19 C.F.R. Subpart D—Principals and Sureties
Title 19 - Customs Duties
The general information pertaining to the principal and surety which must be given in the body of the bond is set forth in §113.21. (a) Same party as principal and surety. The same person, partnership, or corporation cannot be both principal and surety on a bond. (b) Attorney in fact for principal or surety. In executing a bond, a person may act as: (1) Attorney in fact for both principal and surety; (2) Surety and attorney in fact for the principal; or (3) Principal and attorney in fact for the surety. (a) Names of partners on the bond—(1) In general. Unless written notice of the full names of all partners in the partnership has been previously filed with the port director or drawback office in the case of a bond relating to repayment of erroneous drawback payment, the names of all persons composing the partnership shall appear in the body of the bonds. (2) Limited partnerships. Bonds submitted by limited partnerships need only have the firm name and the names of the general partners authorized to bind the firm on them. The bond must be accompanied by a copy of the partnership agreement. For this purpose, a partnership or a limited partnership means any business association recognized as such under the laws of the state where the association is organized. (b) Execution. Partnership bonds shall be executed in the firm name, with the name of the member or attorney of the firm executing it appearing immediately below the firm signature. (c) Action of one principal binding on all principals of the partnership. Pursuant to section 495, Tariff Act of 1930, as amended (19 U.S.C. 1495), when a bond is executed by any member of the partnership, the bond shall be binding on the other partners in like manner and to the same extent as if such other partners had personally joined in the execution. However, in the case of a limited partnership, the limited partners will not be bound by the actions of any other partner in the firm, except as provided for in the partnership agreement. [T.D. 84–213, 49 FR 41171, Oct. 19, 1984, as amended by T.D. 86–204, 51 FR 42998, Nov. 28, 1986] (a) Name of corporation on the bonds. The name of a corporation executing a Customs bond as a principal, may be printed or placed thereon by means of a rubber stamp or otherwise, followed by the written signature of the authorized officer or attorney. (b) Signature and seal of the corporation on the bond. The bond of a corporate principal shall be signed by an authorized officer or attorney of the corporation and the corporate seal shall be affixed immediately adjoining the signature of the person executing the bond, as provided for in §113.25. (c) Bond executed by an officer of corporation. When a bond is executed by an officer of a corporation, a power of attorney shall not be required if the person signing the bond on behalf of the corporation is known to the port director or drawback office to be the president, vice president, treasurer, or secretary of the corporation. The officer's signature shall be prima facie evidence of that officer's authority to bind the corporation. When a power of attorney is required it shall conform to the requirements of subpart C, part 141, of this chapter. (d) Bond executed by an attorney in fact. When an attorney in fact executes a bond on behalf of a corporate principal and a power of attorney has not been filed with the port director (unless exempted from filing by §141.46 of this chapter), there shall be attached a power of attorney executed by an officer of the corporation whose authority to execute the power shall be shown as prescribed in paragraph (c) of this section. (e) Subsidiaries as co-principals. The provisions of this section shall be applicable to each corporate subsidiary which joins its parent corporation by signing the bond as co-principal. A bond with a co-principal may be used by a person having a distinct legal status (e.g., individual, partnership, corporation) to join another person with the same distinct legal status on the bond. A bond with a co-principal shall not be used to join an entity which does not have a distinct legal status (e.g. an unincorporated division of a corporation). However, an entity which does not have a distinct legal status may use another bond if listed on the bond by the principal at the time of execution or by subsequent rider (see §113.24). A bond with co-principal may not be used to join different legal entities (e.g. an individual and a corporation, a partnership and a corporation). (a) Number required. If individuals sign as sureties, there shall be two sureties on the bond, unless the port director is satisfied that one surety is sufficient to protect the revenue and insure compliance with the law and regulations. (b) Qualifications to act as surety—(1) Residency and citizenship. Each individual surety on a Customs bond must be both a resident and citizen of the United States. (2) Married women. A married woman may be accepted as a surety, unless the state in which the bond is executed prohibits her from acting in that capacity. (3) Granting of power of attorney. Any individual other than a married woman in a state where she is prohibited from acting as a surety may grant a power of attorney to sign as surety on Customs bonds. Unless the power is unlimited, all persons to which the power relates shall be named. (4) Property requirements. Each individual surety must have property available as security within the limits of the port where the contract of suretyship is to be approved. The current market value of the property less any encumbrance must be equal to or greater than the amount of the bond. If one individual surety is accepted, the individual surety must have property the value of which, less any encumbrance, is equal to or greater than twice the amount of the bond. (c) Oath and evidence of solvency. Before