(1) Whenever it appears probable after investigation that a licensed warehouse operator does not possess sufficient commodities to cover the outstanding negotiable warehouse receipts, scale tickets, or other evidence of storage liability issued or assumed by the warehouse operator, the department may give notice to the warehouse operator that the warehouse operator is required to do all or any of the following: (a) Cover the shortage; (b) Give an additional bond or irrevocable letter of credit; (c) Submit to such inspection as the department may deem necessary. (2) If the warehouse operator fails to comply with the terms of the notice within twenty- four hours after the date of its issuance or within such further time as the department may allow, the department may do all or any of the following: (a) Issue a cease-and-desist order pursuant to section 35-36-104; (b) Take possession of all commodities in the public warehouse owned, operated, or controlled by the warehouse operator and of all books, papers, records, and property of all kinds used in connection with the conduct or operation of the warehouse operator's public warehouse business, whether the books, papers, records, and property pertain specifically, exclusively, directly, or indirectly to that business or are related to the warehouse operator's handling, storage, or use of commodities in any other business; (c) Apply to any court of competent jurisdiction for an order to enjoin the warehouse operator from interfering with the department in the discharge of its duties as required by this section; (d) Petition any court of competent jurisdiction for an order requiring the warehouse operator or any person who has possession of any commodities, books, papers, records, or property of any kind used in connection with the conduct or operation of the public warehouse business who has refused to surrender possession to the department to surrender possession of the same to the department. (3) Upon its taking possession of the commodities, the department may give written notice of its action to the holders of all negotiable warehouse receipts or other evidence of deposits issued for commodities to present their negotiable warehouse receipts or other evidence of deposits for inspection or to account for the same. Thereupon, the department shall cause an audit to be made of the affairs of the public warehouse with respect to any commodity in which there is an apparent shortage, determine the amount of the shortage, and compute the shortage as to each owner of the commodity. The department shall attempt to notify the warehouse operator of the amount of the shortage and attempt to notify each owner affected by the shortage. If the owner cannot be notified after a reasonable attempt by the department, the department is not liable for any losses incurred by the owner. (4) The department shall retain possession of the commodity in the public warehouse and of the books, papers, records, and property of the warehouse operator until such time as the warehouse operator or the warehouse operator's bond or irrevocable letter of credit has satisfied the claims of all holders of negotiable warehouse receipts or other evidence of deposits. In case the shortage exceeds the amount of the bond or irrevocable letter of credit, the warehouse operator's bond or irrevocable letter of credit satisfies the claims pro rata. Nothing in this section prevents the department from complying with an order of a court of competent jurisdiction to surrender possession. (5) If, during or after the audit provided for in this section or at any other time, the department is of the opinion that the warehouse operator is insolvent or in danger of becoming insolvent or is unable to satisfy the claims of all holders of negotiable warehouse receipts or other evidence of deposits, the department may petition a court of competent jurisdiction in the county for the appointment of a receiver to operate or liquidate the business of the warehouse operator in accordance with applicable law. (6) At any time within ten days after the department takes possession of any commodities or the books, papers, records, and property of any public warehouse, the warehouse operator may apply to a court of competent jurisdiction for an order requiring the department to show cause why the commodities, books, papers, records, and property should not be restored to the warehouse operator's possession. Upon its being served notice, the department has up to ten days to respond. (7) (a) If a court of competent jurisdiction determines that all or any part of the commodities, books, papers, records, and property should not be restored to the possession of the warehouse operator, the court may: (I) Appoint a receiver for all or any part of the commodities, books, papers, records, and property; or (II) Determine the disposition of the commodities, books, papers, records, and property that were in the public warehouse and seized pursuant to this part 2. (b) Pending determination of the ownership of the commodities, any money received from the disposition of the commodities shall be placed in an interest-bearing escrow account. (8) If the warehouse operator does not apply to a court of competent jurisdiction for a show-cause order under subsection (6) of this section, the department's action is presumed valid, and the commissioner may determine the disposition of the commodities, books, papers, records, and property that were in the public warehouse and seized pursuant to this part 2. Pending determination of the ownership of the commodities, any money received from the disposition of the commodities shall be placed in an interest-bearing escrow account. (9) All expenses incurred by the department in carrying out this section are a first charge and lien upon the assets of the warehouse operator; and the department may bring a separate civil action through representation by the attorney general in a court in the county in which the public warehouse is located to recover the expenses, or they may be recovered at the same time and as a part of an action filed under subsection (5) of this section. (10) As a part of the expenses incurred by the department in carrying out this section, the department or the receiver is authorized to include the cost of adequate liability insurance necessary to protect the department, its officers, and others engaged in carrying out this section.
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