securities for the benefit and security of its policyholders. Sometimes the deposit is required to be made with an officer of the local State government, and sometimes with an officer of the State of the corporate domicile. In either case the assets deposited become impressed with the character of a trust fund. Thus, where the State treasurer was authorized to receive such deposits on behalf of any domestic company in pursuance of the statutes of foreign States requiring such a deposit as a prerequisite of a license to do business within its limits, it was held upon the insolvency of such a company that the treasurer held such securities as a trustee for the policy-holders, and would not be required to surrender them to a receiver of the company, but would hold them for distribution to the beneficiaries under the law of trusts.' And under the New York statute requiring the deposit of "not less than $200,000" of bonds, etc., with the superintendent of insurance as a condition of doing business in that State, it was held that where an English company deposited with him securities amounting to over $700,000, the whole sum became impressed with the character of a trust fund and no part of it could be subsequehtly withdrawn by the company although entirely solvent; that the courts would not interfere with its custody and administration otherwise than in accordance with the trust created by the statute."

§ 61.

Same-Construction.-Where the statute provides for a deposit "with the State treasurer of this State, or with the chief financial officer, or

1 Cooke v. Warner, 56 Conn. 234, 14 Atl. Rep. 798.

2 Lancashire Ins. Co. v. Maxwell, 131 N. Y. 286, 30 N. E. Rep. 192; affirming 61 Hun, 360, 16 N. Y. Supp. 53.

commissioner of insurance in the State where such company or association is organized," it was held that a British or other foreign corporation could not be regarded as "organized" in the State of New York because it had there made the deposit of securities required by the law of that State and thereby obtained authority to do business there; such company could only comply with the statute by making the required deposit with the State treasurer.1

§ 62. Same-Liability for Acts of Corporate Agents. In Vermont, fire insurance companies are prohibited from taking risks, unless they are responsible, by the laws of the State of their creation, or by their acts of incorporation, or by a proviso to that effect in their policies of insurance, for the acts and neglect of their agents, as between the companies and the insured or applicants for insurance." Under this provision, the court held that it was not necessary to show a positive statutory enactment of the foreign State; that it was sufficient if it appeared that the company was liable for the acts of the agent under the common law of the corporate domicile, that the act was declaratory of the common law and was intended to prevent companies from attempting to abrogate its rules by inserting a clause in their policies or by-laws, that an agent taking an application for insurance should be deemed the agent of the assured and not of the company."

'Employers' Liab. Assur. Co. v. Commr. of Insurance, 64 Mich. 614, 31 N. W. Rep. 542.

2 Rev. L. Vt. §§ 3610, 3618.

8 Lycoming F. Ins. Co. v. Wright, 60 Vt. 515, 12 Atl. Rep. 103.

§ 63. Same-Payment of Loss-Requiring Agent to Hold Corporate Moneys.-In Indiana a statute prescribing conditions upon which a foreign insurance company may do business within the State, and requiring the agent to retain all the money of the company which comes to his hands after he has received notice of a loss, until it is paid' has been held a valid exercise of the power of regulation.'

3

§ 64. Same-Penalty for Delay in "Bad Faith." -In Georgia it is provided that by the refusal in bad faith to pay a loss within sixty days after demand by the policy-holder, the company makes itself liable in damages for an amount not more than twenty-five per cent. of the loss and a reasonable attorney's fee. As might be expected the interpretation of the words "bad faith" has been a fruitful source of controversy. The statute, of course, was not intended to prevent the company from withholding payment when it has, or has good reason to believe that it has, a valid legal defense to the demand. So, where in an action on a life policy, which by its terms was to be void in case of death by suicide, the evidence disclosed the fact that the insured died by his own hand, a verdict for such damages was set aside as unsupported by the evidence. And so, where the difference between the parties was as to the construction of the contract, and presented a question about which the highest courts of the country have differed. But where the company had expressed satisfaction.