being accepted as a surety, the individual shall: (1) Take an oath on Customs Form 3579, setting forth: (i) The amount of assets over and above all debts and liabilities and such exemptions as may be allowed by law; and (ii) The general description and the location of one or more pieces of real estate owned within the limits of the port and the value thereof over and above all encumbrances. (2) Produce such evidence of solvency and financial responsibility as the port director may require. (d) Determination of financial responsibility. An individual surety shall not be accepted on a bond until the port director is satisfied as to the financial responsibility of the individual. The port director may refer the matter to the special agent-in-charge for immediate investigation to verify the financial responsibility of the surety. (e) Continuancy of financial responsibility. In order to follow the continued solvency and financial responsibility of individual sureties, the port director shall require a new oath and determine the financial responsibility of each individual surety as prescribed in paragraphs (c) and (d) of this section at least once every 6 months, and more often if deemed advisable. A member of a partnership shall not be accepted as an individual surety on a bond executed by the partnership as principal. A partner may be an individual surety for a fellow partner on a bond if (a) the transaction is in an individual capacity and unrelated to the partnership, (b) sufficient unencumbered nonpartnership property is available as security, and (c) the individual qualifies as an individual surety under the provisions of §113.35 of this part. (a) Lists of corporations and limits of their bonds. Treasury Department Circular 570 contains a list of corporations authorized to act as sureties on bonds, with the amount in which each may be accepted. Unless otherwise directed by the Commissioner of Customs, no corporation shall be accepted as surety on a bond if not named in the current Circular as amended by (b) Name of corporation on the bond. The name of a corporation executing a Customs bond, as a surety, may be printed or placed thereon by means of a rubber stamp or otherwise, followed by the written signature of the authorized officer or attorney. (c) Name of agent or attorney on the bond. The agent or attorney acting for a corporate surety shall have stamped, printed, or typed on each bond executed by him, below his signature, his full name as it appears on the bond. (d) Social security number of agent or attorney on the bond. In the appropriate place on each bond executed by the agent or attorney acting for a corporate surety, the agent or attorney shall place his/her social security number, as it appears on the corporate surety power of attorney. (e) Signature and seal of the corporation on the bond. A bond executed by a corporate surety shall be signed by an authorized officer or attorney of the corporation and the corporate seal shall be affixed immediately adjoining the signature of the person executing the bond, as provided for in §113.25. (f) Two or more corporate sureties as sureties on the same obligation. Two or more corporate sureties may be accepted as sureties on any obligation the amount of which does not exceed the limitations of their aggregate qualifying power as fixed and determined by the Secretary of the Treasury. The amount for which each corporate surety may act as surety in all cases must be within the limitation prescribed by the Secretary, unless the excess is protected as prescribed in §223.11, Bureau of Government Financial Operations Regulations (31 CFR 223.11). Each corporate surety shall limit its liability to a definite specified amount, in terms, upon the face of the bond by attaching the following:
Corporate Sureties Agreement for Limitation of Liability __ (name of surety), __ (surety code), a surety company incorporated under laws of the State of __, authorized to conduct a surety business in the State of __, and having its principal place of business at __ (address), and __ (names of surety), __ (surety code), a surety company incorporated under the laws of the State of __ and having its principal place of business at __ (address), as sureties, and __ (name of principal), as principal, are jointly and severally obligated to the United States in the amount of __ ($ ) on a bond executed on __ (date of execution) with each surety jointly and severally obligate with the principal in the amounts listed below and no more: __ (name of surety) __ ($ ) __ (name of surety) __ ($ ) By this agreement the principal and sureties bind themselves and agree that for the purpose of allowing a joint action against any or all of them, and for that purpose only, this agreement and the bond under which they are obligated and which is incorporated by reference into this agreement, shall be treated as the joint and several as well as the several obligation of each of the parties. Signed and sealed this ______ day of ______19__ __Principal __Surety __Surety __Port Director (Drawback Office) (g) Power of attorney for the agent or attorney of the surety. Corporations may execute powers of attorney to act in their behalf in the following manner: (1) Execution and contents. The corporate surety power of attorney shall be executed on Customs Form 5297, and shall contain the following information: (i) Corporate surety name and number, (ii) Name and address of agent or attorney, and social security number of agent or attorney, (iii) Port(s) where the agent or attorney is authorized to act, (iv) Date of execution of power of attorney, (v) Seal of the corporate surety, (vi) Signature of any two principal officers of corporation, and (vii) Dollar amount of authorization. (2) Filing. The corporate surety power of attorney executed on Customs Form 5297 shall be filed with Customs. The original(s) of the corporate surety power of