CALIFORNIA INSURANCE LAWS 1912 fi 4 C, COOPER INSURANCE COMMISSIONS!! BANCROFT LIBRARY THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA With the Compliments of Insurance Commissioner INSURANCE LAWS OF THE STATE OF CALIFORNIA Compiled by E. C. COOPER, Insurance Commissioner SAN FRANCISCO 19 12 SACRAMENTO Friend Wm. Richardson - - Superintendent of State Printing 1912 \U3 5 (,1*9*3 BANCROFT LIBRARY PRINCIPAL REQUIREMENTS AS TO INSURANCE COMPANIES OE OTHER STATES AND FOREIGN COUNTRIES DESIRING TO ENTER THE STATE OF CAUEORNIA EOR THE TRANSACTION OE BUSINESS. All capital stock fire, marine and life companies must have an unim- paired paid-up capital of at least $200,000.00. A fire insurance company may transact, in addition to such kind of insurance, marine, sprinkler insurance, team and vehicle and miscel- laneous. Marine insurance companies may transact, in addition to such kind of insurance, only fire insurance and team and vehicle insurance. Each of such companies must have such unimpaired capital stock of at least $200,000.00 for either fire or marine insurance or $400,000.00 for both fire and marine insurance. Should a company desire to do any of the additional classes mentioned, it must have an additional unimpaired capital of $50,000.00 for each class. No company shall do any of said kinds of insurance, unless authorized so to do by their charter. Life companies may transact, in addition to such kind of insurance, only accident and health and liability insurance, and must have an unim- paired capital of $200,000.00 and an additional capital of $50,000.00 for transacting accident and health or liability insurance, and $100,000.00 additional capital for transacting both kinds. All companies other than these, if stock companies, must have a paid-up capital, unimpaired, of at least $100,000.00 for transacting one kind of business and $50,000.00 additional for transacting any other kind of insurance. A capital stock company is insolvent if its paid-in capital is impaired more than twenty-five per cent, although the balance exceeds the re- quired amount above specified. Only that portion of the capital stock can be considered as unimpaired which is free from all liabilities; in- cluding statutory requirements as to reserves, etc. Where policyholders participate in the management of the company (whether it has a capital stock or not) the company must (in lieu of such capital stock) hold in "available cash assets" free from all liabili- ties the amount above specified unless some special provision governs. Companies organized outside of the United States must have on de- posit with some State official charged with the supervision of insurance in that State, and in which State the company must be transacting business, an amount equal to the amount of capital stock or cash assets required. Such deposits must be for the benefit and security of all the policyholders in the United States. 4 INSURANCE LAWS OF CALIFORNIA. Such companies must file both Home Office and United States state- ments. Generally, each company on applying must file the following docu- ments and pay the fees specified : 1. Certified copy of Charter (or Articles of Incorporation), and Certificate as to Organization, Capital and Assets from the Insurance Commissioner of its own State $55 00 2. Appointment of General Agent and Stipulation 5 00 3. Bond in the sum of $20,000.00 5 00 4. Statement as to financial Condition 20 00 5. Application for Certificate of Authority (fee for issuing certificate) 10 00 6. Certificate of Deposit of Securities (required only of companies organized outside of the United States) 5 00 Authorization empowering general agent to sign bond and appoint solicitors and agents may also be filed. The Certificate of Authority expires on July 1st of each year unless sooner revoked. Financial statement must be on the latest convention form, and must be verified by an examination made either by the Department of the State in which the company is organized; or by this Department at the company's expense. Every agent or solicitor must have a license which, unless sooner revoked, expires on July 1st of each year ; the fee for same is $1.00. Taxes. All companies pay a tax of 1^ per cent on premiums, less return premiums, and reinsurance in authorized companies. Retaliatory statute. applies when statutes of other States discriminate in favor of their do- mestic companies and may affect taxes, fees and other matters. Requirements of office of secretary of state. Companies must file with the Secretary of State at Sacramento cer- tified copies of their Articles of Incorporation, the fee for which varies according to the amount of capital stock, and an appointment of agent upon whom service of summons and other legal process may be made ; the fee for filing. which is $5.00. Every corporation transacting business in this State must pay the Secretary of State a license tax which is graded according to the amount of authorized capital stock. This tax is payable on July 1st of each year and delinquent on September 1st. INSURANCE LAWS Of THE STATE OP CALIFORNIA POLITICAL CODE. PART III. TITLE I. CHAPTER III. ARTICLE II. Sec. 368. Insurance commissioner, how appointed. 369. Term of office. Insurance commissioner, how appointed. Sec. 368. The following executive officers are appointed by the governor with the consent of the senate : 2 * # 2. * * * the Insurance Commissioner * * * Enacted March 12, 1872. Term of office. Sec. 369. The officers enumerated in the first subdivision of the last section hold their offices for the term of two years, those in the second subdivision for the term of four years, and those in the third subdivision during the governor's pleasure. Enacted March 12, 1872. PART III. TITLE I. CHAPTER III. ARTICLE XVI. INSURANCE COMMISSIONER. Sec. 588. Eligibility. 589. Salary. 591. Rooms. Expenses. Special fund. 592. Office. 593. Bond. 594. Insurance classified. Capital stock. 594a. Deposits by foreign companies. 595. General duties of commissioner. Withdrawal of companies. 596. Certificates of authority to companies. Insurance in unauthorized com- panies. 596a. Attorney general to examine documents. 597. Examination of companies. 598. Obtaining and furnishing information to policyholders and others. 599. Subpoena. 600. Records. 601. Actuary. 602. Insolvency. 602a. Liability insurance reserve. 603. Revocation for insolvency. 603a. Restoration after revocation for insolvency. 604. Reporting insolvency to attorney general. 604a. Insolvency laws applicable. 605. Fees. 606. Collections and assessments. 607. Charter and similar papers to be filed. 608. Actions not to be transferred to United States court. 609. Approval of company name. 610. Verifying statements. 611. Filing, adjusting and publishing annual statements. 612. Statements by companies, other than life. 613. Statements of life, health and accident companies. 614. Mutual companies. 615. Furnishing statement forms. 6 INSURANCE LAWS OF CALIFORNIA. Sec. 616. Designation of principal agent and stipulation for service of papers. 617. Penalty for failure to file statements. 618. General provisions for deposits. 619. Certificate of deposit. 620. Withdrawal of deposit. 621. Annual examination of securities. 622. Applying foreign discrimination laws. 622a. Tax. 623. Bond of company. 624. Separate bonds. 625. Furnishing information to assessors. 625a. Listing surety companies to county clerks. 626. Complying with Civil Code. 627. Computations and payments on gold basis. 628. Special valuation of policies of life insurance companies. 629. General valuation of policies of life insurance companies. 630. Secret and fraternal societies. 631. Reviewing commissioner's acts. 631a. Publication of notice of withdrawal. 632. Informing district attorneys. 633. Licensing agents and solicitors. 634. Registration of policies of life insurance companies. 634a. Definitions and exceptions. 634&. Demanding and recovering payments other than fees. Eligibility. Sec. 588. No person is eligible to the office of insurance commissioner or deputy who is an officer, agent, or employee of an insurance company. Enacted as section 594, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 141. The first legislation in the State of California providing for a supervisory control of the business of insurance was the Act of March 26, 1868 (Stats. 1868, p. 336). By that act the office of insurance commissioner was created. * * * The act was reenacted in 1872, in sections 594 et seq. of the Political Code. (State Invest- ment and Insurance Co. vs. Superior Court of San Francisco, 101 Cal. 143-4.) The Political Code, from sections 594 to 634, inclusive, deals specifically with insurance corporations, both domestic and foreign, * * * and particularly pro- vides in great detail how foreign insurance corporations must put themselves in position to be served with process in this State. (Harrigan vs. Home Life Insurance Company, 128 Cal. 537.) By an act, approved March 8, 1907, which went into effect immediately (Statutes 1907, p. 141) article 16, chapter 3, part III, title I, of the Political Code, and each and every section thereof, were repealed and a new article 16, covering the same subject of insurance was enacted. (Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413, 416.) Salary. Sec. 589. The annual salary of the insurance commissioner is four thousand dollars and the annual salary of the deputy of the insurance commissioner is two thousand seven hundred dollars. Enacted as sections 628 and 629, March 12, 1872. Amended Stats. 1880, p. 411 ; 1887, p. 12. Repealed and present section enacted, Stats. 1907, p. 141. Rooms, expenses, special fund. Sec. 591. The commissioner may procure suitable rooms for his offices anjl may provide a suitable safe and furniture therefor. He may also provide stationery, fuel, printing and other conveniences and assist- ance and incur traveling and such other expenses as are necessary for the transaction of the business of his office. Out of the funds paid into the state treasury by the insurance commissioner, there shall be set aside and reserved each and every year the sum of thirty thousand dollars as a special fund to be called the insurance commissioner's special fund. All expenditures authorized in this section must be audited by the board of examiners, who must allow the same and direct payment thereof to be made, and the controller shall draw warrants therefor on INSURANCE COMMISSIONER POWERS AND DUTIES. I the state treasury for the payment of the same to the insurance com- missioner out of the said insurance commissioner's special fund. Enacted as section 630, March 12, 1872. Amended, Stats. 1887, p. 12 ; 1906, p. 31. Repealed and present section enacted, Stats. 1907, p. 141. Amended May 1, 1911, Stats. 1911, p. 1247. Office. Sec. 592. The commissioner must keep his office in the city of San Francisco. Enacted as section 631, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 141. Bond. Sec. 593. The commissioner must execute an official bond in the sum of twenty thousand dollars. Enacted as section 632, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 141. Insurance classified. Capital stock. Sec. 594. All insurance business in the State of California is hereby classified in the fifteen kinds as follows: 1. Life insurance business, including endowments and annuities, but not including health or accident or sickness insurance or any casualty insurance as hereinafter provided. 2. Fire insurance but not including any marine insurance, nor any inland navigation insurance, nor any casualty insurance except as herein- after provided. 3. Marine insurance, including ocean and inland risks, transportation and automobiles, but not including any other casualty insurance, except as hereinafter provided. 4. Title insurance, including insuring owners of real or personal property, or others interested therein, against loss by encumbrance, or defective titles, or adverse claim to title, either together with or without examination of title, or furnishing information relative thereto; pro- vided, that any written contract or instrument issued by any person, firm or corporation purporting to show the title to real property or furnish information relative thereto which shall in express terms pur- port to insure or guarantee such title, shall be deemed a policy of title insurance. 5. Fidelity and surety insurance, including the guaranteeing of per- sons holding places of public or private trust and guaranteeing the performance of contracts other than insurance policies and guaranteeing and executing all bonds, undertakings and contracts of suretyship. 6. Accident insurance, and either sickness or health insurance, includ- ing insurance against injury, disablement or death resulting from travel- ing or general accident, and against disablement resulting from sickness, and every insurance appertaining thereto. 7. Plate glass insurance, including all insurance against breakage of glass, whether local or in transit. 8. Liability insurance, including all insurance against loss or damage resulting from accident to or injury, fatal or non-fatal, suffered by an employee or other person for and which the insured is liable. 9. Boiler and machinery insurance, including insurance upon steam boiler, and upon pipes, engines, and machinery connected therewith and 8 INSURANCE LAWS OF CALIFORNIA. operated thereby, against explosion and accident, and against loss or damage to life, person or property, resulting therefrom. 10. Burglary insurance, including insurance against loss by burglary, housebreaking or theft. 11. Credit insurance, including insurance or guaranty either by agree- ment to purchase uncollectible debts or otherwise, to insure against loss or damage from the failure of persons indebted or to become indebted to the insured or to meet existing or contemplated liabilities. 12. Sprinkler insurance, including insurance against loss or damage by water to any goods or premises arising from the breakage or leakage of sprinklers or water pipes. 13. Team and vehicle insurance, including insurance against loss or legal liability for loss because of damage to property caused by the use of teams or vehicles whether by accident or collision or by explosion of any engine or tank or boiler or pipe or tire of any vehicle and also including insurance against theft of the whole or any part of any vehicle ; the term vehicle as here used includes elevators and automobiles and bicycles but does not include ships nor vessels nor boats nor any railroad rolling stock. 14. Miscellaneous insurance, including cyclone, tornado, windstorm and lightning insurance and any and all casualty insurance not included under any of the foregoing thirteen kinds, and which is a proper subject of insurance. No company having a capital stock shall do in California any of said first kind of insurance without having a capital stock of at least two hundred thousand dollars nor shall any such company do in California any other said kinds of insurance except the sixth and eighth ; provided, that any such insurance company desiring to do the kind of insurance embraced within either the sixth or eighth kind must have in addition to such two hundred thousand dollars of capital stock, at least fifty thousand dollars of capital stock and do the kind of insurance embraced within both the sixth and eighth kinds at least the sum of one hundred thousand dollars capital stock in addition to the said two hundred thou- sand dollars of capital stock required to do the first kind of insurance. No company having a capital stock shall do in California any of said second kind of insurance without having a capital stock of at least two hundred thousand dollars nor shall such company do in California any other of such kinds of insurance except the third, twelfth, thirteenth and fourteenth, nor do the third without having in addition to such two hundred thousand dollars capital stock at least two hundred thousand dollars capital stock for such third kind of insurance, nor do any of the twelfth, thirteenth or fourteenth kinds of insurance without having in addition to such two hundred thousand dollars capital stock for the second, nor do any of the twelfth, thirteenth or fourteenth other than automobile insurance without having in addition to such four hundred thousand dollars capital stock for the second and third at least fifty thousand dollars capital stock for each of such twelfth, thirteenth and fourteenth kinds of insurance, but no company shall do any of said kinds of insurance, unless authorized so to do by their charter. No company having a capital stock shall do in California any of said third kind of insurance without having a capital stock of at least two hundred thousand dollars nor shall any such company do in California any other of said kinds of insurance except the second and thirteenth INSURANCE COMMISSIONER POWERS AND DUTIES. 9 nor do the second without having in addition to such two hundred thousand dollars capital stock at least two hundred thousand dollars capital stock for such second kind of insurance nor do any of the thir- teenth other than automobile insurance without having in addition to such two hundred thousand dollars capital stock for the third or in addition to such four hundred thousand dollars capital stock for the second and third at least fifty thousand dollars capital stock for such thirteenth kind of insurance. No company having a capital stock shall do in California any of the fourth or fifth or sixth or seventh or eighth or ninth or tenth or eleventh or twelfth or thirteenth or fourteenth of said kinds of insurance without having a capital stock of at least one hundred thousand dollars nor shall any such company do in California any other of said fourth or fifth or sixth or seventh or eighth or ninth or tenth or eleventh or twelfth or thirteenth or fourteenth kinds of insurance without having in addition to such one hundred thousand dollars capital stock at least fifty thou- sand dollars capital stock for each additional kind of insurance. No company having a capital stock of at least two hundred thousand dollars, and organized to do in California the thirteenth kind of insurance, shall therein do the first or second or third kind of insurance, and must in addition to such capital stock of at least two hundred thousand dollars, have fifty thousand dollars of capital stock for each kind of insurance it may do therein other than the said thirteenth kind. Such capital stock required must be fully paid up before the doing of any such business in the State of California except that companies incorporated under the laws of California must have at least twenty-five per cent of their capital stock paid in previous to the issuance of any policies and the residue within twelve months of the filing of the cer- tificate of incorporation. The capital stock required must be exclusive of all liabilities for losses reported, expenses, taxes and reinsurance of all outstanding risks, as provided in sections 602 and 602a of the Political Code. Every company organized or formed under the laws of any other state or country as a mutual or as a joint stock and mutual company having a capital stock of not more than one hundred thousand dollars must have in lieu of such capital stock available cash assets of at least two hundred thousand dollars above all liabilities for losses reported, expenses, taxes, and reinsurance of all outstanding risks as provided in sections 602 and 602a of the Political Code. Enacted March 8, i907 ; Stats. 1907, p. 141. Amended, Stats. 1909, p. 928. Amended Stats. 1911, p. 1347. See former sections 419 and 420, Civil Code, repealed by act amending above section 594 of the Political Code. That portion of this section classifying insurance business was added to the law in 1907. The section was amended in 1909 to provide for "Team and Vehicle" insurance, and such amending act of 1909 contained the following provision: "Sec. 2. The provisions of this act shall not apply to life or fire insurance associa- tions operating on the assessment plan or on the fraternal plan." See sections 630 and 634a, Political Code; post, also adopted by the act so adding section 594 in 1907. A corporation was attempted to be formed by articles dated May 27, 1874, the purpose of which was "to insure dwellings, barns, etc." The amount of the capital stock named was one hundred thousand dollars, only five thousand dollars of which 10 INSURANCE LAWS OF CALIFORNIA. was actually subscribed. After doing business for several years, the attorney general, on the relation of one Schindler, brought an action in the name of the people against the parties individually, who were alleged to constitute the alleged unlawful corpora- tion, to have them each and all restrained from the usurpation of the rights, privileges, immunities, and franchises of a corporation ; but the alleged corporation was treated as a nullity and was not joined as a party defendant. The trial in the lower court resulted in an injunction forbidding the alleged corporation from doing any further business, or from prosecuting or maintaining any action in its name or for its benefit. On appeal the supreme court declared that though illegally formed, and in fact never properly constituted, it still had a right to be heard as an entity, and was a necessary party defendant in the action ; and further, that it had a right under section 400 of the Civil Code to wind up its business through trustees, collect what was due to it, pay its debts, and divide any surplus among its stockholders. (People ex rel. Schind- ler vs. Flint c* al, 64 Cal. 49.) An association organized to do fidelity and surety business must have a capital stock of at least $100,000.00. A company organized without capital stock, but having in lieu thereof five bonds, either personal or surety, each in the sum of $20,000,000, is not organized in accordance with law and can not legally do, nor obtain a cer- tificate of authority to do, any insurance business in the State of California : Opinion of the Attorney General, February 12, 1910. Deposits by foreign companies. Sec. 594a. No insurance company organized or existing under the laws of any country outside of the United States shall transact any business of insurance in the State of California without first making deposit, and thereafter continuously maintaining such deposit except as hereinafter otherwise specially provided, so long as any such business transacted in this state remains in existence for any purpose whatever, either unmatured or matured but unsettled, and whether in controversy or not. Such deposit must be of securities which the law of California permits for the investment of the assets of such California insurance companies. Such deposits may be with the insurance commissioner or superintendent of insurance, or with the auditor, comptroller or general fiscal officer of any state in the United States in which said foreign company is authorized to do such insurance business, or a like amount held in trust for the purposes herein specified as provided for by the laws of that state. The amount of the deposit must be equal to the minimum amount of the capital stock or available cash assets required by the preceding section and must be maintained exclusive of all liabilities for losses reported, expenses, taxes and reinsurance of all outstanding risks, as provided in sections 602 and 602a of the Political Code. Such deposits, for all purposes of the insurance laws of this state, may be treated as a part of the capital of the company making it. If such deposit is not so maintained in the State of California, its existence in some other state of the United States shall be certified at least annually to the insurance commissioner of the State of California by the superintendent of insurance or commissioner of insurance or auditor, or comptroller, or general fiscal officer of the state in the United States wherein such deposit is so maintained, and also so certified oftener and whenever from time to time required by the insurance commissioner of the State of California, and such certificate shall show in detail of what such deposit consists. None of such securities so deposited shall be estimated above the par value of the same nor above the market value. Such deposits must be for the benefit and security of all the policyholders of the company in the United States. Such securities so deposited with the insurance com- missioner of the State of California shall be by him specially deposited in the state treasury in packages marked with the name of the company INSURANCE COMMISSIONER POWERS AND DUTIES. 11 from whom received, and so long as the company continues solvent it shall be permitted to collect the interest or dividends on the securities so deposited, and from time to time to withdraw such securities on depositing other securities in the stead of those to be withdrawn, such new securities to be of the character and value specified in this section, but none of such securities shall be withdrawn from the state treasury except upon the written order of the company making the deposit, which order must be indorsed by the insurance commissioner of the State of California or else such withdrawal must be had under the authority of some court of competent jurisdiction, which must be obtained if the insurance commissioner for any reason refuses to so endorse said order. Whenever such deposit has been made with the insurance commis- sioner of the State of California as provided in this section, said com- missioner must issue to the company so depositing, a certificate under his official seal stating the items and amount of securities so deposited, and their value, to the best of his knowledge, information and belief, and in case of withdrawal and substitution, he shall issue suitable supple- mental similar certificate. None of the provisions of this section shall affect the present statutes of California, either as to registered policies, or under what is known as the retaliatory law, or otherwise, either as to papers, bonds or other securities. Enacted March 8, 1907, Stats. 1907, p. 143. Amended, Stats. 1909, p. 910. A deposit in another state made by a company organized outside the United States must be for the benefit of policyholders only. A deposit made for the benefit of "policyholders and creditors" will not satisfy the requirements of this section : Opinion of the Attorney General, August 19, 1910. The required amount of deposits need not be in a single state, but may be in two or more states of the United States, and if, in the aggregate, the securities are of the required amount, character and value, they are sufficient: Opinion of the Attorney General, March 31, 1908. General duties of commissioner. Withdrawal of companies. Sec. 595. The insurance commissioner must receive all bonds and securities of persons engaged in the transaction of insurance business in this state, and file and safely keep the same in his office, or deposit them as provided by law. He must examine and inspect the financial condition of every company engaged, or which desires to engage in the business of insurance, and issue a certificate of authority to transact insurance business in this state to any company in a solvent condition which has fully complied with the laws of this state. He must determine the sufficiency and validity of all bonds and other securities required to be given by persons engaged, or to be engaged, in insurance business, and cause the same to be renewed in case of the insufficiency or invalidity thereof; and perform all other duties imposed upon him by the laws regulating the business of insurance in this state, and enforce the execu- tion of such laws. He must make, on or before the first day of August in each year, a report to the governor of the state, containing a tabular statement and synopsis of the reports which have been filed in his" office, showing, generally, the condition of the insurance business and interests in this state, and other matters concerning insurance, and a detailed verified statement, of the moneys and fees of office received by him, and for what purpose; and the printing of said report and all other printing required by the insurance department shall be exempt from the provisions of article twelve, chapter three, title one, part three of the Political Code. 12 INSURANCE LAWS OF CALIFORNIA. Any insurance company may pay the fees and costs therefor and may surrender to the insurance commissioner its certificate of authority previously granted, and apply to withdraw from this state, such appli- cation to be in the form of a written instrument, duly executed, and accompanied with evidence of due authority for such execution, and such written instrument to be properly acknowledged. The commissioner, at the expense of the company, paid by it in advance, must make due publication of such application for withdrawal, daily, for the period of one week, in each of two daily newspapers of general circulation, the one published in the city of San Francisco, and the other in the city of Sacramento. The commissioner must make such examination of the books of such company as may be necessary to ascertain that such company has no liabilities outstanding and not paid to residents of this state and no uncanceled policies in favor of residents of this state and if he finds that such company has no outstanding liabilities to residents of this state and no uncanceled policies in favor of the residents of this state, he shall cancel such certificate of authority. All such examinations must be at the expense of the company, and such expense must be paid in advance. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 8 ; 1877-8, p. 13 j 1907, p. 13. Repealed and present section enacted, Stats. 1907, p. 145. Provisions somewhat similar to that portion of former section 595, authorizing and requiring the insurance commissioner to revoke the certificate of authority of any foreign insurance company doing business in this state, which transfers to the federal court, from any court of this state, any action brought by a citizen of the state arising out of business transacted in this state, have been reenacted in present section 608, post. General duties of commissioner and his authority to revoke certificates construed. (Harrigan vs. Home Life Insurance Company, 128 Cal. 539.) In a proceeding brought by a foreign insurance company to compel the insurance commissioner to issue a license authorizing the company to transact business in this state for the year ending July 1, 1908. where it had caused removal of suits to the federal courts, the appellate court held : It appearing that at the time the act of March 8, 1907, went into effect, the company was doing business in the state and that its license had not been revoked, and there being no saving clause in the repealing act providing for the enforcement of the penalty for past delinquency, a removal of suits to the federal court prior to March 8, 1908, was no authority for withholding license. (Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413.) The power of the insurance commissioner to revoke the certificate of authority under which a foreign company is doing business in the state arises only (1) when such company removes an action to a federal court, and (2) when it becomes insol- vent. He can cancel its bond only when defective in form or substance, or when the sureties are financially insufficient ; and he has no power or discretion to do either merely on the ground that such company is a member of an illegal combination to raise insurance rates, or because it refuses to pay a tax which it claims is illegal. (Liverpool, London & Globe Insurance Company et al. vs. Clunie, 88 Fed. Rep. 160.) The commissioner is required to make distribution of printed copies of his report under section 337, Political Code, which section is as follows : Sec. 337. Of the report of the insurance commissioner, the commissioner must have printed, at the expense of his office, one thousand copies, and must deliver of the same as follows : , To the governor, twenty copies. To the state librarian, ten copies. To the secretary of state, thirty copies. To the sergeant-at-arms of the senate, eighty copies. To the sergeant-at-arms of the assembly, one hundred and sixty copies. And the residue must be distributed by the commissioner in furtherance of the interest of insurance. INSURANCE COMMISSIONER POWERS AND DUTIES. 13 Certificates of authority to companies. Insurance in unauthorized companies. Sec. 596. No company shall transact any insurance business in this state without first complying with all the provisions of the laws of this state, and thereafter procuring from the insurance commissioner a certificate of authority, arid continuing to comply with the laws of this state, provided that insurance may be procured from or placed with companies not authorized to transact business in this state upon the terms and conditions hereinafter stated. Every such certificate of authority shall expire on the first day of the July after its issuance unless sooner revoked. No certificate of authority shall be granted or renewed to any company in arrears to the state or to any county, city and county, city or town in the state for fees, licenses, taxes, assessments, fines Or penalties accrued on business previously transacted in the state, nor while said company is otherwise in default for failure to comply with any of the laws of this state regarding the governmental control of such company by the state. No person shall act as agent in any transaction of any insurance business for any insurance company not authorized to transact such business in this state. A surplus line broker is one licensed by the insurance commissioner to act as broker in soliciting, negotiating, and effecting insurance under conditions hereinafter stated, to be procured from or placed with companies not authorized to transact such business in this state. Within the meaning of this law ' ' authorized companies ' ' are those authorized by the insurance commissioner to transact in the State of California the kinds of insurance business that they are trans- acting. All others are ' ' unauthorized companies. ' ' The insurance commissioner may issue a license authorizing any indi- vidual to act as surplus line broker from its date until the first of July following, on the following conditions : (a) Payment to the insurance commissioner of a fee of twenty-five ($25.00) dollars in advance. (&) Delivery to the insurance commissioner of a bond to the State of California in the sum of five thousand ($5,000) dollars with sureties having the qualifications mentioned in sections 1056 and 1057 of the Code of Civil Procedure, conditioned that said licensee will fully and faithfully comply with the requirements of section 596 of the Political Code. A surplus line broker, after having procured from and placed with authorized companies the total amount of insurance obtainable on any property from a majority of all authorized companies, may place the excess of insurance desired over such amount with unauthorized com- panies. No insurance is to be procured from or placed with unauthorized companies by any one except by a surplus line broker and under such conditions. The following are the duties of a surplus line broker with which he is required to comply : 1. To maintain in good faith an office in this state. 2. To keep in said office books of account correctly showing in separate accounts all business transacted with unauthorized companies. Said books are to specify the dates of such insurance going into effect, the name of the insurers and of the insured, the gross premiums payable therefor, the terms, character of insurance and locations of the insured property. They shall also contain statements in the same detail of all such insurance canceled, or on which premiums have been increased or 14 INSURANCE LAWS OF CALIFORNIA. reduced and the amounts of additional or of return premiums thereon. Such books are to be open at all times for the inspection of, and examina- tion by, the insurance commissioner, or any one appointed by him for said purpose. 3. Within one week after the surplus line broker shall have obtained knowledge of the completion of the procurement of insurance on any property from an unauthorized company, he shall file with the insurance commissioner a true report showing the name of the insured and of the insurers, the character of the insurance, location of the property, gross premium payable therefor, and the date of such insurance taking effect and the term thereof; also a list of authorized companies comprising a majority thereof from whom the insurance so effected was not obtain- able. As soon as practicable after any such insurance has been canceled or any premium thereon has been increased or reduced, such surplus line broker shall file with the insurance commissioner a report thereof in the same detail as above required in the case of the report above referred to. 4. On or before the first day of March of each year he shall file with the insurance commissioner a sworn statement of all business transacted under his license during the last preceding calendar year ending Decem- ber 31st. Such statement shall contain true accounts of the gross amount of insurance procured from and placed with unauthorized companies during said calendar year, the gross premiums charged therefor including additional insurance premiums, and the gross amount of all insurance canceled during said year, and the gross return premiums thereon. Such statements shall also include additional premiums charged during said calendar year on insurance previously effected and the gross return premiums during said calendar year on insurance previously effected. 5. All such reports and statements shall be made on blanks to be fur- nished surplus line brokers by the insurance commissioner on applica- tion therefor. 6. On or before the 1st day of June of each year said surplus line broker shall pay to the insurance commissioner for use of the State of California three (3%) per cent of the gross premiums charged, less three (3%) per cent of all return premiums on policies canceled, or upon which the premiums have been reduced during the year ending December 31st last preceding. The insurance commissioner shall revoke the license of any surplus line broker who wilfully fails or refuses to perform any of his duties hereinabove specified. If in the opinion of the insurance commissioner the solvency of any surety on a bond hereby required has become im- paired or doubtful, he shall notify the surplus line broker in writing, and unless within ten (10) days after receipt of such notice the solvency of such surety is proved to the satisfaction of the insurance commis- sioner, or a new bond is substituted therefor, said insurance commissioner shall revoke the license of the surplus line broker. The removal of the office of the surplus line broker from this state, or the removal therefrom of his accounts of his business as such, or the closing of his said office for a period of more than twenty (20) consecutive days, shall constitute a termination of the authority of said surplus line broker, and shall be tantamount to an express revocation of his license, whether or not the insurance commissioner thereafter revokes the same. No new license shall be issued to any surplus line broker whose license has been revoked INSURANCE COMMISSIONER POWERS AND DUTIES. 15 for any reason other than the insufficiency of his sureties, within the period of one year after such revocation, and until all indebtedness of said surplus line broker on former business has been paid to said insurance commissioner. Every insured for whom insurance has been effected with unauthorized companies shall produce for examination by the insurance commissioner, whenever requested by him, in writing, so to do, all policies, contracts, and other documents evidencing such insur- ance and disclose to him the true amount of the gross premiums paid or agreed to be paid therefor, or upon refusal so to do, he shall forfeit to the State of California, the sum of two hundred ($200) dollars for each refusal. All policies and other contracts of insurance issued without full compliance by all parties concerned with the laws of this state, shall be null and void. Enacted March 12, 1872. Amended, Stats. 