30 days after the date such notice of termination is received by the Administrator unless the Administrator in writing approves an earlier termination date. Transactions occurring after the termination date may not be the basis of claims under this agreement. The trustee shall deliver such notice upon receipt of any claim for recovery under this agreement unless the principal informs the trustee that action will be taken to contest the claim. The trustee, unless otherwise directed in writing by the Administrator, shall, before the termination date, draw the full amount which can be drawn under every letter of credit obtained by the principal hereunder.

(j) During times when the trustee holds funds which have been obtained under this agreement, the trustee shall invest such funds in the name of the trustee in fully negotiable obligations of or guaranteed by the United States, or in deposits in national banks or other banks insured by the Federal Deposit Insurance Corporation, or as otherwise approved in writing by the Administrator. The trustee shall not be obligated to maximize interest received on such funds. Interest received by the trustee on such funds shall be disposed of by the trustee in the same manner as such funds. The trustee shall not expend such funds except as follows:

(1) Such funds may be used to pay taxes due on account of interest received by the trustee on such funds;

(2) Such funds may, with the written approval of the Administrator, be used to pay reasonable expenses and compensation of the trustee;

(3) Such funds may be paid to claimants to whom such funds are due under this agreement;

(4) Such funds determined not to be needed to pay claimants under this agreement may, with the written approval of the Administrator, be returned to the bank from which such funds are obtained for credit to the account of the principal.

(k) No amendment, endorsement, rider, or modification of this agreement shall be effective unless it is in writing, a fully executed duplicate of it is received by the Administrator, and either 30 days shall elapse after the date the duplicate is received by the Administrator or the Administrator shall state in writing that he has no objection to it. Termination of the clearance of a registrant under condition clause 3 of this agreement may be accomplished by a rider deducting the name of such registrant.

(1) The trustee may resign by delivering written notice of resignation to the Administrator. The Administrator is hereby authorized to designate a person to act as trustee under this agreement if the trustee designated herein or a successor trustee resigns, or fails or is unable to act or serve.

Immediately upon such designation by the Administrator, the prior trustee shall transfer all letters of credit obtained by the principal hereunder, and shall pay over all funds drawn under such letters of credit and in the possession of the prior trustee, to the person so designated by the Administrator. Such transfer and payment shall discharge the prior trustee from all obligation hereunder to draw funds after such transfer under any letter of credit so transferred, or to disburse any funds so paid, and from all other obligations accruing under this agreement after such transfer and payment. Resignation shall not operate to discharge the prior trustee from obligations accruing under this agreement prior to such transfer and payment.

(m) The term "person" as used in this agreement shall be construed to mean and include both singular and plural, corporations, partnerships, associations, individuals and the heirs, executors, administrators, successors, or assigns thereof.

(n) Any reference herein to one letter of credit shall be deemed to apply to multiple letters of credit if obtained by the principal under this agreement.

(0) Any notice or document required to be given to or filed with the Administrator under this agreement may be given to the Regional Supervisor, Packers and Stockyards Administration, for the region of the principal's residence or principal place of business. Any approval, authorization, designation or other action by the Administrator under this agreement may be taken or performed by such Regional Supervisor or by the Administrator.

This agreement shall become effective on the day of 19

Signature of Trustee Signature of Principal (7 U.S.C. 204, 228(a))

[48 FR 8807, Mar. 2, 1983, as amended at 48 FR 11926, Mar. 22, 1983]

PROCEEDS OF SALE

8 201.39 Payment to be made to consignor or shipper by market agencies; exceptions.

(a) No market agency shall, except as provided in paragraph (b) of this section, pay the net proceeds or any part thereof, arising from the sale of livestock consigned to it for sale, to any person other than the consignor or shipper of such livestock except upon an order from the Secretary or a court of competent jurisdiction, unless (1) such market agency has reason to believe that such person is the owner

of the livestock, (2) such person holds a valid, unsatisfied mortgage or lien upon the particular livestock, or (3) such person holds a written order authorizing such payment executed by the owner at the time of or immediately following the consignment of such livestock: Provided, That this paragraph shall not apply to deductions made from sales proceeds for the purpose of financing promotion and research activities, including educational activities, relating to livestock, meat, and other products covered by the Act, carried out by producer-sponsored organizations.