attorney shall be retained at the port where it(they) was(were) filed. (3) Use at port where power of attorney not filed before receipt of computer printout. If the grantee desires to use the power of attorney at a port covered by the power of attorney, other than the one where the power of attorney was filed, before the first computer printout reflecting this power of attorney is received, the Customs Form 5297, shall be filed in triplicate (original and two copies), rather than duplicate. The second copy shall be validated by Customs and returned to the grantee. The grantee, at the time of filing a bond at a port other than the port where the power of attorney was filed, shall provide this validated copy of the power of attorney as proof of the grant of authority. The validity of this copy of the power of attorney shall expire when the first computer printout reflecting this power of attorney is received. (4) Term and revocation. Corporate surety powers of attorney shall continue in force and effect until revoked. Any surety desiring that a designated agent or attorney be divested of a power of attorney must execute a revocation on Customs Form 5297. The revocation shall take effect on the close of business on the date requested provided the corporate surety power of attorney is received 5 days before the date requested; otherwise the revocation will be effective at the close of business 5 days after the request is received at the port office. (5) Change on the power of attorney. No change shall be made on the Customs Form 5297 after it has been approved by Customs except the following: (i) Grantee name change, (ii) grantee address change, and (iii) the addition of port(s) to the corporate surety power of attorney on file. To make any other change to the power of attorney two separate Customs Forms 5297 shall be submitted, one revoking the previous power of attorney, and one containing a new grant of authority. [T.D. 84–213, 49 FR 41171, Oct. 19, 1984; 49 FR 44867, Nov. 9, 1984; T.D. 95–77, 60 FR 50020, Sept. 27, 1995] (a) Acceptance as surety when in default as principal on another Customs bond. No person shall be accepted as surety on any Customs bond while in default as principal on any other Customs bond. (b) Acceptance as surety when in default as surety on another Customs bond. A surety on a Customs bond which is in default may be accepted as surety on other Customs bonds only to the extent that the surety assets are unencumbered by the default. (c)(1) Nonacceptance of bond by port director. A port director may refuse to accept a bond secured by an individual or corporate surety when the surety, without just cause, is significantly delinquent either in the number of outstanding bills or dollar amounts thereof. If the port director believes that a substantial question of law exists as to whether a breach of bond obligation has occurred he should request internal advice under the provisions of §177.11 from the Director, International Trade Compliance Division, Customs Headquarters. (2) Nonacceptance of bond upon instructions by Commissioner. The Commissioner may, when he believes the circumstances warrant, issue instructions to the port directors that they shall not accept a bond secured by an individual or corporate surety when that surety, without just cause, is significantly delinquent either in the number of outstanding bills or dollar amounts thereof. (3) Notice of surety. The appropriate Customs officer may take the above actions only after the surety has been provided reasonable notice with an opportunity to pay delinquent amounts, provide justification for the failure to pay, or demonstrate the existence of a significant legal issue justifying further delay in payment. (4) Review and final decision. After a review of any submission made by the surety under paragraph (c)(3) of this section, if the appropriate Customs officer is still of the opinion bonds secured by the surety should not be accepted, written notice of the decision shall be provided to the surety in person or by certified mail, return receipt requested, at least five days before the date that Customs will no longer accept the bonds of the surety. When notice is sent to the surety of the decision not to accept the surety's bonds the appropriate Customs officer shall notify the Director, International Trade Compliance Division, Customs Headquarters. Notice shall be given to the importing public by posting a copy of the decision in the customhouse. The decision shall also be published in the Customs Bulletin. (5) Duration of decision. Any decision not to accept a given surety's bond shall remain in effect for a minimum of five days or until all outstanding delinquencies are resolved, whichever is later. (6) Actions consistent with requirements. Any action not to accept the bonds of a surety under paragraphs (c) (1) and (2) of this section shall be consistent with the requirements of this section. [T.D. 84–213, 49 FR 41171, Oct. 19, 1984, as amended by T.D. 91–77, 56 FR 46115, Sept. 10, 1991; T.D. 95–77, 60 FR 50020, Sept. 27, 1995; T.D. 99–27, 64 FR 13675, Mar. 22, 1999; T.D. 99–64, 64 FR 43266, Aug. 10, 1999] If a port director or Fines, Penalties, and Forfeitures Officer is unsatisfied with a surety company because the company has neglected or refused to pay a valid demand made on the surety company's bond or otherwise has failed to honor an obligation on that bond, the port director may take the following steps to recommend that the surety company be removed from Treasury Department Circular 570. (a) Report to Headquarters. A port director or Fines, Penalties, and Forfeitures Officer shall send the following evidence to Headquarters, Attn: Director, International Trade Compliance Division. (1) A copy of the bond in issue; (2) A copy of the entry or other evidence which shows that there was a default on the bond; (3) A copy of all notices, demands or