1 Rev. St. Ind. 1881, § 3768.

2 Phoenix Ins. Co. v. Burdett, 112 Ind. 204, 13 N. E. Rep. 705.

3 Code Ga. § 2850.

'Merritt v. Cotton States L. Ins. Co., 55 Ga. 103.

Northwestern Mut. L. Ins. Co. v. Ross, 63 Ga. 199.

with the proofs of death furnished (although these disclosed the fact that the insured had gone into the torrid zone in violation of the contract), and had promised to pay the loss when an administrator should be appointed, but after that was done had withheld payment, alleging that it had been notified by one claiming to be a creditor not to pay over the money to the administratrix, which as it appeared was a mere pretext upon which it did not rely when sued, but instead set up the very defenses of which it had been informed and which it had abandoned, the court held that bad faith was sufficiently shown and sustained a verdict for damages'. And so, too, where it appeared that the defendant had put off payment of the policy on the pretext of wanting to investigate the matter, but made no effort to investigate or ascertain facts to sustain a defense, and after the commencement of the action offered to settle by paying the face of the policy. Such liability for damages of course depends upon the facts of a demand and refusal sixty days before suit brought, which must be plainly averred."

§ 65.

"Doing Business Within the State"-Construction. The prohibition of all these statutes is against the foreign company's "doing business" in the State, and it becomes in many cases an important matter to determine what, in legal contemplation, is "doing business." Where contracts are made and are to be performed by the foreign company

1 Cotton States L. Ins. Co. v. Edwards, 74 Ga. 220. See also Watertown Fire Ins. Co. v. Grehan, 74 Ga. 642.

2 Hull v. Ala. Gold L. Ins. Co., 79 Ga. 93, 3 S. E. Rep. 903.

3 Lester v. Piedmont, etc. L. Ins. Co., 55 Ga. 475.

beyond the limits of the State, there seems to be no room for doubt that the State has no jurisdiction to control such transactions. As expressed by GRESHAM, J., in Lamb v. Bowser,' the legislature has no power to declare that the citizens of a State shall not be allowed to make such contracts as they please out of the State for the insurance of their property, whether it be within or without the State," and he there held that the issue of a policy of insurance in one State upon property located in another does not constitute "doing business" within the latter. But where an application for life insurance in a Pennsylvania company, was taken by an agent in Indiana and forwarded to the home office in Philadelphia, and upon the receipt of the policy issued thereon the agent delivers it to the assured and receives from him the first payment of premium, the contract is consummated in Indiana, and in absence of a compliance with the statute the contract of the insured to pay assessments cannot be inforced in that State.' And the Georgia statute authorizing a verdict for damages, for a refusal in "bad faith" to pay a policy within sixty days after the loss, has been held applicable to a contract of

17 Biss. 315, 318.

See to the same effect Marine Ins. Co. v. St. Louis, etc. R. Co., 41 Fed. Rep. 643, 653; Huntley v. Merrill, 32 Barb. 626; Eureka Ins. Co. v. Parks, 1 Cin. Sup. Ct. 574; Hyde v. Goodnow, 3 N. Y. 266; People v. Imlay, 20 Barb 68; Columbia F. Ins. Co. v. Kinyon, 37 N. J. L. 33; Commonwealth v. Biddle, 139 Pa. St. 605. Compare Employers' Liab. Assur. Corp. v. Employers' Liab. Ins. Co., 61 Hun, 552; Hull v. Alabama Gold L. Ins. Co., 79 Ga. 93.

Wiestling v. Warthin, 1 Ind. App. 217, 27 N. E. Rep. 576. See to the same effect Berry v. Knights' F. & M. L. I. Co., 46 Fed. Rep. 439; Ford ▼. Buckeye Ins. Co., 6 Bush (Ky.), 133; Northwestern Mut. L. Ins. Co. ▼. Elliott, 7 Sawy. 17, 5 Fed. Rep. 225.

Code Ga. § 2850.