1873-4, pp. 9-61 ; 1877-8, p. 13 ; 1880, p. 89. Repealed and reenacted, Stats: 1907, p. 146. Amended, Stats. 1911, p. 1269. A justice's court has jurisdiction of an action to recover a penalty given by statute ; and a penalty of two hundred dollars claimed for issuing a certificate of relief without authority from the insurance commissioner, is such a penalty. (Thomas vs. Justice Court, 80 Cal. 40.) A contract to indemnify in case of loss of a lighter by the hirer of the same is not an insurance contract requiring authority from the insurance commissioner. (Wilmington Trans. Co. vs. O'Neil, 98 Cal. 7.) In a proceeding brought by a foreign insurance company to compel the insurance commissioner to issue a certificate of authority to do business in the state, the court cites this section and holds that the act repealing all of the prior sections of the Political Code, relating to the subject of insurance, contains a saving clause as to all causes of action that had accrued, or that had been commenced, for assessments, penalties and fines under the repealed law, but no saving clause for any other delin- quency, and the insurance commissioner had no authority to withhold license. (Com- mercial Union Assurance Company vs. Wolf, 8 Cal. App. 417.) Attorney general to examine documents. Sec. 596a. Before the insurance commissioner issues any certificate of authority or any other certificate or gives any permission or authority of any kind, based upon any written instrument or document or certified copy thereof, required by the statutes of the State of California, the commissioner shall submit such instrument, document or certified copy to the attorney general of the State of California, who shall examine the same and return it to the commissioner with his certificate or opinion as to whether such instrument, document or certified copy is in accord- ance with the requirements of law, and such certificate or opinion of the attorney general shall govern and control the commissioner, subject only to review by a court of competent jurisdiction, provided that neither the authority to nor bond of an agent or solicitor, nor the annual state- ments as to the condition and affairs need, but may, be so submitted (with the same effect) by the commissioner to the attorney general. Enacted, Stats. 1907 p. 147. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413. Examination of companies. Sec. 597. The commissioner, whenever he deems necessary, or when- ever he is requested by verified petition, signed by twenty-five persons interested, either as stockholders, policyholders, or creditors of any company engaged in insurance business in this state, showing that such company is insolvent under the laws of this state, must make an exami- nation of the business and affairs relating to the insurance business of such company, and must make such an examination whenever any com- pany is organized to do insurance business in this state, and before 16 INSURANCE LAWS OF CALIFORNIA. issuing a certificate of authority other than renewals to such company ; provided, the insurance commissioner shall have no authority to issue and no certificate of authority shall be issued to any insurance company Or corporation hereafter organized or incorporated in this state, whether the same be organized and promoted directly or by means of a holding company or corporation, one of the purposes of which is the organization and promotion of such insurance company or corporation, where such examination shows the expense of organization and promotion to be in excess of fifteen per cent of the total amount actually paid on its capital stock exclusive of surplus. Whenever any company not organized under the laws of this state, applies for a certificate of authority to do business in this state, the insurance commissioner may make or cause to be made by the insurance department of the state where such company is organized, an examina- tion of the business arid affairs relating to the insurance business of such company. The company organized or existing under the laws of any country outside of the United States, shall be deemed to be organized within the meaning of this act in any state wherein such company main- tains the deposits required by the laws of this state. For the purpose of making such examination the insurance commissioner shall have free access to all the books and papers of such company, and must thoroughly inspect and examine all its affairs, and ascertain its condition and ability to fulfill its engagements, and that it has complied with all the provisions of law applicable to its insurance transactions. Every company examined under the provisions of this section must open its books and papers for the inspection of the commissioner, and otherwise facilitate such examination; and the commissioner may administer oaths and examine under oath any person relative to the business of such company ; and if he finds the books to be carelessly or improperly kept or posted he must employ sworn experts to re-write, post, and balance the same at the expense of such company. Such examination must be conducted in the county where such company has its principal office, and must be private, unless the commissioner deems it necessary to publish the result of such investigation in which case he may publish the same in two of the public newspapers of this state, one of which must be published in the city of San Francisco. All examina- tions must be at the expense of the company, such expense to be paid in advance, and if any such company refuses to pay such expenses in advance the insurance commissioner may refuse to issue any such cer- tificate of authority and must revoke any existing certificate of authority authorizing such company to do business. Enacted March 12, 1872. New section enacted, Stats. 1907, p. 147. Amended, Stats. 1911, p. 334. Obtaining and furnishing information to policyholders and others. Sec. 598. Any person interested in, as owner, assignee, pledgee or payee, of any policy of insurance and desiring any information about such policy, may file with the insurance commissioner an affidavit show- ing that he is entitled to the benefits of the provisions of this section and apply to the insurance commissioner for his certificate of the facts or information desired. If the records of his office show the facts or infor- mation desired, the insurance commissioner shall prepare his certificate reciting such facts or information. If his records do not show the facts or information desired the insurance commissioner may deliver an order INSURANCE COMMISSIONER POWERS AND DUTIES. 17 to the agent of the company, designated under section 616 of the Political Code, directing such company to state such information or facts in an affidavit and deliver such affidavit to him. In such affidavit the company must make a full, true and correct statement of all the said facts and information in the possession of said company, whether such information be contained in the books, records, or papers in this state or in any other state or country. If such company neglects or refuses to make and deliver such affidavit to the insurance commissioner within ninety days from the date of the delivery of the said order by the commissioner to the said agent as herein provided, the commissioner must revoke the certificate of authority authorizing the company to do business in this state. Immediately after receiving any affidavit from any insurance company pursuant to the provisions of this section the commissioner must certify such affidavit to the person so applying for the information or facts. Such affidavit so certified by the insurance commissioner shall be delivered to the applicant by delivering it to him personally or by depositing the same in the United States post office and prepaying the postage thereon. If a loss has been sustained under any policy of insurance and such policy has been lost or destroyed all rights of every kind and nature and the time for the presentation of notice of loss and the time for the presentation of proof of loss are stayed from the date such interested person delivers to the commissioner the affidavit herein provided for and until five days after the date of the delivery by the insurance com- missioner to such interested person of any affidavit furnished by any insurance company pursuant to the provisions of this section. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 148. Practically new section substituted for old one. Subpoena. Sec. 599. The commissioner may issue subpoenas for witnesses to attend and testify before him on any subject touching insurance busi- ness, or in aid of his duties, which may be served, obeyed, and enforced as provided in the Code of Civil Procedure for civil cases, and the commissioner may issue attachments and impose the same penalty which a court might impose for disobedience ; and, in addition, the defaulting witness may be punished as provided in the Penal Code. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 149. Records. Sec. 600. The commissioner must keep and preserve in a permanent form a full record of his proceedings, including a concise statement of the condition of each company visited or examined by him. Enacted as Section 603, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 149. Actuary. Sec. 601. The commissioner may employ an actuary to make the valuation of life policies, at a compensation of not exceeding one cent for each thousand dollars of insurance, to be paid by the company for which the valuation is made. Enacted as Section 604, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 149. 2 IN 18 INSURANCE LAWS OF CALIFORNIA. Insolvency. Sec. 602. Whenever provisions for the liabilities of any company engaged in the business of fire, marine, or inland navigation insurance in this state, for losses reported, expenses, taxes and reinsurance of all out- standing risks, estimated at fifty per cent of the premiums received and receivable on all fire risks and marine time risks, at the full premiums received and receivable on all other marine risks, would so far impair its capital paid in as to reduce the same below two hundred thousand dollars, or below seventy-five per cent of said capital paid in, such com- pany is insolvent ; and in case of a company engaged in such insurance in this state, on the mutual plan, if the available cash assets of such com- pany shall not exceed its liabilities, as hereinbefore enumerated, in the full sum of two hundred thousand dollars, such company is insolvent; and wherever provision for the liabilities of any company engaged in the business of insuring any one against loss or damage resulting from accident to or injury suffered by an employee or other person for which the person insured may be liable, for losses reported, expenses, taxes and reinsurance of all outstanding risks estimated as provided in section 602a of the Political Code would so far impair its capital paid in as to reduce the same below one hundred thousand dollars, or below seventy- five per cent of said capital paid in, such company is insolvent; and whenever provision for the liabilities of any company engaged in any kind of insurance business in this state, other than life, liability, and insurance of titles to real estate, provided for in section 594 of the Political Code of this state, for losses reported, expenses, taxes, and reinsurance of all outstanding risks, estimated at such rates as are accepted by the insurance authorities of the State of New York, would so far impair its capital paid in as to reduce the same below one hun- dred thousand dollars, or below seventy-five per cent of said capital stock paid in, such company is insolvent; and in case of a company engaged in such insurance business in this state, on the mutual plan, if its available cash assets shall not exceed its liabilities, as hereinbefore enumerated, in the full sum of one hundred thousand dollars, such company is insolvent. In the case of a company engaged in the business of life insurance, whenever its liabilities for losses reported, expenses, taxes, and reinsurance of all its outstanding risks written prior to January 1st, eighteen hundred and ninety-two, at the rates based upon the American Experience Table of Mortality with interest at the rate of four and one half per cent per annum, and reinsurance of all its out- standing risks written from and after the thirty-first day of December, eighteen hundred and ninety-one, up to and including the thirty-first day of December, nineteen hundred and seven, at rates based upon the Combined Experience or Actuaries' Table of Mortality with interest at the rate of four per cent per annum, and reinsurance of all its outstanding risks written from and after December thirty-first, nineteen hundred and seven, at rates based upon the American Experience Table of Mortality with interest at the rate of three and one half per cent per annum, exceeds its assets, such company is insolvent. In the case of a company engaged in the business of insurance of the title to real estate, whenever provision for its liability for losses reported, expenses, and taxes, would, after exhausting its surplus fund, required by section 432 of the Civil Code or otherwise, so far impair its capital stock paid INSURANCE COMMISSIONER POWERS AND DUTIES. 19 in as to reduce the same below one hundred thousand dollars, Or below seventy-five per cent of said capital paid in, such company is insolvent. The provisions of this act shall not apply to life or fire insurance associations operating on the assessment plan or on the fraternal plan. Enacted March 12, 1872. Amended, Stats. 1873-4, pp. 9 and 62; 1877-8, p. 14; 1887, p. 19; 1905, p. 379. Repealed by act approved March 8, 1907, arid present section, with same number, covering same subject matter with material important changes, enacted, Stats. 1907, p. 149. Amended by act approved April 15, 1909, Stats. 1909, p. 915, and such amending act in 1909 contained the sentence appearing at the end of the section as above given. See comment in connection with section 594, Political Code, ante. See State Investment & Ins. Co. vs. Superior Court, 101 Cal. 135, 144, 145, 149. Liability insurance reserve. Sec: 602a. In estimating the condition of any company engaged in the business of liability insurance under the provisions of this article the insurance commissioner shall charge as liabilities all outstanding indebtedness of such company, and the premium reserve on policies in force, equal to the unearned portions of the gross premiums charged for covering risks, computed on each respective risk from the date of the issuance of the policy. There shall also be charged as a liability to each company engaged in the business of insuring any one against loss or damage resulting from accident to or injury suffered by an employe or other person for which the person insured may be liable, whether a natural person, a firm or a corporation organized under the laws of this or any other state or country, a further reserve as hereinafter provided. For the purpose of computing said reserve, each company which has been engaged in liability underwriting for ten years or more, shall, on or before the first day of October in each year, state in writing to the insur- ance commissioner its experience in the United States, under all forms of liability policies, each year separately according to the calendar years in which the policies were written, during a period of five years com- mencing ten years previous to the thirty-first day of December of the year in which the statement is made, in the following particulars namely : The number of persons reported injured under all of the forms of liability policies, whether such injuries were reported to the home office of the given person or to any of his representatives ; the amount of all payments made on account or in consequence of injuries reported under such policies; the number and amount, separately, of all suits or actions against policyholders under such policies which have been settled, either by payment or compromise; both of the above amounts to be ascertained as of date of the thirty-first day of August of the year in which the statement is made, and to include in the case of suits all payments made on account or in consequence of the injury from which the suit arose, whether prior to or later than the date at which the suit was brought. Each person shall thereupon reserve upon all said kind of policies, irrespective of the date at which the policies were issued, (1) for each suit or action pending, on injuries reported prior to eighteen months previous to the date of making the statement, whether such injuries were reported to the home office of the given company or to any of its repre- sentatives, and which is being defended for or on account of the holder of any such policy, the. average cost thereof as shown by said experience, and (2) for injuries reported under such policies at any time within eighteen months, whether such injuries were reported to the home office 20 INSURANCE LAWS OF CALIFORNIA. of the given person or to any of his representatives, the average cost for each injured person as shown by said experience. From the sum so ascertained the person may deduct (1) the amount of all payments on said pending suits on injuries reported prior to eighteen months, including all payments made on account or in consequence of the injury from which the suit arose, whether prior to or later than the date at which the suit was brought, and (2) the amount of all payments made on account or in consequence of said injuries reported within eighteen months ; both of the above amounts to be taken as of the date at which the statement is made. Any person who now issues, or shall hereafter issue, liability policies as aforesaid, and who shall not be engaged in liability underwriting for ten years, shall nevertheless, until such times as he may be able to state his experience of the period hereinbefore required, make and maintain a reserve upon all said kind of policies, irrespective of the date at which the policies were issued, determined as follows: (1) For each suit or action pending, on injuries reported prior to eighteen months previous to the date of making the statement, whether such injuries were reported to the home office of the given company or to any. of his representatives, and which is being defended for or on account of the holder of any such policy, the average cost thereof as shown by the average of said experience of all other persons stated as required by this section, and (2) for injuries reported under such policies at any time within eighteen months, whether such injuries were reported to the home office of the given person or to any of his repre- sentatives, the average cost for each injured person as shown by the average of said experience of all other companies stated as required by this section ; which average costs for suits and for injured persons shall be furnished by the insurance commissioner to each such company on or before the first day of December, in each year. From the sum so ascer- tained each company may deduct (1) the amount of all payment on said pending suits on injuries reported prior to eighteen months, includ- ing all payments made on account or in consequence of the injury from which the suit arose, whether prior to or later than the date at which the suit was brought, and (2) the amount of all payments made on account or in consequence of said injuries reported within eighteen months ; both of the above amounts to be taken as of the date at which the statement is made. Enacted as section 612a, Stats. 1905, p. 380. Repealed and present section enacted, Stats. 1907, p. 151. Revocation for insolvency. Sec. 603. Whenever the commissioner ascertains that any company engaged in the insurance business is insolvent within the meaning of this chapter, he must revoke the certificate of authority granted, and send by mail to such company, addressed to it at its principal place of business, or deliver to it, a notice of such revocation and cause a copy of such notice together with the proof of service to be filed in his office. Enacted as first part of section 600, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 152. Original Code section 603 is now section 600. See State Investment and Insurance Company vs. Superior Court of San Francisco, 101 Cal. 135, which cites the following, viz. : The insolvency of an insurance company which will authorize the insurance commissioner to revoke his certificate of authority and require the corporation to INSURANCE COMMISSIONER POWERS AND DUTIES. 21 repair its capital is of a merely arbitrary character, defined by the statute. It is not the ordinary commercial insolvency ; and for the purposes of the statute it may be held insolvent, while at the same time it may be actually solvent in a business sense, and justly so regarded by the commercial world. The commissioner may stop, in his discretion, with the delivery of the requisition directing the corporation to repair its capital, before resorting to harsher measures such as revoking his certificate and making publication of the insolvency of the company. (Palache vs. Pacific Insurance Co., 42 Cal. 432-434.) The power of the insurance commissioner to revoke the certificate of authority under which a foreign company is doing business in the state arises only (1) when such company removes an action to a federal court, and (2) when it becomes insol- vent. (Liverpool, London & Globe Insurance Company vs. Clunie, 88 Fed. Rep. 160.) See section 597, Pol. Code, ante. Restoration after revocation for insolvency. Sec. 603a. If any insurance company (whose certificate of authority has been revoked by the insurance commissioner on the ground that such company is insolvent) within ninety days after the receipt of the notice of revocation, shall repair its capital to such an extent that such com- pany is solvent within the provisions of section six hundred and two (602) of the Political Code, then upon such fact being made to appear to the insurance commissioner, he may issue a new certificate of authority in the same manner and to the same effect as an original certificate of authority. Enacted as section 600a in 1907, Stats. 1907, p. 149, and number changed to 603a in 1909, Stats. 1909, p. 913. The act of 1909 provided : "Sec. 3. Nothing herein contained shall affect any rights acquired under said section 600a, but all such rights shall be preserved under the provisions of said section 603a." See old section 600. See note to preceding section. Reporting insolvency to attorney general. Sec. 604. When the insurance commissioner ascertains that any insurance corporation organized under the laws of this state is insolvent he must certify such fact to the attorney general. Upon receipt of such certificate so made by the insurance commissioner, the attorney general must commence an action against such company under the provisions of chapter V, title X, part II of the Code of Civil Procedure. If on the trial of any such action it appears to the court that such company is insolvent, before causing judgment to be entered, the court may direct the corporation and the officers thereof to levy an assessment on the capital stock sufficient to enable the defendant corporation to pay its debts, and in such order shall give full directions as to the manner of levying such assessment and the amount thereof, and such assessment must be levied before judgment is entered. In all other respects the relief awarded against the defendant company shall be the same as provided in said chapter five of the Code of Civil Procedure. Any receiver thereafter appointed to liquidate the affairs of such company, shall have full power to bring such actions as may be necessary for the purpose of recovering the amounts of the assessments levied as herein provided. In any action commenced pursuant to the provisions of this section the court shall have power to authorize the defendant insurance company, or the receiver appointed to liquidate the affairs of such com- pany, to reinsure all or any part of the business theretofore written by such company. Enacted, Stats. 1907, p. 153. Amended, Stats. 1909, p. 916. See note to section 603, ante. 22 INSURANCE LAWS OF CALIFORNIA. Insolvency laws applicable. Sec. 604a. When the insurance commissioner shall have revoked the certificate of authority authorizing any insurance company, not a cor- poration, to do business on the ground that such company is insolvent, any person or persons may commence insolvency proceedings against such company. Such proceedings must be done, had, and taken in all respects as provided bv the then existing insolvency laws of the state. Enacted, Stats. 1907, p. 153. Fees. Sec. 605. The commissioner must require in advance, in United States gold coin, the following fees: (1) For filing papers required under either of subdivisions two or three or four of section 607 of the Political Code, fifty-five dollars; (2) for filing papers required under subdivision five of section 607 of the Political Code, on account of change or changes made at one time, ten dollars; (3) for filing annual statement required to be filed, twenty dollars ; (4) for filing bond under section 623 of the Political Code, five dollars; (5) for filing appointment of agent or stipulation or both appointment and stipulation under sec- tion 616 of the Political Code, five dollars; (6) for filing each certificate of deposit of securities under section 594a of the Political Code, five dollars; (7) for furnishing copies of papers filed in his office, twenty cents per folio; (8) for certifying copies, one dollar each; (9) for each certificate issued, as provided in section 619 of the Political Code, five dollars; (10) for registering each policy as provided by section 634 of the Political Code, one dollar; (11) for issuing each annual certificate of authority authorizing any insurance company to transact business in this state, ten dollars; (12) for issuing each annual license under section 633 of the Political Code, to an agent or solicitor, one dollar; (13) for issuing each annual license under section 633a of the Political Code to an insurance broker, ten dollars; (14) for attaching the seal of office to any paper or document not herein specified, one dollar; (15) for issuing any other certificate, two dollars. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 153. Amended, Stats. 1909, p. 917. Collections and assessments. Sec. 606. If the salary of the commissioner and the expenses of his office exceed the fees and charges collected by him, such excess must be annually assessed by the commissioner upon all persons or corporations engaged in the business of insurance in this state, and they are severally liable therefor, pro rata, according to the amount of premiums received or receivable from risks taken in this state, respectively, during the year ending on the thirty-first day of December next preceding the assess- ment. The commissioner must collect all fees and assessments, and pay monthly into the state treasury whatever amounts may be received and collected by him. If any insurance company neglects or refuses to pay the amount of any such assessments within ten days after demand thereof in writing by the insurance commissioner, the commissioner may revoke the certificate of authority previously granted and commence an action to recover such assessment. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 154. An officer of the state has no authority to loan the moneys of the state, nor to deposit the same as a general deposit in a bank, although such deposit be made by him as an agent of the state, and not upon his individual account. (People vs. Wilson, 117 Cal. 242.) INSUEANCE COMMISSIONER POWERS AND DUTIES. 23 Charter and similar papers to be filed. Sec. 607. The commissioner must cause every company, before engaging in the business of insurance, to file in his office as follows : 1. A certified copy of the last annual statement or a verified finan- cial statement exhibiting the condition and affairs of such company. 2. If incorporated under the laws of this state, a copy of the articles of incorporation and certificate of any increase or diminution of the capital stock, certified by the secretary of state to be a copy of that which is filed in his office. 3. If incorporated under the laws of any other state or country, a copy of the articles of incorporation, if organized or formed under any law requiring articles to be filed, duly certified by the officer having the custody of such articles, or if not so organized, a copy of the law, charter, or deed of settlement under which the deed of organization is made, duly certified by the proper custodian thereof, or proved by affidavit to be a copy ; also, a certificate under the hand and seal of the proper officer of such state or country having supervision of insurance business therein, if any there be, that such corporation or company is organized under the laws of such state or country, with the amount of capital stock or assets required by this article. 4. If not incorporated, a certificate setting forth the nature and character of the business, the location of the principal office, the names of the persons and of those composing the company, firm, or association, the amount of actual capital employed or to be employed therein, and the names of all officers and persons by whom the business is or may be managed. The certificate must be verified by the affidavit of the chief officer, secretary, agent, or manager of the company; and if there are any written articles of agreement or company, a copy thereof must accom- pany such certificates. Enacted March 12, 1872. Amended, Stats. 1887, p. 8. Repealed and new section enacted, Stats. 1907, p. 155. Amended, Stats. 1911, p. 1351. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-19. Actions not to be transferred to United States court. Sec. 608. If any foreign insurance company doing business in this state shall transfer or cause to be transferred to the United States circuit court from any court of this state having jurisdiction of the subject-matter, any action or special proceeding arising or growing out of any business previously transacted in this state, then the insurance commissioner shall have the power and it shall be his duty upon receiv- ing a certified copy of the record showing the facts herinabove set forth to immediately revoke the certificate of authority authorizing such com- pany to transact insurance business in this state. Enacted March 18, 1872. Repealed and present section enacted, Stats. 1907, p. 155. See old section 595. Under this section it is the duty of the insurance commissioner, "upon receiving a certified copy of the record showing the facts hereinabove set forth, to immediately revoke the certificate of authority." Such revocation only deprives the insurance company of the right to transact insurance business in the state until July 1, follow- ing. The license or certificate of authority under the act in every case expires on the first day of July after its issuance, and must be renewed annually. The act of revok- ing can only deprive the company of that which the commissioner had already given by issuing the certificate. {Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-19.) 24 INSURANCE LAWS OF CALIFORNIA. Approval of company name. Sec. 609. The commissioner must require the name under which any company hereafter proposes to be formed or organized under the laws of this state, for the transaction of insurance business, to be submitted to him before the commencement of such business; and he may reject any name or title so submitted when the same is an interference with or too similar to one already appropriated, or likely to mislead the public in any respect ; and in such case a name not liable to such objection must be chosen. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 155. Verifying statements. Sec. 610. The commissioner must require statements and reports to be verified as follows: (1) If it be made by a corporation organized under the laws of this state, by the oaths of any two of the executive officers thereof; (2) If it be made by an individual or firm, by the oath of such individual or member of the firm; (3) if made by a foreign insurance company, or person, by the oath of the principal executive officer thereof, or manager residing within the United States. Enacted March 12, 1872. Amended, Stats. 1873-74, p. 10 ; 1887, p. 9, Repealed and present section enacted, Stats. 1907, p. 155. Filing, adjusting and publishing annual statement. Sec. 611. All insurance companies doing business in this state must make and file with the insurance commissioner, on or before the first day of March of each year, statements, which must exhibit the condition and affairs of every such company, on the thirty-first day of December then next preceding, a synopsis of which statements, as adjusted by the commissioner upon a proper examination of the same, must be published by such company in the city or city and county where the principal office in this state is located, said publication to be daily for the period of one week in some daily newspaper of general circulation or four consecutive times in some weekly newspaper of general circulation. Enacted, March 12, 1872. Amended, Stats. 1873-74, p. 10 : 1877-78, p. 15 ; 1887, p. 9. Repealed and new section enacted, Stats. 1907, p. 155. Amended, Stats. 1911, p. 1274. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-19. Statement by companies, other than life. Sec. 612. Such statement, if made by other than life insurance com- panies, must show : First The amount of the capital stock of the company. Second The property or assets held by the company specifying: 1. The value of real estate held by said company ; 2. The amount of cash on hand and deposited in banks to the credit of the company, specifying the same ; 3. The amount of cash in the hands of agents, and in course of trans- mission ; 4. The amount of loans secured by bonds and mortgages, constituting the first lien on real estate, on which there is less than one year 's interest due or owing ; 5. The amount of loans on which interest has not been paid within one year previous to such statement ; INSURANCE COMMISSIONER POWERS AND DUTIES. 25 6. The amount due the company upon which judgments have been obtained ; 7. The amount of stocks of this state, of the United States, or any incorporated city of this state, and of any other stocks owned by the company, specifying the amount, number of shares, and par and market value of each kind of stocks ; 8. The' amount of stocks held as collateral security for loans, with the amount loaned on each kind of stock, its par value and its market value ; 9. The amount of interest due and unpaid; 10. The amount of all other loans made by the company, specifying the same ; 11. The amount premium notes on hand on which policies are issued; 12. All other property belonging to the company, specifying the same. Third The liabilities of such company, specifying : 1. The amount of losses due and unpaid; 2. The amount of claims for losses resisted by the company ; 3. The amount of losses in process of adjustment or in suspense, including all reported or supposed losses ; 4. The amount of dividends declared, due, and remaining unpaid ; 5. The amount of dividends declared, but not due ; 6. The amount of money borrowed and security given for the payment thereof ; 7. Gross premium (without any deductions) received and receivable upon all unexpired fire risks running one year or less from date of policy, reinsurance thereon at fifty per cent; 8. Gross premiums (without any deductions) received and receivable upon all unexpired fire risks running more than one year from the date of policy, reinsurance thereon pro rata ; 9. Gross premiums (without any deductions) received and receivable upon all unexpired marine and inland navigation risks, except time risks, reinsurance thereon at one hundred per cent ; 10. Gross premiums (without any deductions) received and receivable on marine time risks, reinsurance thereon at fifty per cent ; 11. Amount reclaimable by the insured on perpetual fire insurance policies, being ninety-five per cent of the premiums or deposit received ; 12. Reinsurance fund and all other liabilities, except capital; 13. Unused balances of bills and notes taken in advance for premiums on open marine and inland policies, or otherwise, returnable on settle- ment ; 14. Principal unpaid on scrip or certificates of profits, which have been authorized or ordered to be redeemed ; 15. Amount of all other liabilities of the company, specifying the same. Fourth The income of the company during the preceding year, specifying : 1. The amount of cash premiums received ; 2. The amount of notes received from premiums ; 3. The amount of interest money received, specifying the same ; 4. The amount of income received from all other sources, specifying the same. Fifth The expenditures of the preceding year, specifying : 1. The amount of losses paid ; 2. The amount of dividends paid ; 26 INSURANCE LAWS OF CALIFORNIA. 3. The amount of expenses paid, including commissions and fees to agents and officers of the company ; 4. The amount paid for taxes ; 5. The amount of all other payments and expenditures. Sixth 1. The amount of risks written during the year; 2. The amount of risks expired during the year ; 3. The amount of risks written during the year in the State of Cali- fornia ; 4. The amount of premiums thereon ; Provided, that any foreign fire, marine, or inland insurance company, incorporated or not incorporated, doing business within this state, shall return only the business done in the United States and the assets of the company situated in the United States and held for the protection of the policyholders of the company who are residents of the United States, except that any further returns requested from time to time by the insurance commissioner must be made. Enacted March 12, 1872. Amended, Stats. 1877-78, p. 15 ; 1887, p. 9. Repealed and present section enacted, Stats. 1907, p. 155. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-19. Statements of life, health and accident companies. Sec. 613. Such statement, if made by life, health, and accident com- panies, must show: Capital. First The amount of the capital stock of the company. Assets. Second The property or assets held by the company, specifying: (1) The value of the real estate held by the company; (2) The amount of cash on hand and deposited in banks to the credit of the company, specifying the same; (3) The amount of loans secured by bond and mortgage on real estate, specifying the same; (4) Amount of loans secured by pledge of bonds, stocks, or other marketable securities as collateral, specifying the same; (5) Cash market value of all stocks and bonds owned by the company, specifying the same; (6) Interest due the company and unpaid; (7) Interest accrued, but not due; (8) Premium notes and loans in any form taken in payment of premiums on policies now in force; (9) Gross amount of premiums in process of collection and transmission on policies in force; (10) Gross amount of deferred premiums; (11) All other assets, specifying the same. Liabilities. Third (1) Claims for death losses and matured endowments due and unpaid; (2) Claims for death losses and matured endowments in process of adjustment or adjusted and not due; (3) Claims resisted by the company; (4) Amounts due and unpaid on annuity claims; (5) Trust funds on deposit or net present value of all outstanding policies, com- puted according to the American Experience Table of Mortality, with interest at the rate of four and one half per cent per annum upon all outstanding risks written prior to January 1st, 1892, and according to the Combined Experience or Actuaries ' Table of Mortality with interest at the rate of four per cent per annum upon all outstanding risks written from and after the 31st day of December, 1891, up to and including the 31st day of December, 1907, and according to the American Experience Table of Mortality with interest at the rate of three and one half per cent per annum upon all outstanding risks written from and after INSURANCE COMMISSIONER POWERS AND DUTIES. 