(b) The net proceeds arising from the sale of livestock, the ownership of which has been questioned by a market agency duly authorized to inspect brands, marks, and other identifying characteristics of livestock may be paid in accordance with the directions of such brand inspection agency if the laws of the State from which such livestock originated or was shipped to market make provision for payment of the proceeds in the manner directed by the brand inspection agency and if the market agency to which the livestock was consigned, and the consignor or consignors concerned, are unable to establish the ownership of the livestock within a reasonable period of time, not to exceed 60 days after sale.

(7 U.S.C. 181 et seq.)

[19 FR 4528, July 22, 1954, as amended at 28 FR 7218, July 13, 1963; 44 FR 45361, Aug. 2, 1979]

8201.42 Custodial accounts for trust funds.

(a) Payments for livestock are trust funds. Each payment that a livestock buyer makes to a market agency selling on commission is a trust fund. Funds deposited in custodial accounts are also trust funds.

(b) Custodial accounts for shippers' proceeds. Every market agency engaged in selling livestock on a commission or agency basis shall establish and maintain a separate bank account designated as "Custodial Account for Shippers' Proceeds," or some similar identifying designation, to disclose that the depositor is acting as a fidu

ciary and that the funds in the account are trust funds.

(c) Deposits in custodial accounts. The market agency shall deposit in its custodial account before the close of the next business day (the next day on which banks are customarily open for business whether or not the market agency does business on that day) after livestock is sold (1) the proceeds from the sale of livestock that have been collected, and (2) an amount equal to the proceeds receivable from the sale of livestock that are due from (i) the market agency, (ii) any owner, officer, or employee of the market agency, and (iii) any buyer to whom the market agency has extended credit. The market agency shall thereafter deposit in the custodial account all proceeds collected until the account has been reimbursed in full, and shall, before the close of the seventh day following the sale of livestock, deposit an amount equal to all the remaining proceeds receivable whether or not the proceeds have been collected by the market agency.

(d) Withdrawals from custodial accounts. The custodial account for shippers' proceeds shall be drawn on only for payment of (1) the net proceeds to the consignor or shipper, or to any person that the market agency knows is entitled to payment, (2) to pay lawful charges against the consignment of livestock which the market agency shall, in its capacity as agent, be required to pay, and (3) to obtain any sums due the market agency as compensation for its services.

(e) Accounts and records. Each market agency shall keep such accounts and records as will disclose at all times the handling of funds in such custodial accounts for shippers' proceeds. Accounts and records must at all times disclose the name of the consignors and the amount due and payable to each from funds in the custodial account for shippers' proceeds.

(f) Insured banks. Such custodial accounts for shippers' proceeds must be established and maintained in banks whose deposits are insured by the Federal Deposit Insurance Corporation.

(g) Certificates of deposit and/or savings accounts. Funds in a custodial account for shippers' proceeds may be

maintained in an interest-bearing savings account and/or invested in one or more certificates of deposit, to the extent that such deposit or investment does not impair the ability of the market agency to meet its obligations to its consignors. The savings account must be properly designated as a party of the custodial account of the market agency in its fiduciary capacity as trustee of the custodial funds and maintained in the same bank as the custodial account. The certificates of deposit, as property of the custodial account, must be issued by the bank in which the custodial account is kept and must be made payable to the market agency in its fiduciary capacity as trustee of the custodial funds.

[47 FR 32696, July 29, 1982]

ACCOUNTS AND RECORDS

§201.43 Payment and accounting for livestock.

(a) Market agencies to make prompt accounting and transmittal of net proceeds. Each market agency shall, before the close of the next business day following the sale of any livestock consigned to it for sale, transmit or deliver to the consignor or shipper of the livestock, or the duly authorized agent, in the absence of any knowledge that any other person, or persons, has any interest in the livestock, the net proceeds received from the sale and a true written account of such sale, showing the number, weight, and price of each kind of animal sold, the name of the purchaser, the date of sale, the commission, yardage, and other lawful charges, and such other facts as may be necessary to complete the account and show fully the true nature of the transaction.

(b) Prompt payment for livestockterms and conditions. (1) No packer, market agency, or dealer shall purchase livestock for which payment is made by a draft whch is not check, unless the seller expressly agrees in writing before the transaction that payment may be made by such a draft. (In cases of packers whose average annual purchases exceed $500,000, and market agencies and dealers acting as agents for such packers, see also § 201.200.)