correspondence sent to the surety company requesting the honoring of the bond obligation; (4) A copy of all correspondence from the surety company; and (5) A written report of the facts known to the port director or Fines, Penalties, and Forfeitures Officer showing the unsatisfactory performance by the surety company of the bond obligation(s). (b) Review by Headquarters. The Director, International Trade Compliance Division, shall review submitted evidence and determine whether further action against the surety company is warranted. If it is determined that further action is warranted, a report recommending appropriate action will be submitted to the Fiscal Assistant Secretary, Department of the Treasury, as required by §223.18(a), Bureau of Government Financial Operations Regulations (31 CFR 223.18(a)). The port director and Fines, Penalties, and Forfeitures Officer will be informed in writing of Headquarters action regarding their request for removal of the surety. [T.D. 84–213, 49 FR 41171, Oct. 19, 1984, as amended by T.D. 91–77, 56 FR 46115, Sept. 10, 1991; T.D. 95–77, 60 FR 50020, Sept. 27, 1995; T.D. 99–27, 64 FR 13675, Mar. 22, 1999] (a) General provision. In lieu of sureties on any bond required or authorized by any law, regulation, or instruction which the Secretary of the Treasury or the Commissioner of Customs is authorized to enforce, the port director is authorized to accept United States money, United States bonds (except for savings bonds), United States certificates of indebtedness, Treasury notes, or Treasury bills in an amount equal to the amount of the bond. (b) Authority to sell United States obligations on default. At the time of deposit of any obligation of the United States, other than United States money, with the port director or other appropriate Customs officer, the obligor shall deliver a duly executed power of attorney and agreement authorizing the port director or other appropriate Customs officer, as, in case of any default in the performance of any of the conditions of the bond, to sell the obligation so deposited and to apply the proceeds of sale, in whole or in part, to the satisfaction of any damages, demands, or deficiency arising by reason of default. The format of the power of attorney and agreement, when the obligor is a corporation, is set forth below, and shall be modified as appropriate when the obligor is either an individual or a partnership:
Power of Attorney and Agreement (For Corporation) __, (name of corporation) a corporation duly incorporated under the laws of the State of __, and having its principal office in the City of __, State of __, as authorized by a resolution of the board of directors of the corporation, passed on the __ day of __, 19—, a duly certified copy of which is attached, does constitute and appoint __ (name and official title of bond-approving officer), and his successors in office, as attorney for said corporation, for and in the name of the corporation to collect or to sell, assign, and transfer the securities described as follows: The securities having been deposited by it as security for the performance of the agreements undertaken in a bond with the United States, executed on the date of ____, 19—, the terms and conditions of which are incorporated by reference into this power of attorney and agreement and made a part hereof. The undersigned agrees that in case of any default in the performance of any of the agreements the attorney shall have full power to collect the securities or any part thereof, or to sell, assign, and transfer the securities or any part thereof at public or private sale, without notice, free from any equity of redemption and without appraisement or valuation, notice and right to redeem being waived and to apply the proceeds of the sale or collection in whole or in part to the satisfaction of any obligation arising by reason of default. The undersigned further agrees that the authority granted by this agreement is irrevocable. The corporation for itself, its successors and assigns, ratifies and confirms whatever the attorney shall do by virtue of this agreement. Witnessed, signed, and sealed, this ___ day of _______ 19__. [Corporate seal.] Before me, the undersigned, a notary public within and for the County of ______, in the State of ______ (or the District of Columbia), personally appeared ____________ (name and title of officer) and for and in behalf of said __________, a corporation, acknowledged the execution of the foregoing power of attorney. Witness my hand and notarial seal this ____ day of _______, 19__;. [Notarial seal.] Notary Public __________ Note: Securities must be described by title, date of maturity, rate of interest, denomination, serial number, and whether coupon or registered. Failure to give a complete description will warrant rejection of this power of attorney. (c) Application of United States money on default. If cash is deposited in lieu of sureties on the bond, the port director or other appropriate Customs officer, as appropriate is authorized to apply the cash, in whole or in part, to the satisfaction of any damages, demands, or deficiency arising by reason of a default under the bond. [T.D. 84–213, 49 FR 41171, Oct. 19, 1984; 49 FR 44867, Nov. 9, 1984]
Title 19: Customs Duties
PART 113—CUSTOMS BONDS
Subpart D—Principals and Sureties
§ 113.30 Information pertaining to principals and sureties on the bond.
§ 113.31 Same party as principal and surety; attorney in fact.
§ 113.32 Partnerships as principals.
§ 113.33 Corporations as principals.
§ 113.34 Co-principals.
§ 113.35 Individual sureties.
§ 113.36 Partner acting as surety on behalf of a partner or on behalf of a partnership.
§ 113.37 Corporate sureties.
§ 113.38 Delinquent sureties.
§ 113.39 Procedure to remove a surety from Treasury Department Circular 570.
§ 113.40 Acceptance of cash deposits or obligations of the United States in lieu of sureties on bonds.