27 December 31st, 1907; (6) Additional trust fund on deposit, or net present value of extra and special risks, including those on impaired lives ; (7) Amount of all unpaid dividends of surplus percentage bonuses, and other description of profits to policyholders, and interest thereon; (8) Amount of any other liability to policyholders or annuitants not included above. Income. Fourth (1) Cash received for premiums on new policies during the year; (2) Cash received for renewal of premiums during the year; (3) Cash received for purchase of annuities; (4) Cash received for all other premiums; (5) Cash received for interest on loans, specifying the same; (6) Rents received; (7) Cash received from all other sources, specifying the same; (8) Gross amount of notes taken on account of new premiums; (9) Gross amount of notes taken on account of renewal premiums. Expenditures. Fifth (1) Cash paid for losses ; (2) Cash paid to annuitants ; (3) Cash paid for lapsed, surrendered, and purchased policies; (4) Cash paid for dividends to policyholders; (5) Cash paid for dividends to stock- holders ; (6) Cash paid for reinsurances ; (7) Commission paid to agents ; (8) Salaries and other compensation of officers and employes, except agents and medical examiners; (9) Medical examiners' fees and salaries; (10) Cash paid for taxes; (11) Cash paid for rents; (12) Cash paid for commuting commissions; (13) All other cash payments. Sixth Balance sheet of premium note account. Seventh Balance sheet of all the business of the company. Eighth (1) Total amount of insurance effected during the year on new policies; (2) Total amount of insurance effected during the year in the State of California ; (3) Premiums received during the year on busi- ness done in the State of California. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 157. Mutual companies. Sec. 614. Mutual companies formed, existing, and doing business under an act entitled ' ' An act to provide for the incorporation of mutual insurance companies," passed April twenty-sixth, eighteen hundred and fifty-one, may report their approved stock as capital paid up, and such notes for all purposes must be deemed part of the paid-up capital stock of such corporation. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 159. Furnishing statement forms. Sec. 615. The insurance commissioner must cause to be prepared, and furnish on demand to each of the companies printed forms of the statements herein required; and he may make such changes from time to time in the form of such statements and reports as seems to him best adapted to elicit from the companies a true exhibit of their condition. The same forms must be so furnished on demand to all companies engaged in the same kind of business. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 159. 28 INSURANCE LAWS OF CALIFORNIA. Designation of principal agent and stipulation for service of papers. Sec. 616. The insurance commissioner must require, as a condition precedent to the transaction of insurance business in this state by any foreign insurance company, that such company file in his office a writing designating the name of an agent, and his place of business in this state, on whom any notice provided by law or by any insurance policy, proof of loss, summons, and other process may be served in all actions or other legal proceeding against such company. All notices, proof of loss, sum- mons or other process so served give jurisdiction over the person of such company. The agent so appointed and designated shall be deemed in law a general agent, and must be the principal agent of such company in this state; any such foreign company shall, as a further condition precedent to the transaction of insurance business in this state, and in consideration of the privilege to transact such insurance business in this state, make and file with the insurance commissioner an agreement or stipulation, executed by the proper authorities of such company, in form and substance as follows: The (giving name of company) does hereby stipulate and agree that, in consideration of the permission granted by the State of California to it to transact insurance business in this state, that if at any time said company shall leave this state or cease to transact business in this state or shall be without an agent in said state, on whom any notice, proof of loss, summons, or other legal process may be served, then in any action or proceeding arising out of any business or transactions which occurred in this state, service of any notice pro- vided by law, or insurance policy, proof of loss, summons, or other legal process may be made upon the insurance commissioner, and that such service upon the commissioner shall have the same force and effect as if made upon the company. Whenever such service of notice, proof of loss, summons, or other legal process shall be made upon the insurance commissioner, he must, within ten days thereafter, transmit by mail, postage paid, a copy of such notice, proof of loss, summons, or other legal process to the company, addressed to the manager, president, or secretary thereof at its home or principal office. The sending of such copy by the commissioner shall be a necessary part of the service of the notice, proof of loss, summons, or other legal process. When any notice, summons, or other legal process is served upon the insurance commissioner pursuant to the provisions of this section, the service as to the company shall be deemed complete at the end of sixty (60) days after the date of the delivery of the notice, summons, or other process to the insurance commissioner. When any notice, provided by law or by any insurance policy, is to be served on the agent designated, as in this section provided, such service may be made as provided in chapter V, part II, title XIV of the Code of Civil Procedure. Enacted March 12, 1872. Amended, Stats. 1873-74, p. 63 ; 1877-78, p. 17. Repealed and present section enacted, Stats. 1907, p. 159. A motion to dismiss an appeal upon the ground that the undertaking on appeal was executed by the American Surety Company, a foreign corporation, which had failed to file with the secretary of state a designation of some person residing in this state upon whom service of summons may be made, as required by the act of April 1, 1872 (Stats. 1871-72, p. 826), was denied, because it appeared from the certificate of the insurance commissioner that the company was duly authorized to transact business in this state, section 1056 of the Code of Civil Procedure providing that he should have the same jurisdiction over such companies as he had over others. (Gutzeil vs. Pennie, 95 Cal. 598.) INSURANCE COMMISSIONER POWERS AND DUTIES. 29 To the same effect is the case of Harrigan vs. Home Life Insurance Company, 1^8 Cal 540 " See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-420. A foreign insurance company which, in compliance with the laws of the state appoints an agent therein upon whom service may be made distinctly agrees with the people of the state that summons and other process may be served upon it in all actions or legal proceedings against the company, and that all process so served gives jurisdiction over the person of the company. For all purposes of legal proceedings the company is. therefore, an "inhabitant" of the state. (Shainwald vs. Davids et al., 69 Fed. Rep. 704.) . , . ' . _ A foreign insurance company doing busines in the state, may be served witn process under Code of Civ. Proc, sec. 411, subd. 2, which provides generally for serving foreign corporations, or service may be made under sec. 616 of the Pol. Code, if it has filed with the insurance commissioner the name of its agent upon whom process may be served and an agreement that, should it at any time be without such agent process against it may be served on the commissioner, but substituted service on the commissioner is authorized only when the company is, by resignation, revoca- tion, or otherwise, without the agent specified in the latter section. {Buckingham & Hecht vs. North German Fire Insurance Company of New York, 149 Fed. Rep. 622.) It is apparent from the nature of this section that in so far as the appointment of agent in this state is concerned, the same is subject to revocation or substitution at any time by the company, and that an appointment once made by the company con- tinues until revocation of the same is made irrespective of the number of years such company continues in business. The stipulation by its terms continues during the time such company transacts and after such company ceases to transact insurance business in this state. It is an irrevocable contract entered into with the state and covers both the period during which such company may enjoy a license and all time thereafter. It furthermore covers any period when such company may be without the agent in the state contemplated by the section : Opinion of the Attorney General, June 30, 1908. Penalty for failure to file statements. Sec. 617. The commissioner must collect the sum of one hundred dollars from any company engaged in the business of insurance in this state, for a wilful failure to make and file in his office within the time prescribed by law, any statements or stipulations required by this title, and an additional penalty of two hundred dollars for each and every month or fractional part of a month thereafter, that such company continue to transact the business of insurance until such statements and stipulations are filed. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 65 ; 1877-8, p. 18 ; 1887, p. 11. Repealed and present section enacted, Stats. 1907, p. 160. A company which has written no new business during the preceding year and which has ceased writing business in the state is not subject to the penalty prescribed by section 617 of the Political Code for failing to file its annual statement: Opinion of the Attorney General, June 14, 1909. General provisions for deposits. Sec. 618. Whenever the laws of any state of the United States, or of any country foreign to the United States, require any insurance com- pany organized under the laws of this state, to deposit with some officer of this state securities in trust for, and for the benefit of, the policy- holders of such company, as a prerequisite to transacting insurance business in such other state or foreign country, and whenever under any laws of this state any insurance company is required to deposit with any officer of this state securities in trust for, and for the benefit of policyholders of such company, the insurance commissioner of this state must receive from such company securities in the amount required by the law under which such deposit is made on deposit and in trust for the policyholders of such company. None of such securities so deposited must be estimated above the par value of the same, nor above their market value. The insurance commissioner must, upon the receipt of such securities, forthwith make a special deposit of the same in the state 30 INSURANCE LAWS OP CALIFORNIA. treasury, in packages marked with the name of the company from whom received, where they must remain as security for policyholders in the company to whom they respectively belong ; but so long as the company continues solvent he must permit it to collect the interest or dividends on the securities so deposited, and from time to time to withdraw any such securities on depositing other securities in the stead of those to be withdrawn. Such new securities to be of the same value and character mentioned in this section, but such securities must not be withdrawn from the state treasury unless upon the written order of the company making the deposits, which order must be indorsed by the commissioner, or upon the order and authority of some court of competent jurisdiction. If the deposit is of mortgages, it shall be accompanied by full abstracts of title or policies of title insurance or certificates of title issued by a duly organized title insurance company authorized to transact business under the laws of California, and the fees for examination of title, unless accompanied by such certificates of title or policies of title insurance, and the fees for appraisal of property shall be paid by the company making the deposit. If the deposit is of stocks or bonds, it shall be accompanied by the fees necessary for the appraisal thereof. Enacted March 12, 1872. Amended, Stats. 1877-78, p. 18. Repealed and present section enacted, Stats. 1907, p. 160. Amended, Stats. 1909, p. 909. Certificate of deposit. Sec. 619. Whenever an insurance company has deposited with the commissioner the requisite security, in conformity with the requirements of the preceding section, the commissioner must issue to such company a certificate, under his official seal, of such deposit, for each state or country requiring the same, which said certificate must state the items and amount of securities so deposited, and that they are of the value therein represented. Enacted March 12, 1872. Amended Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. Withdrawal of deposit. Sec. 620. Whenever any insurance company so depositing securities with the commissioner has paid, canceled, or reinsured all its unexpired policies outstanding in the state, satisfactorily to the insurance commis- sioner, and all its liabilities under such policies are extinguished, or assumed by other responsible companies or corporations, then, if on application of such company, duly verified, and from an examination of the books of the company, and of its officers under oath, the insurance commissioner is satisfied that all of its policies are so paid, canceled, extinguished, or reinsured, he must deliver up to the company the securities deposited ; provided, however, that pending such examination the securities requested to be withdrawn may at the discretion of the commissioner be delivered to the depositor upon the condition that the applicant deposit with the commissioner securities of like value; and whenever the laws of any other state or country, by reason of which section 622 of the Political Code of this state is brought into force, shall be repealed and abrogated, then any deposit which shall have been made with the commissioner, under and by reason of said section 622 of the Political Code, must be delivered up to the company making the deposit. Enacted March 12, 1872. Amended Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. INSURANCE COMMISSIONER POWERS AND DUTIES. 31 Annual examination of securities. Sec. 621 The commissioner must make an annual examination of the securities received by him from each insurance company, and if it appear at any time that the securities deposited by any such company amount to less than the sum required for the purposes for which the deposit was made, he must notify the company thereof, and unless the deficiency is made up within thirty days after notice, the commissioner must revoke the certificate of authority previously granted and countermand all the certificates he may have issued to the company under this chapter, and give notice thereof to the officers of the several states to whom the cer- tificate may have been transmitted. Enacted March 12, 1872. Amended, Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. Applying foreign discrimination law. Sec. 622. When by the laws of any other state or country, any taxes, fines, penalties, licenses, fees, deposits of money or of securities, or other obligations or prohibitions, are imposed on insurance companies of this state doing business in such other state or country, or upon their agents therein, in excess of such taxes, fines, penalties, licenses, fees, deposits of securities, or other obligations or prohibitions, imposed upon insurance companies of such other state or country, so long as such laws continue in force, the same obligations and prohibitions of whatsoever kind must be imposed upon insurance companies of such other state or country doing business in this state. And whenever under this section any deposit of security shall be made in this state, such deposit shall be made in bonds of the United States Government, or in those of the State of California, or in interest-bearing bonds of any of the countries or incor- porated cities and towns of the State of California, not in default for interest on such bonds, which said securities must be estimated at not exceeding their par value nor their market value. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 11 ; 1877-8, p. 22 ; 1897, p. 242. Repealed and present section enacted, Stats. 1907, p. 162. When the act of March 3, 1885 (Stats. 1885, p. 15), was passed requiring the payment of certain premiums to counties and cities and counties by fire insurance companies not organized under the laws of California, the conditions on which such foreign corporations could do business were prescribed, and very full provision had been made by the Political Code, sections 622-624, and the legislature had no power to impose the premiums mentioned, as the same do not constitute a condition precedent to their right to do business in this state, but on the contrary, by a special law a tax is created upon these corporations, alone, discriminatory in its nature, and conse- quently unconstitutional. (San Francisco vs. Liverpool, L. & G. Ins. Co., 74 Cal. 113.) See Liverpool, London & Globe Insurance Company et al. vs. Clunie, 88 Fed. Rep. 1G0-176. Tax. Sec. 622a. Every insurance company other than life, not organized or incorporated under the laws of California, and doing business in this state, and every other insurance company other than life, whose charter may be owned, or a majority of whose stock may be controlled, or whose business may be carried on in the interest, or for the benefit of any insurance company or association not organized or incorporated under the laws of California, shall annually pay to the insurance com- missioner, for the state, a tax of two (2) per cent upon the amount of the gross premiums received upon its business done in the state, during the year ending on the preceding thirty-first day of December, less return premiums, reinsurance in companies authorized to do business 32 INSURANCE LAWS OF CALIFORNIA. in this state, and losses actually paid on its business in this state, and every life insurance company not organized or incorporated under the laws of California, which does business or collects premiums or assess- ments in the state, shall annually pay to the insurance commissioner, for the state, a tax of one per cent upon the amount of the gross premiums received upon its business done in this state duing the year ending on the preceding thirty-first day of December. This section shall not be held or construed so as to relieve any company or organization from any tax, fee or other obligation or charge imposed upon it by the provisions of section 622 of this code, and whenever the taxes imposed by the appli- cation of section 622 exceed those imposed by the application of this section the provisions of the former section shall prevail. ' Enacted, Stats. 1903, p. 359. Amended, Stats. 1905, p. 136. Repealed and present section enacted, Stats. 1907, p. 162. See, post, section 3 of act to carry into effect the provisions of section fourteen of article thirteen of the constitution, etc., approved April 1, 1911. The use of the words "its business" found in the statute above cited, undoubtedly comprehends all of the classes of insurance which the corporation is licensed to transact, and in estimating the tax for which each company is liable, I am of the opinion that the tax is to be estimated upon the aggregate of the gross premiums received by the company from all of the branches or classes of insurance that it transacts: Opinion of the Attorney General, September 3, 1908. Bond of company. Sec. 623. The commissioner must require every company, not incor- porated under the laws of this state, now transacting or proposing to transact insurance business by agent or agents in this state, before com- mencing such business to file in his office a bond in favor of the people of the State of California, to be signed by the company, as principal, with two sureties, to be approved by the commissioner, in the penal sum of twenty thousand dollars, the condition of such bonds to be as follows : (1) That the company and its agents will pay all state, county, and municipal property and license taxes, in the manner and at the time prescribed by law; (2) that the company named therein will conform to all the provisions of the revenue and other laws made to govern them ; (3) and that the company will promptly pay all fees, assessments, taxes, penalties, and fines that may be laid upon or against such company. Such bonds may be sued on in the same manner and shall be subject to the same rules governing official bonds. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-16 ; Liver- pool, London & Globe Insurance Company et al. vs. Clunie, 88 Fed. Rep. 160-166-173. The bond must be given "before commencing such business" lives and dies with the term of the license to which it related and upon which it is predicated, and that upon a renewal of the license there must be a renewal of the bond required by section 623 of the Political Code : Opinion of the Attorney General, June 30, 1908. Bond containing proper continuation clause, making such bond applicable alike to the first and all subsequent license periods for which renewals of certificates of authority are issued, is held to cover subsequent license periods without a renewal of such bond. Separate bonds. Sec. 624. Whenever the same company desires to collect premiums of insurance for more than one company, the commissioner must require a separate bond, as provided in the preceding section, for each company so represented by such company. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. San Francisco vs. Liverpool, London & Globe Insurance Company, 74 Cal. 113. See note to section 622, Political Code, ante. INSURANCE COMMISSIONER POWERS AND DUTIES. 33 Furnishing information to assessors. Sec. 625. The commissioner must, before the commencement of each fiscal year as fixed in the revenue laws, furnish the assessor of the county in which the principal office of any company doing business of insurance is situated, all the data concerning premiums collected by and all other necessary information in relation to the business of such com- pany as will assist the assessor in the performance of his duties. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. Listing surety companies to county clerks. Sec. 625a. The insurance commissioner of the State of California must make up and certify to the county clerk of each county of this state a complete list of all corporations engaged in the business of making, guaranteeing or becoming a surety upon bonds or undertakings required or authorized by law, holding certificates of authority to trans- act such business in this state, which list shall set forth : (1) The full corporate name of such corporation; (2) The name of the state, territory or country under whose laws such corporation is organized; (3) The date of the certificate of authority issued to such corporation to transact such a business in this state. From and after the date when the list aforesaid shall have been certi- fied as hereinbefore provided, the said insurance commissioners shall likewise certify to the county clerk of each county of this state, the same facts concerning any other corporation thereafter authorized to transact such business in this state. Whenever the certificate of authority of any such corporation to do business in this state shall for any reason be surrendered, revoked, can- celed, or annulled, or whenever the said certificate of any such corpora- tion has been suspended as provided in section 1056 of the Code of Civil Procedure of this state, or whenever any such corporation whose certifi- cate of authority has been so suspended, again becomes authorized in law to do business in this state under such certificate of authority, the insurance commissioner of this state shall forthwith certify to the county clerk of each county of this state, the name of such corporation, and the date of such surrender, revocation, cancellation, annulment or suspension, or of renewed authority to act under such certificate. Enacted, Stats. 1907, p. 977. Complying with Civil Code. Sec. 626. The commissioner must require from every company, before and after engaging in the business of insurance, a full compliance with all the provisions of title two, part four, division one, of the Civil Code applicable thereto ; and every company neglecting to comply with such requirements is subject to the fines and penalties therein prescribed. Enacted March 12, 1872. Repealed and present action enacted, State. 1907, p. 163. See Civil Code, section 414-450, post. Computations and payments on gold basis. Sec. 627. All statements, estimates, percentages, payments, and cal- culations, required by this chapter to be made, either by the commis- -IN 34 INSURANCE LAWS OF CALIFORNIA. sioner or companies, must be made on the basis of gold coin of the United States. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. Special valuation of policies of life insurance companies. Sec. 628. When the certificate of the insurance commissioner of this state, of the valuation of the policies of a life insurance company, as pro- vided in the next section of this code, issued to any company organized under the laws of this state, shall not be accepted by the insurance authorities of any other state, in lieu of a valuation of the same, by the insurance officer of such other state, then every company organized under the laws of such other state doing business in this state, shall be required to have a separate valuation of its policies made under the authority of the insurance commissioner of this state, as provided in the next section. Enacted, Stats. 1907, p. 163. Formerly section 449, Civil Code. Old section 628, Pol. Code, is now numbered 589. General valuation of policies of life insurance companies. Sec. 629. Every life insurance corporation organized under the laws of this state must, on or before the first day of February of each year, furnish the insurance commissioner the necessary data for determining the valuation of all its policies outstanding on the thirty-first day of December then next preceding. And every life-insurance company organized under the laws of any other state or country, and doing busi- ness in this state, must, upon the written requisition of the commissioner, furnish him, at such time as he may designate, the requisite data for determining the valuation of all its policies then outstanding; such valuations must be based upon the rate of mortality established by the American Experience Life Table, and interest at four and one half per cent per annum on all outstanding risks written prior to January first, eighteen hundred and ninety-two, and such valuations must be based upon the rate of mortality established by the Combined Experience or Actuaries ' Table of Mortality with interest at the rate of four per cent per annum on all outstanding risks written from and after the thirty- first day of December, A. D. one thousand eight hundred and ninety-one, up to and including the thirty-first day of December one thousand nine hundred and seven, and such valuations must be based upon the rate of mortality established by the American Experience Table of Mortality with interest at the rate of three and one half per cent per annum on all outstanding risks written from and after December thirty-first, nine- teen hundred and seven. "When the laws of any other state or territory require of a life insurance company organized under the laws of this state a valuation of its outstanding policies by any standard of valuation different from that named in this section, the insurance commissioner is hereby authorized to make such valuation for use in such other state or territory, and to issue his certificate in accordance therewith. For the purpose of making the valuations, the insurance commissioner is authorized to employ a competent actuary, whose compensation for such valuations shall be one cent for each thousand dollars of insurance, to be paid by the respective companies whose policies are thus valued. Enacted, Stats. 1907, p. 164. Formerly section 447, Civil Code. Old section 629, Pol. Code, is now numbered 589. INSURANCE COMMISSIONER POWERS AND DUTIES. 35 Secret and fraternal societies. Sec. 630. Secret or fraternal societies, lodges, or councils incorpo- rated or organized for the purpose of mutual protection and relief of their members and for the payment of stipulated sums of money to their members or to the beneficiaries of deceased members which conduct their business and secure membership on the lodge system exclusively, having ritualistic work and ceremonies in their societies, lodges, or councils, and all mutual or benefit associations, organized or formed and composed of members of any such society, lodge or council exclusively, are exempt from the provisions of all the insurance laws of this state. Enacted, Stats. 1907, p. 164 takes the place of, although differing in important respects from section 451, Civil Code, repealed at the same time. Old section 630 is now numbered 591. See Perkins vs. Fish, 121 Cal. 319-321 ; Marshall vs. Grand Lodge, A. O. V. W., 133 Cal. 686 ; Lyon vs. United Moderns, 148 Cal. 471. Reviewing commissioner's act. Sec. 631. If at any time the insurance commissioner revokes the cer- tificate of authority theretofore granted to any insurance company, or refuses to grant a certificate of authority to any insurance company, any interested person or company may commence an action against the insurance commissioner for the purpose of reviewing the facts and the law pertinent to the controversy and for the purpose of obtaining the relief refused or for concelling the action of the commissioner. In any such action the court shall have full power to investigate all the facts de novo without regard to the determinations previously made by the commissioner. In the trial of such actions all of the provisions of the Code of Civil Procedure, not inconsistent herewith, shall be applicable. Enacted Stats. 1907, p. 164. Old section 631, Pol. Code, is now numbered 592. Publication of notice of withdrawal. Sec. 631a. Whenever any insurance company shall have withdrawn from business in this state, and whenever for any reason the insurance commissioner shall have revoked or cancelled the certificate of authority authorizing any insurance company to do business in this state, the insurance commissioner shall cause to be published, in each of two daily newspapers, one published in San Francisco and one published in Sacra- mento, a notice of such revocation or of such withdrawal. The expense of such publication shall be paid in advance by the insurance company withdrawing or whose certificate shall have been so revoked. Enacted, Stats. 1907, p. 165. Practically new section added in 1907 ; but see old section 595. Informing district attorneys. Sec. 632. "Whenever the insurance commissioner ascertains that any insurance company, or any of its agents, officers, or employees, or any other person has been guilty of violating any of the penal statutes of this state, the commissioner shall certify such facts to the district attorney of the county in which such offense was committed. Such offenses shall be prosecuted and tried in all respects as provided in the Penal Code. For the purpose of evidence the commissioner shall furnish to the district attorney, without cost to the county, certified copies of any papers or records of the office of the commissioner. Enacted, Stats. 1907, p. 165. Old section 632 is now numbered 593. 36 INSURANCE LAWS OF CALIFORNIA. Licensing agents and solicitors. Sec. 633. No person shall in this state act as the agent or solicitor of any insurance company doing business in this state until he has pro- duced to the commissioner, and filed with him, a duplicate power of attorney from the company, or its authorized agent, authorizing him to act as such agent or solicitor. Upon filing such power, the commissioner shall issue a license to him to act as such agent or solicitor for such com- pany, if such company has received a certificate of authority from such commissioner to do business in this state. Such license shall continue in force until July first after the date thereof, but must be, and shall be, sooner revoked upon application of the company or its authorized agent. Such license may be renewed from time to time, for an additional period of twelve months, on production by the holder to the commissioner of a certificate from the company that such person's authority as such agent or solicitor continues. The commissioner shall keep an alphabetical list of the names of the persons to whom such licenses shall be issued, with the date of the license and renewal, and the name of the company for whom such person is working. Enacted, Stats. 1873-74, p. 66. Amended, Stats. 1880, p. 90; 1893, p. 116. Repealed and present section enacted, Stats. 1907, p. 165. Registration of policies of life insurance companies. Sec. 634. It shall be lawful for any company or corporation transact- ing the business of life insurance in this state to register with the insur- ance commissioner such of its policies as may be agreed upon by the company and the insured; such registration to consist in a written or printed list of such policies filed with the commissioner, showing the name and age of the insured, number and date of the policy, and the kind and amount of insurance in each case. Such list must be filed with the commissioner within thirty days after the issuance of the first regis- tered policy ; and must contain all such policies issued up to the date of filing. After that date the company must, within three days after the first day of each calendar month, file a statement embracing all its regis- tered policies issued since the filing of its last preceding list. Upon filing such lists of policies, from time to time, the company must deposit with the commissioner, as a special deposit for the benefit of such registered policies, securities of the denominations stated in section 421 of the Civil Code as permissible for the investment of the capital and accumulations of insurance companies. Such deposit must be in an amount equal to the full net value of all policies registered up to the time of making the deposit, and must at all times be equal to such net value of all registered policies. Upon receipt of such securities, the commissioner must imme- diately deposit them in the state treasury, in accordance with the provi- sions of section 618 of the Political Code, where they must remain as a special security for the benefit of such registered policies. Such com- pany may at any time withdraw any excess of securities above the net present value hereinbefore specified, upon satisfying said commissioner by written proof that such excess exists, and shall be allowed to receive the interest on all securities deposited, and to exchange such securities by substituting other securities of the character in which, by the laws of and present section enacted, Stats. 1907, p. 166. Enacted, Stats. 1877-8, p. 20. Amended, Stats. 1905, p. 151. Repealed this state, it may invest its funds. See Harrigan vs. Home Life Insurance Company, 128 Cal. 540. OFFICIx\L BONDS SURETIES. 37 Definitions and exceptions. Sec. 634a. The word company as used in this title includes every association, corporation, firm or person transacting or desiring to trans- act any kind of insurance business under the laws of the state of Cali- fornia ; provided, that no part of this act shall be held to apply to any company organized under an act entitled "An act to provide for the organization and management of county fire insurance companies, ' ' ap- proved April first, eighteen hundred and ninety-seven, or to any corpo- ration doing or transacting the business of mutual insurance on the assessment plan as defined in section 453d of the Civil Code of the State of California. The words "capital stock" as referred to in this title shall be deemed to include the capital of any person, firm or association. Enacted, Stats. 1907, p. 166. Demanding and recovering payments other than fees. Sec. 6346. All fines, taxes, assessments, and penalties provided for in this title shall be due and payable on the demand of the insurance com- missioner. If the same are not paid within ten days after such demand is made, then the insurance commissioner shall institute an action in the name of the people of the State of California for the purpose of recover- ing such fines, penalties, and taxes, or either, as the case may be. All such actions shall be subject to all the provisions of the Code of Civil Procedure which may be applicable thereto. Enacted, Stats, 1907, p. 166. PART III. TITLE I. CHAPTER VII. ARTICLE IX. BONDS OF OFFICERS. Sec. 955. Justification of sureties. 956. Sureties for less than the penal sum. Justification of sureties. Sec. 955. The officer whose duty it is to approve official bonds re- quired of state, county, city and county, or township officers, must not accept or approve any such bond unless each of the sureties severally justify before an officer authorized to administer oaths as follows : 2 # # # 2 * * * 3 * =* # 4. A corporation, such as is mentioned in section 1056 of the Code of Civil Procedure of this State, may become and shall be accepted as sole and sufficient surety upon any bond or undertaking authorized or re- quired by the provisions of this code or of any law of this state, subject to the provisions of said section, and those of section 1057 of the same code. Enacted, March 12, 1872. Amended, Stats. 1873-4, p. 72 ; 1889, p. 220. Sureties for less than the penal sum. Sec. 956. When the penal sum of any bond required to be given, amounts to more than one thousand dollars, the sureties may become sev- erally liable for portions of not less than five hundred dollars thereof, making, in the aggregate, at least two sureties for the whole penal sum. And if any such bond becomes forfeited an action may be brought thereon against all or any number of the obligors, and judgment entered 38 INSURANCE LAWS OF CALIFORNIA. against them, either jointly or severally, as they may be liable. The judgment must not be entered against a surety severally bound for a greater sum than that for which he is specially liable by the terms of the bond. Each surety is liable to contribution to his co-sureties *in propor- tion to the amount for which he is liable. Any corporation, such as is mentioned in section 955 of this code, may become one of such sureties, or be accepted as sole and sufficient surety. Enacted, March 12, 1872. Amended, Stats. 1889, p. 220. TITLE VI. CHAPTER I. ARTICLE VIII. PORT WARDENS. Sec. 2507. Sales of wrecks, etc., and merchandise for foreign underwriters. 2508. Notice of sale, how given. 