Section 12300.3 Of Chapter 4. Licensee Regulations From California Financial Code >> Division 3. >> Chapter 4.
12300.3
. All funds received by a licensee or its agents from the
sale of checks, drafts, money orders, or other commercial paper
serving the same purpose and for the purpose of paying bills,
invoices, or accounts of an obligor, equal in amount to the face
value of such instruments or equal to the amount to be paid, shall
constitute trust funds owned by and belonging to the person from whom
they were received or a licensee who has paid the checks, drafts,
money orders or other commercial paper serving the same purpose, for
which the funds of such persons have been received by the agent but
not transmitted to such licensee or deposited in the trust account of
such licensee. If a licensee or an agent of a licensee shall
commingle such funds with those of his own, all assets of such agent
shall be impressed with a trust in favor of said purchaser or the
licensee in an amount equal to the aggregate funds received or which
should have been received by the agent from such sale. Such trust
shall continue until an amount equal to said funds is separated from
those of the agent and transmitted to the licensee or deposited in
the trust account of licensee. An amount equal to all such trust
funds shall be deposited in a bank or banks in an account or accounts
in the name of the licensee designated "trust account," or by some
other appropriate name indicating that the funds are not the funds of
the licensee or of its officers, employees, or agents. Such funds,
or, in the event of commingling of such funds by licensee or its
agent with those of the licensee or its agent, an amount of funds of
such licensee or of its agent equal thereto, shall constitute trust
funds as herein provided and shall not be subject to attachment, levy
of execution or sequestration by order of court except by a payee,
or bona fide assignee, or bona fide holder in due course of a check,
draft, or money order sold by a licensee, or except by an obligor for
whom a licensee is acting as an agent in paying bills. Funds in said
account, together with funds and checks on hand and in the hands of
agents held for the account of the licensee, at all times shall be at
least equal to the aggregate liablity of the licensee on account of
checks sold and bills, invoices, and accounts accepted for payment.
Upon request of the commissioner, a licensee shall furnish to the
commissioner an authorization for examination of financial records of
any such trust fund account, maintained in a financial institution,
in accordance with the procedures set forth in Section 7473 of the
Government Code.
Nothing in this law shall be construed to prevent a purchaser, a
holder in due course, the payee of a check, draft or money order sold
by the licensee in the usual course of his business, or an obligor
for whom the licensee is acting as an agent in paying bills of the
obligor, from taking any legal action necessary to enforce any claims
which said purchaser, holder in due course, payee, or obligor may
desire to take including the right to levy attachment or execution.
In the event a license under this law shall be suspended or
terminated the licensee shall immediately deposit in said trust
account an amount which with funds therein contained shall be equal
to the outstanding checks sold and bills unpaid.