the person legally entitled to 
it.  
    (b) Upon conviction of the person, the court shall issue an 
order directed to any person that may have any right, title, or 
interest in, or lien upon, the seized property.  The order must 
describe the property and state that it was seized and that a 
complaint against it has been filed.  The order shall require a 
person claiming right, title, or interest in, or lien upon, the 
property to file with the court administrator an answer to the 
complaint, stating the claim, within ten days after the service 
of the order.  The order shall contain a notice that if the 
person fails to file an answer within the time limit, the 
property may be ordered sold by the commissioner.  
    (c) The court order must be served upon any person known or 
believed to have any right, title, interest, or lien in the same 
manner as provided for service of a summons in a civil action, 
and upon unknown persons by publication, in the same manner as 
provided for publication of a summons in a civil action.  
    Subd. 6.  [COURT ORDERED SALE AFTER NO ANSWER.] If an 
answer is not filed within the time provided in subdivision 5, 
the court administrator shall notify the court and the court 
shall order the commissioner to sell the property.  The net 
proceeds of the sale shall be deposited in the state treasury 
and credited to the game and fish fund.  
    Subd. 7.  [HEARING AFTER ANSWER.] If an answer is filed 
within the time provided in subdivision 5, the court shall 
schedule a hearing within ten to 30 days after the time expired 
for filing the answer.  The court, without a jury, shall 
determine whether any of the property was used in a violation 
specified in the complaint and whether the owner had knowledge 
or reason to believe that the property was being used, or 
intended to be used, in the violation.  The court shall order 
the commissioner to sell the property that was unlawfully used 
with knowledge of the owner and to return to the owner property 
that was not unlawfully used with the knowledge of the owner.  
If the property is to be sold, the court shall determine the 
priority of liens against the property and whether the 
lienholders had knowledge that the property was being used or 
was intended to be used.  Lienholders that had knowledge of the 
property's use in the violation are not to be paid.  The court 
order must state the priority of the liens to be paid.  
    Subd. 8.  [PROCEEDS OF SALE.] After determining the expense 
of seizing, keeping, and selling the property, the commissioner 
must pay the liens from the proceeds according to the court 
order.  The remaining proceeds shall be deposited in the state 
treasury and credited to the general fund.  
    Subd. 9.  [CANCELLATION OF SECURITY INTERESTS.] A sale 
under this section cancels all liens on and security interests 
in the property sold. 
    Sec. 18.  Minnesota Statutes 1988, section 27.19, is 
amended to read:  
    27.19 [VIOLATIONS, PENALTIES.] 
    Subdivision 1.  [PROHIBITED ACTS.] Any (a) A person subject 
to the provisions of this section and sections 27.01 to 
27.15 who shall may not:  
    (1) operate or advertise to operate as a dealer at 
wholesale without a license; or 
    (2) make any false statement or report as to the grade, 
condition, markings, quality, or quantity of produce, as defined 
in section 27.069, received or delivered, or act in any manner 
so as to deceive the a consignor or purchaser thereof; or 
    (3) refuse to accept any a shipment contracted for by the 
person, unless such the refusal is based upon the showing of a 
state inspection certificate secured with reasonable promptness 
after the receipt of such the shipment showing that the kind and 
quality of produce, as defined in section 27.069, is other than 
that purchased or ordered by the person; or 
    (4) fail to account or make a settlement for produce or to 
make settlement therefor within the required time herein 
limited; or who shall 
    (5) violate or fail to comply with the terms or conditions 
of any a contract entered into by the person for the purchase or 
sale of produce; or 
    (5) (6) purchase for the a person's own account any produce 
received on consignment, either directly or indirectly, without 
the consent of the consignor; or 
    (6) (7) issue any a false or misleading market quotations 
quotation, or who shall cancel any quotations a quotation during 
the period advertised by the person; or 
    (7) (8) increase the sales charges on produce shipped to 
the person by means of "dummy" or fictitious sales; or 
    (8) (9) receive decorative forest products and the products 
of farms and waters from foreign states or countries for sale or 
resale, either within or without outside of the state, and give 
the purchaser the impression, through any method of advertising 
or description, that the produce is of Minnesota origin; or 
    (9) Whoever shall violate any provisions of this section 
and sections 27.01 to 27.15, or any rule made or published 
thereunder by the commissioner, shall be guilty of a misdemeanor 
and the person's license may be forthwith suspended, revoked, or 
canceled by the commissioner, upon ten days notice and 
opportunity to be heard; but, upon conviction of any such 
offense, or upon conviction in any federal court for violation 
of the federal statutes relative to the fraudulent use of the 
mails, or conviction in any court of other criminal acts under 
any federal food or drug statute, or any statute of this state 
administered by the commissioner of agriculture, pertaining to 
the conduct of the person's business, the commissioner may 
forthwith revoke and cancel the license of the person so 
convicted.  Each day a person violates any provisions of this 
section and sections 27.01 to 27.15, or any rule published 
thereunder by the commissioner, shall constitute a separate 
offense. (10) fail to notify in writing all suppliers of produce 
of the protection afforded to suppliers by the person's licensee 
bond including:  availability of a bond, notice requirements, 
and any other conditions of the bond; 
    (11) make a false statement to the commissioner on an 
application for license or bond or in response to written 
questions from the commissioner regarding the license or bond; 
    (12) commit to pay and not pay in full for all produce 
committed for; or 
    (13) discriminate between different sections, localities, 
communities, or cities, or between persons in the same 
community, by purchasing produce from farmers of the same grade, 
quality, and kind, at different prices, except that price 
differentials are allowed if directly related to the costs of 
transportation, shipping, and handling of the produce and a 
person is allowed to meet the prices of a competitor in good 
faith, in the same locality for the same grade, quality, and 
kind of produce.  A showing of different prices by the 
commissioner is prima facie evidence of discrimination.  