2509. Wardens not to be connected with insurance. Sales of wrecks, etc., and merchandise for foreign underwriters. Sec. 2507. All wrecked or damaged vessels, or materials from the same, and all merchandise sold at public auction for account of under- writers residing abroad, when required by any party having an interest in the same, or for account of whom it may concern, or upon which claims are to be made against underwriters residing abroad, must be sold under the inspection of a warden of the port where such sale is made. And the warden must separate sound goods from those damaged and certify specially the nature, and, as far as can be done, the extent of such damage. No port warden has authority to sell or dispose of any prop- erty that may have been surveyed by him without the consent of the owner or agent of the same ; nor when the settlement of losses has been agreed upon in writing by the parties interested and a copy thereof given to the warden. Enacted March 12, 1872. Notice of sale, how given. Sec. 2508. In case sales are made at auction under the direction of the port warden, he must give at least three days ' notice of the same by publication in some newspaper published in the county where the survey is made, describing the articles to be sold ; and if merchandise, the vessel by which imported ; and if a wrecked or damaged vessel or materials of of the same, the name of the vessel and where from. If no newspaper is published in the place where the sale is made, then a written notice of such sale must be posted up in the vicinity. Enacted March 12, 1872. Wardens not to be connected with insurance. Sec. 2509. No port warden must, either directly or indirectly, have any connection with insurers of this state, or of any other of the states, or of foreign countries, or with the agents or representatives of such in- surers, so far as his duties as port warden are concerned. He must not in any manner be interested, directly or indirectly, in any repairs he may recommend, nor in any vessel, cargo, or portion of cargo he may be required to survey. Enacted March 12, 1872. INSURANCE CORPORATIONS. 39 CIVIL CODE. DIVISION I. PART IV. TITLE I. CHAPTER II. ARTICLE II. ASSESSMENTS OF STOCK. Sec. 831. Directors may levy assessments. 332. Limitation. Directors may levy assessments. Sec. 331. The directors of any corporation formed or existing under the laws of this state, after one fourth of its capital stock has been sub- scribed, may, for the purpose of paying expenses, conducting business, or paying debts, levy and collect assessments upon the subscribed capital stock thereof, in the manner and form, and to the extent provided herein. Enacted March 21, 1872. Amended, Stats. 1873-74, p. 206. Limitation. Sec. 332. No one assessment must exceed ten per cent of the amount of the capital stock named in the articles of incorporation, except in the cases in this section otherwise provided for, as follows : 2 # * # 2* * * * 3. The directors of fire or marine insurance corporations may assess such a percentage of the capital stock as they deem proper. Enacted March 21, 1872. TITLE II. INSURANCE CORPORATIONS. Chapter I. General Provisions. Sees. 414-421. II. Fire, Marine, and Title Insurance Corporations. Sees. 424-432. III. Mutual Life, Health, and Accident Insurance Corporations. Sees. 437-452. IV. Mutual Benefit and Life Associations. Sees. 452a, 453. V. Corporations to Discover Fire and Save Property and Human Life from Destruction Thereby. Sees. 453a-453c. VI. Life, Health, Accident, and Annuity or Endowment Insurance on the Assessment Plan. Sees. 453d-453|). CHAPTER I. GENERAL PROVISIONS. Sec. 414. Subscriptions to capital stock opened, and how collected. 415. Purchase and conveyance of real estate. 416. Policies, how issued and by whom signed. 417. Dividends, of what, and when declared. 418. Directors liable for loss on insurance in certain cases. 421. How capital and accumulations may be invested. Subscriptions to capital stock opened and how collected. Sec. 414. After the secretary of state issues the certificate of incorpo- ration, as provided in article one, chapter one, title one, of this part, the directors named in the articles of incorporation must proceed in the man- ner specified, or in their by-laws, or if none, then in such manner as they may by order adopt, to open books of subscription to the capital stock then unsubscribed, and to secure subscriptions to the full amount of the fixed capital ; to levy assessments and installments thereon, and to collect the same, as in chapter two of title one provided. Enacted March 21, 1872. 40 INSURANCE LAWS OF CALIFORNIA. Purchase and conveyance of real estate. Sec. 415. No insurance corporation may purchase, hold or convey real estate, except as hereinafter set forth, to wit : 1. The building in which it has its principal office and the land upon which it stands. 2. Also, such as may be requisite for its accommodation in the con- venient transaction of its business. 3. Also, such as may be conveyed to it, or to any person for it, by way of mortgage, or in trust or otherwise, to secure or provide for the pay- ment of loans previously contracted or for moneys due. 4. Also, such as may be purchased at sales upon deeds of trust, or judgments obtained or made for such loans or debts. 5. Also, such as may be conveyed to it in satisfaction of debts pre- viously contracted in the course of its dealings. All such real estate, mentioned in subdivisions three, four and five so acquired, which is not requisite for the accommodation of such corpora- tion in the transaction of its business, must be sold and disposed of within five years after such corporation acquired title to the same. Enacted March 21, 1872. Amended, Stats. 1905, p. 21. Policies, how issued and by whom signed. Sec. 416. All policies made by insurance corporations must be sub- scribed by the president or vice-president, or in case of the death, absence, or disability of those officers, by any two of the directors, and countersigned by the secretary of the corporation. All such policies are as binding and obligatory upon the corporation as if executed over the corporate seal. Enacted March 21, 1872. Dividends, of what, and when declared. Sec. 417. The directors of every insurance corporation, at such times as their by-laws provide, must make, declare, and pay to the stockholders dividends of so much of the net profits of the corporate business and interest on capital invested as to them appears advisable ; but the moneys received and notes taken for premium on risks which are undetermined and outstanding at the time of making the dividend must not be treated as profits, nor divided, except as provided in chapter two of this title. Enacted March 21, 1872. Directors liable for loss on insurance in certain cases. Sec. 418. If any insurance corporation is under liabilities for losses to an amount equal to its capital stock, and the president or directors, after knowing the same, make any new or further insurance, the estates of all who make such insurance, or assent thereto, are severally and jointly liable for the amount of any loss which takes place under such insurance. Enacted March 21, 1872. How capital and accumulations may be invested. Sec. 421. Companies organized under the laws of this state for the transaction of business in any kind of insurance may invest their capital and accumulations in the following named securities : 1. In the purchase of, or loans upon interest-bearing bonds of the United States government. INSURANCE CORPORATIONS. 41 2. In the purchase of, or loans upon interest-bearing bonds of any of the states of the United States, not in default for interest on such bonds. 3. In the purchase of, or loans upon interest-bearing bonds of any of the counties and incorporated cities and towns and duly organized school districts of any state or territory of the United States not in default for interest on such bonds. 4. In loans upon unencumbered real property, no loan to exceed sixty per cent of the market value of any piece of real estate to be taken as security. 5. Corporations engaged in the business of insuring titles to real estate may, after the investment of one hundred thousand dollars in the man- ner provided for in subdivisions one, two, three and four of this section invest an amount not exceeding fifty per cent of their subscribed capital stock, in the preparation or purchase of the materials or plant necessary to enable them to engage in such business; and such material or plant shall be deemed an asset valued at the actual cost thereof, in all state- ments and proceedings required by law for the ascertainment and deter- mination of the condition of such corporations. 6. Companies organized for and engaged in the business of fire, life, health, accident and marine insurance, may, after the investment of two hundred thousand dollars, and companies duly formed or organized for the transaction of business in any other kind of insurance may, after the investment of one hundred thousand dollars, in the manner provided in subdivisions one, two, three and four of this section, invest the balance of their capital and any accumulations in the purchase of or loans upon the stock of any corporation (except mining companies) organized and carrying on business under the laws of the state of California which have at the time of investment a market value of not less than their paid-in value, and which are rated as first-class securities, or in interest- bearing bonds of any corporation of any state or territory of the United States not in default of interest ; provided, that a two-thirds vote of all the directors of such corporations shall approve such investment. It shall be the duty of the officers of such corporation to report quarterly during the months of January, April, July and October of each year to the insurance commissioner a list of such investments so made by them, and the insurance commissioner may, if such investments, or any of them, seem injudicious to him, require the sale of the same. But no in- vestment in the securities named in subdivisions one, two, three and six of this section must be made in an amount exceeding the market value of such securities, at the date of such investment. 7. Life insurance companies may loan upon their own policies; pro- vided, that the amount so loaned upon each policy shall not exceed the reserve against said policy at the time said loan is made ; provided, fur- ther, that no policy loans whatever shall ever be used as security which may be deposited with the insurance commissioner under section 634 of the Political Code ; and provided, further, that whenever any such loan in any amount is made on a policy registered with the insurance com- missioner under said section 634 of the Political Code, such registration shall be forthwith canceled. Enacted, Stats. 1905, p. 628. Amended, Stats. 1907, p. 890. Section 427 of the Civil Code, relating to how funds may be invested, was repealed in 1905 and two sections, each 421 of the Civil Code, were enacted in 1905, one approved March 3d and the other approved March 24th. Of these two the former 42 INSURANCE LAWS OF CALIFORNIA. was repealed in 1905 and the latter was amended in 1907 as set forth above and is now the general statute of California relating to investment by insurance companies of California. Section 444 of the Civil Code relating to the investment of capital stock by mutual health, life and accident insurance corporations was repealed in 1907. Fire insurance companies organized outside the State of California are not required, as a condition precedent to conducting business in this state, to exhibit securities named in section 421 of the Civil Code to the extent of a $200,000.00 invest- ment : Opinion of the Attorney General, April 21, 1909. CHAPTER II. FIRE, MARINE AND TITLE INSURANCE CORPORATIONS. Sec. 424. Payment of subscriptions. Capital to be all paid in twelve months. 425. Certificate of capital stock paid up to be filed, and when. 426. Property which may be insured. 428. Limit of one risk. 429. Amounts to be reserved before making dividends. 430. Reservations by companies with less than two hundred thousand dol- lars capital. 432. Corporations for insuring titles to real estate. Payment of subscriptions. Capital to be all paid in twelve months. Sec. 424. The entire capital stock of every fire or marine insurance corporation must be paid up in cash within twelve months from the fil- ing of the articles of incorporation, and no policy of insurance must be issued or risk taken until twenty-five per cent of the whole capital stock is paid up. Enacted March 21, 1872. There is no good reason for holding that a company which has failed to pay up its entire capital stock within the one year period may not thereafter, upon fully paying up its capital stock receive a license, particularly in view of the fact that there is no provision of the law that it shall not, but merely the direction of the law that it must pay up its capital within one year : Opinion of the Attorney General, October 2, The insurance department has no authority to issue a certificate of authority to an insurance company until it has complied with all the laws governing such companies. The insurance department may require such company before issuing a certificate of authority to reduce the amount of its authorized capital to the amount shown by its books to have been fully paid up, and may then issue such certificate. Such company has the right to continue its stock selling until the amount of its capital is fully paid up, unless, before that, on a suit of some stockholder, the state shall have declared forfeited the right of the company to do business : Opinion of the Attorney General, October 2, 1911. Certificate of capital stock paid up to be filed and when. Sec. 425. The president and a majority of the directors must, within thirty days after the payment of the twenty-five per cent of the capital stock, and also within thirty days after the payment of the last install- ment or assessment of the capital stock limited and fixed, prepare, sub- scribe, and swear to a certificate setting forth the amount of the fixed capital and the amount thereof paid up at the times respectively in this section named, and file the same in the office of the county clerk of the county where the principal place of business of the corporation is located, and a duplicate thereof, similarly executed, with the insurance commissioner. Enacted March 21, 1872. Property which may be insured. Sec. 426. Every corporation formed for fire or marine insurance, or both, may make insurance on all insurable interests within the scope of its articles of incorporation, and may cause itself to be reinsured. Enacted March 21, 1872. FIRE, MARINE, AND TITLE INSURANCE. 43 Limit of one risk. Sec. 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. Enacted March 21, 1872. Amended, Stats. 1873-74, p. 210; Stats. 1905, p. 570. Amounts to be reserved before making dividends. Sec. 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 420 of this code, except insurance of the title to real prop- erty, must make any dividend 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. Enacted March 21, 1872. Amended, Stats. 1877-78, p. 81 ; Stats. 1887, p. 23. Reservation by companies with less than two hundred thousand dollars capital. Sec. 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 divi- dend; 4. A sum sufficient to pay all losses reported or in course of settle- ment, and all liabilities for expenses and taxes. Enacted March 21, 1872. Corporations for insuring titles to real estate. Sec. 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 re- maining on hand after retaining unimpaired : 1. The entire subscribed capital stock. 44 INSURANCE LAWS OP CALIFORNIA. 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 settle- ment, which shall be in excess of the surplus fund, and all liabilities for expenses and taxes. Enacted, Stats. 1887, p. 23. CHAPTER III. MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE CORPORATIONS. Sec. 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. 445. Limitations to the holding of stock, and in other particulars, may be provided for in by-laws. 446. Premiums, how payable. 450. Policy to contain what provisions. 452. Dividends, how made. Capital stock. Guarantee fund. Sec. 437. Every corporation formed for the purpose of mutual insur- ance 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 busi- ness 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, with- out effect, nothing in this section shall be deemed to contravene any of the provisions of section 451. Enacted March 21, 1872. Amended, Stats. 1905, p. 183. The so-called Home Benefit Life Association failed to organize in accordance with section 437, and after doing business for many years, an action was brought against the officers for a large sum of money paid in by plaintiff and his assignors, many in number, upon the theory that the association was never legally incorporated, and that the defendants acted without statutory authority. The evidence showed that the business had been honestly administered, that the moneys received had been paid out in accordance with the by-laws which were printed on the back of each certificate received by the plaintiff and his assignors, that there was no fraud, that all made substantially the same mistake in supposing the association to have been properly incorporated, and that under such circumstances the parties were estopped to recover back payments thus voluntarily made. (Perkins vs. Fish et al., 121 Cal. 317.) Of what guarantee fund shall consist. 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 with- out 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 MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE. 45 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 con- tingency 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 pre- miums and other sources, exclusive of capital stock, until the net earn- ings over and above its expenses, losses and liabilities shall have accumu- lated 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. Sec. 439. The sum accumulated, as provided in the preceding sec- tion, 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. Sec. 440. Whenever the fixed capital of the corporation is obtained as hereinbefore provided, the president of the corporation and its act- uary, 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 news- paper published in the county where the principal business of the corpo- ration is situated. Upon the filing of such declaration the guarantee fund is discharged of its obligations, and all notes of the fund remain- ing 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. Sec. 441. Until the guarantee fund is discharged from its obliga- tions, as provided in the preceding section, no note must be withdrawn from the fund unless another note of equal solvency is substituted there- for, 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, 46 INSURANCE LAWS OF CALIFORNIA. 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 con- form to the current rate. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 210. Insured to be entitled to vote, when. 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 elec- tion of directors, and have one vote for each one thousand dollars insured by their policies, respectively. * Enacted March 21, 1872. Number of directors may be altered, how. Sec. 443. The number of directors specified in the articles of incor- poration 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 five. Enacted March 21, 1872. Limitations to the holding of stock and in other particulars, may be provided for in by-laws. 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 provi- sions 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. Enacted March 21, 1872. Premiums, how payable. Sec. 446. All premiums must be payable wholly in cash, or one half or a greater proportion in cash, and the 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 participa- tion therein, as may be provided by the by-laws and agreed between the parties. Enacted March 21, 1872. Policy to contain what provisions. Sec. 450. Every contract or policy of life insurance hereinafter made by any person or corporation, with and upon the life of a resident of this state, and delivered within this state, shall provide, in event of default of any premium payment after three full annual premiums shall have been paid on such policy, that without any action on the part of the in- sured, the net value of such policy based upon the reserve basis used in computing the premiums and values thereunder (the policy to specify the mortality table and rate of interest so adopted) which net value shall be at least equal to its entire net reserve at the date of default, including that of dividend additions, if any, based upon a standard not lower than the American Experience Tables of Mortality with interest at three and one half per cent yearly, less a surrender charge of not more than two and one half per cent of the face amount of the policy and of any exist- MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE. 47 ing dividend additions thereto and less any indebtedness to the company on or secured by the policy, shall be applied as a single premium to the purchase of one of the following stipulated forms of insurance : First Paid-up non-participating term insurance in the amount of the face of the policy, plus dividend additions, if any, for such a period as the net value outlined above will purchase at the net single premium, at the attained age of the insured at the time of the lapse, based upon the reserve basis described in the policy ; provided, however, that under en- dowment contracts the term shall not extend beyond the endowment period named in the original contract, and the excess value, if any, shall be applied as a net single premium to purchase in the same manner paid-up pure endowment insurance, payable at the end of the endow- ment period named in the contract if the insured be then living ; or, Second Paid-up non-participating term insurance in the amount of the face of the policy, plus dividend additions, if any, and less any out- standing indebtedness, for such a period as the net value outlined above will purchase at the net single premium, at the attained age of the insured, based upon the reserve basis described in the policy ; provided, however, that under endowment contracts the term shall not extend be- yond the endowment period named in the original contract, and the excess value, if any, shall be applied as a net single premium to purchase in the same manner paid-up pure endowment insurance, payable at the end of the endowment period named in the contract if the insured be then living ; or, Third Paid-up non-participating insurance payable at the time and on the conditions named in the policy for such an amount as the net value outlined above will purchase at the net single premium, at the attained age of the insured, based upon the reserve basis described in the policy ; provided, however, that the policy may be surrendered to the company, at its home office, upon due application by the legal owner thereof, within one month after date of premium default, for a specified cash value which shall be at least equal to the sum which would be other- wise available for the purchase of the automatic form of insurance pro- vided therein ; and provided further, that the company may defer pay- ment of such cash value for not more than six months after application therefor is made. No agreement between the company and the policy- holder or applicant for insurance contrary to the foregoing shall be held to waive any of the provisions provided above. Any life insurance policy issued upon the life of a resident of this state, and delivered within this state, which does not contain an automatic non-forfeiture value in conformity with the foregoing shall be construed as granting non- participating term insurance, as provided in paragraph first of this section, and such a benefit shall be read into the contract. The provi- sions of this section shall not apply to annuities, industrial policies or to term contracts issued for periods of twenty years or less. Sec. 2. All acts and parts of acts in conflict with this act are hereby repealed. Enacted, Stats. 1873-4, p. 271. Amended, Stats. 1877-8, p. 82 ; 1880, p. 91 ; 1911, p. 1272. A policy of insurance was issued of the character known as the ordinary life divi- dend insurance policy. After the premiums had been paid for several years, a default occurred and the policy was surrendered to the company for a cash consideration. Within eighteen months after the surrender the party, upon whose life the insurance 48 INSURANCE LAWS OP CALIFORNIA. was brought, died, and an action was brought against the company based upon its alleged fraud and deceit in procuring the surrender of the policy. It was contended that the stipulation mentioned in section 450, to the effect that after payment of three full annual premiums a policy should cease to become void solely by reason of non-payment, etc., should be read into and considered a part of the policy, as if it had been actually inserted therein. The court was of the opinion, however, that this contention was not tenable, because in providing severe penalties for the omission to insert the stipulation mentioned the legislature recognized the fact that it might be left out of any policy in which event the violation of the section was a matter between the company and the state, which could not affect the terms of the policy. (Straube vs. Pacific M. L. Ins. Co., 123 Cal. 677.) This construction of the section was affirmed in Rife vs. Union Central Life Co^ 129 Cal. 455. See Nielsen vs. Provident Savings Life Ins. Society of N. Y., 139 Cal. 332, con- struing New York statute, similar in many respects to section 450 of our Civil Code. Dividends, how made. Sec. 452. No corporation formed under the laws of this state, and transacting life insurance business, must make any dividends, except from profits remaining on hand after retaining unimpaired : (1) The entire capital stock; (2) A sum sufficient to pay all losses reported or in course of settle- ment, and all liabilities for expenses and taxes \ (3) A sum sufficient to reinsure all outstanding policies, as ascer- tained 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. Enacted, Stats. 1877-8, p. 83. Eepealed, Stats. 1880, p. 72. Added, Stats. 1905, p. 571. CHAPTER IV. MUTUAL BENEFIT AND LIFE ASSOCIATIONS. Sec. 452a. Formation of the association. 453. Levying of assessments. By-laws which may be made. Formation of the association. Sec. 452a. Associations of not exceeding one thousand persons may be formed for the purpose of paying to the nominee of any member a sum, upon the death of the member, not exceeding three dollars for each member of the association. Such association may be formed by filing articles of incorporation in the office of the clerk of the county in which the principal place of business is situated and a certified copy of such articles of incorporation, duly certified by the county clerk, in the office of the secretary of state. Such articles must state the names of the cor- poration, its general purposes, its principal place of business, its term of existence, not exceeding fifty years, the names and residences of the directors selected or appointed to serve for the first year, and must be signed and verified as required by sections 292 and 594. Enacted, Stats. 1905, p. 411. Levying of assessments. By-laws which may be made. Sec. 453. Each association provided for in this chapter may, on the death of a member, levy an assessment on the surviving members of not exceeding three dollars for each member, and collect and pay the same to the nominee of such decedent, and may also provide for the payment of such annual payments by members as may be deemed just, but no member must be subject to any annual assessment in excess of that estab- lished when he joined the association. The association may make such by-laws not inconsistent with the laws of the state as may be necessary CORPORATIONS TO SAVE PROPERTY AND HUMAN LIFE. 49 for its government and the transaction of its business ; may, by its name, sue and be sued ; loan such funds as it may have on hand ; and own suffi- cient real estate for its business purposes and such as it may be neces- sary to purchase on foreclosure of its mortgages. Enacted, Stats. 1905, p. 411. The statute of 1873-4, page 745, as amended by the statutes of 1880, page 250, and 1901, page 6, relating to Mutual Benefit Associations, is codified in the above sections of the Civil Code (452a, 453). CHAPTER V. CORPORATIONS TO DISCOVER FIRE AND SAVE PROPERTY AND HUMAN LIFE FROM DESTRUCTION THEREBY. Sec. 453a. Powers of the corporation. 4536. Right of way of corporation and its officers when running to fires. 453c. Yearly meeting of corporation, notice to be given thereof, and pro- ceedings which may be authorized thereat. Powers of the corporation. Sec. 453a. Any corporation of underwriters heretofore organized and now existing, or which may be hereafter organized under the laws of this state, for the purpose of discovering and preventing fires and of saving property and human life from conflagration, and doing business within any municipal corporation of this state, has power, at its own proper cost and expense, to maintain a corps of men, with proper officers, equipped with the necessary machinery and apparatus therefor, whose duty it is, so far as practicable, to discover and prevent fires and save property and human life from conflagration ; and for the effective dis- charge of such duties, authority is hereby granted such corps to enter any building on fire, or in which property is on fire, or which such corps or any officer thereof deems to be immediately exposed to any existing fire, or in danger of taking fire from a burning building, and to remove or otherwise save and protect from conflagration or damage by water any property, during and immediately after such fire. Nothing in this chapter must be so construed as in any degree to lessen, impair, or inter- fere with the powers, privileges, duties or authority of the regular fire department of such municipality ; nor can any act of such corps justify any owner of any building or property in abandoning such building or property. Enacted, Stats. 1905, p. 571. Right of way of corporations and its officers when running to fires. Sec. 453&. Such corporation, with its officers and corps, when run- ning to a fire with its horses, vehicles, and salvage apparatus, has the same right of way as is or may be bestowed by any ordinance of the municipality or law of this state upon the regular fire department of the municipality wherein such corporation is acting ; but the rights of such fire department must always be paramount to the rights of such corpora- tion. All ordinances now existing or which may hereafter be passed by the municipal authorities of any city and county, or of any incorporated city or town wherein such a corporation may carry on business, and all laws of this state applicable to such city and county, or city or town, for the conviction or punishment of any person or persons wilfully or care- lessly obstructing the progress of the apparatus of the fire department of such city and county, or city or town, while going to a fire, or of any person or persons wilfully or carelessly injuring any animal or property -IN 50 . INSURANCE LAWS OF CALIFORNIA. of said fire department, are equally applicable to any person or persons wilfully or carelessly obstructing the progress of the apparatus of such corporation while going to a fire, and to any person or persons who wilfully or carelessly injures any animal or property of such corpo- ration; and said laws and ordinances, and their penalties, may be enforced in the same courts and in the same manner, and with equal force and effect, as in the case of the fire department. Enacted, Stats. 1905, p. 572. Yearly meeting of corporation, notice to be given thereof, and proceedings which may be authorized thereat. Sec. 453c. In the month of July, in every year, there must be held a meeting of all corporations created for the purposes specified in this chapter, of which ten days' previous notice must be inserted in at least one daily newspaper published in the municipality where said corpora- tion is organized or established, at which meeting each insurance com- pany, corporation, association, underwriter, agent, person, or persons doing a fire insurance business in said municipality, whether members of said corporation or not, shall have a right to be represented, and shall be entitled to one vote. A majority of the whole number so represented has power to decide upon the question of sustaining the fire patrol organized by corporations heretofore created, or that may be hereafter created, and fixing the maximum amount of expenses which may be incurred there- for during the fiscal year next to ensue, which amount must in no case exceed two per centum of the aggregate premiums returned as received, as provided in this section, and the whole of such amount, or so much thereof as may be necessary, may be assessed upon all insurance com- panies, corporations, associations, underwriters, agents, person, or per- sons who assume risks and accept premiums for fire insurance in said municipality, as hereinbefore mentioned, in proportion to the several amounts of premiums returned, as received by each, as hereinafter pro- vided, and such assessment is collectible by and in the name of said corporation, in any court of law in the State of California having juris- diction, in such manner and at such time or times as said corporation may determine. In order to provide for the payment of persons employed by said corporation, and to maintain suitable rooms, and apparatus for sav- ing life and property contemplated, said corporation is empowered to require a statement to be furnished, semi-annually, by all insurance com- panies, corporations, associations, underwriters, agents or persons of the aggregate amount of premiums received for insuring property in the municipality where said corporation is organized or established, for and during the six months next preceding the first day of July and the first day of January of each year, which statement must be sworn to by the president or secretary of the corporation or association, or by the agent or person so acting or effecting such insurance in said municipality, and must be handed to the secretary of said corporation heretofore created or hereafter to be created under the provisions of this chapter within ten days after the first day of July and the first day of January of each year. Said secretary must, within the ten days aforesaid, by written or printed demand signed by him, require from every insurance company, corpora- tion, association, underwriter, agent, or person engaged in the business of fire insurance in the municipality where said corporation is organized or established, the statement hereinbefore provided for. Such demand LIFE, HEALTH, ACCIDENT, AND ANNUITY INSURANCE. 51 may be delivered personally at the office of such insurance company, corporation, association, underwriter, agent, or person within said municipality, and every officer of such insurance company, corporation, association, and every such underwriter, agent or person, who, for fifteen days after said demand, neglects to render the statement herein provided for, forfeits fifty dollars for the use of said corporation, and also forfeits for its use twenty-five dollars in addition for every day he so neglects after the expiration of the said fifteen days, and such additional penalty may be computed and collected up to the time of the trial of any action brought for the recovery thereof. The penalty herein provided for may be sued for and collected, with costs, in any court of law within the State of California having jurisdiction, by and in the name of said cor- poration. Enacted, Stats. 1905, p. 572. The statute of 1875-6, page 689, concerning the powers of underwriters, as amended by the statute of 1897, page 223, is codified in the foregoing sections of the Civil Code (453a, 6, c). CHAPTER VI. LIFE, HEALTH, ACCIDENT, AND ANNUITY OR ENDOWMENT INSURANCE ON THE ASSESSMENT PLAN. Sec. 453d. Contracts which may be made by, defined. 453e. Formation of corporations ; issuing of contracts ; investments. 453/. Preexisting corporations, right of to reincorporate. 453tf. Contracts of insurance, contents and effects of. 453ft. Reserve and emergency fund. 453*. Foreign corporations, conditions precedent to doing business in this state. 453;. Limitations upon right to issue contracts of insurance. 453fc. Exemptions from attachment and execution. 453J. Statements to be filed with the insurance commissioner; proceedings to be taken by him thereon. 453m. Lapsing of policies when forbidden. 453n. Fees and penalties. 453o. Insurance commissioner to present bills for certain expenses. 453p. Exemption of fraternal societies from this chapter. Contracts. which may be made by, defined. Sec. 453d Every contract whereby a benefit may accrue to a party or parties therein named upon the death or physical disability of a person insured thereunder, or for the payment of any sums of money dependent 'in any degree upon the collection of assessments or dues from persons holding similar contracts, is deemed a contract of mutual insurance upon the assessment plan. Such contracts must show that the liabilities of the insured thereunder are not limited to fixed premiums. Enacted, Stats. 1905, p. 418. Upon the insolvency of a benefit life association organized upon the assessment plan, the reserve fund of five thousand dollars required by the act of 1891, to be held and deposited in trust for the contract-holders of the corporation, is designed as an emergency fund, to be used only in case of the insolvency of the corporation, and can not be used to pay the benefits due from the corporation while solvent, nor is it subject to any liens in favor of policyholders, nor to executions for any debts of the corporation. It must be distributed pro rata among the beneficiaries for whose benefit the policies were issued ; and neither the members of the association per capita nor its general creditors can share in the distribution. (San Francisco Savings Union vs. Long, 123 Cal. 109.) The term "contract-holders" has been defined to mean holders of contracts of life insurance, and does not include general creditors, or holders of "debenture con- tracts," who have loaned money to the company, and who have no interest in the trust fund until all holders of insurance have been paid therefrom. All contract- holders are entitled to share ratably in the trust funds and are all necessary parties to a distribution, which can not be had except upon a bill in equity in the nature of 52 INSURANCE LAWS OF CALIFORNIA. a creditors' bill, upon the hearing of which with all parties interested before it, the court may make distribution and appoint a receiver to carry distribution into effect. (Engwicht vs. Pacific States, etc. Co., 153 Cal. 183.) Formation of corporations; issuing contracts; investments. Sec. 453e. Corporations may be formed to carry on the business of mutual insurance upon the assessment plan, and are subject only to the provisions of this chapter. No such corporation must issue contracts of insurance until at least two hundred persons have applied, in writing, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of five thousand dollars. This sum must be invested in bonds or securities, approved by the insurance commissioner of this state, or deposited in some bank in this state where it will earn interest. Said bonds or securities, or evidences of such deposit, must be placed, through the insurance commissioner of this state, with the state treasurer, and the principal sum must be held in trust for the contract- holders of such corporation, with the right in the corporation to exchange said bonds, securities, or evidence of bank deposit for others of like value. Such corporation must also, as a condition precedent to issuing any contracts of insurance, obtain the written certificate of the insurance commissioner that it has complied with the requirements of this chapter ; and that the name of the corporation is not the same as that of any other corporation of this or other states, as indicated by the insur- ance department reports in his office ; nor must the commissioner approve any name or title so closely resembling another as to mislead the public. No corporation formed hereunder has legal existence after one year from the date of its articles, unless its organization has been completed and business commenced ; nor must any corporation or individual solicit, or cause to be solicited, any business, until such corporation has com- plied with the provisions of section 633 of the Political Code. Nothing contained in this chapter shall be construed to exempt any corporation from the provisions of sections 296 and 299 of this code. Enacted, Stats. 