course of settlement, and all liabilities for expenses and taxes. Stats. 1867-8, 328, Sec. 8. SEC. 430. No fire, marine or inland insurance corporation, with a subscribed capital of less than two hundred thousand dollars, must declare any dividends, except from profits remaining on hand after reserving Amounts to be reserved by compaless than two nies with bundred thousand dollars 1. A sum necessary to form, with the subscribed capi- capital. tal stock, the aggregate sum of two hundred thousand dollars. 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks. 3. A fund equal to one-half the amount of all premiums on fire risks and marine time risks not terminated at the time of making such dividend. 4. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. Stats. 1867-8, 328, Sec. 9. CHAPTER III. MUTUAL LIFE, HEALTH AND ACCIDENT INSURANCE CORPO RATIONS. SECTION 437. Capital stock. Guarantee Fund. 438. Of what Guarantee Fund shall consist. 439. What constitutes, and deficiency in fixed capital. 440. Declaration of fixed capital to be filed. 441. Guarantee notes and interest, how disposed of. 442. Insured to be entitled to vote, when. 443. May invest in what securities. 444. Number of Directors may be altered, how. 445. Limitations to the holding of stock and in other particulars 446. Premiums, how payable. 447. Corporations to furnish Insurance Commissioner with valua- 448. No stamp required on accident insurance contract. SEC. 437. Every corporation formed for the purpose Capital stock of mutual insurance on the lives, or any period less than life, of persons, on the health or against accidents to them, for life or any fixed period of time, or to purchase. sell annuities, must have a capital stock of not less Guarantee Of what Fund shall What constitutes, and than one hundred thousand dollars. It must not make Stats. 1865-6, 753, 755, Secs. 1, 8. SEC. 438. The Guarantee Fund mentioned in the preceding section must consist of the promissory notes of solvent parties, approved by the Board of Directors and by each other, payable to the corporation or its order, and at such times, in such modes and in such sums, with or without interest, and conformable in all other respects to such requirements as the Board of Directors prescribe; but the amount of the notes given by any one person must not exceed in the whole the sum five thousand dollars, exclusive of interest. Such notes must be payable absolutely and at the option of the corporation; they must be negotiable, and may be indorsed and transferred, or converted into cash, or otherwise dealt with by the corporation, at its discretion, without reference to any contingency of losses or expenses. Such notes, or the proceeds thereof, must remain with the corporation as a fund for the better security of its dealers, and constitute the assets of the corporation, liable for all its debts, obligations and indebtedness next after its assets from premiums and other sources, exclusive of capital stock, until the net earnings, over and above its expenses, losses and liabilities, shall have accumulated in cash, or securities in which the net earnings have been invested, to a sum which, with the capital stock, is equal to the aggregate of the original amounts of the Guarantee Fund and of the capital stock. Stats. 1865-6, 755, Sec. 9. SEC. 439. The sum accumulated as provided in the fixed capital preceding section, together with the capital stock, shall deficiency in become and remain the fixed capital of the corporation, not subject to division among the stockholders or parties dealing with it, or to be expended in any manner otherwise than may be required in payment of the corporation's debts and actual expenses, until the business of the corporation is closed, its debts paid, and its outstanding policies and obligations of every kind cancelled or provided for; and if from any cause a deficiency at any time occurs in such fixed capital, no further division of profits shall take place until such deficiency has been made up. Stats. 1865-6, 755, Sec. 9. SEC. 440. Whenever the fixed capital of the corpora tion is obtained as herein before provided, the President of the corporation and its Actuary, or its Secretary, there is no Actuary, must make a declaration in writing, sworn to before some Notary Public, of the amount of such fixed capital, and of the particular kinds of property composing the same, with the nature and amount of each kind, which must be filed with the original articles of incorporation, and a copy, certified by the County Clerk, must be published for at least four weeks, in a newspaper published in the place where the principal office of the corporation is situated. Upon the filing of such declaration the Guarantee Fund is discharged of its obligations, and all notes of the fund remaining in the control of the corporation, and not affected by any lien thereon, or claim in that nature, must be surrendered by it to the makers thereof, respectively, or other parties entitled to receive the same. Stats. 1865-6, 756, Sec. 10. SEC. 441. Until the Guarantee Fund is discharged from its obligations, as provided in the preceding section, no note must be withdrawn from the fund, unless another note of equal solvency is substituted therefor, with the unanimous approval of the Board of Directors then in office, and of all other parties liable on the rest of the notes comprising the Guarantee Fund. The corporation. must allow a commission of five per cent. per annum on all such guarantee notes while outstanding, and also interest on all moneys paid on such notes by the parties liable thereon, at the rate of twelve per cent. per annum, payable half yearly, until repaid by the corporation. But Insured to be entitled to vote, when. May invest in what. securities Number of Directors may be altered, how. such rate of interest may, from time to time, at intervals of not less than one year, be increased or reduced by the Board of Directors, so as to conform to the then current rates of interest. Stats. 1865-6, 756, Sec. 10. SEC. 442. After the filing of the declaration of the fixed capital, as in this article.provided, the holders of policies of life insurance for the term of life, on which the premiums are not in default, may vote at the election of Directors, and have one vote for each one thousand dollars insured by their policies, respectively. Stats. 1865-6, 754, Sec. 5. SEC. 443. The number of Directors specified in the articles of incorporation may be altered from time to time, during the existence of the corporation, by resolution, at the annual meeting of a majority of those entitled to vote at the election of Directors, but the number must never be reduced below seven. Stats. 1865-6, 754, Sec. 5. SEC. 444. Life, health and accident insurance corporations may invest their capital stock as follows: 1. In loans upon unencumbered and improved real estate within the State of California, which shall be worth at the time of the investment at least fifty per cent. more than the sum loaned. 2. In the purchase of or loans upon interest-bearing stocks, bonds and other securities of the United States, and of the States thereof. 3. In the purchase of or loans upon interest-bearing bonds of any incorporated city, or city and county in the State of California. 4. In the purchase of or loans upon any stocks of companies and corporations formed under the laws of this State, except mining stocks; which shall have, at the time of the investment, a value, in the City and County of San Francisco, of not less than sixty per cent. of their par value, and which shall be rated as first class securities. But no loans shall be made on any securities specified in Subds. 2, 3 and 4, of this section, in any amount beyond seventy-five per cent. of the market value of the securi ties, nor shall any loan be made on the stock of the corporation making the loan. Stats. 1887-8, 661; 1865-6, 748, Sec. 18. NOTE. The exception of mining stocks is here made SEC. 445. The corporation, may, by its by-laws, limit the number of shares which may, be held by any one person, and make such other provisions for the protection of the stockholders and the better security of those dealing with it, as to a majority of the stockholders may seem proper, not inconsistent with the provisions of this Title or Part. Stats. 1865-6, 754, Sec. 7. SEC. 446. All premiums must be payable wholly in' Premians, cash, or one-half or a greater proportion in cash, and the how payable. remainder in promissory notes bearing interest, as may be provided for by the by-laws. Agreements and policies. of insurance made by the corporation may be upon the basis of full or partial participation in the profits, or without any participation therein, as may be provided by the by-laws and agreed between the parties. Stats. 1865-6, 758, Sec. 16. SEC. 447. Every life insurance corporation doing busi- Corporations ness in this State, or formed under the provisions of this Part, must, on or before the first Monday in January of to furnish Insurance Commissioner with valuation of policies out. standing, each Stats. 1870, 859, Sec. 1. NOTE. This section will, in the bill prepared for the Legislature, be also placed in the chapter on Insurance Commissioner. The first section of this chapter requires all corporations doing the business of insurance to be governed by the provisions of the chapter on Insurance Commissioner. estimated. |