(1) Whenever it appears probable after investigation that a licensed warehouseman has not in possession sufficient grain to cover the outstanding warehouse receipts, load slips or other evidence of storage liability issued or assumed by the warehouseman, or when such warehouseman refuses to submit books, papers or property to lawful inspection, the State Department of Agriculture may give notice to the warehouseman to comply with all or any of the following requirements:
(a) Cover such shortage.
(b) Give additional bond.
(c) Submit to such inspection as the department may deem necessary.
(2) If such warehouseman fails to comply with the terms of such notice within 24 hours from the date of its issuance, or within such further time as the department may allow, the department, represented by the Attorney General or the district attorney of the county in which the warehouse is located, shall apply to the circuit court of such county for an order:
(a) Authorizing the department to take possession of all special piles and special bins of grain and all commingled grain in the public warehouse or warehouses owned, operated or controlled by the warehouseman, and of all books, papers and property of all kinds used in connection with the conduct or the operation of such warehouseman’s warehouse business, whether such books, papers, records and property pertain specifically, exclusively, directly or indirectly to that business, or are related to the handling, storage or use of grain of the warehouseman in any other business; and
(b) Enjoining the warehouseman from interfering with the department in the discharge of its duties as required by this section.
(3) Upon taking possession the department shall give written notice of its action to the surety on the bond of the warehouseman and may notify the holders of all warehouse receipts or other evidence of deposits issued for grain, to present their warehouse receipts or other evidence of deposits, for inspection, or to account for the same. The department may thereupon cause an audit to be made of the affairs of such public warehouse with respect to the grain in which there is an apparent shortage, determine the amount of such shortage and compute the shortage as to each depositor of grain. The department shall notify the warehouseman and the surety on the bond of the warehouseman of the amount of such shortage and notify each depositor thereby affected.
(4) The department shall retain possession of the grain in the warehouse or warehouses, and of the books, papers and property of the warehouseman, until such time as the warehouseman or the surety on the bond shall have satisfied the claims of all holders of warehouse receipts or other evidence of deposits, or, in case the shortage exceeds the amount of the bond, the surety on the bond shall have satisfied such claims pro rata, or until such time as the department is ordered by the court 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 warehouseman is insolvent or in danger of becoming so or is unable to satisfy the claims of all holders of warehouse receipts or other evidence of deposits, the department, represented by the Attorney General or the district attorney of the county in which the public warehouse is located, may petition the circuit court of such county for the appointment of a receiver to operate or liquidate the business of the warehouseman in accordance with law.
(6) At any time within 10 days after the department takes possession of any grain, or the books, papers and property of any licensed grain warehouse, the warehouseman may serve notice upon the department to appear in the circuit court of the county in which such warehouse is located, at a time to be fixed by such court, which shall be not less than five, nor more than 15 days from the date of the service of such notice, and show cause why such grain, books, papers and property should not be restored to the possession of the warehouseman.
(7) All expenses incurred by the department in carrying out the provisions of this section shall be a first charge and lien upon the assets of the warehouseman, and may be recovered in a separate civil action brought by the department, represented by the Attorney General or the district attorney, in the circuit court of the county in which the public warehouse is located, or recovered at the same time and as a part of the action filed under this section.
(8) As a part of the expenses so incurred, 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 the provisions of this section.
(9) Nothing in this section shall be construed as a waiver by the State of Oregon of any immunity against suit or action. [1957 c.11 §3; 1961 c.445 §17]
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