1905, p. 418. See note to section 453d, ante. Before one of these corporations can be declared insolvent, it has a right to be heard before the insurance commissioner, and the superior court at the suit of a creditor or stockholder has no right to appoint a receiver. A complete remedy by proceeding instituted by the attorney general, after exam- ination by the commissioner, is provided by section 10 of the act of 1891. There is no other method provided in the act by which the authority of the corporation to do business can be revoked. (Murray vs. Superior Court, 129 Cal. 628.) See section 4531, post. The act evidently contemplates that there must be such confidence in the proposed scheme that at least two hundred persons can be found who will apply for member- ship or insurance and pay in the prescribed amount of money not that any one or two promoters can evade that provision by themselves putting up some sort of security. (Stevens vs. Reeves, 138 Cal. 683.) To recover upon a certificate of membership which entitled the holder to a benefit of ten thousand dollars, payable in five equal installments or endowments, five coupons being attached to the certificate for two thousand dollars each, to mature at different periods of time, on the falling due of the first coupon, after demand, the holder brought suit against the corporation and joined the treasurer of the State of California as a defendant, as the holder of securities under the act upon which the holder claimed a lien. The court gave judgment for plaintiff, and on appeal the supreme court affirmed the judgment, holding the treasurer to be a proper party defendant. (Kruger vs. Life and Annuity Association et al., 106 Cal. 99.) Preexisting corporations, right of to reincorporate. Sec. 453/. Any existing corporation engaged in the business of life, health, accident, or endowment insurance on the assessment plan may re- LIFE, HEALTH, ACCIDENT, AND ANNUITY INSURANCE. 53 incorporate under the provisions of this code and chapter, but it is not obliged to do so, and may, without such reincorporation, exercise the rights, powers and privileges conferred by this chapter. Enacted, Stats. 1905, p. 419. Where a so-called corporation had for many years been carrying on the business of insurance on the mutual benefit plan, the members assenting to the by-laws on joining, although not properly incorporated, nor complying with the provisions of the act of March, 1891, payments voluntarily made by the members, can not in the absence of fraud, be recovered from the officers. (Perkins vs. Fish, 121 Cal. 317.) Contracts of insurance, contents and effect of. Sec. 453<7. Every contract of insurance issued by such corporation must specify the sum or sums to be paid upon the happening of the con- tingency insured against, and when such payments must be made. Un- less the contract is invalidated by fraud or by breach of its conditions, the corporation is obligated to pay the beneficiary the amount or amounts specified in its contract at the time or times therein named, and such indebtedness is a lien upon all the property of such corporation, with priority over all indebtedness thereafter incurred, except as here- inafter provided in case of insolvency. Failure to make such payment, within thirty days after notice, at the home office, by mail, as provided by law, of a final judgment, unless waiver is made by the beneficiary, constitutes a forfeiture of the right to do business. Enacted, Stats. 1905, p. 419. Reserve and emergency fund. Sec. 453/i. Every domestic corporation, organized to do or doing business of insurance on the assessment plan, must accumulate a reserve or emergency fund, which must, at all times, be not less than the largest benefit contracted to be paid by it to any one person. Every corporation organized under the provisions of this chapter must accumulate such fund within a year from the date of its certificate of incorporation. Such fund, to the extent of the largest amount contracted to be paid by any such corporation to any one person, must be invested and deposited, as provided in section 453e, with the right in the corporation to exchange any such securities for others of equal value. The deposit required by section 453e constitutes a part of the reserve required by this section, at the option of such corporation. When any such corporation discon- tinues business, this fund must be returned to such corporation, or dis- posed of as may be determined by the superior court of the county in which is its principal place of business. Enacted, Stats. 1905, p. 419. San Francisco Savings Union vs. Long, 123 Cal. 107, 118. See note to section 453d, ante. Foreign corporations, conditions precedent to doing business in this state. Sec. 543i Corporations organized under the laws of any other state or country to transact the business of mutual assessment insurance must, as a condition precedent to transacting business in this state, comply with the provisions of sections 405 and 408 of this code, and deposit with the insurance commissioner of this state a certified copy of its charter or other instrument required by its home authorities; a statement under oath, of its president or secretary, of its business for the preceding year, in such form as may be required by the insurance commissioner of this state; an appointment of a general agent, service upon whom binds the corporation ; a certificate that for the next preced- 54 INSURANCE LAWS OP CALIFORNIA. ing twelve months it has paid in full the maximum amount named in its contract of insurance ; a certificate from the proper officer of its state or government that like corporations of this state are legally entitled to do business in such state or country ; copies of its contracts of insurance and applications, which must show that the liabilities of its members are not limited to fixed premiums; and evidence, satisfactory to the insur- ance commissioner, that the corporation has accumulated a fund equal to that required of like corporations in this state, constituting a reserve or surplus fund, held in trust for the benefit of its contract-holders, and so invested and held as required by the laws of the state or government under which such corporation was organized. The insurance commis- sioner must thereupon issue a license to such corporation to do business in this state. This license must be renewed annually, and may be revoked whenever it is ascertained that the statements required to be made by this section are not true. Upon such revocation, notice thereof must be given by the insurance commissioner by publication in some newspaper published in the city and county of San Francisco, for two weeks, daily, and no new contracts must be made by such company in this state. When any other state or country imposes any additional license, fees, taxes or penalties upon any corporation organized or doing business under this chapter, like license, fees, taxes or penalties are imposed upon corpora- tions of the same kind and their agents of such state or country doing business in this state. Enacted, Stats. 1905, p. 419. Limitations upon right to issue contracts of insurance. Sec. 453i. No corporation doing business under this chapter, except accident or casualty corporations, must issue a contract of insurance upon the life of any person under fifteen nor over sixty-one years of age. Every such contract of insurance must be founded upon written applica- tion therefor, and, except where the application is for health, accident or casulty insurance only, or for one hundred dollars life insurance or less, such application must be accompanied by the report of a reputable physician, containing a detailed statement of his examination of the applicant, showing the applicant to be in good health, and recommend- ing the issuance of a contract of insurance. Any solicitor, agent, em- ployee, examining physician, or other person, making a false or fraudu- lent statement to any corporation doing business under this chapter, with reference to any application for insurance, or for the purpose of obtaining any money or benefit from such corporation, is guilty of a mis- demeanor ; and any person who makes a false statement of any material fact or thing in a sworn statement as to the death or disability of a con- tract-holder, in any such corporation for the purpose of procuring or aiding the beneficiary or beneficiaries or contract-holder in procuring the payment of a benefit named in the contract, is guilty of perjury. Enacted, Stats. 1905, p. 420. Exemptions from attachment and execution. Sec. 453A-. The money, benefit, annuity, endowment, charity, relief, or aid to be paid as provided by the contracts issued by any corporation doing business under this chapter, is not liable to attachment or other process, nor to be seized, taken, appropriated or applied by any legal or LIFE, HEALTH, ACCIDENT, AND ANNUITY INSURANCE. 55 equitable process, nor by operation of law, to pay any debts or liability of the contract-holder or any beneficiary named thereunder. Enacted, Stats. 1905, p. 421. Statements to be filed with the insurance commissioner; proceedings to be taken by him thereon. Sec. 453Z. Every corporation, whether domestic or foreign, doing the business of effecting insurance on the assessment plan must, an- nually, on or before the first day of February, file with the insurance commissioner, in such form as he may prescribe, a statement of its affairs for the year ending on the preceding thirty-first day of December. The insurance commissioner, in person or by duly authorized deputy, has the power of examination into the affairs of any domestic corporation doing business or claiming to do business under this chapter, at any time, in his discretion, and must make such examination at least once a year. If he, after an examination of the affairs of a corporation, finds that it is not doing its business in conformity to this chapter, or that it is doing a fraudulent or unlawful business, or that it is not carrying out its terms of contract, or that it can not, within three months from the date of notice of default, pay its obligations, he must cite the president, secre- tary, manager or general agent of the corporation, or all of them, to appear before him, stating the time and place, to show cause why the authority of the corporation to do business should not be revoked, and if cause is not shown, then he must report the facts to the attorney gen- eral of the state, who must commence proceedings in the proper court to restrain the corporation from doing any further business. Enacted, Stats. 1905, p. 421. Murray vs. Superior Court, 129 Cal. 628, 633. See note to section 453e, ante. Lapsing of policies when forbidden. Sec. 453m. No policy or certificate issued by any corporation or association doing business under the provisions of this chapter lapses for the non-payment of any assessments, dues or premiums, unless the cor- poration or association has first mailed to the insured under such policy or certificate, at his or her last given post office address, a notice setting forth the amount to be paid, and the time the same is due and payable ; and such notice must be mailed at least fifteen days before the assess- ment is due ; provided, that such corporations doing business under this chapter as collect specific amounts at specific dates, as contained in the contract, are not compelled to send such notices ; and an affidavit made by the officer, bookkeeper or clerk of any such corporation having charge of the mailing of notices, setting forth the facts as they appear on the records in the office of the said corporation, showing that such notice was mailed and the date of mailing, is conclusive evidence of the mailing of such notice. Enacted, Stats. 1905, p. 421. Fees and penalties. Sec. 453m. The fees for filing statements, certificates, or other docu- ments required by this chapter, or for any service or act of the insurance commissioner, and the penalties for any violation of this chapter, must, except as otherwise provided herein, be the same as provided in the laws 56 INSURANCE LAWS OF CALIFORNIA. of this state relating to life insurance companies, and must be disposed of as provided by such laws. Enacted, Stats' 1905, p. 422. Insurance commissioner to present bills for certain expenses. Sec. 453o. For all lawful expenses under this chapter, or by reason of any of its provisions, in the prosecution of any suit or proceeding, or otherwise, for the enforcement of the provisions of this chapter, the insurance commissioner must present bills, duly certified by him, and accompanied with vouchers, to the state board of examiners, who may allow the same, and direct payment thereof to be made; and the state controller must draw warrants therefor on the state treasurer for the payment of the same to the insurance commissioner, out of the general fund, in addition to the ordinary contingent expense. Enacted, Stats. 1905, p. 422. Exemption of fraternal societies from this chapter. Sec. 453p. The provisions of this chapter do not apply to secret or fraternal societies, lodges or councils, which conduct their business and secure membership on the lodge system exclusively, having ritualistic work and ceremonies in their societies, lodges or councils, nor to any mutual or benefit association organized or formed and composed of mem- bers of any such society, lodge or council exclusively. Enacted, Stats. 1905, p. 422. The foregoing sections of the Civil Code (453d, e, f, g, h, i, j, Jc, I, m, n, o, p) are a codification of the statutes of 1891, page 126, relating to life, health, accident and annuity endowment insurance on the assessment plan. DIVISION III. PART IV. TITLE XI. INSURANCE. Chapter I. Insurance in General. Articles I-XII. Sees. 2527-2649. II. Marine Insurance. Articles I-IX. Sees. 2655-2746. III. Fire Insurance. Sees. 2752-2757. IV. Life and Health Insurance. Sees. 2762-2766. CHAPTER I. INSURANCE IN GENERAL. Article I. Definition of Insurance. Sec. 2527. II. What may be Insured. Sees. 2531-2534. III. Parties to the Contract. Sees. 2538-2542. IV. Insurable Interest. Sees. 2546-2558. V. Concealment and Representations. Sees. 2561-2583. VI. The Policy. Sees. 2586-2599. VII. Warranties. Sees. 2603-2612. VIII. Premium. Sees. 2616-2622. IX. Loss. Sees. 2626-2629. X. Notice of Loss. Sees. 2633-2637. XI. Double Insurance. Sees. 2641-2642. XII. Reinsurance. Sees. 2646-2649. ARTICLE I. DEFINITION OF INSURANCE. See. 2527. Insurance, what. Insurance, what. Sec. 2527. Insurance is a contract whereby one undertakes to indem- nify another against loss, damage, or liability, arising from an unknown or contingent event. Enacted March 21, 1872. INSURANCE IN GENERAL. 57 The general rule is that a policy, if delivered, takes effect from its date, unless it be otherwise stated, or unless there is evidence of a contrary intent. If the premium be paid and the policy be not delivered till afterward, the policy takes effect by rela- tion as of its date, even though a loss intervenes. ( Union Ins. Co. vs. American F. I. Co., 107 Gal. 329.) To the same effect is Crawford vs. Transatlantic, etc., Co-, 125 Cal. 609. A beneficiary certificate of a fraternal association, being a contract of insurance, can not be impaired in its obligation by either party without the assent of the other, and an enactment by the association passed subsequent to the issuance of such a cer- tificate, reducing the amount payable on outstanding certificates, is not a regulation for the government of the association, but an attempt to repudiate its obligation under its contract. (Bornstein vs. District Grand Lodge No. 4, 2 Cal. App. 624, 629.) ARTICLE II. WHAT MAY BE INSURED. Sec. 2531. What events may be insured against. 2532. Insurance of lottery or lottery prize unauthorized. 2533. Usual kinds of insurance. 2534. All subject to this chapter. What events may be insured against. Sec. 2531. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against, subject to the provisions of this chapter. Enacted March 21, 1872. See note to section 2527, ante. Insurance of lottery or lottery prize unauthorized. Sec. 2532. The preceding section does not authorize an insurance for or against the drawing of any lottery, or for or against any chance or ticket in a lottery drawing a prize. Enacted March 21, 1872. Usual kinds of insurance. Sec. 2533. The most usual kinds of insurance are : (1) Marine insurance ; (2) Fire insurance ; (3) Life insurance ; (4) Health insurance ; and, (5) Accident insurance. Enacted March 21, 1872. All subject to this chapter. Sec. 2534. All kinds of insurance are subject to the provisions of this chapter. Enacted March 21, 1872. ARTICLE III. PARTIES TO THE CONTRACT. Sec. 2538. Designation of parties. 2539. Who may insure. 2541. Assignment to mortgagee of policy on thing insured. 2542. New contract between insurer and assignee. Designation of parties. Sec. 2538. The person who undertakes to indemnify another by a contract of insurance is called the insurer, and the person indemnified is called the insured. Enacted March 21, 1872. 58 INSURANCE LAWS OF CALIFORNIA. Who may insure. Sec. 2539. Any one capable of making a contract may be an insurer, subject to the restrictions imposed by special statutes upon foreign cor- porations, non-residents and others. Enacted March 21, 1872. Who may be insured. Sec. 2540. Any one except a public enemy may be insured. Enacted March 21, 1872. Assignment to mortgagee of policy on thing insured. Sec. 2541. Unless the policy otherwise provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mort- gagor, who does not cease to be a party to the original contract, and any act of his, prior to the loss, which would otherwise avoid the insurance, will have the same effect, although the property is in the hands of the mortgagee, but any act, which, under the contract of insurance, is to be performed by the mortgagor, may be performed by the mortgagee therein named, with the same effect as if it had been performed by the mortgagor. Enacted March 21, 1872. Where a mortgagee had assigned to him a policy of insurance, as further security for the mortage debt, and afterwards on foreclosure proceedings became the pur- chaser of the land and premises on which the mortgage was made for the full amount of his judgment and costs, it was decided that when the entire indebtedness was thus discharged his interest in the policy was extinguished. (Reynolds vs. London, etc., Ins. Co., 128 Cal. 16.) Where mortgagor made fire insurance policy payable to his mortgagee, as her interest may appear, and policy contained provision that commencement of fore- closure proceedings on property covered would render policy void, it was held that the filing of a complaint in foreclosure did not defeat right to recover on policy. Dis- senting opinion, however, states that the holding of the majority to the effect that mortgagee is not prejudiced by failure of insured to fulfill the conditions of his contract, seems to nullify the express provisions of section 2541, Civil Code. (Sharp vs. Scottish Union, etc., Co., 136 Cal. 542, 547. ) Section 2541 of the Civil Code gives the rule governing the effect of the creation of an interest in a mortgagee or creditor where the policy runs to the mortgagor or debtor, and does not apply to policies which themselves provide to what extent its conditions shall apply to such interest, when created. In an action to recover on a fire insurance policy by a creditor whose debt was secured by a deed of trust of the property insured executed after the issuance of the policy without the consent of the company, by virtue of the mortgage clause in the body of the policy (being the mortgage clause in the form of policy known as the "New York Standard Form"), the interest of the mortgagee was free from all conditions expressed in the body of the policy not expressly made applicable at the time of creation of such interest. (Welch vs. British American, etc., Co., 148 Cal. 223, 227.) New contract between insurer and assignee. Sec. 2542. If an insurer assents to the transfer of an insurance from a mortgagor to a mortgagee, and, at the time of his assent, imposes fur- ther obligations on the assignee, making a new contract with him, the acts of the mortgagor can not affect his rights. Enacted March 21, 1872. INSURANCE IN GENERAL. 59 ARTICLE IV. INSURABLE INTEREST. Sec. 2546. Insurable interest, what. 2547. In what may consist. 2548. Interest of carrier or depositary. 2549. Mere expectancies. 2550. Measure of interest in property. 2551. Insurance without interest, illegal. 2552. When interest must exist. 2553. Effect of transfer. 2554- Transfer after loss. 2555. Exception in the case of several subjects in one policy. 2556. In case of the death of the insured. 2557. In case of transfer between co-tenants. 2558. Policy, when void. Insurable interest, what. Sec. 2546. Every interest in property, or any relation thereto, or liability in respect thereof, of such a nature that a contemplated peril might directly damnify the insured, is an insurable interest. Enacted March 21, 1872. Where an applicant for fire insurance in the sum of eight hundred dollars had paid the consideration for the insured property but had taken title in the name of another as security for a loan of five hundred dollars, and asked for insurance in the name of the creditor, loss, if any, to be paid to applicant as his interest might appear, and policy was issued with full knowledge of the facts, applicant and owner of legal title had each an insurable interest in the property, and policy was construed as intended to insure interests of both. (Loring vs. Dutchess Ins. Co., 1 Cal. App. 186, 188.) In what may consist. Sec. 2547. An insurable interest in property may consist in ; (1) An existing interest; (2) An inchoate interest founded on an existing interest; or (3) An expectancy, coupled with an existing interest in that out of which the expectancy arises. Enacted March 21, 1872. Interest of carrier or depositary. Sec. 2548. A carrier or depositary of any kind has an insurable interest in a thin^ held by him as such, to the extent of its value. Enacted March 21, 1872. Mere expectancies. Sec. 2549. A mere contingent or expectant interest in anything, not founded on an actual right to the thing, nor upon any valid contract for it, is not insurable. Enacted March 21, 1872. Measure of interest in property. Sec. 2550. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof. Enacted March 21, 1872. Insurance without interest, illegal. Sec. 2551. The sole object of insurance is the indemnity of the in- sured, and if he has no insurable interest the contract is void. Enacted March 21, 1872. 60 INSURANCE LAWS OF CALIFORNIA. When interest must exist. Sec. 2552. An interest insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the mean time. Enacted March 21, 1872. Effect of transfer. Sec. 2553. Except in the cases specified in the next four sections, and in the cases of life, accident, and health insurance, a change of interest in any part of a thing insured, unaccompanied by a correspond- ing change of interest in the insurance, suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person. Enacted March 21, 1872. Transfer after loss. Sec. 2554. A change of interest in a thing insured, after the occur- rence of an injury which results in a loss, does not affect the right of the insured to indemnity for the loss. Enacted March 21, 1872. Exception in the case of several subjects in one policy. Sec. 2555. A change of interest in one or more of several distinct things, separately insured by one policy, does not avoid the insurance as to the others. Enacted March 21, 1872. In case of the death of the insured. Sec. 2556. A change of interest, by will or succession, on the death of the insured, does not avoid an insurance ; and his interest in the insur- ance passes to the person taking his interest in the thing insured. Enacted March 21, 1872. In case of transfer between co-tenants. Sec. 2557. A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance, even though it has been agreed that the insur- ance shall cease upon an alienation of the thing insured. Enacted March 21, 1872. Policy, when void. Sec. 2558. Every stipulation in a policy of insurance for the pay- ment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy executed by way of gaming or wagering, is void. Enacted, Stats. 1873-4, p. 255. ARTICLE V. CONCEALMENT AND REPRESENTATIONS. Sec. 2561. Concealment, what. 2562. Effect of concealment. 2563. What must be disclosed. 2564. Matters which need not be communicated without inquiry. 2565. Test of materiality. 2566. Matters which each is bound to know. 2567. Waiver of communication. 2568. Interest of insured. INSURANCE IN GENERAL. 61 Sec. 2569. Fraudulent warranty. 2570. Matters of opinion. 2571. Representation, what. 2572. When made. 2573. How interpreted. 2574. Representation as to future. 2575. How may affect policy. 2576. When may be withdrawn. 2577. Time intended by representation. 2578. Representing information. 2579. Falsity. 2580. Effect of falsity. 2581. Materiality. 2582. Application of provisions of this article. 2583. Right to rescind. Concealment, what. Sec. 2561. A neglect to communicate that which a party knows, and ought to communicate, is called a concealment. Enacted March 21, 1872. The owner of a cargo of wheat which was shipped on a barge, and which was overdue, received information that a barge had been lost that morning, and imme- diately effected an insurance on the cargo, without communicating his knowledge of the supposed loss to the insurer. The court decided the same to be a fraudulent concealment. {Hart vs. British F. M. Co., 80 Cal. 440.) Effect of concealment. Sec. 2562. A concealment, whether intentional or unintentional, en- titles the injured party to rescind a contract of insurance. Enacted March 21, 1872. See note to section 2561, ante. What must be disclosed. Sec. 2563. Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are or which he believes to be material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty. Enacted March 21, 1872. See note to section 2561, ante. Matters which need not be communicated without inquiry. Sec. 2564. Neither party to a contract of insurance is bound to com- municate information of the matters following, except in answer to the inquiries of the other : 1. Those which the other knows ; 2. Those which, in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant ; 3. Those of which the other waives communication; 4. Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material ; and, 5. Those which relate to a risk excepted from the policy, and which are not otherwise material. Enacted March 21, 1872. It is a general rule that when a stipulation or exception to a policy of insurance emanating from the insurer is capable of two meanings, the one to be adopted is that which is most favorable to the insured. (Bayley vs. Employers' L. A. Corp., 125 Cal. 345.) Test of materiality. Sec. 2565. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the 62 INSURANCE LAWS OF CALIFORNIA. party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. Enacted March 21, 1872. Matters which each is bound to know. Sec. 2566. Each party to a contract of insurance is bound to know all the general causes which are open to his inquiry, equally with that of the other, and which may affect either the political or material perils contemplated ; and all general usages of trade. Enacted March 21, 1872. Waiver of communication. Sec. 2567. The right to information of material facts may be waived, either by the terms of insurance or by neglect to make inquiries as to such facts, where they are distinctly implied in other facts of which information is communicated. Enacted March 21, 1872. Interest of insured. Sec. 2568. Information of the nature or amount of the interest of one insured need not be communicated unless in answer to an inquiry, except as prescribed by section 2587. Enacted March 21, 1872. Fraudulent warranty. Sec. 2569. An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind. Enacted March 21, 1872. Matters of opinion. Sec. 2570. Neither party to a contract of insurance is bound to com- municate, even upon inquiry, information of his own judgment upon the matters in question. Enacted March 21, 1872. Representation, what. Sec. 2571. A representation may be oral or written. Enacted March 21, 1872. Where a fire insurance policy referred to a survey of the insured property and made it a part of the policy, the fact that the survey was not made at or before the execution of the policy may have deprived it of the quality of an express warranty, but it still operated as evidence of representations made as inducement for the issu- ance of the policy, and as such was proper matter to go to the jury. (Rankin vs. Amazon Ins. Co., 25 Pac. Rep. 260, 261; 89 Cal. 203 on rehearing.) When made. Sec. 2572. A representation may be made at the same time with issu- ing the policy, or before it. Enacted March 21, 1872. See note to section 2571, ante. How interpreted. Sec. 2573. The language of a representation is to be interpreted by the same rules as the language of contracts in general. Enacted March 21, 1872. ' See note to section 2571, ante. INSURANCE IN GENERAL. 63 Representation as to future. Sec. 2574. A representation as to the future is to be deemed a prom- ise, unless it appears that it was merely a statement of belief or expec- tation. Enacted March 21, 1872. See note to section 2571, ante. How may affect policy. Sec. 2575. A representation can not be allowed to qualify an express provision in a contract of insurance; but it may qualify an implied warranty. Enacted March 21, 1872. See note to section 2571, ante. When may be withdrawn. Sec. 2576. A representation may be altered or withdrawn before the insurance is effected, but not afterwards. Enacted March 21, 1872. Time intended by representation. Sec. 2577. The completion of the contract of insurance is the time to which a representation must be presumed to refer. Enacted March 21, 1872. See note to section 2571, ante. Representing information. Sec. 2578. When a person insured has no personal knowledge of a fact, he may nevertheless repeat information which he has upon the subject, and which he believes to be true, with the explanation that he does so on the information of others, or he may submit the information, in its whole extent, to the insurer ; and in neither case is he responsible for its truth, unless it proceeds from an agent of the insured, whose duty it is to give the intelligence. Falsity. Sec. 2579. A representation is to be deemed false when the facts fail to correspond with its assertions or stipulations. Effect of falsity. Sec. 2580. If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time when the representation becomes false. An insured is not entitled to sue for a cancellation of his policy and to recover a ratable proportion of the premium paid, without a provision in the policy to that effect. Section 2610, 2617 and 2619 construed. (Joshua Hendy M. Works vs. Insur- ance Co., 86 Cal. 248.) The fact that a survey of insured premises was not delivered until after the deliv- ery of the policy to the insured, where it was referred to in the policy and made a part thereof in express terms, did not justify the court in excluding it as evidence. Sections 2583 and 2605 also considered. Where the policy provided that a watchman was to be employed about the premises day and night and the person employed did not watch the premises at night but slept in a building about three hundred yards from the premises, the warranty was not kept. (Rankin vs. Amazon Ins. Co., 89 Cal. 203.) Materiality. Sec. 2581. The materiality of a representation is determined by the same rule as the materiality of a concealment. Enacted March 21. 1872. 64 INSURANCE LAWS OF CALIFORNIA. Application of provisions of this article. Sec. 2582. The provisions of this article apply as well to a modifica- tion of a contract of insurance as to its original formation. Enacted March 21, 1872. Right to rescind. Sec. 2583. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right may be exercised at any time previous to the commencement of an action on the contract. Enacted, Stats. 1873-4, p. 255. Rankin vs. Amazon Ins. Co., 25 Pac. Rep., 260, 261 ; 89 Cal. 203, on rehearing. See note to section 2580, ante. ARTICLE VI. THE POLICY. Sec. 2586. Policy, what 2587. What must be specified in a policy. 2588. Whose interest is covered. 2589. Insurance by agent or trustee. 2590. Insurance by part-owner. 2591. General terms. 2592. Successive owners. 2593. Transfer of the thing insured. 2594. Open and valued policies. 2595. Open policy, what. 2596. Valued policy, what. 2597. Running policy, what. 2598. Effect of receipt. 2599. Agreement not to transfer. Policy, what. Sec. 2586. The written instrument, in which a contract of insurance is set forth, is called a policy of insurance. Enacted March 21, 1872. What must be specified in a policy. Sec. 2587. A policy of insurance must specif y : 1. The parties between whom the contract is made ; 2. The rate of premium ; 3. The property or life insured ; 4. The interest of the insured in property insured, if he is not the absolute owner thereof ; 5. The risks insured against ; and, 6. The period during which the insurance is to continue. Enacted March 21, 1872. Where a contract for the hiring of a lighter provided for the payment of $3,500, after loss, it was held to be a contract of bailment merely and not insurance within the meaning of sections 2587 and 2596. {Wilmington Trans. Go. vs. O'Neil, 98 Cal. 1.) The rule as to what constitutes a policy of insurance, and also when the risk shall commence, considered and stated. See note to section 2527. ( Union Ins. Co. vs. American Ins. Co., 107 Cal. 329 ; Crawford vs. Transatlantic, etc., Co., 125 Cal. 609, to same effect.) Where an application for insurance stated fully that the applicant held the prem- ises upon which was situated the house insured (afterwards destroyed by fire), under a contract to purchase the same, while the policy contained a proviso to the effect that if the assured was not the sole and unconditional owner in fee of said property, the policy should be null and void, making, however, the application by reference part of the policy, the court decided that the proviso in the policy could not defeat an action brought thereon. The court, however, reduced the amount of the judgment to the sum paid on the purchase price. (Davis vs. Phcenix Ins. Co., Ill Cal. 409.) INSURANCE IN GENERAL. 65 Whose interest is covered. Sec. 2588. When the name of the person intended to be insured is specified in a policy, it can be applied only to his own proper interest. Enacted March 21, 1872. Insurance by agent or trustee. Sec. 2589. When an insurance is made by an agent or trustee, the fact that his principal or beneficiary is the person really insured may be indicated by describing him as agent or trustee, or by other general words in the policy. Enacted March 21, 1872. Insurance by part owner. Sec. 2590. To render an insurance, effected by one partner or part owner, applicable to the interest of his copartners, or of other part owners, it is necessary that the terms of the policy should be such as are applicable to the joint or common interest. Enacted March 21, 1872. General terms. Sec. 2591. When the description of the insured in a policy is so general that it may comprehend any person or any class of persons, he only can claim the benefit of the policy who can show that it was in- tended to include him. Enacted March 21, 1872. In an action brought to recover unpaid premiums on several policies of fire insur- ance on certain buildings which were part of the estate of one Samuel Hancock, deceased, said estate being then in process of administration and the administratrix and the defendant, Robert Hancock, being the sole heirs of said deceased. The policies purported, respectively, to insure the estate of Samuel Hancock, deceased, against loss on the several buildings described, the evidence showing that the defendant, Robert Hancock, had procured the policies to be issued, but neither himself nor the admin- istratrix was named personally in the policies, and the latter repudiated the trans- action. There was a verdict and judgment for plaintiff, the defendant claiming he should not be held personally liable for the premiums. The supreme court affirmed the judgment, holding that the phrase "Estate of Samuel Hancock, deceased," suffi- ciently covered the interest of the defendant in the property, and that although he had no authority to procure insurance for the administratrix, yet she could have rati- fied his act, even after the occurrence of a loss. (Phoenix Insurance Go. vs. Han- cock, 123 Cal. 222.) Successive owners. Sec. 2592. A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured. Enacted March 21, 1872. Transfer of the thing insured. Sec. 2593. The mere transfer of a thing insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thing insured. Enacted March 21, 1872. Open and valued policies. Sec. 2594. A policy is either open or valued. Enacted March 21, 1872. Open policy, what. Sec. 2595. An open policy is one in which the value of the thing in- sured is not agreed upon, but is left to be ascertained in case of loss. Enacted March 21, 1872. 5 IN 66 INSURANCE LAWS OF CALIFORNIA. Valued policy, what. Sec. 2596. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specified sum. Enacted March 21, 1872. Wilmington T. Co. vs. O'Neil, 98 Cal. 1, 7. See note to section 2587, ante. Running policy, what. Sec. 2597. A running policy is one which contemplates successive insurances, and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by addi- tional statements or indorsements. Enacted March 21, 1872. Effect of receipt. Sec. 2598. An acknowledgment in a policy of the receipt of pre- mium is conclusive evidence of its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid. Enacted March 21, 1872. An agent for an insurance company delivered a policy for one thousand dollars to the owner of a barn, and at the same time agreed, verbally, to credit the owner on the premium for a period of five months. The barn was destroyed by fire before the period of credit expired, and the company refused to pay the loss, for the reason that the agent had exceeded his authority in granting a longer time of credit than sixty days. The policy contained no express acknowledgment of payment, but recited a consideration. It did not contain, however, a proviso that the company should not be liable by virtue of the policy, or any renewal thereof, until the premium therefor had been actually paid. On appeal the supreme court decided that the agent having authority to grant a credit on the premium the unconditional delivery of the policy by him to the owner waived the general provision of non-liability until after payment of the premium contained in the policy. (Farnum vs. Phcenix Ins. Co., 83 Cal. 246.) In a similar case and upon a like policy, where promissory notes were given for the premium, and where the policy recited that the premium had been paid, it was decided that the company was estopped to deny payment, and that the proviso for non-liability of the company until after actual payment of the premium set forth in the policy, was waived. (Palmer vs. Continental Ins. Co., 132 Cal. 68.) Agreement not to transfer. Sec. 2599. An agreement made before a loss, not to transfer the claim of a person insured against the insurer, after the loss has hap- pened, is void. Enacted March 21, 1872. ARTICLE VII. WARRANTIES. Sec. 2603. Warranty, express or implied. 2604. Form. 2605. Express warranties to be in policy. 2606. Past, present, and future warranties. 2607. Warranty as to past or present 2608. Warranty as to the future. 2609. Performance excused. 2610. What acts avoid the policy. 2611. Policy may provide for avoidance. 