     (b) A separate violation occurs with respect to each 
different person involved, each purchase or transaction 
involved, and each false statement. 
    Subd. 2.  [CIVIL PENALTY.] (a) A person who violates a 
provision of this chapter or rules adopted under this chapter is 
subject to a civil penalty not to exceed $500 per violation.  
    (b) In addition, the person's license may be suspended, 
revoked, or canceled by the commissioner, upon ten days' notice 
and opportunity to be heard.  Action under this subdivision is a 
civil penalty.  
     (c) A civil penalty amount received by the commissioner 
under this section must be deposited in the wholesale produce 
dealer account. 
    Subd. 3.  [CRIMINAL PENALTY.] (a) A person who willfully 
violates a provision of this chapter or rules adopted under this 
chapter is guilty of a misdemeanor.  
    (b) Upon conviction, or upon conviction in a federal court 
for violation of the federal statutes relative to fraudulent use 
of the mails or in any court of other criminal acts under a 
federal food or drug statute or a statute of this state 
administered by the commissioner of agriculture pertaining to 
the conduct of the person's business, the commissioner may 
immediately revoke and cancel the license of the person 
convicted, without further hearing.  
    Subd. 4.  [SETTLEMENTS.] (a) The commissioner or the 
commissioner's authorized representative may enter into a 
written agreement with a person in settlement of an alleged 
violation whether or not a hearing is held.  An agreement must 
be construed as a "no contest" pleading and may encompass 
sanctions, penalties, and affirmative actions that are mutually 
satisfactory and are consistent with the intent and purpose of 
this chapter.  
    (b) The agreement is final and conclusive with respect to 
the action, except upon a showing of fraud or malfeasance or 
misrepresentation of a material fact.  The matter agreed upon in 
the agreement may not be reopened or modified by an officer, 
employee, or agent of the state.  In an action, suit, or 
proceeding, the agreement and any determination or payment made 
under the agreement is final and conclusive and may not be 
annulled, modified, set aside, or disregarded.  
    Sec. 19.  [17A.036] [CUSTODIAL ACCOUNT FOR SHIPPER 
PROCEEDS.] 
    Every market agency engaged in selling livestock on a 
commission or agency basis in this state shall establish and 
maintain a separate bank account designated as "custodial 
account for shippers proceeds." 
    Sec. 20.  [31B.01] [CITATION.] 
    This chapter is known and may be cited as the "Minnesota 
packers and stockyards act." 
    Sec. 21.  [31B.02] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] The definitions in this section 
apply to this chapter. 
    Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
commissioner of agriculture. 
    Subd. 3.  [DEALER.] "Dealer" means a person, other than a 
market agency in the business of buying or selling livestock, 
either on the person's own account or as the employee or agent 
of the vendor or purchaser. 
    Subd. 4.  [LIVESTOCK.] "Livestock" means live or dead 
cattle, sheep, swine, horses, mules, or goats.  
    Subd. 5.  [LIVESTOCK PRODUCTS.] "Livestock products" means 
products and by-products other than meats and meat food products 
of the slaughtering and meat-packing industry derived in whole 
or in part from livestock. 
    Subd. 6.  [MARKET AGENCY.] "Market agency" means a person 
engaged in the business of (1) buying or selling livestock on a 
commission basis, or (2) furnishing stockyard services and 
includes a person who sells or offers for sale livestock located 
in this state by satellite video auction. 
    Subd. 7.  [MEAT FOOD PRODUCTS.] "Meat food products" means 
edible products and by-products of the slaughtering and 
meat-packing industry. 
    Subd. 8.  [PACKER.] "Packer" means a person in the business 
of (1) buying livestock for purposes of slaughter, (2) 
manufacturing or preparing meats or meat food products for sale 
or shipment, or (3) marketing meats, meat food products, or 
livestock products in an unmanufactured form acting as a 
wholesale broker, dealer, or distributor. 
    Subd. 9.  [STOCKYARD.] "Stockyard" means a place, 
establishment, or facility commonly known as a stockyard 
conducted, operated, or managed for profit or nonprofit as a 
public market for livestock producers, feeders, market agencies, 
and buyers, consisting of pens, or other enclosures, and their 
appurtenances, in which live cattle, sheep, swine, horses, 
mules, or goats are received, held, or kept for sale or shipment.
    Subd. 10.  [STOCKYARD OWNER.] "Stockyard owner" means a 
person in the business of conducting or operating a stockyard. 
