§499e — Title 7 Agriculture | U.S. Code

Summary

If a commission merchant, dealer, or broker breaks the rules in section 499b, they must pay anyone harmed by that breaking the full amount of their losses, including any handling fee paid under section 499f(a)(2). A harmed person can complain to the Secretary or sue in court to get paid. This does not take away any other legal rights or remedies people already have. Perishable agricultural goods a commission merchant, dealer, or broker gets, plus any inventories made from them and money owed or received from selling them, must be held in trust for unpaid suppliers, sellers, or agents until those people are paid in full. A payment is not valid if the check or other payment is dishonored. The trust rule does not apply to a cooperative association dealing with its members (see 12 U.S.C. 1141j(a)). To keep trust rights, the unpaid supplier, seller, or agent must give written notice to the merchant within 30 calendar days after the normal payment time set by the Secretary ends, after any different written payment deadline agreed beforehand ends, or after they learn a payment was dishonored. The notice must identify the transaction. Parties who agree to a different payment time must file that agreement in their records and show the payment terms on invoices and account statements. A licensee may also preserve the trust by putting the required information on ordinary bills or invoices and stating that the seller keeps a trust claim over the commodities, related inventories, and any receivables or proceeds until full payment. Federal district courts can hear cases by trust beneficiaries to get payment and by the Secretary to stop trust assets from being wasted.

Title 7, §499e

Agriculture — Source: USLM XML via OLRC

(a)If any commission merchant, dealer, or broker violates any provision of section 499b of this title he shall be liable to the person or persons injured thereby for the full amount of damages (including any handling fee paid by the injured person or persons under section 499f(a)(2) of this title) sustained in consequence of such violation.

(b)Such liability may be enforced either (1) by complaint to the Secretary as hereinafter provided, or (2) by suit in any court of competent jurisdiction; but this section shall not in any way abridge or alter the remedies now existing at common law or by statute, and the provisions of this chapter are in addition to such remedies.

(c)(1)It is hereby found that a burden on commerce in perishable agricultural commodities is caused by financing arrangements under which commission merchants, dealers, or brokers, who have not made payment for perishable agricultural commodities purchased, contracted to be purchased, or otherwise handled by them on behalf of another person, encumber or give lenders a security interest in, such commodities, or on inventories of food or other products derived from such commodities, and any receivables or proceeds from the sale of such commodities or products, and that such arrangements are contrary to the public interest. This subsection is intended to remedy such burden on commerce in perishable agricultural commodities and to protect the public interest.

(2)Perishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions, and all inventories of food or other products derived from perishable agricultural commodities, and any receivables or proceeds from the sale of such commodities or products, shall be held by such commission merchant, dealer, or broker in trust for the benefit of all unpaid suppliers or sellers of such commodities or agents involved in the transaction, until full payment of the sums owing in connection with such transactions has been received by such unpaid suppliers, sellers, or agents. Payment shall not be considered to have been made if the supplier, seller, or agent receives a payment instrument which is dishonored. The provisions of this subsection shall not apply to transactions between a cooperative association, as defined in section 1141j(a) of title 12, and its members.

(3)The unpaid supplier, seller, or agent shall lose the benefits of such trust unless such person has given written notice of intent to preserve the benefits of the trust to the commission merchant, dealer, or broker within thirty calendar days (i) after expiration of the time prescribed by which payment must be made, as set forth in regulations issued by the Secretary, (ii) after expiration of such other time by which payment must be made, as the parties have expressly agreed to in writing before entering into the transaction, or (iii) after the time the supplier, seller, or agent has received notice that the payment instrument promptly presented for payment has been dishonored. The written notice to the commission merchant, dealer, or broker shall set forth information in sufficient detail to identify the transaction subject to the trust. When the parties expressly agree to a payment time period different from that established by the Secretary, a copy of any such agreement shall be filed in the records of each party to the transaction and the terms of payment shall be disclosed on invoices, accountings, and other documents relating to the transaction.

(4)In addition to the method of preserving the benefits of the trust specified in paragraph (3), a licensee may use ordinary and usual billing or invoice statements to provide notice of the licensee’s intent to preserve the trust. The bill or invoice statement must include the information required by the last sentence of paragraph (3) and contain on the face of the statement the following: “The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.”.

(5)The several district courts of the United States are vested with jurisdiction specifically to entertain (i) actions by trust beneficiaries to enforce payment from the trust, and (ii) actions by the Secretary to prevent and restrain dissipation of the trust.

Notes & Related Subsidiaries

Editorial Notes

Codification Section was formerly classified to section 555 of this title.

Amendments

1995—Subsec. (a). Pub. L. 104–48, § 8(b), inserted “(including any handling fee paid by the injured person or persons under section 499f(a)(2) of this title)” after “damages”. Subsec. (c)(3). Pub. L. 104–48, § 6(a), (b), struck out “and has filed such notice with the Secretary” before “within thirty calendar days” in first sentence and inserted after first sentence “The written notice to the commission merchant, dealer, or broker shall set forth information in sufficient detail to identify the transaction subject to the trust.” Subsec. (c)(4), (5). Pub. L. 104–48, § 6(c), added par. (4) and redesignated former par. (4) as (5). 1991—Subsec. (c)(2). Pub. L. 102–237 substituted “, as” for “(as” before “defined”. 1984—Subsec. (c). Pub. L. 98–273 added subsec. (c). 1937—Subsec. (a). Act Aug. 20, 1937, struck out “paragraph (1), (2), (3), or (4) of” after “provisions of”.

§499e Liability to Persons Injured

Summary

Title 7, §499e

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata