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2. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes.

3. A sum sufficient to reinsure all outstanding policies as ascertained and determined upon the basis of the American experience table of mortality, and interest at the rate of four and one-half per cent per annum. En. 1877-78, 81.

Life, health, and accident insurance corporations: See post, secs. 437-452, C. C.

Life and health insurance: See secs. 2762 et seq., C. C.

CORPORATIONS FOR INSURING TITLES TO REAL ESTATE. Sec. 432, C. C. Corporations transacting business in insuring titles to real estate shall annually set apart a sum equal to twenty-five per cent of their premiums collected during the year, which sum shall be allowed to accumulate until a fund shall have been created amounting to ten per cent of the subscribed capital stock. Such fund shall be maintained as a further security to policy holders, and shall be known as the surplus fund; and if at any time such fund shall be impaired by reason of a loss, the amount by which it may be impaired shall be restored in the manner hereinabove provided for its accumulation. The reporting of a loss shall be deemed impairment of such fund for the purposes of this section. Such corporation must not make any dividends except from profits remaining on hand after retaining unimpaired:

1. The entire subscribed capital stock.

2. The amount owing to the surplus fund, under the provisions of this section.

3. A sum sufficient to pay all losses reported or in course of settlement, which shall be in excess of the surplus fund, and all liabilities for expenses and taxes. En. 1887, 23.

CHAPTER III.

MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE CORPORATIONS.

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. Number of directors may be altered, how.

444. Investment of capital stock.

445. Limitations to the holding of stock and in other particulars may be provided for in by-laws.

§ 446. Premiums, how payable.

447. Insurance corporations to furnish data to insurance commissioner-Employment of actuary.

§ 448. No stamp required on accident insurance contract. § 449. Valuation of policies, retaliatory provisions.

450. Policy to contain what provisions.

§ 451. Fraternal societies exempt from insurance laws. § 452. Policies continued in force. (Repealed.)

CAPITAL STOCK-GUARANTEE FUND.

Sec. 437, C. C. Every corporation formed for the purpose of mutual insurance on the lives or health of persons, or against accidents to persons for life or any fixed period of time, or to purchase and sell annuities, must have a capital stock of not less than one hundred thousand dollars. It must not make any insurance upon any risk or transact any other business as a corporation until its capital stock is fully paid up in cash, nor until it has also obtained a fund, to be known as a "guarantee fund,” of not less than two hundred and fifty thousand dollars, as is hereinafter provided. If more than the requisite amount is subscribed, the stock must be distributed pro rata among the subscribers. Any subscription may be rejected by the board of directors or the committee thereof, either as to the

whole or any part thereof, and must be, so far as rejected, without effect. En. March 21, 1872.

Act relating to life, health, accident and annuity or endowment insurance: See post, Appendix, title "Insurance."'

Incorporation of mutual insurance companies: See post, Appendix,

title Insurance.''

Section Cited.

Perkins v. Fish, 121 Cal. 317, 53 Pac. 901.

Annotation.

Construction of the Section.-A life insurance association, formed under sections 451 and 503 et seq. of the Civil Code, as an association, without profit of persons as members thereof, for the purpose of equalizing the risk of death, and to pay to the nominees of such nrembers as may die stipulated sums of money, to be collected from surviving members on the assessment or co-operative plan, has declared objects; and its articles being in due form of such a corporation, need not set forth any capital stock nor guarantee fund, such as is required of life insurance companies organized under this and following sections. (Perkins v. Fish, 121 Cal. 317, 53 Pac. 901.)

OF WHAT GUARANTEE FUND SHALL CONSIST.

Sec. 438, C. C. 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 of 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 persons dealing with it, and constitute the assets of the corporation, liable for all its debts, obligations, and in

debtedness 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. En. March 21, 1872.

WHAT CONSTITUTES, AND DEFICIENCY IN FIXED CAPITAL. Sec. 439, C. C. The sum accumulated as provided in the preceding section, together with the capital stock, shall 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 canceled or provided for; and if from any cause a deficiency at any time occurs in such fixed capital, no further division of profits must take place until such deficiency has been made up. En. March 21, 1872.

DECLARATION OF FIXED CAPITAL TO BE FILED.

Sec. 440, C. C. Whenever the fixed capital of the corporation is obtained as hereinbefore provided, the president of the corporation and its actuary, or its secretary, if 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 successive weeks, in a newspaper published in the county where the principal business 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 Corporation Laws-21

control of the corporation, and not affected by any lien thereon, or claim of that nature, must be surrendered by it to the makers thereof, respectively, or other parties entitled to receive the same. En. March 21, 1872.

GUARANTEE NOTES AND INTEREST, HOW DISPOSED OF.

Sec. 441, C. C. 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 approval of the board of directors. The corporation must allow a commission, not exceeding 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, unless the current rate of interest is different from this amount, in which case the rate payable 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 current rate. En. March 21, 1872. Amd. 1873-74, 210.

Legislative History.

The original section reads as follows: "Until the guarantee fund is discharged from its obligations, as provided in the preceding seetion, 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 the 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 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."'

INSURED TO BE ENTITLED TO VOTE, WHEN.

Sec. 442, C. C. capital, as in this

After the filing of the declaration of the fixed

article provided, the holders of policies of

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