    Subd. 11.  [STOCKYARD SERVICES.] "Stockyard services" means 
services or facilities furnished at a stockyard in connection 
with the receiving, buying, or selling on a commission basis or 
otherwise, marketing, feeding, watering, holding, delivery, 
shipment, weighing, or handling of livestock. 
    Sec. 22.  [31B.03] [REPORTING REQUIREMENTS.] 
    A packer, stockyard owner, market agency, and dealer and 
grain and feed businesses with livestock contracts shall file 
annually with the commissioner a copy of the annual report form 
of the federal packers and stockyards regulations filed with the 
federal packers and stockyards administration and any additional 
information that may be required on a form prescribed by the 
commissioner.  The report and any additional information must be 
filed with the commissioner not later than April 15 following 
the end of the calendar year or, if the records are kept on a 
fiscal year basis, not later than 90 days after the close of the 
fiscal year. 
    The commissioner shall require:  (1) a packer to annually 
complete a form showing the maximum capacity of each of the 
packer's packing plants; and (2) a copy of each contract a 
packer has entered into with a livestock producer and each 
agreement that will become part of the contract that a packer 
has with a livestock producer for the purchase or contracting of 
livestock. 
    Sec. 23.  [31B.04] [PROMPT PAYMENT FOR PURCHASE OF 
LIVESTOCK.] 
    Subdivision 1.  [KIND OF PAYMENT; TIME REQUIRED.] A packer, 
market agency, or dealer purchasing livestock shall, before the 
close of the next business day following the purchase of 
livestock and transfer of its possession, deliver to the seller 
or the seller's authorized representative the full amount of the 
purchase price.  If a packer, market agency, or dealer is 
purchasing livestock for slaughter, that person shall, before 
the close of the next business day following purchase of 
livestock and transfer of its possession, actually deliver at 
the point of transfer of possession to the seller or the 
seller's authorized representative a check or shall wire 
transfer funds to the seller's account for the full amount of 
the purchase price; or, in the case of a purchase on a carcass 
or "grade and yield" basis, the purchaser shall make payment by 
check at the point of transfer of possession or shall wire 
transfer funds to the seller's account for the full amount of 
the purchase price not later than the close of the first 
business day following determination of the purchase price.  If 
the seller or a duly authorized representative is not present to 
receive payment at the point of transfer of possession, the 
packer, market agency, or dealer shall wire funds or place a 
check in the United States mail for the full amount of the 
purchase price properly addressed to the seller within the time 
limits specified in this section, and that action complies with 
the requirement for prompt payment. 
    Subd. 2.  [WAIVER.] Notwithstanding subdivision 1 and 
subject to terms and conditions the commissioner may prescribe, 
the parties to the purchase and sale of livestock may expressly 
agree in writing, before the purchase or sale, to effect payment 
in a manner other than that required in subdivision 1.  The 
agreement must be disclosed in the records of the market agency 
or dealer selling the livestock, and in the purchaser's records 
and on the accounts or other documents issued by the purchaser 
relating to the transaction. 
    Subd. 3.  [DELAY IN PAYMENT OR ATTEMPT TO DELAY.] Any delay 
or attempt to delay by a market agency, dealer, or packer 
purchasing livestock, the collection of funds under this 
section, or otherwise for the purpose of or resulting in 
extending the normal period of payment for the livestock is an 
"unfair practice" in violation of this chapter. 
    Sec. 24.  [31B.05] [UNFULFILLED CONTRACT TO BUY LIVESTOCK.] 
    A packer who has committed either orally or in writing to 
buy more livestock than the packer's plant can process and who 
cannot fulfill the commitment to the producer within 30 days of 
the delivery date of the contract is subject to denial, 
suspension, or revocation of the packer's license. 
    Sec. 25.  [31B.06] [PACKER AND PROCESSOR ACCOUNTING 
REQUIREMENTS.] 
    Hog, cattle, sheep, and dairy processors with annual sales 
greater than $10,000,000 are required to conduct all financial 
transactions relating to a contract feeding operation through a 
separate and exclusive bank account.  This separate account is 
subject to audit and inspection at any reasonable time by the 
commissioner. 
    Grain and feed businesses with annual sales greater than 
$10,000,000 are required to conduct all financial transactions 
relating to contract feeding of hogs, cattle, sheep, or dairy 
cows through a separate and exclusive bank account.  This 
separate account is subject to audit and inspection at any 
reasonable time by the commissioner. 
    Sec. 26.  [APPROPRIATION.] 
    $15,000 is appropriated from the general fund to the 
commissioner of agriculture to administer and enforce sections 
27.001 to 27.06, and sections 27.11 to 27.19. 
    Sec. 27.  [REPEALER.] 
    Minnesota Statutes 1988, section 27.05, is repealed. 
    Sec. 28.  [EFFECTIVE DATE.] 
    This act is effective July 1, 1990, except section 11, 
subdivision 2, is effective the day following final enactment 
and applies to licenses issued or renewed under that subdivision.
    Presented to the governor April 24, 1990 
    Signed by the governor April 26, 1990, 11:16 p.m.