(2)(i) No packer, market agency, or dealer purchasing livestock for cash and not on credit, whether for slaughter or not for slaughter, shall mail a check in payment for the livestock unless the check is placed in an envelope with proper first class postage prepaid and properly addressed to the seller or such person as he may direct, in a post office, letter box, or other receptacle regularly used for the deposit ( of mail for delivery, from which such envelope is scheduled to be collected (a) before the close of the next business day following the purchase of livestock and transfer of possession thereof, or (b) in the case of a chase on a "carcass" or "grade and yield" basis, before the close of the first business day following determination of the purchase price.

(ii) No packer, market agency, or dealer purchasing livestock for slaughter, shall mail a check in payment for the livestock unless (a) the check is made available for actual delivery and the seller or his duly authorized representative is not present to receive payment, at the point of transfer of possession of such livestock, on or before the close of the next business day following the purchase of the livestock and transfer of possession thereof, or, in the case of a purchase on a "carcass" or "grade and yield" basis, on or before the close of the first business day following determination of the purchase price; or unless (b) the seller expressly agrees in writing before the transaction that payment may be made by such mailing of a check.

(3) Any agreement referred to in paragraphs (b) (1) or (2) of this section, shall be disclosed in the records of any market agency or dealer selling such livestock, and in the records of the packer, market agency or dealer purchasing such livestock, and retained by such person for such time as is required by any law, or by written notice served on such person by the Administrator, but not less than two calendar years from the date of expiration thereof.

(4) No packer, market agency or dealer shall, as a condition of purchase by him of livestock, impose, demand, compel or dictate the terms or manner of payment, or attempt to obtain a

payment

agreement from a seller through any threat of retaliation of other form of intimidation.

(c) Purchasers to promptly reimburse agents. Each packer, market agency, or dealer who utilizes or employs an agent to purchase livestock for him, shall, in transactions where such agent uses his own funds to pay for livestock purchased on order, transmit, or deliver to such agent the full amount of the purchase price before the close of the next business day following receipt of notification of the payment of such purchase price, unless otherwise expressly agreed between the parties before the purchase of the livestock. Any such agreement shall be disclosed in the records of the principal and in the records of any market agency or dealer acting as such agent.

(d) The provisions of paragraphs (b) (1) and (c) of this section shall not be construed to permit any transaction prohibited by § 201.61(a) relating to financing by market agencies selling on a commission basis, or by § 201.68 relating to financing packers by dealers or vice versa.

OMB CONTROL No. 0581-0024. (47 FR 746, Jan. 7, 1982)

(Secs. 202, 307, 312, 401, 42 Stat. 161, 165, 167, 168; 7 U.S.C. 181 et seq., 192, 208, 213, 221; sec. 409, as added by sec. 7, 90 Stat. 1250; 7 U.S.C. 228b; 7 CFR 2.17, 2.54; 42 FR 35625; Pub. L. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[19 FR 4528, July 22, 1954, as amended at 29 FR 1796, Feb. 6, 1964; 36 FR 2777, Feb. 10, 1971; 42 FR 49928, Sept. 28, 1977; 44 FR 45360, Aug. 2, 1979; 47 FR 746, Jan. 7, 1982]

8 201.44 Market agencies to render prompt accounting for purchases on order. Each market agency shall, promptly following the purchase of livestock on a commission or agency basis, transmit or deliver to the person for whose account such purchase was made, or the duly authorized agent, a true written account of the purchase showing the number, weight, and price of each kind of animal purchased, the names of the persons from whom purchased, the date of purchase, the commission and other lawful charges, and such other facts as may be necessary to complete the account and show fully the true nature of the transaction.

(7 U.S.C. 181 et seq.)

[44 FR 45360, Aug. 2, 1979]

8 201.45 Market agencies to make records available for inspection by owners, consignors, and purchasers.

Each market agency engaged in the business of selling or buying livestock on a commission or agency basis shall, on request from an owner, consignor, or purchaser, make available copies of bills covering charges paid by such market agency for and on behalf of the owner, consignor, or purchaser which were deducted from the gross proceeds of the sale of livestock or added to the purchase price thereof when accounting for the sale or purchase.

