the scope of its articles of incorporation, and may cause itself to be reinsured. Enacted March 21, 1872. Funds may be invested, how. [Repealed.] § 427. Funds may be invested, how. [Repealed March 3, and 21, 1905; stats. 1905, pp. 34 and 628.] 123 Cal. 203. Limit of risk. § 428. Fire and marine insurance corporations must never take, on any one risk, whether it is a marine insurance or an insurance against fire, a sum exceeding one tenth part of their capital actually paid in, and intact at the time of taking such risk, without at once reinsuring the excess above one tenth. Amended March 21, 1905; stats. 1905, p. 570. NOTE.- 428. The change consists in the insertion of the words "at once" before "reinsuring." Amounts to be reserved before making dividends. § 429. No corporation formed subsequent to April first, eighteen hundred and seventy-eight, under the laws of this state, and transacting fire, marine, inland navigation insurance business, or insurance provided for by section four hundred and twenty (420) of this code, except insurance of the title to real property, must make any dividends except from profits remaining on hand after retaining unimpaired: 1. The entire subscribed capital stock; 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks; 3. A fund equal to one half of the amount of all premiums on all other 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. Amended March 5, 1887; stats. 1887, p. 23. In general. Declaring dividends: See Civ. C. § 309; as to insurance companies, see, also, § 417. Reservation by companies with less than $200,000 capital. § 430. No fire or marine 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 : 1. A sum necessary to form, with the subscribed capital 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. Enacted March 21, 1872. 110 Cal. 460. Amounts to be reserved by life insurance companies. [Repealed.] § 431. Amounts to be reserved by life insurance companies. [Repealed March 21, 1905; stats. 1905, p. 571.] See note following § 452. Corporations for insuring titles to real estate. § 432. 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 policyholders, 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 an 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. Enacted March 5, 1887; stats. 1887, p. 23. CHAPTER III. ACCIDENT CORPORATIONS. MUTUAL LIFE, HEALTH, AND INSURANCE (Insurance commissioner: See Pol. C. § 588 et seq.; mutual fire insurance: See "Insurance,” statutes at large, Appendix.) SEC. 437. 438. 439. 440. 441. 442. 443. 444. Capital stock. Guarantee fund. Of what guarantee fund shall consist. What constitutes, and deficiency in fixed capital. Guarantee notes and interest, how disposed of. Insured to be entitled to vote, when. Number of directors may be altered, how. Investment of capital stock, in what securities. [Repealed.] 445. Limitations to the holding of stock and in other particulars may be provided for in by-laws. 446. Premiums, how payable. 447. 448. 449. 450. 451. Insurance corporations to furnish data to insurance commissioner. Employment of actuary. [Repealed.] No stamp required on accident insurance contracts. [Repealed.] Valuation of policies. pealed.] Retaliatory provisions. [Re Policy to contain what provisions. Fraternal societies exempt from insurance laws. [Repealed.] 452. Dividends, how and when made. Capital stock-Guarantee fund. § 437. 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 two 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, nothing in this section shall be deemed to contravene any of the provisions of section four hundred and fifty-one. Amended March 18, 1905; stats. 1905, p. 183. 121 Cal. 320. Of what guarantee fund shall consist. § 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 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 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. Enacted March 21, 1872. What constitutes, and deficiency in fixed capital. § 439. 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. Enacted March 21, 1872. Declaration of fixed capital to be filed. § 440. 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 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. Enacted March 21, 1872. Guarantee notes and interest, how disposed of. § 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 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. Amended March 30, 1874; amendts. 1873-4, p. 210. |