2612. Breach without fraud. Warranty, expressed or implied. Sec. 2603. A warranty is either expressed or implied. Enacted March 21, 1872. A policy of insurance on a combined harvester provided that risk assumed should be while in use in Tulare County. It was destroyed by fire while not in use, but while housed in a shed. It was decided by the court that the company was not liable on the policy. (Slinkard vs. Manchester, etc., Co., 122 Cal. 595.) INSURANCE IN GENERAL. 67 Form. Sec. 2604. No particular form of words is necessary to create a warranty. Express warranties to be in policy. Sec. 2605. Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instru- ment signed by the insured and referred to in the policy, as making a part of it. Enacted March 21, 1872. Amended, Stats. 1873, p. 255. Rankin vs. Amazon F. Ins. Co., 25 Pac. Rep., 260, 261 ; 89 Cal. 203, on rehearing. See note to section 2580, ante. Past, present and future warranties. Sec. 2606. A warranty may relate to the past, the present, the future, or to any or all of these. Enacted March 21, 1872. A stipulation in a fire policy that the insurance company should not be liable for loss caused directly or indirectly by order of any civil authority, is not a warranty, but where the supervisors of a county ordered fires to start to destroy insects, the fact that such supervisors had authority under the law to start the fires, was sufficient to relieve an insurer of grain destroyed thereby from liability under a provision of the policy that the insurer should not be liable for loss occasioned by order of any civil authority, although the burning of the grain was occasioned by the fire getting beyond control. (Conner vs. Manchester Assur. Co., 130 Fed. Rep. 740, 743-4.) Warranty as to past or present. Sec. 2607. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as a fact, is an express warranty thereof. Enacted March 21, 1872. The statement in a policy to the effect that the insurers were the owners of the property insured, while in fact they were stockholders and creditors of a corporation, which was solvent; held to make the policy void. (McCormick vs. Springfield F. & M. I. Co., 66 Cal. 361.) Overvaluation, failure to keep a watchman, and leasing without consent, held to avoid policy in which such conditions were contained. Sections 2607 and 2612 cited. (Wenzel vs. Commercial Ins. Co., 67 Cal. 438.) Where insured made a statement to the insuring company that the property about to be insured had been leased to a certain firm which lease was merely verbal held out to vitiate the policy. (National Bank vs. Union Ins. Co., 88 Cal. 497.) Conner vs. Manchester Assur. Co., 130 Fed. Rep. 740-744. See note to section 2606, ante. Warranty as to the future. Sec. 2608. A statement in a policy, which imports that it is intended to do or not to do a thing which materially affects the risk, is a warranty that such act or omission shall take place. Enacted March 21, 1872. An action commenced against a surety company resulted in favor of the company, a judgment of nonsuit having been entered. The action was on a bond to indemnify an employer against the dishonesty of his cashier and bookkeeper. In his application for the bond, in answer to questions, he stated that all the books and accounts of his employee would be examined and audited, and all moneys, securities, vouchers, and property also would be examined and verified, by himself daily, and that these answers and representations were true and should be held to form the basis of the contract for the proposed bond. During an absence of four days of the employer the cashier absconded with his employer's money. In affirming the judgment on an appeal there- from, the supreme court said : "It is apparent at a glance that the employer com- mitted a breach of the contract of indemnity in failing to examine the books, etc., for four days." (Young vs. Pacific Surety Co., 137 Cal. 596.) Conner vs. Manchester Assur. Co., 130 Fed. Rep. 743-744. See note to section 2606, ante. Performance excused. Sec. 2609. When, before the time arrives for the performance of a warrant}^ relating to the future, a loss insured against happens, or per- 68 INSURANCE LAWS OF CALIFORNIA. formance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not avoid the policy. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 255. What acts avoid the policy. Sec. 2610. The violation of a material warranty, or - other material provision of a policy, on the part of either party thereto, entitles the other to rescind. Enacted March 21, 1872. Joshua Hendy M. Works vs. American S. B. Ins. Co., 86 Cal. 248, 251. See note to section 2580, ante. Policy may provide for avoidance. Sec. 2611. A policy may declare that a violation of specified pro- visions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy. Enacted March 21, 1872. See note to section 2607, ante. The ordinary negligence of the insured and his agents is a risk which the insurer takes upon himself, and the existence of which does not absolve him from liability. But where the insured warranted, in case the property insured was idle and not in use, to have a watchman on duty constantly day and night in and immediately about the buildings or works, he bound himself to the performance of specific acts from which no negligence could exonerate him, regardless of whether material to the risk or not. {McKenzie vs. Scottish TJ. & N. Ins. Co., 112 Cal. 548, 558-9.) See note to section 2629, post. So where a policy provided that it should be void if dynamite were kept, used or allowed on the premises, a violation of such condition precluded a recovery on the policy though the dynamite did not cause the fire. (Bastian vs. British American, etc., Co., 143 Cal. 287, 291.) Where a tender of premium and all sums due was made within a reasonable time after premium was due, the action of the company in refusing to accept payment on the ground that policy had been forfeited, was upheld. (D'Orlu vs. Bankers' & Merchants' M. L. Assn, 46 Fed. Rep. 355, 356. ) Breach without fraud. Sec. 2612. A breach of warranty, without fraud, merely exonerates an insurer from the time that it occurs, or where it is broken in its in- ception prevents the policy from attaching to the risk. Enacted March 21, 18.72". See note to section 2607, ante. ARTICLE VIII. PREMIUM. Sec. 2616. When premium is earned. 2617. Return of premium. 2618. When not allowed. 2619. Return for fraud. 2620. Over-insurance by several insurers. 2621. Contribution. 2622. Proportionate contribution. When premium is earned. Sec. 2616. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Joshua Hendy M. Works vs. American 8. B. Ins. Co., 86 Cal. 248, 252. See note to section 2580, ante. Return of premium. Sec. 2617. A person insured is entitled to a return of premium, as follows : 1. To the whole premium, if no part of his interest in the thing in- sured be exposed to any of the perils insured against. INSURANCE IN GENERAL. 69 2. Where the insurance is made for a definite period of time, and the insured surrenders his policy, to such proportion of the premium as corresponds with the unexpired time, after deducting from the whole premium any claim for loss or damage under the policy which has pre- viously accrued. Enacted March 21, 1872. Amended Stats. 1873-4, p. 256. Joshua Hendy M. Works vs. American 8. B. Ins. Co., 86 Cal. 248, 252. See note to section 2580, ante. Under an agreement between an insurance company and its general agents whereby the agents were to receive as compensation thirty-five per cent of the gross premiums "after deducting all return premiums, rebates and reinsurances," they were properly chargeable with all return premiums on surrendered policies after being credited with thirty-five per cent of the full amount of insurance written by them, and as this arrangement necessarily contemplated that return premiums might be payable after the termination of the agency, there could be no immediate settlement of accounts on termination of the agency. (Milwaukee Mechanics' Ins. Co. vs. Warren. 150 Cal. 346, 354.) When not allowed. Sec. 2618. If a peril insured against has existed, and the insurer has been liable for any period, however short, the insured is not entitled to return of premiums, so far as that particular risk is concerned. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 256. Joshua Hendy M. Works vs. American 8. B. Ins. Co., 86 Gal. 248, 252. See note to section 2580, ante. Return for fraud. Sec. 2619. A person insured is entitled to a return of the premium when the contract is voidable, on account of the fraud or misrepresenta- tion of the insurer, or on account of facts, of the existence of which the insured was ignorant without his fault ; or when, by any default of the insured other than actual fraud, the insurer never incurred any liability under the policy. Enacted March 21, 1872. Joshua Hendy M. Works vs. American 8. B. Ins. Co., 86 Cal. 248, 252. See note to section 2580, ante. Over-insurance by several insurers. Sec. 2620. In case of an over-insurance by several insurers, the in- sured is entitled to a ratable return of the premium, proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk. Enacted March 21, 1872. Contribution. Sec. 2621. When an over-insurance is effected by simultaneous policies, the insurers contribute to the premium to be returned in pro- portion to the amount insured by their respective policies. Enacted March 21, 1872. Proportionate contribution. Sec. 2622. When an over-insurance is effected by successive policies, those only contribute to a return of the premium who are exonerated by prior insurances from the liability assumed by them, and in proportion as the sum for which the premium was paid exceeds the amount for which, on account of prior insurance, they could be made liable. Enacted March 21, 1872. 70 INSURANCE LAWS OF CALIFORNIA. ARTICLE IX. LOSS. Sec. 2626. Perils remote and proximate. 2627. Loss incurred in rescue from peril. 2628. Excepted perils. 2629. Negligence and fraud. Perils, remote and proximate. Sec. 2626. An insurer is liable for a loss of which a peril insured against was the proximate cause ; although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause. Enacted March 21, 1872. Loss incurred in rescue from peril. Sec. 2627. An insurer is liable where the thing insured is rescued from a peril insured against, that would otherwise have caused a loss, if in the course of such rescue the thing is exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part; or where a loss is caused by efforts to rescue the thing insured from a peril insured against. Enacted March 21, 1872. Excepted perils. Sec. 2628. Where a peril is specially excepted in a contract of insur- ance, a loss, which would not have occurred but for such peril, is thereby excepted; although the immediate cause of the loss was a peril which was not excepted. Enacted March 21, 1872. Negligence and fraud. Sec. 2629. An insurer is not liable for a loss caused by the wilful act of the insured ; but he is not exonerated by the negligence of the in- sured, or of his agents or others. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 256. See note to section 2580, ante. A policy of insurance provided that a watchman should be kept in and upon the premises insured day and night. The lower court found that a watchman wus not kept thereon from and after the hour of ten o'clock nightly until an early hour of each morning thereafter, and that no watchman was in or upon said premises at the hour of ten o'clock of the night when the fire occurred. It was claimed by the plain- tiff that the insurer was not exonerated in consequence of the negligence of the watchman, but the court decided that plaintiff could not recover. {Trojan M. Co. vs. Fireman's Ins. Co., 67 Cal. 27.) Where a watchman was employed, and at the time the fire occurred he was stand- ing on a tramway sixty-five feet away from the mill insured, but on higher ground, the warranty was held to be complied with. (Sierra Milling, etc., Co. vs. Hartford Fire Ins. Co., 76 Cal. 237.) A warranty contained in a policy of insurance of a sawmill provided that in case the mill was shut down one or more watchmen should be on duty, constantly, day and night, in and immediately about the buildings and works; and further, that if the buildings and works should remain idle for more than thirty days notice thereof should be given to the insurer. The mill was shut down for more than three months, and the watchman employed did not remain on duty later than ten o'clock each night, when he retired. He slept in a house about three hundred yards away, from which the mill was only partially visible. The mill was destroyed by fire at 11 :15 o'clock in the night. Notice that the mill had been idle was not given. The court held that both warranties had been violated and that plaintiff was not entitled to recover. (McKenzie vs. Scottish U. & N. Ins. Co., 112 Cal. 548.) Where an insurance company was sued for loss of an insured vessel wrecked by floating ice in Behring sea, an allegation in the answer that the vessel was sailed into INSURANCE IN GENERAL. 71 the ice with knowledge of the danger to be encountered, is not an allegation that the loss was caused by the wilful act of the insured, but an allegation of negligent devia- tion, which would constitute no defense to liability. (Nome Beach L. & T. Co. vs. Munich Assur. Co., 123 Fed. Rep. 820.) The conduct of the master of a vessel on a voyage to Alaska in forcing vessel through floating ice with knowledge of the danger, was not mere negligence, but wil- ful omission to perform his legal duty. (Standard Marine Ins. Co. vs. Nome Beach L. & T. Co., 133 Fed. Rep. 636.) ARTICLE X. NOTICE OF LOSS. Sec. 2633. Notice of loss. 2634. Preliminary proofs. 2635. Waivers of defects in notice, etc. 2636. Waiver of delay. 2637. Certificate, when dispensed with. Notice of loss. Sec. 2633. In case of loss upon an insurance against fire, an insurer is exonerated, if notice thereof be not given to him by some person insured, or entitled to the benefit of the insurance, without unnecessary- delay. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 256. Preliminary proofs. Sec. 2634. "When preliminary proof of loss is required by a policy, the insured is not bound to give such proof as would be necessary in a court of justice; but it is sufficient for him to give the best evidence which he has in his power at the time. Enacted March 21, 1872. Waivers of defects in notice, etc. Sec. 2635. All defects in a notice of loss, or in preliminary proof thereof, which the insured might remedy, and which the insurer omits to specify to him, without unnecessary delay, as grounds of objection, are waived. Enacted March 21, 1872. At the trial of an action to recover upon an insurance policy, it was contended that the insurer was entitled to an instruction to the jury to the effect that if they found that the plaintiff, in his proof of loss made to the company, had made any false statements, he could not recover; also, that the plaintiff could not recover if they found that plaintiff had refused to submit the matter of loss to arbitration. On appeal the supreme court sustained the action of the lower court, holding that fraud had not been properly charged or pleaded, and that the stipulation which provided for arbitration was too indefinite. (Qreiss vs. State Inv. Ins. Co., 98 Cal. 241.) Waiver of Delay. Sec. 2636. Delay in the presentation to an insurer of notice or proof of loss is waived, if caused by any act of his, or if he omits to make objection promptly and specifically upon that ground. Enacted March 21, 1872. Certificate, when dispensed with. Sec. 2637. If a policy requires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is sufficient for the insured to use reasonable diligence to procure it, and in case of the refusal of such person to give it, then to furnish reason- able evidence to the insurer that such refusal was not induced by any just grounds of disbelief in the facts necessary to be certified. Enacted March 21, 1872. A policy of insurance provided that in case of loss the insured should forthwith give notice thereof and should also produce a certificate under the hand and seal of 72 INSURANCE LAWS OF CALIFORNIA. the nearest magistrate or notary public not concerned in the loss, nor related to the assured, stating that he had examined the circumstances attending the loss, knew the character and circumstances of the assured, and verily believed that the loss had been sustained without fraud. The nearest magistrate refused to make the certifi- cate required, for the reason that he had been employed by the company to take some affidavits, and another signed the same. Under these circumstances the certificate was held by the court to have been properly made and furnished. (Noone vs. Trans- atlantic F. Ins. Co., 88 Cal. 152.) ARTICLE XL DOUBLE INSURANCE. Sec. 2641. Double insurance. 2642. Contribution in case of double insurance. Double insurance. Sec. 2641. A double insurance exists where the same person is insured by several insurers separately in respect to the same subject and interest. Enacted March 21, 1872. Contribution in case of double insurance. Sec. 2642. In case of double insurance, the several insurers are liable to pay losses thereon as follows : 1. In fire insurance, each insurer must contribute ratably towards the loss, without regard to the dates of the several policies. 2. In marine insurance, the liability of the several insurers for a total loss, whether actual or constructive, where the policies are not simultaneous, is in the order of the dates of the several policies; no liability attaching to a second or other subsequent policy, except as to the excess of the loss over the amount of all previous policies on the same interest. If two or more policies bear date upon the same day, they are deemed to be simultaneous, and the liability of insurers on simultaneous policies, is to contribute ratably with each other. The insolvency of any of the insurers does not affect the proportionate liability of the other insurers. The liability of all insurers on the same marine interest for a partial or average loss, is to contribute ratably. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 257. ARTICLE XII. REINSURANCE. Sec. 2646. Reinsurance, what. 2647. Disclosures required. 2648. Reinsurance presumed to be against liability. 2649. Original insured has no interest. Reinsurance, what. Sec. 2646. A contract of reinsurance is one by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance. Enacted March 21, 1872. After notice of loss the insurer and reinsurer consulted and agreed that the claim was illegal and should be contested. On suit being brought the original insurer aban- doned its defense and compromised without notice to the reinsurer. The reinsurer was held to be exonerated. (Commercial Union Assurance Co. vs. American Central Insurance Co., 68 Cal. 430.) Where policy of reinsurance provides for no past loss, it will not be given a retro- spective effect. (Union Ins. Co. vs. American F. Ins. Co., 107 Cal. 327.) Where a contract by which one insurance company assumes all the policies and risks of another like company, the former is primarily liable to the insured, and in MARINE INSURANCE. 73 case of loss may be sued directly on its obligation by the insured. ( Whitney vs. American Ins. Co., 127 Cal. 464.) Disclosures required. Sec. 2647. Where an insurer obtains reinsurance, he must commu- nicate all the representations of the original insured, and also all the knowledge and information he possesses, whether previously or subse- quently acquired, which are material to the risk. Enacted March 21, 1872. Reinsurance presumed to be against liability. Sec. 2648. A reinsurance is presumed to be a contract of indemnity against liability, and not merely against damage. Enacted March 21, 1872. Union Ins. Go. vs. American F. Ins. Co., 107 Cal. 327, 330. See note to section 2646, ante. Original insured has no interest. Sec. 2649. The original insured has no interest in a contract of reinsurance. Enacted March 21, 1872. Commercial Union Assur. Co. vs. American Cent. Ins. Co., 68 Cal. 431, 433. See note to section 2646, ante. CHAPTER II. MARINE INSURANCE. Article I. Definition of Marine Insurance. Sec. 2655. II. Insurable Interest. Sees. 2659-2665. III. Concealment. Sees. 2669-2672. IV. Representation. Sees. 2676-2677. V. Implied Warranties. Sees. 2681-2688. VI. The Voyage, and Deviation. Sees. 2692-2697. VII. Loss. Sees. 2701-2712. VIII. Abandonment. Sees. 2716-2732. IX. Measure of Indemnity. Sees. 2736-2746. ARTICLE I. DEFINITION OF MARINE INSURANCE. Sec. 2655. Marine insurance, what. Marine insurance, what. Sec. 2655. Marine insurance is an insurance against risks con- nected with navigation, to which a ship, cargo, freightage, profits, or other insurable interest in movable property, may be exposed during a certain voyage or a fixed period of time. Enacted March 21, 1872. ARTICLE II. INSURABLE INTEREST. Sec. 2659. Insurable interest in a ship. 2660. Interest reduced by bottomry. 2661. Freightage, what. 2662. Expected freightage. 2663. Interest in expected freightage, what. 2664. Insurable interest in profits. 2665. Insurable interest of charterer. Insurable interest in a ship. Sec. 2659. The owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who covenants to pay him its value in case of loss. Enacted March 21, 1872. 74 INSURANCE LAWS OF CALIFORNIA. Interest reduced by bottomry. Sec. 2660. The insurable interest of the owner of a ship hypothe- cated by bottomry is only the excess of its value over the amount secured by bottomry. Enacted March 21, 1872. Freightage, what. Sec. 2661. Freightage, in the sense of a policy of marine insurance, signifies all the benefit derived by the owner, either from the chartering of the ship or its employment for the carriage of his own goods or those of others. Enacted March 21, 1872. Expected freightage. Sec. 2662. The owner of a ship has an insurable interest in expected freightage which he would have certainly earned but for the interven- tion of a peril insured against. Enacted March 21, 1872. Interest in expected freightage, what. Sec. 2663. The interest mentioned in the last section exists, in the case of a charter-party, when the ship has broken ground on the char- tered voyage, and if a price is to be paid for the carriage of goods when they are actually on board, or there is some contract for putting them on board, and both ship and goods are ready for the specified voyage. Enacted March 21, 1872. Insurable interest in profits. Sec. 2664. One who has an interest in the thing from which profits are expected to proceed, has an insurable interest in the profits. Enacted March 21, 1872. Insurable interest of charterer. Sec. 2665. The charterer of a ship has an insurable interest in it, to the extent that he is liable to be damnified by its loss. Enacted March 21, 1872. ARTICLE III. CONCEALMENT. Sec. 2669. Information must be communicated. 2670. Material information. 2671. Presumption of knowledge of loss. 2672. Concealments which only affect the risk in question. Information must be communicated. Sec. 2669. In marine insurance each party is bound to communicate, in addition to what is required by section 2563, all the information which he possesses, material to the risk, except such as is mentioned in section 2564, and to state the exact and whole truth in relation to all matters that he represents, or upon inquiry assumes to disclose. Enacted March 21, 1872. Material information. Sec. 2670. In marine insurance, information of the belief or expec- tation of a third person, in reference to a material fact, is material. Enacted March 21, 1872. MARINE INSURANCE. 75 Presumption of knowledge of loss. Sec. 2671. A person insured by a contract of marine insurance is presumed to have had knowledge, at the time of insuring, of a prior loss, if the information might possibly have reached him in the usual mode of transmission, and at the usual rate of communication. Enacted March 21, 1872. Concealments which only affect the risk in question. Sec. 2672. A concealment in a marine insurance, in respect to any of the following matters, does not vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed. 1. The national character of the insured ; 2. The liability of the thing insured to capture and detention ; 3. The liability to seizure from breach of foreign laws of trade ; 4. The want of necessary documents ; and, 5. The use of false and simulated papers. Enacted March 21, 1872. ARTICLE IV. REPRESENTATIONS. Sec. 2676. Effect of intentional falsity. 2677. Representation of expectation. Effect of intentional falsity. Sec. 2676. If a representation, by a person insured by a contract of marine insurance, is intentionally false in any respect, whether material or immaterial, the insurer may rescind the entire contract. Enacted March 21, 1872. Representation of expectation. Sec. 2677. The eventual falsity of a representation as to expectation does not, in the absence of fraud, avoid a contract of insurance. Enacted March 21, 1872. ARTICLE V. IMPLIED WARRANTIES. Sec. 2681. Warranty of seaworthiness. 2682. Seaworthiness, what. 2683. At what time seaworthiness must exist. 2684. What things are required to constitute seaworthiness. 2685. Different degrees of seaworthiness at different stages of the voyage. 2686. Unseaworthiness during the voyage. 2687. Seaworthiness for purposes of insurance on cargo. 2688. Neutral papers. Warranty of seaworthiness. Sec. 2681. In every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject of marine insurance, a warranty is implied that the ship is seaworthy. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 257. Even if there be no technical warranty of seaworthiness, failure to provide the vessel with ground tackle reasonably fit to perform the services and meet the ordinary exigencies of the voyage contemplated, was a breach of implied warranty of sea- worthiness. (Pope vs. The Swiss Lloyd Ins. Co., 4 Fed. Rep. 153.) Seaworthiness, what. Sec. 2682. A ship is seaworthy, when reasonably fit to perform the services, and to encounter the ordinary perils of the voyage, contem- plated by the parties to the policy. Enacted March 21, 1872. 76 INSURANCE LAWS OF CALIFORNIA. At what time seaworthiness must exist. Sec. 2683. An implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk, except in the following cases : 1. When the insurance is made for a specified length of time, the implied warranty is not complied with unless the ship be seaworthy at the commencement of every voyage she may undertake during that time; and, 2. When the insurance is upon the cargo, which, by the terms of the policy, or the description of the voyage, or the established custom of the trade, is to be transshipped at an intermediate port, the implied warranty is not complied with, unless each vessel upon which the cargo is shipped, or transshipped, be seaworthy at the commencement of its particular voyage. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 257. See note to section 2571, ante. What things are required to constitute seaworthiness. Sec. 2684. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurte- nances and equipments, such as ballast, cables, and anchors, cordage and sails, food, water, fuel, and lights, and other necessary or proper stores and implements for the voyage. Enacted March 21, 1872. Different degrees of seaworthiness at different stages of the voyage. Sec. 2685. Where different portions of the voyage contemplated by a policy different in respect to the things requisite to make the ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each portion, the ship is seaworthy with refer- ence to that portion. Enacted March 21, 1872. Unseaworthiness during voyage. Sec. 2686. When a ship becomes unseaworthy during the voyage to which an insurance relates, an unreasonable delay in repairing the defect exonerates the insurer from liability from any loss arising therefrom. Enacted March 21, 1872. Seaworthiness for purposes of insurance on cargo. Sec. 2687. A ship which is seaworthy for the purpose of an insur- ance upon the ship may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of insurance upon the cargo. Enacted March 21, 1872. Neutral papers. Sec. 2688. Where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied that the ship will carry the requisite documents to show such nationality or neutrality, and that it will not carry any documents which cast reasonable suspicion thereon. Enacted March 21, 1872. MARINE INSURANCE. 77 ARTICLE VI. THE VOYAGE, AND DEVIATION. Sec. 2692. Voyage insured, how determined. 2693. Course of sailing, how determined. 2694. Deviation, what. 2695. When proper. 2696. When improper. 2697. Deviation exonerates the insurer. Voyage insured, how determined. Sec. 2692. When the voyage contemplated by a policy is described by the places of beginning and ending, the voyage insured is one which conforms to the course of sailing fixed by mercantile usage between those places. Enacted March 21, 1872. Course of sailing, how determined. Sec. 2693. If the course of sailing is not fixed by mercantile usage, the voyage insured by a policy is the way between the places specified which, to a master of ordinary skill and discretion, would seem the most natural, direct and advantageous. Enacted March 21, 1872. Deviation, what. Sec. 2694. Deviation is a departure from the course of the voyage insured, mentioned in the last two sections, or an unreasonable delay in pursuing the voyage, or the commencement of an entirely different voyage. Enacted March 21, 1872. When proper. Sec. 2695. A deviation is proper : 1. When caused by circumstances over which neither the master nor the owner of the ship has any control ; 2. When necessary to comply with a warranty, or to avoid a peril whether insured .against or not ; 3. When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril ; or, 4. When made in good faith, for the purpose of saving human life, or relieving another vessel in distress. Enacted March 21, 1872. When improper. Sec. 2696. Every deviation not specified in the last section is im- proper. Enacted March 21, 1872. Deviation exonerates the insurer. Sec. 2697. An insurer is not liable for any loss happening to a thing insured subsequently to an improper deviation. Enacted March 21, 1872. Any voluntary deviation is a change of risk ; it forms a departure from the con- tract, and an attempt to substitute another ; and the legal effect is to discharge the insurer from liability for any loss happening to the thing insured subsequently to the unauthorized deviation. The discharge of the insurer in such cases depends, not upon any supposed increase of risk, but wholly upon the departure of the insured from the contract of insurance. (Schroeder vs. Schweitzer L. T. V. G., 66 Cal. 294.) 78 INSURANCE LAWS OF CALIFORNIA. ARTICLE VII. LOSS. Sec. 2701. Total and partial loss. 2702. Partial loss. 2703. Actual and constructive total loss. 2704. Actual total loss, what. 2705. Constructive total loss. 2706. ' Presumed actual loss. 2707. Insurance on cargo, etc., when voyage is broken up. 2708. Cost of reshipment, etc. 2709. When insured is entitled to payment. 2711. Average loss. 2712. Insurance against total loss. Total and partial loss. Sec. 2701. A loss may be either total or partial. Enacted March 21, 1872. Partial loss. Sec. 2702. Every loss which is not total is partial. Enacted March 21, 1872. Actual and constructive total loss. Sec. 2703. A total loss may be either actual or constructive. Enacted March 21, 1872. Actual total loss. what. Sec. 2704. An actual total loss is caused by: 1. A total destruction of the thing insured; 2. The loss of the thing by sinking, or by being broken up ; 3. Any damage to the thing which renders it valueless to the owner for the purposes for which he held it; or, 4. Any other event which entirely deprives the owner of the posses- sion, at the port of destination, of the thing insured. Enacted March 21, 1872. In a suit brought on two policies of insurance issued on two river steamboats about to be towed from Oregon to Alaska but which met with such damage they could not be repaired so as to reach their point of destination, the loss was an "actual, total loss" under subdivisions 3 and 4 of the above section. (Progresso S. S. Co. vs. St. Paul, etc., Ins. Co., 146 Cal. 279, 280.) Constructive total loss. Sec. 2705. A constructive total loss is one which gives to a person insured a right to abandon, under section 2717. Enacted March 21, 1872. Unless something remains of value to pass to the underwriter, there is nothing to abandon, and no case for the operation of the doctrine of abandonment. Where dam- aged cargo was sold after reaching port of destination in satisfaction of salvage, there was no abandonment before the sale, and it was held there could be none afterwards to create constructive total loss. (Standard Marine Ins. Co. vs. Nome Beach L. & T. Co., 133 Fed. Rep. 636.) Presumed total loss. Sec. 2706. An actual loss may be presumed from the continued absence of a ship without being heard of j and the length of time which is sufficient to raise this presumption depends on the circumstances of the case. Enacted March 21, 1872. Insurance on cargo, etc., when voyage is broken up. Sec. 2707. When a ship is prevented, at an intermediate port, from completing the voyage, by the perils insured against, the master must MARINE INSURANCE. 79 make every exertion to procure, in the same or a contiguous port, another ship, for the purpose of conveying the cargo to its destination ; and the liability of a marine insurer thereon continues after they are thus reshipped. Enacted March 21, 1872. Cost of reshipment, etc. Sec. 2708. In addition to the liability mentioned in the last section a marine insurer is bound for damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses incurred in saving cargo reshipped pursuant to the last section, up to the amount insured. Enacted March 21, 1872. When insured is entitled to payment. Sec. 2709. Upon an actual total loss, a person insured is entitled to payment without notice of abandonment. Enacted March 21, 1872. Average loss. Sec. 2711. Where it has been agreed that an insurance upon a par- ticular thing, or a class of things, shall be free from particular average, a marine insurer is not liable for any particular average loss not depriving the insured of the possession, at the port of destination, of the whole of such thing, or class of things, even though it become entirely worthless; but he isjiable for his proportion of all general average loss assessed upon the thing insured. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 259. Insurance against total loss. Sec. 2712. An insurance confined in terms to an actual total loss, does not cover a constructive total loss, but covers any loss which necessarily results in depriving the insured of the possession, at the port of destination, of the entire thing insured. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 259. ARTICLE VIII. ABANDONMENT. Sec. 2716. Abandonment, what. 2717. When insured may abandon. 2718. Must be unqualified. 2719. When may be made. 2720. Abandonment may be defeated. 2721. How made. 2722. Requisites of notice. 2723. No other cause can be relied on. 2724. Effect. 2725. Waiver of formal abandonment. 2726. Agents of the insured become agents of the insurer. 2727. Acceptance not necessary. 2728. Acceptance conclusive. 2729. Accepted abandonment, irrevocable. 2730. Freightage, how affected by abandonment of ship. 2731. Refusal to accept. 2732. Omission to abandon. Abandonment, what. Sec. 2716. Abandonment is the act by which, after a constructive total loss, a person insured by contract of marine insurance declares to the insurer that he relinquishes to him his interest in the thing insured. Enacted March 21, 1872. 80 INSURANCE LAWS OF CALIFORNIA. When insured may abandon. Sec. 2717. A person insured by a contract of marine insurance may- abandon the thing insured, or any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against : 1. If more than half thereof in value is actually lost, or would have to be expended to recover it from the peril ; 2. If it is injured to such an extent as to reduce its value more than one half; 3. If the thing insured, being a ship, the contemplated voyage cannot be lawfully performed without incurring an expense to the insured of more than half the value of the thing abandoned, or without incurring a risk which a prudent man would not take under the circumstances ; or, 4. If the thing insured, being cargo or freightage, the voyage cannot be performed nor another ship procured by the master, within a reason- able time and with reasonable diligence, to forward the cargo, without incurring the like expense or risk. But freightage cannot in any case be abandoned, unless the ship is also abandoned. Enacted March 21, 1872. In a case where the insurance policies contained the provision that the vessels insured were "warranted free from all average and salvage," it was claimed that this limited the right of recovery to an "actual, total loss" only, and excluded the "right to abandon" for "constructive total loss," but the question became immaterial as the loss was found to be an actual total loss. (Progresso S. S. Co. vs. St. Paul, etc., Ins. Co., 146 Cal. 279, 280.) Must be unqualified. Sec. 2718. An abandonment must be neither partial nor conditional. Enacted March 21, 1872. When may be made. Sec. 2719. An abandonment must be made within a reasonable time after the information of the loss, and after the commencement of the voyage, and before the party abandoning has information of its com- pletion. Enacted March 21, 1872. Abandonment may be defeated. Sec. 2720. Where the information upon which an abandonment has been made proves incorrect, or the thing insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual. Enacted March 21, 1872. How made. Sec. 2721. Abandonment is made by giving notice thereof to the insurer, which may be done orally, or in writing. Enacted March 21, 1872. Requisites of notice. Sec. 2722. A notice of abandonment must be explicit, and must specify the particular cause of the abandonment, but need state only enough to show that there is probable cause therefor, and need not be accompanied with proof of interest or of loss. Enacted March 21, 1872. MARINE INSURANCE. 81 No other cause can be relied on. Sec. 2723. An abandonment can be sustained only upon the cause specified in the notice thereof. Enacted March 21, 1872. Effect. Sec. 2724. An abandonment is equivalent to a transfer, by the insured, of his interest, to the insurer, with all the chances of recovery and indemnity. Enacted March 21, 1872. Waiver of formal abandonment. Sec. 2725. If a marine insurer pays for a loss as if it were an actual total loss, he is entitled to whatever may remain of the thing insured, or its proceeds or salvage, as if there had been a formal abandonment. Enacted March 21, 1872. Agents of the insured become agents of the insurer. Sec. 2726. Upon an abandonment, acts dne in good faith by those who were agents of the insured in respect to the thing insured, subse- quent to the loss, are at the risk of the insurer, and for his benefit. Enacted March 21, 1872. Acceptance not necessary. Sec. 2727. An acceptance of an abandonment is not necessary to the rights of the insured, and is not to be presumed from the mere silence of the insurer, upon his receiving notice of abandonment. Enacted March 21, 1872. Acceptance conclusive. Sec. 2728. The acceptance of an abandonment, whether express or implied, is conclusive upon the parties, and admits the loss and the suffi- ciency of the abandonment. Enacted March 21, 1872. Accepted abandonment, irrevocable. Sec. 2729. An abandonment once made and accepted is irrevocable, unless the ground upon which it was made proves to be unfounded. Enacted March 21, 1872. Freightage, how affected by abandonment of ship. Sec. 2730. On an accepted abandonment of a ship, freightage earned previous to the loss belongs to the insurer thereof; but freightage sub- sequently earned belongs to the insurer of the ship. Enacted March 21, 1872. Refusal to accept. Sec. 2731. If an insurer refuses to accept a valid abandonment, he is liable as upon an actual total loss, deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured. Enacted March 21, 1872. Omission to abandon. Sec. 2732. If a person insured omits to abandon, he may neverthe- less recover his actual loss. Enacted March 21, 1872. 