OMB CONTROL NO. 0581-0024. (47 FR 746, Jan. 7, 1982)

(7 U.S.C. 181 et seq.; Pub. L. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[19 FR 4528, July 22, 1954, as amended at 44 FR 45361, Aug. 2, 1979; 47 FR 746, Jan. 7, 1982]

§ 201.46 Stockyard owners, market agencies and dealers to keep daily record. Each stockyard owner, in addition to other necessary records, shall make and keep an accurate record of the number of head of each class of livestock received, shipped, or disposed of locally each day. Each market agency or dealer buying or selling livestock on a commission basis or otherwise, except packer buyers registered as dealers to purchase livestock for slaughter only, in addition to other necessary records, shall make and keep an accurate record of the number and weight of livestock bought, sold, or otherwise disposed of each business day, the prices paid or received therefor, and the charges made for services. OMB CONTROL No. 0581-0024. (47 FR 746, Jan. 7, 1982)

(Pub. L. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[19 FR 4528, July 22, 1954, as amended at 24 FR 3183, Apr. 24, 1959; 44 FR 45360, Aug. 2, 1979; 47 FR 746, Jan. 7, 1982]

§ 201.47 Market agencies to disclose business relationships, if any, with purchasers.

as a

No market agency acting broker, factor, or commission merchant shall knowingly sell or dispose of consigned livestock to any person in whose business such market agency or any stockholder, owner, officer, or employee thereof, has a financial interest, or to any person who has a financial interest in such market agency, unless the market agency or licensee discloses on the accounts of sales issued to the consignors concerned the nature of the relationship existing between the market agency and the buyers of the livestock and then only if the livestock has been offered for sale on the open market and the purchaser's bid exceeds that of other bidders. The provisions of this section shall not be construed to permit any transaction prohibited by §§ 201.57 and 201.60 relating to sales of livestock out of consignments to owners, officers, agents, or employees of market agencies to which the livestock was consigned.

(7 U.S.C. 181 et seq.)

[19 FR 4529, July 22, 1954, as amended at 44 FR 45361, Aug. 2, 1979]

8 201.49 Requirements regarding scale tickets evidencing weighing of livestock.

(a) When livestock is weighed for purpose of purchase or sale, a scale ticket shall be issued which shall show: (1) The name and location of the agency performing the weighing service; (2) the date of the weighing; (3) the name of the buyer and seller or consignor, or a designation by which they may be readily identified; (4) the number of head; (5) kind; (6) actual weight of the livestock; and (7) the name, initials, or number of the person who weighed the livestock, or if required by State law, the signature of the weighmaster. Scale tickets issued under this section shall be serially numbered and sufficient copies executed to provide a copy to all parties to the transaction.

(b) In instances where the weight values are recorded by means of automatic weighing and recording equip

ment directly on the account of sale or other basic record, this record may serve in lieu of a scale ticket.

(c) Stockyard owners, market agencies, and dealers who own or operate livestock scales shall be responsible for the accurate weighing of livestock and the execution and issuance of scale tickets.

OMB CONTROL No. 0581-0024. (47 FR 746, Jan. 7, 1982)

(Secs. 402 and 407(a) of the Packers and Stockyards Act, 1921, as amended (42 Stat. 169, as amended; 7 U.S.C. 222, 228(a); sec. 6 (g) of the Federal Trade Commission Act 38 Stat. 721, 15 U.S.C. 46(g)); 37 FR 28465, 28477; Pub. L. 96-511, 94 Stat. 2812 (44 U.S.C. 3501 et seq.))

[39 FR 8913, Mar. 7, 1974, as amended at 47 FR 746, Jan. 7, 1982]

8 201.50 Records; disposition.

(a) Except as otherwise provided in paragraphs (b) and (c) of this section, no stockyard owner, market agency, or dealer shall, without the consent in writing of the Administrator, destroy or dispose of any books, records, documents, or papers which contain, explain or modify transactions in the business under the Act.

(b) Every stockyard owner, market agency or dealer may destroy or dispose of the following categories of records after they have been retained for a period of 2 full calendar years: STOCKYARD OWNERS

All feed records.
Dipping and spraying orders.
Vaccinating and testing orders.
Orders for special services.
Routine correspondence.

Railroad advance charges.

Bills to commission firms and others. Records of shipments by States and markets.

Deposit slips.

Bank statements.

Cancelled checks and drafts.

Check stubs.

Railroad in-bound records.

Truck-in receipt records.

Delivery records.

Yarding receipts.

Pass-out and delivery orders.
Truck shipping orders.
Railroad shipping orders.
Scale yarding records.
Scale tickets.
Scale test reports.