[Code of Federal Regulations]
[Title 7, Volume 7]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR736.42]

[Page 256-258]
 
                          TITLE 7--AGRICULTURE
 
                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
 
PART 736--GRAIN WAREHOUSES--Table of Contents
 
Sec. 736.42  Excess storage.

    (a) If at any time a warehouseman shall store grain in his warehouse 
in excess of the capacity for which it is licensed, such warehouseman 
shall immediately notify the Secretary of such

[[Page 257]]

excess storage, the reason therefor, and the location thereof.
    (b) A warehouseman who lacks sufficient space and desires to 
transfer stored grain for which receipts have been issued to another 
licensed warehouse may do so either by physical movement or by other 
methods accepted as standard industry practice subject to the following 
terms and conditions:
    (1) The transferring (shipping) warehouseman's accepted rules or 
schedule of charges must contain notice that the warehouseman may 
forward grain deposited on a commingled basis under such terms and 
conditions as the Secretary may prescribe.
    (2) For purposes of this section of the regulations a licensed 
warehouse means a warehouse operated by a warehouseman who holds an 
unsuspended, unrevoked license under the U.S. Warehouse Act for grain, 
or a warehouse operated by a warehouseman who holds an effective 
warehouse license for the public storage of grain and/or rice issued by 
a State that has financial, bonding and examination requirements for the 
benefit of all depositors.
    (3) Non-negotiable warehouse receipts shall be obtained promptly by 
the shipping warehouseman from the receiving warehouseman for all 
transferred grain. Such recipts shall have printed or stamped in large 
bold or outline letters diagonally across the face and covering the face 
from corner to corner the words ``NOT NEGOTIABLE''. Receipts are not 
valid for collateral purposes. They shall be retained by the shipping 
warehouseman to be presented to and used by Department examiners in lieu 
of an on-site inventory. The grain covered by such receipts is not the 
property of either the receiving or shipping warehouseman but held in 
trust by both solely for the benefit of the depositors whose bailed 
grain was transferred individually or collectively and the depositor or 
the depositor's transferee retains title thereto.
    (4) The shipping warehouseman's bond shall be increased to consider 
the addition of the transferred grain to the licensed capacity of the 
warehouse with the net asset requirements based on the total of the 
licensed capacity and the forwarded grain. The bond amount need not be 
more than $500,000 unless necessary to cover a deficiency in net assets 
to meet requirements. The receiving warehouseman shall not incur storage 
obligations that exceed the licensed capacity of his warehouse.
    (5) The shipping warehouseman continues to retain storage obligation 
to the owners of all grain deposited in the warehouse for a storage 
whether forwarded or retained and is, except as otherwise agreed upon 
under paragraph (b)(6) of this section, required to redeliver the grain 
upon demand to the depositor or the depositor's transferee at the 
warehouse where the grain was first deposited for storage.
    (6) The owner of grain deposited for storage at the warehouse must 
make settlement and take delivery at the warehouse where the grain was 
first deposited for storage, unless the owner of the commodity, with the 
consent of both the shipping warehouseman and the receiving 
warehouseman, elects to take delivery at the warehouse to which grain 
was transferred under this section.
    (7) Nothing in this section shall in any way diminish the right of 
the owner of the grain to receive on delivery, or the obligation of the 
warehouseman of a licensed warehouse from which the product is 
transferred, to deliver to the owner, grain in the amount, and of the 
kind, quality, and grade, called for by the warehouse receipts or other 
evidence of storage.
    (8) Recording and retention of non-negotiable warehouse receipts 
received as a result of forwarding a commodity under this section shall 
be subject to the requirements for warehouse receipts specified 
elsewhere in these regulations.
    (9) If it is the shipping warehouseman's obligation by terms of the 
warehouse receipt or otherwise to insure the grain subject to the 
transfer, he must in accordance with 7 CFR 736.33 keep such grain 
insured in his own name or transfer the grain only to a warehouse where 
the grain is fully insured.
    (c) A warehouseman may transfer stored grain for which receipts have 
not and are not to be issued to another

[[Page 258]]

licensed warehouse for continued storage by complying with the 
provisions of paragraphs (b)(1), (2), (5), (6), (7), and (9) of this 
section. However, in no event shall the warehouseman's total storage 
obligations to others (not including stored receipted grain shipped 
under provisions of paragraph (b) of this section) exceed the shipping 
warehouseman's licensed capacity.

[52 FR 8057, Mar. 16, 1987]