6 IN 82 INSURANCE LAWS OP CALIFORNIA. ARTICLE IX. MEASURE OF INDEMNITY. Sec. 2736. Valuation, when conclusive. 2737. Partial loss. 2738. Profits. 2739. Valuation apportioned. 2740. Valuation applied to profits. 2741. Estimating loss under open policy. 2742. Arrival of thing damaged. 2743. Labor and expenses. 2744. General average. 2745. Contribution. 2746. One third new for old. Valuation, when conclusive. Sec. 2736. A valuation in a policy of marine insurance is conclusive between the parties thereto in the adjustment of either a partial or total loss, if the insured has some interest at risk, and there is no fraud on his part ; except that when a thing has been hypothecated by bottomry or respondentia, before its insurance, and without the knowledge of the person actually procuring the insurance, he may show the real value. But a valuation fraudulent in fact entitles the insurer to rescind the contract. Enacted March 21, 1872. See note to section 2705, ante. Partial loss. Sec. 2737. A marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the property insured. Enacted March 21, 1872. Profits. Sec. 2738. Where profits are separately insured in a contract of marine insurance, the insured is entitled to recover, in case of loss, a proportion of such profits equivalent to the proportion which the value of the property lost bears to the value of the whole. Enacted March 21, 1872. Valuation apportioned. Sec. 2739. In case of a valued policy of marine insurance on freightage or cargo, if a part only of the subject is exposed to risk, the valuation applies only in proportion to such part. Enacted March 21, 1872. Valuation applied to profits. Sec. 2740. When profits are valued and insured by a contract of marine insurance, a loss of them is conclusively presumed from a loss of the property out of which they were expected to arise, and the valuation fixes their amount. Enacted March 21, 1872. Estimating loss under an open policy. Sec. 2741. In estimating a loss under an open policy of marine in- surance the following rules are to be observed : 1. The value of a ship is its value at the beginning of the risk includ- ing all articles or charges which add to its permanent value, or which are necessary to prepare it for the voyage insured ; MARINE INSURANCE. 83 2. The value of cargo is its actual cost to the insured, when laden on board, or where that cost cannot be ascertained, its market value at the time and place of lading, adding the charges incurred in purchasing and placing it on board, but without reference to any losses incurred in raising money for its purchase, or to any drawback on its exporta- tion, or to the fluctuations of the market at the port of destination, or to expenses incurred on the way or on arrival ; 3. The value of freightage is the gross freightage, exclusive of pri- mage, without reference to the cost of earning it ; and, 4. The cost of insurance is in each case to be added to the value thus estimated. Enacted March 21, 1872. Arrival of things damaged. Sec. 2742. If cargo insured against partial loss arrives at the port of destination in a damaged condition, the loss of the insured is deemed to be the same proportion of the value which the market price at that port, of the thing so damaged, bears to the market price it would have brought if sound. Enacted March 21, 1872. Labor and expenses. Sec. 2743. A marine insurer is liable for all the expense attendant upon a loss which forces the ship into port to be repaired; and where it is agreed that the insured may labor for the recovery of the property, the insurer is liable for the expense incurred thereby, such expense, in either case, being in addition to a total loss, if that afterwards occurs. Enacted March 21, 1872. General average. Sec. 2744. A marine insurer is liable for a loss falling upon the insured, through a contribution in respect to the thing insured, required to be made by him towards a general average loss called for by a peril insured against. Enacted March 21, 1872. Contribution. Sec. 2745. "Where a person insured by a contract of marine insur- ance has a demand against others for contribution, he may claim the whole loss from the insurer, subrogating him to his own right to con- tribution. But no such claim can be made upon the insurer after the separation of the interests liable to contribution, nor when the insured, having the right and opportunity to enforce contribution from others, has neglected or waived the exercise of that right. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 259. One third new for old. Sec. 2746. In the case of a partial loss of a ship or its equipments, the old materials are to be applied toward payment for the new, and whether the ship is new or old, a marine insurer is liable for only two thirds of the remaining cost of the repairs, except that he must pay for anchors and cannon in full, and for sheathing-metal at a depreciation of only two and one half per cent for each month that it has been fastened to the ship. Enacted March 21, 1872. 84 INSURANCE LAWS OF CALIFORNIA. CHAPTER III. FIRE INSURANCE. Sec. 2753. Alteration increasing risk. 2754. Alteration not increasing risk. 2755. Acts of the insured. 2756. Measure of indemnity. 2757. Value of interest in policy of insurance. How may be fixed. Total or partial loss. Alteration increasing risk. Sec. 2753. An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increas- ing the risk, entitles an insurer to rescind a contract of fire insurance. Enacted March 21, 1872. Alteration not increasing risk. Sec. 2754. An alteration in the use or condition of a thing insured from that to which it is limited by the policy, which does not increase the risk, does not affect a contract of fire insurance. Enacted March 21, 1872. Where policy of insurance was issued on combined harvester while in use, and it was destroyed by fire while housed in a shed, the alteration in the risk was held to be fatal to a recovery of the insurance money. (Slinkard vs. Manchester, etc., Co., 122 Cal. 595.) Acts of the insured. Sec. 2755. A contract of fire insurance is not affected by any act of the insured subsequent to the execution of the policy, which does not violate its provisions, even though it increases the risk and is the cause of a loss. Enacted March 21, 1872. Measure of indemnity. Sec. 2756. If there is no valuation in the policy, the measure of indemnity in an insurance against fire is the expense it would be to the insured at the time of the commencement of the fire to replace the thing lost or injured in the condition in which it was at the time of the injury ; but the effect of a valuation in a policy of fire insurance is the same as in a policy of marine insurance. Enacted March 21, 1872. Value of interest in policy of insurance; how may be fixed; total or partial loss. Sec. 2757. Whenever the insured desires to have a valuation named in his policy, insuring any building or structure against fire, he may require such building or structure to be examined by the insurer and the value of the insured's interest therein shall be thereupon fixed by the parties. The cost of such examination shall be paid for by the insured. A clause shall be inserted in such policy stating substantially that the value of the insured's interest in such building or structure has been thus fixed. In the absence of any change increasing the risk without the consent of the insurer or of fraud on the part of the insured, then in case of a total loss under such policy, the whole amount so insured upon the insured's interest in such building or structure, as stated in the policy upon which the insurers have received a premium, shall be paid, and in case of a partial loss the full amount of the partial loss shall be so paid, and in case there are two or more policies covering the insured's interest therein, each policy shall contribute pro rata to LIFE AND HEALTH INSURANCE. 85 the payment of such whole or partial loss. But in no case shall the insurer be required to pay more than the amount thus stated in such policy. This section shall not prevent the parties from stipulating in such policies concerning the repairing, rebuilding or replacing build- ings or structures wholly or partially damaged or destroyed. Enacted March 21, 1872. CHAPTER IV. LIFE AND HEALTH INSURANCE. Sec. 2762. Insurance upon life, when payable. 2763. Insurable interest. 2764. Assignee, etc., of life policy need have no interest. 2765. Notice of transfer. 2766. Measure of indemnity. Insurance upon life, when payable. Sec. 2762. An insurance upon life may be made payable on the death of the person, or on his surviving a specified period, or periodically so long as he shall live, or otherwise contingently on the continuance or determination of life. Enacted March 21, 1872. Insurable interest. Sec. 2763. Every person has an insurable interest in the life and health : 1. Of himself; 2. Of any person on whom he depends wholly or in part for educa- tion or support; 3. Of any person under a legal obligation to him for the payment of money, or respecting property or services, of which death or illness might delay or prevent the performance ; and, 4. Of any person upon whose life any estate or interest vested in him depends. Enacted March 21, 1872. An assignee of a policy of insurance, as security for an indebtedness, may main- tain an action for the assured. The company has no concern with the application thereof after recovering. (Curtiss vs. JEtna L. Ins. Co., 90 Cal. 245.) Assignee, etc., of life policy need have no interest. Sec. 2764. A policy of insurance upon life or health may pass by transfer, will, or succession to any person, whether he has an insurable interest or not, and such person may recover upon it whatever the in- sured might have recovered. Enacted March 21, 1872. Curtiss vs. /Etna L. Ins. Co., 90 Cal. 245, 248. See note to section 2763, ante. Notice of transfer. Sec. 2765. Notice to an insurer of a transfer or bequest thereof is not necessary to preserve the validity of a policy of insurance upon life or health, unless thereby expressly required. Enacted March 21, 1872. Measure of indemnity. Sec. 2766. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. Enacted March 21, 1872. 86 INSURANCE LAWS OF CALIFORNIA. CODE OF CIVIL PROCEDURE. PART II. TITLE III. PARTIES TO CIVIL ACTIONS. Plaintiff may sue in one action the different parties to commercial paper or insurance policies. Sec. 383. Persons severally liable upon the same obligation or instru- ment, including the parties to bills of exchange and promissory notes, and sureties on the same or separate instruments, may all or any of them be included in the same action, at the option of the plaintiff ; and all or any of them join as plaintiffs in the same action, concerning or affect- ing the obligation or instrument upon which they are severally liable. Where the same person is insured by two or more insurers separately in respect to the same subject and interest, such person, or the payee under the policies, or the assignee of the cause of action, or other successor in interest of such assured or payee, may join all or any of such insurers in a single action for the recovery of a loss under the several policies, and in case of judgment a several judgment must be rendered against each of such insurers according as his liability shall appear. Enacted March 11, 1872. Amended, Stats. 1897, p. 19; 1903, p. 203. PART II. TITLE VI. CHAPTER IV. PLEADINGS IN CIVIL ACTIONS. Actions to recover insurance what defendant claiming exemption must set up. Sec. 437a. In an action to recover upon a contract of insurance wherein the defendant claims exemption from liability upon the ground that, although the proximate cause of the loss was a peril insured against, the loss was remotely caused by or would not have occurred but for a peril excepted in the contract of insurance, the defendant shall in his answer set forth and r specif y the peril which was the proximate cause of the loss, in what manner the peril excepted contributed to the loss or itself caused the peril insured against, and if he claim that the peril excepted caused the peril insured against, he shall in his answer set forth and specify upon what premises or at what place the peril excepted caused the peril insured against. Enacted, Stats. 1907, p. 836. This section was declared unconstitutional in an action on a fire insurance policy upon property in the city and county of San Francisco, which, among other exemp- tions, provided "This company shall not be liable for loss caused directly or indi- rectly by earthquake," as depriving defendant of the equal protection of the law, in that it discriminates against a particular class of actions and against 'defendants generally without apparent reason for the distinction; and was also held invalid as violating the constitution of California/article 4, section 25, subdivision 3, prohibit- ing special laws regulating the practice of courts. (Board of Education vs. Alliance Assvr. Co. (0, C), 159 Fed, Rep, 994.) . SURETY CORPORATION. 87 PART II. TITLE XIV. CHAPTER VII. SURETY CORPORATIONS. Corporations may become sureties on undertakings and bonds. Sec. 1056. In all cases where an undertaking or bond, with any num- ber of sureties is authorized or required by any provision of this code, or of any law of this state, any corporation with a paid-up capital of not less than one hundred thousand dollars, incorporated under the laws of this or any other state of the United States for the purpose of making, guaranteeing, or becoming a surety upon bonds or undertakings required or authorized by law, or which, by the laws of the state where it was originally incorporated has such power, and which shall have complied with all the requirements of the law of this state regulating the forma- tion or admission of these corporations to transact such business in this state, may become and shall be accepted as security or as sole and suffi- cient surety upon such undertaking or bond, and such corporate surety shall be subject to all the liabilities and entitled to all the rights of natural persons' sureties; provided, that the insurance commissioner shall have the same jurisdiction and powers to examine the affairs of such corporations as he has in other cases ; shall require them to file sim- ilar statements and issue to them a similar certificate. And whenever the liabilities of any such corporation shall exceed its assets, the insur- ance commissioner shall require the deficiency to be paid up in sixty days, and if it is not so paid up, then he shall issue a certificate showing the extent of such deficiency, and he shall publish the same once a week for three weeks, in a daily San Francisco paper. And, until such defi- ciency is paid up, such company shall not do business in this state. In estimating the condition of any such company, the commissioner shall allow as assets only such as are allowed under existing laws at the time, and shall charge as liabilities, in addition of eighty per cent of the capital stock, all outstanding indebtedness of the company, and a pre- mium reserve equal to fifty per centum of the premiums charged by said company on all risks then in force. Enacted March 11, 1872. Repealed, Stats. 1880, p. 111. Enacted, Stats. 1889, p. 215. Undertakings mentioned in this code, requisites of. Sec. 1057. In any case where an undertaking or bond is authorized or required by any law of this state, the officer taking the same must, except in the case of such a corporation as is mentioned in the next pre- ceding section, require the sureties to accompany it with an affidavit that they are each residents and householders, or freeholders, within the state, and are each worth the sum specified in the undertaking or bond, over and above all their just debts and liabilities, exclusive of property ex- empt from execution ; but when the amount specified in the undertaking or bond exceeds three thousand dollars, and there are more than two sureties thereon, they may state in their affidavits that they are severally worth amounts less than the amount specified in the undertaking or bond, if the whole amount is equivalent to that of two sufficient sureties. Any corporation such as is mentioned in the next preceding section may be- come sole surety on such bond. No such corporation must be accepted in any case as a surety when its liabilities exceed its assets as ascertained 88 INSUKANCE LAWS OF CALIFORNIA. in the manner provided in section 1056. Whenever an undertaking has been given and approved in any action or proceeding, and it is there- after made to appear to the satisfaction of the court that any surety upon such undertaking has for any reason become insufficient, the court may, upon notice, order the giving of a new undertaking, with sufficient sureties, in lieu of such insufficient undertaking. In case such new undertaking so required shall not be given within the time required by such order, or in case the sureties thereon fail to justify thereon when required, all rights obtained by the filing of such original undertaking shall immediately cease. Enacted March 11, 1872. Amended, Stats. 1889, p. 216; Stats. 1907, p. 308. On a motion to dismiss an appeal, the two foregoing sections were considered by Department Two of the supreme court of this state, and the following decision was rendered, viz. : DE HAVEN, J. The undertaking on appeal herein was executed by the Ameri- can Surety Company, a foreign corporation, and the respondent moves to dismiss the appeal, upon the ground that the undertaking is not properly signed, and upon the further ground that the corporation has not filed with the secretary of state a desig- nation of some person residing in this state upon whom service of summons may be made as required by the act relating to foreign corporations, approved April 1, 1872. (Stats. 1871-2, p. 826.) 1. The undertaking is signed in behalf of the corporation surety by its second vice-president and its assistant secretary, and has affixed to it the seal of the corpo- ration. There is nothing before us to show that these officers were not authorized to sign and deliver the undertaking, and we can not, therefore, hold that the under- taking is void because not properly signed. 2. The corporation has never filed with the secretary of state a paper designating the person upon whom service of process can be made for it in this state, as required by the act of the legislature above referred to; but it appears from the certificate of the insurance commissioner for this state that "The American Surety Company of New York City, New York, is duly authorized to transact business in this state, and has been so authorized since December 5, 1884." It is provided by section 1056 of the Code of Civil Procedure that in respect to corporations organized for the purpose of becoming surety on bonds or undertakings authorized by law, "the insurance com- missioner shall have the same jurisdiction and powers to examine the affairs of such corporations as he has in other cases ; ( and ) shall require them to file similar state- ments, and issue to them a similar certificate." The certificate referred to in this section is one by which the corporation is author- ized to transact business in this state, and the insurance commissioner is not author- ized to issue such a certificate to a foreign insurance company until it has first filed in his office "the name of an agent and his place of residence in this state, on whom summons and other process may be served in all actions or other legal proceedings against such corporation or company." (Pol. Code, section 616.) We think that under section 1056 of the Code of Civil Procedure this provision of section 616 of the Political Code also applies to corporations like that executing the undertaking on appeal in this case, and that when such a corporation has filed with the insurance commissioner the designation required by this section of the Political Code, that is all that is required of it in the matter of naming an agent upon whom process in actions against it may be served, to entitle it to transact business in this state, although the failure to file such designation with the secretary of state might deprive it of the benefit of "the statutes of this state limiting the time for the commence- ment of actions," as provided by the second section of the above mentioned act of April 1, 1872. The certificate of the insurance commissioner, filed by the appellant herein, while it does not expressly state that the American Surety Company has complied with section 616 of the Political Code, is at least prima facie evidence that it has done so. There is a presumption that the insurance commissioner properly performed his official duty in issuing this certificate, and in the absence of any evidence showing that this certificate was issued under circumstances not authorized by law, the certificate will be regarded as sufficient proof that it was properly issued, and that as stated above, the American Surety Company had and has authority to transact business in this state. If, in fact, that corporation has not complied with the section of the Political Code above referred to, the respondent will be permitted to renew his motion, and show that the certificate was improperly issued, but upon the facts now before us, the motion to dismiss the appeal must be denied. Motion denied. Gutseil vs. Pennie, 95 Cal. 598. SURETY CORPORATION. 89 A corporation of the character defined by section 1056 and 1057 of the Code of Civil Procedure as enacted in 1889, need not be accepted as sole and sufficient surety upon any undertaking no matter what the disparity between its amount and the amount of the corporate assets, but may be required, upon exception to its sufficiency as surety under section 948 of the Code of Civil Procedure, to show surplus assets equal to the amount of its undertaking. Fox vs. The Hale and Norcross 8. M. Co., 97 Cal. 353. How corporate sureties shall justify. Sec. 1057a. Whenever the surety on a bond or undertaking author- ized or required by any law of this state is a corporation of the state or a foreign corporation, authorized to become surety on bonds or under- takings in the state, and exception is taken to the sufficiency of such surety as required by law, such corporate surety may justify on such bond or undertaking as follows : Any agent, attorney in fact, or officer of such corporation shall submit to the court, judge, officer, board or other person before whom the justification is to be made: First The original, or a certified copy of, the power of attorney, by- laws or other instrument showing the authority of the person or persons who executed the bond or undertaking to execute the same ; Second A certified copy of the certificate of authority issued by the insurance commissioner as required by section 596 of the Political Code, showing that the corporation is authorized to transact business ; Third A certificate from the county clerk of the county or city and county in which the bond or undertaking is filed, showing that the said certificate of authority has not been surrendered, revoked, canceled, annulled or suspended, or in the event that it has been, that renewed authority to act under such certificate has been granted, as provided for in section 625a of the Political Code ; Fourth A financial statement showing the assets and liabilities of such corporation at the end of the quarter calendar year next preceding the date of the execution of the bond or undertaking; such financial statement must be verified under oath by the president, or a vice-presi- dent and attested by the secretary or an assistant secretary of such cor- poration. Upon complying with the foregoing provisions and it appearing that the bond or undertaking was duly executed, that the corporation is authorized to transact business in the state, and that its assets exceed its liabilities in an amount equal to or in excess of the amount of the bond or undertaking, the justification of the surety shall be complete and it shall be accepted as the sole and sufficient surety on the bond or under- taking. The county clerk of any county or city and county shall upon request, issue the certificate hereinbefore provided for, which certificate shall state whether or not the certificate of authority of such corporation has been surrendered, revoked, canceled, annulled or suspended, and in the event that it has, whether or not renewed authority to act under such certificate of authority has been granted as provided in section 625a of the Political Code. For each certificate issued the county clerk shall receive a fee of fifty cents to be paid by the person obtaining the cer- tificate. Enacted March 20, 1911. Stats. 1911, p. 412. 90 INSURANCE LAWS OF CALIFORNIA. PENAL CODE. PART I. TITLE XII. CRIMES AGAINST THE REVENUE OF THE STATE. Carrying on business without license. Sec. 435. Every person who commences or carries on any business, trade, profession, or calling, for the transaction or carrying on of which a license is required by any law of this state, without taking out or pro- curing the license prescribed by such law, is guilty of a misdemeanor. Enacted February 14, 1872. Effecting insurance on account of foreign companies that have not complied with the laws of this state. Sec. 439. Every person who in this state procures, or agrees to pro- cure, any insurance for a resident of this state, from any insurance com- pany not incorporated under the laws of this state, unless such company or its agent has filed the bond required by the laws of this state relating to insurance, is guilty of a misdemeanor. Enacted February 14, 1872. On the 20th of September, 1888, one, Hooper, was charged before a police court of the city and county of San Francisco with having committed a violation of this section, as follows : On the 13th day of April, 1888, C. W. Mott, a resident of the State of California, applied to Hooper to procure him an insurance for four thousand dollars on the steamer "Alliance" at a named rate of premium. Hooper was the agent of J. & H., insurance brokers, having their principal place of business in New York, who procured the insurance in the China Mutual Insurance Company of Bos- ton and forwarded the policy to Hooper, who delivered it to Mott. The company mentioned was not incorporated under the laws of the State of California, and had not executed and delivered to the insurance commissioner the bond required by section G23 of the Political Code of the State of California. The prisoner was convicted and sentenced to pay a fine of five dollars, and, in default to be imprisoned for twenty- four hours in the city jail. On appeal to the superior court the judgment of the police court was affirmed, and the cause was taken to the United States supreme court. It was argued in behalf of the prisoner that the section amounts to a regulation of commerce between the several states and foreign nations ; that it violates the right of the defendant to transact any business in the State of California not opposed to good morals or the health of the community ; that it is not a police regulation ; that it is in violation of the fourteenth amendment, and for these reasons unconstitutional. The supreme court decided that the business of insurance is not commerce, nor an instrumentality thereof, but merely an incident thereto ; that the policy having been delivered within the state, and the premium paid within the state, the insurance was procured within the state ; that the fourteenth amendment does not guarantee to a citizen the right to contract within his state in violation of its laws, and that the foreign insurance company not having complied with the laws of the state and not having given the bond required thereby, the prisoner had been guilty of a misde- meanor under the section named, which the court declared to be in no respect uncon- stitutional. {Hooper vs. State of California, 155 U. S. 648.) PART I. TITLE XIII. CHAPTER I. CRIMES AGAINST PROPERTY. "Arson" defined. Sec. 447. Arson is the wilful and malicious burning of a building, with intent to destroy it. Enacted February 14, 1872. CRIMES AGAINST PROPERTY. 91 "Building" defined. Sec. 448. Any house, edifice, structure, vessel, or other erection, capable of affording shelter for human beings, or appurtenant to or con- nected with an erection so adapted, is a "building" within the meaning of this chapter. Enacted February 14, 1872. "Inhabited building" defined. Sec. 449. Any building which has usually been occupied by any person lodging therein at night is an "inhabitated building" within the meaning of this chapter. Enacted February 14, 1872. "Night-time" defined. Sec. 450. The phrase "night-time," as used in this chapter, means the period between sunset and sunrise. Enacted February 14, 1872. "Burning" defined. Sec. 451. To constitute a burning, within the meaning of this chapter, it is not necessary that the building set on fire should have been destroyed. It is sufficient that fire is applied so as to take effect upon any part of the substance of the building. Enacted February 14, 1872. Ownership of the building. Sec. 452. To constitute arson it is not necessary that a person other than the accused should have had ownership in the building set on fire. It is sufficient that at the time of the burning another person was right- fully in possession of, or was actually occupying such building, or any part thereof. Enacted February 14, 1872. Degrees of arson. Sec. 453. Arson is divided into two degrees. Enacted February 14, 1872. Arson of the first degree. Arson of the second degree. Sec. 454. Maliciously burning in the night-time an inhabited build- ing in which there is at the time some human being, is arson in the first degree. All other kinds of arson are of the second degree. Enacted February 14, 1872. Punishment of arson. Sec. 455. Arson is punishable by imprisonment in the state prison, as follows : 1. Arson in the first degree, for not less than two years. 2. Arson in the second degree, for not less than one nor more than twenty-five years. Enacted February 14, 1872. Amended, Stats. 1901, p. 664. 92 INSURANCE LAWS OF CALIFORNIA. PART I. TITLE XIII. CHAPTER XI. Burning or destroying property insured. Sec. 548. Every person who wilfully burns or in any other manner injures or destroys any property which is at the time insured against loss or damage by fire, or by any other casualty, with intent to defraud or prejudice the insurer, whether the same be the property of or in pos- session of such person, or of any other, is punishable by imprisonment in the state prison not less than one nor more than ten years. Enacted February 14, 1872. Presenting false proofs upon policy of insurance. Sec. 549. Every person who presents or causes to be presented any false or fraudulent claim, or any proof in support of any such claim, upon any contract of insurance for the payment of any loss, or who pre- pares, makes, or subscribes any account, certificate of survey, affidavit, or proof of loss, or other book, paper, or writing, with intent to present or use the same, or to allow it to be presented or used in support of any such claim, is punishable by imprisonment in the state prison not exceed- ing three years, or by a fine not exceeding one thousand dollars, or by both. Enacted February 14, 1872. INSURANCE COMMISSIONER. 93 STATUTES. Act of March 26, 1868. The following sections of ' An act creating the office of insurance com- missioner, and prescribing his duties and powers, ' ' approved March 26, 1868 (Stats. 1867-8, p. 336), were considered and construed by the supreme court of this state in the case of Palache vs. Pacific Insurance Co., 42 Cal. 418, before their reenactment in the Political Code. The sections are: Sec. 7. Whenever the liabilities of any person engaged in the insur- ance business for losses reported, for expenses, taxes, and reinsurance of all outstanding risks, estimated at fifty per cent of the premiums received on fire risks and marine time risks, and at the entire pre- miums on all other marine risks, and at such rates for life, accidental and other kinds of insurance as shall be generally accepted by the actu- aries of the states of New York and Massachusetts, would impair his capital stock already paid in to an extent exceeding twenty per cent, such person is hereby declared to be insolvent. Sec. 8. Whenever it shall be ascertained by the commissioner that any person engaged in the insurance business in this state is insolvent, within the true intent and meaning of this act, he shall, and is hereby empowered to, revoke the certificate granted in behalf of such person, and shall send by mail to such person, addressed to him at his principal place of business, or deliver to him personally, notice of such revocation, and shall cause notice of such revocation to be filed in his office, and also to be published in some public newspaper published in the city of San Francisco for at least four weeks; and such person is required, after receiving notice of said revocation, or after the first publication thereof, to discontinue the issuing of any new policies and the renewal of any previously issued ; and in such cases the commissioner shall require the said person, or his manager or agent, to repair its capital within such period as he may designate in such requisition. Any company, corpora- tion, or association receiving the aforesaid requisition from the commis- sioner shall forthwith call upon its stockholders, by assessments, for such amounts as will make its capital equal to the amount of its paid-up cap- ital, exclusive of assets needed to pay all ascertained liabilities for losses reported, for expenses and taxes, and exclusive of the entire premiums received for outstanding risks ; and in case any stockholder shall refuse or neglect to pay the amount so called for, it shall be lawful for said company, corporation, or association to enforce said assessment by such notice and sale as are provided for by the act entitled "An act concern- ing assessments upon the stock of corporations," approved March twenty-sixth, eighteen hundred and sixty-six. In case any person, upon the requisition of the commissioner as aforesaid, shall fail to make up the deficiency of his capital in accordance with the requirements aforesaid, or to comply in all respects with the insurance laws of this state, the commissioner shall communicate the fact to the attorney general, whose duty it shall then become to commence an action in the name of the peo- ple of this state, in the district court of the judicial district where the 94 INSURANCE LAWS OF CALIFORNIA. person in question is located, or has his principal office, against such per- son, and apply for an order requiring him to show cause why his busi- ness should not be closed ; and the court shall thereupon proceed to hear the allegations and proofs of the respective parties as in other cases ; and in case it shall appear to the satisfaction of the court that such person is insolvent, as aforesaid, or that the interests of the public so require, the court shall decree a dissolution of such company, corporation, association, or firm, and a winding up of its affairs and a distribution of the effects of such person. But otherwise the court shall enter a decree annulling the act of the commissioner in the premises, and authorizing such person to resume business. But the commissioner shall not be held liable for damages in the attempted performance of his duty herein, if he has acted in good faith. In the event of any additional losses occurring upon new risks taken after the expiration of the period limited by the commissioner in the requisition, and before the deficiency shall have been filled up, the directors of any company, corporation, or association shall be individ- ually liable to the extent thereof. In the case just mentioned it appeared from the agreed statement of facts that the insurance commissioner had made an examination of the business affairs of the defendant company, on the 20th day of October, 1871, and found its capital to be impaired in consequence of the disastrous Chicago fire. He then notified the com- pany to repair its capital on or before the 30th day of December, 1891, but did not revoke his certificate of authority to do business, and did not publish any notice of revocation of such certificate of authority. Immediately on receiving the notice of the insurance commissioner, the board of directors of the defendant company assembled and levied an assessment of seventy- five per cent upon the capital stock. At that time a general statute provided that no one assessment should exceed five per cent of the stated amount of capital stock of any corporation. (Stats. 1865-6, p. 458.) At the time of the levy of the assessment mentioned, one Ashburner was the owner of a certificate for ten shares of the capital stock of the defendant company, and afterwards, on the 30th day of October, 1871, sold and assigned the same, in due form, to plaintiff in said action. A by-law of the defendant company provided that no transfer of stock should be made upon the books of the company until after payment of all assessments imposed thereon. On the day of the transfer mentioned, the plaintiff, as the assignee of Ashburner. tendered the said certificate of stock for cancellation, and requested the officers of the company to enter the transfer upon the books of the corporation, and to issue to him a new certificate for the said number of shares ; but these officers refused to do so, upon the ground that an assessment of seventy-five per cent had been duly levied upon the capital stock, which had not been paid (and which plaintiff refused to pay), in conformity with said by-law. The defendant brought this action to compel said transfer, and judgment going for the defendant company in the lower court, appealed to the supreme court of this state. On the appeal it was urged that, under the by-law quoted, plaintiff was entitled to have the transfer of stock made on the books of the company in accordance with his demand, for the reason that an assessment in excess of five per cent was pro- hibited by the general act of March 26, 1866, and therefore void, unless the levy of seventy-five per cent was justified under the provisions of the act of March 26, 1868. by the notification by the insurance commissioner to the defendant company, to repair its capital within the time stated; that the insurance commissioner had not complied with the requirements of the latter act in failing to revoke his certificate of authority and to advertise the insolvency of the company ; and, consequently, his acts in the premises, and the levy of the assessment based thereon, were unlawful and void. . . T The action of the commissioner, therefore, was the sole point in controversy. In disposing of this point the court said: It was objected in argument upon the part of the appellant, that the requisi- tion of the commissioner, by which he required the company to repair their capital stock, and in assumed obedience to which the company levied the assessment com- plained of, was itself invalid and unauthorized by the provisions of the statute already referred to, because the commissioner did not then, nor at any time, revoke the certificate of authority which he had previously, under section 4 of the statute, granted to the company, authorizing it to transact insurance business. It was INSURANCE COMMISSIONER. 