Title 7, AgricultureRelease 119-110

§217b Statutory Trust Established; Dealer

Title 7 › CHAPTER 9 — PACKERS AND STOCKYARDS › SUBCHAPTER III — STOCKYARDS AND STOCKYARD DEALERS › § 217b

Last updated Sep 22, 2026|Official source

Summary

Dealers who buy livestock for cash must hold those animals, any inventory, and the money from them in a trust for unpaid cash sellers until those sellers get full payment. A dealer whose average yearly livestock purchases are $100,000 or less does not have to follow this rule. If a payment instrument is returned unpaid, it does not count as payment. An unpaid seller loses trust protection unless the seller gives written notice to the dealer and files the same notice with the Secretary. The seller must do that within 30 days of the final payment date under section 228b if no payment instrument was received, or within 15 business days after being told a presented payment instrument was dishonored. After the dealer gets that notice, the dealer must notify anyone with a recorded lien or security interest in the livestock within 15 business days. A cash sale means the seller did not extend credit. A buyer gets good title if they pay new value and had no reason to know of a breach; a returned payment is not valid. Transfers to pay an earlier debt or to a secured party are not treated as payment for value. The Secretary may appoint or be a trustee, or sue in federal court, to protect the trust. Sellers may also sue.

Full Legal Text

Title 7, §217b

Agriculture, Source: USLM XML via OLRC

(a)Establishment

(1)In general

All livestock purchased by a dealer in cash sales and all inventories of, or receivables or proceeds from, such livestock shall be held by such dealer in trust for the benefit of all unpaid cash sellers of such livestock until full payment has been received by such unpaid cash sellers.

(2)Exemption

Any dealer whose average annual purchases of livestock do not exceed $100,000 shall be exempt from the provisions of this section.

(3)Effect of dishonored instruments

For purposes of determining full payment under paragraph (1), a payment to an unpaid cash seller shall not be considered to have been made if the unpaid cash seller receives a payment instrument that is dishonored.

(b)Preservation of trust

An unpaid cash seller shall lose the benefit of a trust under subsection (a) if the unpaid cash seller has not preserved the trust by giving written notice to the dealer involved and filing such notice with the Secretary—

(1)within 30 days of the final date for making a payment under section 228b of this title in the event that a payment instrument has not been received; or

(2)within 15 business days after the date on which the seller receives notice that the payment instrument promptly presented for payment has been dishonored.

(c)Notice to lien holders

When a dealer receives notice under subsection (b) of the unpaid cash seller’s intent to preserve the benefits of the trust, the dealer shall, within 15 business days, give notice to all persons who have recorded a security interest in, or lien on, the livestock held in such trust.

(d)Cash sales defined

For the purpose of this section, a cash sale means a sale in which the seller does not expressly extend credit to the buyer.

(e)Purchase of livestock subject to trust

(1)In general

A person purchasing livestock subject to a dealer trust shall receive good title to the livestock if the person receives the livestock—

(A)in exchange for payment of new value; and

(B)in good faith without notice that the transfer is a breach of trust.

(2)Dishonored payment instrument

Payment shall not be considered to have been made if a payment instrument given in exchange for the livestock is dishonored.

(3)Transfer in satisfaction of antecedent debt

A transfer of livestock subject to a dealer trust is not for value if the transfer is in satisfaction of an antecedent debt or to a secured party pursuant to a security agreement.

(f)Enforcement

Whenever the Secretary has reason to believe that a dealer subject to this section has failed to perform the duties required by this section or whenever the Secretary has reason to believe that it will be in the best interest of unpaid cash sellers, the Secretary shall do one or more of the following—

(1)appoint an independent trustee to carry out the duties required by this section, preserve trust assets, and enforce the trust;

(2)serve as independent trustee, preserve trust assets, and enforce the trust; or

(3)file suit in the United States district court for the district in which the dealer resides to enjoin the dealer’s failure to perform the duties required by this section, preserve trust assets, and to enforce the trust. Attorneys employed by the Secretary may, with the approval of the Attorney General, represent the Secretary in any such suit. Nothing herein shall preclude unpaid sellers from filing suit to preserve or enforce the trust.

Reference

Citations & Metadata

Citation

7 U.S.C. § 217b

Title 7, Agriculture

Last Updated

Sep 22, 2026

Release point: 119-110