95 argued, in this connection, that the phrase "in such cases," occurring in section 8, and denning the cases in which such a requisition is authorized, embraces only those cases in which the commissioner had not only ascertained the fact of insolvency, but had also revoked the certificate itself. It was said that the language employed in the statute (section 8), is mandatory upon the commissioner, that whenever he shall ascertain the fact of insolvency, he shall, and is hereby empowered to revoke "the certificate granted," etc. It is well settled that in the construction of statutes, for the purpose of ascertaining the legislative intent, regard is to be had not so much to the exact phraseology in which that intent has been expressed, as to the general tenor and scope of the entire legislative scheme embodied in the act. Mere philology often sticks in the bark, and so becomes an obstruction rather than an aid to the correct exposition of the meaning of the statute. The act under consideration plainly distinguishes between the effect of a revocation notified and a requisition received. In the former case it declares that the company shall abso- lutely discontinue the taking of new risks, the issuing of new policies, and the renewal of old ones. (Section 8.) Such revocation deprives the company of the certificate of authority which (under section 9) it must possess before it can be lawful to transact insurance business at all, "and all policies issued or renewed, and all insur- ance taken before the issuance of such certificate, shall be null and void for all pur- poses whatsoever." (Section 9.) But the consequences of a requisition for the repair of capital stock upon insurance business transacted intermediate the receipt of the requisition and the expiration of the time therein limited are widely different from those which ensue upon a revocation notified. The company may, of course, at once and without delay, supply the deficiency in its capital stock, and in that event the transaction of its business is wholly unaffected by the requisition made. Other- wise it may, at its option, suspend the taking of insurances and the issuance of new policies during the time limited in the requisition ; or, if it prefer, it may take such new risks, even before the deficiency in its capital stock be supplied, the directors being in that case, however, personally liable for any loss which may occur upon such new risks thus taken. But if we are to hold that in every case where a requisi- tion to repair capital stock is received a revocation must first be notified, it is obvious that the revocation must operate to utterly destroy the privilege plainly acceded to the company intermediate the receipt of the mere requisition and the expiration of the time therein limited for making the required repair of the capital stock. A con- struction involving such results would be in plain conflict with the apparent intent had in view by the statute. There are other considerations, too, which present them- selves, if attention be had to the general scope of the act and the purpose in which it originated, and which confirm us in the view we have expressed upon this point. The duties imposed upon the commissioner of insurance, though defined in a gen- eral way, are in their nature largely discretionary, and depend for their efficient per- formance in a great degree upon the exercise by him of an enlightened and careful discrimination with reference to the circumstances surrounding each particular case with which he is expected to deal. He is generally to do and perform, with justice and impartiality, the duties of his office in connection with the laws regulating the business of insurance in this state, and to enforce the execution of such laws accord- ing to the true intent and meaning thereof (section 4.) With this view he is clothed with important powers, to be exercised to a greater or less extent according as the particular circumstances appearing may, in his judgment, require. It may be, for instance, that an insurance company is ascertained by him to be insolvent in fact and in a commercial sense, and the risks to be taken by such a company therefore absolutely worthless to the assured. In such a case it may, and doubtless would be, his duty to exert the high authority devolved upon him by law, to revoke its certifi- cate at once, as the only means by which the interests of the public could be pre- served. Such a case would, however, be clearly and easily distinguishable from another, in which there was found to be only the technical insolvency defined by the provisions of the statute itself. For it will be observed that section 7 of the act establishes a test of solvency and insolvency of a merely arbitrary character and under the operation of which an insurance company may, within the intent and for the purposes of the statute, be held insolvent, and at the same time be not only really and actually solvent in a business sense, but justly so regarded in the commercial world. Thus, in order to ascertain the present condition of the company as being one of solvency or insol- vency, for the mere purposes of the statute, the commissioner must assume, against the condition of solvency, that certain losses, though yet in fact only reported, are already established and ascertained; that in relation to outstanding risks, not yet heard from even by report, all of those of one and half of those of another desig- nated class will eventually prove to be losses ; and the probable losses thereafter to be sustained upon outstanding risks of yet another general character are to be arrived at by applying the rules of calculation in such cases adopted by the actuaries in the states of New York and Massachusetts. ,,-,-, If under the provisions of the statute the commissioner should determine, upon a proper investigation had, that the company, though insolvent within the intent of the act, was, nevertheless, solvent in a business point of view, we should be surprised to find, and we do not find, upon examination of the act, that he had no discretion 96 INSURANCE LAWS OF CALIFORNIA. to stop with the delivery of the requisition, but must of mere legal necessity, resort to the harsher measure of an absolute revocation of the company's certificate. We would, we think, greatly misapprehend the scope and purpose of the act should we hold that under its provisions, the commissioner is to exercise no discretion in this most important respect, but that, being once put in motion, he must in all cases, nolens volens, proceed to the same and a uniform extremity against all companies with whose financial condition he is called upon to deal, and that he can not legally require a company to merely repair its capital, even in a case where such repair is all that is needed, but must first revoke its certificate, suspend, and perhaps thereby nearly destroy its business, and certainly injure its general credit in advance by an official promulgation of his judgment, that the company is wholly unfit to transact business at all, and that only after that step has been taken, and notice thereof ''published in some public newspaper published in the city of San Francisco for at least four weeks," is he to call upon the company to repair its capital if it can. We think that such an interpretation of the statute would, in its inevitable con- sequences, involve the absolute destruction of the business of insurance, instead of regulating its transactions. Palache vs. Pacific Insurance Co., 42 Cal. 418. An act to facilitate the giving of bonds required by law. [Approved March 12, 1885. Stats. 1885, p. 114.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. Whenever any person who now or hereafter may be required or permitted by law to make, execute, and give a bond or undertaking, with one or more sureties, conditioned for the faithful per- formance of any duty, or for the doing or not doing of anything in said bond or undertaking specified, any head of department, board, court, judge, officer, or other person who is now or shall hereafter be required to approve the sufficiency of any such bond or undertaking, or the sureties thereon, may accept as sole and sufficient surety on such bond or undertaking, any corporation incorporated under the laws of any state of the United States for the purpose of making or guaranteeing bonds and undertakings required by law, and which shall have complied with all the requirements of the laws of this state regulating the admis- sion of such corporation to transact such business in this state ; and all such corporations are hereby vested with full power and authority to make and guarantee such bonds and undertakings, and shall be subject to all the liabilities and entitled to all the rights of natural persons sureties. Sec. 2. It is further provided that the guaranty of any such com- pany shall not be accepted by heads of departments or others, as pro- vided in section 1 of this act, whenever its liabilities shall exceed its assets, as ascertained in the manner provided in section 3 of this act. Sec. 3. Whenever the liabilities of any such company shall exceed its assets, the insurance commissioner shall require the deficiency to be paid up, within sixty days, and if it is not so paid up, then he shall issue a certificate showing the extent of such deficiency, and he shall publish the same once a week for three weeks, in a daily San Francisco paper, and thenceforth, and until such deficiency is paid up, such company shall not do business under the provisions of this act. And, in estimat- ing the condition of any such company, under the provisions of this act, the commissioner shall allow as assets only such as are authorized under existing laws at the time, and shall charge as liabilities, in addition to eighty per cent of the capital stock, all outstanding indebtedness of the company, and a premium reserve equal to fifty per centum of the pre- COUNTY FIRE INSURANCE. 97 miums charged by said company on all risks then in force. Nothing herein contained shall apply to bonds given in criminal cases. Sec. 4. This act shall take effect immediately. See sections 1056t1057, 1057a, Code of Civil Procedure, ante. An act to require the payment of certain premiums to counties and cities and counties, by fire insurance companies not organized under the laws of the State of California, but doing business therein, and providing for the dispo- sition of such premiums. [Enacted, Stats. 1885, p. 13. Amended, Stats. 1887, p. 13.J This act was declared unconstitutional by the supreme court of this state, which rendered its decision to that effect on November 10, 1887. An action was brought to recover $441.36, with interest, under an act of the legislature, entitled "An act to require the payment of certain premiums to counties and cities and counties by fire insurance companies not organized under the laws of California, but doing business therein, and providing for the disposition of such premiums," approved March 3, 1885. The act required payment of one per cent of the premiums of such companies to constitute a fund to be known as the firemen's relief fund, etc. It was claimed, on the part of the appellant, that the act created a tax the exac- tion of which was illegal, as violative of section 12, article XI of the state consti- tution. Respondent claimed it to be a condition upon the performance of which foreign corporations were permitted to do business in this state. The court took the former view, and reversed the judgment, citing : Barron vs. Burnside, 121 U. S. 186, and Trustees Exempt Firemen's Fund vs. Roome, 93 N. Y. 325, s. c. 45 Am. Rep. 217. San Francisco vs. Liverpool and London and Globe Insurance Co., 74 Cal. 113. An act to provide for the organization and management of county fire insur- ance companies. [Approved April 1, 1897 : Stats. .1897, p. 439. Amended March 23, 1907 ; Stats. 1907, p. 941. Amended April 15, 1909; Stats. 1909, p. 912.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Incorporation. Section 1. Any number of persons, not less than twenty-five, resid- ing in any county in this state, owning insurable property aggregating not less than fifty thousand dollars in value, which they desire to have insured, may incorporate for the purpose of mutual insurance against loss or damage by fire. Filing of articles of incorporation Certificate. Sec. 2. Such persons shall file with the insurance commissioner a declaration of their intention to incorporate for the purposes expressed in section one of this act, which declaration shall be signed by all of the incorporators, and shall contain a copy of the articles of incorporation proposed to be adopted. The insurance commissioner shall examine the proposed articles of incorporation, and, if they conform to this act, he shall deliver to such persons a certificate permitting them to incorporate as such insurance company. Such certificate shall be directed to the clerk of the county in which such corporation is proposed to be organ- ized, and shall contain a copy of the proposed articles of incorporation. Upon filing with the secretary of state the certified copies of the duly executed articles of incorporation, as required by section 290 of the Civil Code of the State of California, and of the certificate above pro- vided for, the secretary of state shall thereupon issue a certificate of incorporation to such county insurance company, and, upon organizing under such articles of incorporation, such county fire insurance com- 7 IN 98 INSURANCE LAWS OF CALIFORNIA. pany may carry on a fire-insurance business as hereinafter provided. The articles of incorporation and the charter or certificate obtained by any county fire-insurance company operating under the provisions of this act shall be subject to the control and modification by the legislature of the State of California. The by-laws and all amendments thereto shall be filed with the insurance commissioner within sixty (60) days after their adoption. Directors. Sec. 3. The number of directors shall not be less than seven (7), nor more than eleven (11), a majority of whom shall constitute a quorum to do business. These directors shall be elected from the members of the association by ballot, and shall hold office for one year, or until their successors are elected and qualified. The annual meeting of the members of the company shall be on the second Monday in Jan- uary of each year. In the election of the first board of directors each member shall be entitled to one vote. At every subsequent election, every person insured shall be entitled to as many votes as there are directors to be elected, and an equal additional number for every risk or risks he holds in the company, and he may cast the same in person or by proxy, distributing them among the directors to be elected, or among a less number of directors, or cumulating them upon one candidate, as he shall see fit. Officers. Sec. 4. The directors shall elect, from their own number, a presi- dent and a vice-president, and shall also elect a treasurer and a secre- tary, who may or may not be members of the company. All of such officers hold their office for one year from the date of their election, and until their successors are elected and qualified. Bonds. Sec. 5. The treasurer and secretary shall give bonds to the company for the faithful performance of their duties, in such amounts as shall be prescribed by the board of directors. Powers By-laws. Sec. 6. Such corporation and its directors shall possess the usual powers, and be subject to the usual duties of corporations and directors thereof, and may make such by-laws, not inconsistent with the constitu- tion and the laws of this state, as may be deemed necessary for the man- agement of its affairs, in accordance with the provisions of this act. Also to prescribe the duties of its officers and to fix their compensation, and to alter and amend its by-laws, when necessary. Membership. Sec. 7. Any person owning property in the county for which any such company is formed or any person owning property in any county adjoining the county wherein such company is formed as hereinafter provided may become a member of such company by insuring therein, and shall be entitled to all the rights and privileges appertaining thereto ; and no person not residing in the county in which the company is formed shall become a director of such company. Section 7 amended March 23, 1907. COUNTY FIRE INSURANCE. 99 Risks. Sec. 8. Such company may issue policies only on detached dwell- ings, schoolhouses, churches, barns (except livery barns and hotel barns), and other farm buildings, and such property as may be con- tained therein; also, other property on the premises owned by the insured; hay and grain in stack or in the field and live stock on the premises of the insured, anywhere in the county, for any time not exceeding five years, and not to extend beyond the time limited for the existence of the charter, and for an amount not to exceed four thou- sand five hundred dollars on any one risk; provided, that no company which has been organized more than six months shall write insurance subject to one fire exceeding three per cent of the amount of risk upon the books of such company. All persons so insured shall give their obli- gation to the company, binding themselves, their heirs and assigns, to pay their pro rata share to the company of the necessary expense and of loss by fire which may be sustained by any member thereof during the time for which their respective policies are written, and they shall also at the time of effecting the insurance pay such a percentage in cash, and such other charges, as may be required by the rules or by-laws of the company. A creamery can not be insured in a county mutual. It is not "a farm building'' within the terms of the statute: Opinion of the Attorney General, November 7, 1901. Classifying risks. Sec. 9. All such companies must classify the property insured therein at the time of issuing policies thereon under different rates, corresponding as nearly as may be to the greater or less risk from fire loss which may be attached to the several kinds of property insured. Limitations upon risks taken. Sec. 10. No such company shall insure any property beyond the limits of the county wherein the said company is organized, except that a company may insure in any county next adjoining the county wherein such company is organized. Nor shall any such company issue policies on property situated within the corporate limits of any city or town in excess of four thousand five hundred dollars on any one risk, under one or more policies. No adjoining risks can be taken by such company unless a clear space of at least one hundred and fifty feet intervenes, and such intervening space must continue at not less than one hundred feet during the life of the policy. Nor shall any risk be taken on any building closer than one hundred feet to any business property, provided the amount of the insurance shall not exceed seventy-five per cent of the value of the property, and no additional insurance shall be allowed. Section amended April 15, 1909 ; in effect in sixty days. Amended May 1, 1911. Stats. 1911, p. 1339. Adjustment of losses Arbitration. Sec. 11. Every member of such company who may sustain loss or damage by fire shall immediately notify the president, or in his absence, the secretary thereof, stating the amount of damage or loss sustained or claimed, and if not more than fifteen hundred dollars, then the presi- dent and secretary shall proceed to ascertain the amount of such loss or damage and adjust the same. If the claim for damage or loss be for an amount greater than fifteen hundred dollars, then the president of such company, or in his absence, the vice-president, or in the absence of both, 100 INSURANCE LAWS OF CALIFORNIA. the secretary thereof, shall forthwith convene the board of directors of such company, whose duty it shall be when convened, to appoint a com- mittee, of not less than three disinterested members of such company, to ascertain the amount of such damage or loss. If in either case there is a failure of the parties to agree upon the amount of such damage or loss they may submit the question of the amount of such loss to arbitra- tion, and in that event the president of the company shall appoint one disinterested person to act as an arbitrator, and the claimant or insured shall appoint another, and if such two arbitrators fail to agree upon the amount of such loss, then they shall select a third disinterested person to act with them, and such arbitrators so appointed shall have full authority to examine witnesses and to do all other things necessary to the proper determination of the amount of loss sustained by the claim- ant, and shall make their award in writing to the president of the com- pany, and to the insured, and such award so as aforesaid made, shall be final as to the amount of the loss sustained. The pay of said committee shall be three dollars per day for each day's services so rendered, and five cents for each mile necessarily traveled in the discharge of their duties, which shall be paid by the claimant unless the award of such com- mittee shall exceed the sum offered by the company in liquidation of such loss or damage, in which case such expense shall be paid by the company. Section 11 amended April 15, 1909 ; in effect in sixty days. Assessments for deficiency. Sec. 12. When the amount of any loss shall have been ascertained, which exceeds in amount the cash funds of the company, the president shall convene the directors of said company, who shall make an assess- ment upon all the property to the amount for which each several piece of property is insured, taken in connection with the rate of premium under which it may be classified; provided, further, that the board of directors may at their annual meeting levy an assessment not to exceed twenty-five cents on the one hundred dollars on first-class insurance and a pro rata amount on other classes and said sum so raised shall consti- tute a reserve fund to be used in emergency cases only and another assessment for this fund shall not be made while this reserve remains intact. Section 12 amended March 23, 1907. Notice of assessment. Sec. 13. It shall be the duty of the secretary, whenever such an assessment shall have been made, to immediately notify every person holding a risk in such company, personally, by an agent, or by letter directed to his usual post office address, of the amount of such loss, and the sum due from him, as his share thereof, and of the time and to whom such payment is to be made ; but such time shall not be less than thirty days, nor more than ninety days from the date of such notice. Action for neglect or refusal to pay assessment. Sec. 14. An action may be brought against any member of such company who shall neglect or refuse to pay any assessment made upon him by the provisions of this act, or other liabilities due the company, and the directors of any company so formed who shall wilfully refuse or neglect to perform the duties imposed upon them by law or by the COUNTY FIRE INSURANCE. 101 by-laws of the company shall be liable in their individual capacity to the person sustaining such loss. An action may also be brought and maintained against any such company by members thereof for losses sustained if payment is withheld after the amount of such losses have been determined, and is due by the terms of the policy. Annual statement. Sec. 15. It shall be the duty of the secretary to prepare an annual statement showing the condition of such company on the thirty-first day of December, and present the same at the annual meeting. Withdrawal. Sec. 16. Any member of such company may withdraw therefrom by surrendering his policy for cancellation at any time while the organiza- tion continues the business for which it was organized, by giving notice in writing to the secretary thereof, and paying his share of all claims that may exist against such company ; provided, that the company shall have power to cancel or terminate any policy by giving the insured five days' written notice to that effect, and returning to him any excess of premium he may have paid during the term of the policy, over the cost of his insurance, as measured by the rates of standard fire insur- ance companies doing business in this state. Report of officers. Sec. 17. It shall be the duty of the president and secretary within thirty days after the first day of January in each year, to prepare, under their own oath, and transmit to the insurance commissioner, a statement of the condition of the company on the last day of the month next preceding the annual meeting. If, upon examination, the insur- ance commissioner finds that such company is doing business correctly, in accordance with the provisions of this act, he shall thereupon furnish the company his certificate, which shall be deemed authority to continue business during the ensuing year, subject, however, to the provisions of this act. For such examination and certificate the company shall pay one dollar. Each company shall pay at the time of organization, five dollars to the insurance commissioner, for all services which he shall render in the matter of organization. Dissolution. Sec. 18. Any such company may be proceeded against and dissolved in the manner and upon the same conditions as provided in case of other insurance companies incorporated in this state. Conflicting laws repealed. Sec. 19. All acts and parts of acts in conflict with this act are hereby repealed. County mutuals are corporations, and are subject to the insurance tax provided by section 14, article 13 of the constitution : Opinion of the Attorney General, May 24, 1911. m . . While county mutuals do not charge regular premiums, in lieu thereof, their mem- bers are assessed to meet losses as well as sufficient to cover expenses. It is clearly a method of collecting sufficient funds to carry on the business of the company, and whether the payments be termed premiums or assessments, they are used for the same purpose, and I am, therefore, of the opinion that the total amount received by such county mutuals should be considered as gross premiums and deductions should be made therefrom in accordance with the constitutional provisions: Opinion of the Attorney General, Man 2> h 1911. 102 INSURANCE LAWS OF CALIFORNIA. An act providing for the organization and management of mutual fire insurance corporations and associations and defining the same, and regulating the transaction of the business of mutual fire insurance in the State of Cali- fornia, and repealing an act entitled "An act providing for the organization and management of mutual fire insurance companies" approved March 19, 1907. [Approved May 1, 1911, Stats. 1911, p. 1342.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. Private corporations or associations may be formed for a term to be stated in their articles not exceeding fifty years for the pur- pose of insuring the property of their members against loss or damage by fire in accordance with this act, and not otherwise. Sec. 2. The trustees or directors of any corporation or association shall adopt such by-laws not in conflict with the laws of this state, as they may deem proper for the government of its affairs and the conduct of its business. Such by-laws shall provide for the liability of its mem- bers in accordance with the provisions of this act. Sec. 3. Each person or partnership or corporation accepting a policy in any such mutual insurance corporation or association shall thereby become a member of such corporation or association and shall be liable for his proportionate share of losses and operating expenses as herein- after provided. Sec. 4. No policy shall be issued by any such corporation or asso- ciation until not less than five hundred thousand (500,000) dollars of insurance in not less than five hundred separate risks have been sub- scribed for and are entered upon its books, nor until it has collected from insurance premiums, and then has on hand not less than ten thou- sand (10,000) dollars in cash over and above all liabilities other than reinsurance reserve as specified in section 13 of this act, and also con- tingent funds consisting of the liability of its members liable to assess- ment, in addition to cash premiums collected, amounting to not less than fifty thousand (50,000) dollars, such liability to be shown in the signed applications of its members. Sec. 5. The expenses including commissions an^ fees to agents and officers of any calendar year of any such corporation or association organized or operating under this act shall be limited to thirty per cent of what is left of the gross premiums actually received during that year after deducting from such premiums the return premiums and reinsur- ance paid out by or for which the corporation or association has become liable during the year. A violation of this provision shall render the officers and directors and all persons having similar powers jointly and severally liable to such company for any amount used for expenses in excess of the amount provided for in this section. In the event that such company fails or refuses to recover such moneys so paid the insur- ance commissioner may sue for and recover the same from any one or all of the officers or directors and all persons having similar powers of such company for the benefit of its policyholders. No officer or other person whose duty it is to determine the character of the risks, and upon whose decision the application shall be accepted or rejected by such corpora- tion shall receive as any part of his compensation a commission upon the premiums, but his compensation shall be a fixed salary and such share of the net profits as the directors, and all persons having similar powers may determine. MUTUAL FIRE INSURANCE. 103 Sec. 6. Such corporation or association may issue policies for a term not exceeding five years; provided, the term of any policy does not exceed the time limited for the existence of the charter or articles of asso- ciation. No policy or policies shall be for an amount in excess of twenty- five hundred (2500) dollars on any one risk, unless protected by rein- surance in companies having sufficient assets and surplus to entitle such companies to be permitted to do business in the State of California ; pro- vided, however, that one thousand (1000) dollars additional insurance may be written on any one risk for each million dollars of total insurance outstanding on the books of the corporation or association in excess of one million dollars; provided, further, that two or more buildings sit- uated in the same city block, or separated by less than one hundred feet shall be deemed to be one risk. Sec. 7. Any mutual fire insurance corporation or association without subscribed capital or guarantee fund organized under the laws of some other state desiring to transact business in this state shall file with the insurance commissioner its last financial statement, showing its condi- tion on December thirty-first, next preceding the date of its application for admission, signed by its president and secretary under oath, and showing that it is possessed of cash assets of not less than two hun- dred thousand (200,000) dollars, of which not less than fifty thousand (50,000) dollars shall be net cash surplus over and above all liabilities, including its reinsurance reserve as provided in section 13 of this act. Also a certificate from the insurance commissioner of the state in which said corporation or association is incorporated, certifying that in the judgment of the state insurance commissioner the statement is correct and that the corporation or association is possessed of two hundred thousand (200,000) dollars cash assets, of which not less than fifty thousand (50,000) dollars is such net cash surplus. The insurance com- missioner of this state upon receipt and examination of such statement and certificate and upon satisfying himself of the correctness thereof and of compliance with the law of this state applicable as shown by this act shall issue to such corporation or association a certificate of authority granting it full power to transact business under this act. Sec. 8. Each policyholder shall be liable to pay his proportionate share of any assessment which may be levied by any such corporation or association and in accordance with the law and his contract, on account- of losses and expenses incurred while he is a member. Any such cor- poration or association shall charge and collect upon its policies the full premium in cash, and may in its by-laws, fix the liability of its members for the payment of the losses and expenses not provided for by its cash funds ; provided, that the liability of a member to assessment shall not be less than the amount of one annual premium in addition to the annual cash premium of his policy; provided, however, that corporations or associations which have accumulated in the regular course of the busi- ness, cash assets of not less than two hundred thousand (200,000) dol- lars of which not less than fifty thousand (50,000) dollars is net cash surplus over and above all the requirements of section 13 of this act shall have power, while in that condition, to adopt by-laws limiting the lia- bility of its policyholders for loss or damage by fire to any amount it may desire to specify in its policies, and the power to issue policies with such limitation of liability to continue only during the time such corpora- 104 INSURANCE LAWS OF CALIFORNIA. tion or association is in such financial condition ; provided, further, that every such corporation or association must print upon its policies such by-laws or mutual conditions as will define the liability of a policyholder. Sec. 9. Whenever such corporation or association is not possessed of cash funds above its reinsurance reserve fund and all other liabilities sufficient for the payment of accrued losses it shall make an assessment for the amount needed to pay such losses and expenses, upon its mem- bers liable to assessment therefor in proportion to their several lia- bilities. The corporation or association shall cause to be recorded in a book kept for that purpose the order of such assessment, together with a statement which shall set forth the condition of the corporation or association at the date of the order, the amount of its cash assets and contingent funds liable to assessment and the amount of the assessment called for. Such record shall be made and signed by the directors or other persons who voted for the order, before any part of the assessment is collected, and any person liable to assessment may inspect and take a copy of the same. Sec. 10. Any member of any such corporation or association may withdraw at any time by surrendering his policy or certificate of insur- ance to the corporation or association and giving thirty days' written notice of his intention to withdraw and by paying his share of all losses which shall have accrued by the end of the time specified in the notice, and of all losses arising out of fires occurring theretofore and all losses occurring within thirty days after the service of such notice and all assessments levied in whole or in part to meet such losses, and all assess- ments due, accrued or pending at the time of the cancellation of his policy, but the corporation or association may retain the customary short rate for the expired time ; provided, also, that the corporation shall have power to cancel or determine any policy by giving the insured five days' written notice to that effect, and returning to the insured his pro rata of the unearned premium. Sec. 11. No corporation or association formed under this act may make any dividend except from profits in hand after retaining unim- paired, a cash surplus of fifty thousand (50,000) dollars over and above all liabilities including reinsurance reserve and shall thereafter retain not less than five per- cent per annum of all profits available for dividends until the sum of two hundred thousand dollars ($200,000.00) net cash surplus has been accumulated. Such cash surplus shall be invested in the manner provided for in subdivisions 1, 2, 3 and 4 of section 421 of the Civil Code of the State of California as that section was amended by act approved March 22, 1907. Sec. 12. Any corporation or association organized or operating under this act shall file with the insurance commissioner on or before the first day of March of each year, its financial statement exhibiting its condition on the thirty-first day of December next preceding. Such statement shall be made as provided for in the blanks furnished by the insurance department. Sec. 13. Whenever the liabilities of any corporation or association operating under this act for losses reported, expenses, taxes, reinsurance reserve upon all unexpired fire risks running one year or less from date of policy at fifty (50) per cent, and upon all unexpired fire risks running more than one year from date of policy to be estimated pro rata, are LIVE STOCK INSURANCE. 105 greater than its admitted cash assets, or whenever the available resources of any company are less than the requirements under section 4 of this act, then such company or association is insolvent. Sec. 14. The general provisions applicable to all corporations as expressed in part four, division first of the Civil Code of the State of California and all provisions contained in sections 595, 596, 596a, 597, 598, 599, 603, 604, 605, 606, 607, 608, 609, 610, 611, 612, 615, 616, 617, 618, 619, 620, 621, 622, 623, 627, 631, 631a, 632, 633, 634a, 634& of the Political Code of the State of California, and sections 435 and 439 of the Penal Code of the State of California, and section 388 of the Code of Civil Procedure of the State of California, also section 415 of the Civil Code of the State of California, and all other laws of the state relating to fire insurance, in so far as any section or law herein referred to is not inconsistent with or in conflict with the provisions of this act, are hereby made to apply to all corporations or associations operating under this act ; provided, nothing herein shall relieve such corporations or associations from full compliance with the provisions of section 14 of article XIII of the constitution of the State of California and of all statutes enacted in aid thereof. Sec. 15. This act shall not apply to contracts made between persons, firms or corporations, of this state, and others of this state and other states for the protection of their own property under the plan known as reciprocal or interinsurance, nor to unincorporated inter-indemnity compacts. Sec. 16. Nothing in this act shall be construed to restrict or affect the provisions of an "Act to provide for the organization and manage- ment of county fire insurance companies," approved April 1, 1897. Sec. 17. That certain act of the legislature of the State of Cali- fornia, entitled "An act providing for the organization and manage- ment of mutual fire insurance companies" (approved March 19, 1907) is hereby repealed. An act relating to life, health and accident insurance of live stock on the assess- ment plan and the conduct of the business of such insurance. [Approved March 23, 1907; Stats. 1907, p. 952.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Contract of mutual insurance of animals defined. Section 1. Every contract whereby a benefit may accrue to a party or parties therein named upon the death or physical disability of an animal insured thereunder, or for the payment of any sums of money dependent in any degree upon the collection of assessments or dues from owners holding similar contracts, shall be deemed a contract of mutual insurance upon the assessment plan. Such contracts must show that the liabilities of the insured thereunder are not limited to fixed premiums. How corporations may be formed Investments Condition precedent to issuing insurance. Sec. 2. Corporations may be formed under the general laws of this state to carry on the business of mutual live stock insurance upon the assessment plan, and shall be subject only to the provisions of this act. 106 INSURANCE LAWS OF CALIFORNIA. No such corporation shall issue contracts of insurance until at least two hundred (200) persons owning live stock have applied, in writing, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of five thousand (5000) dollars. This sum shall be invested in bonds or securities, approved by the insurance commis- sioner of this state, or deposited in some bank in this state w r here it will earn interest. Said bonds or securities or evidences of such deposit, shall be placed, through the insurance commissioner of this state, with the state treasurer, and the principal sum shall be held in trust for the contract holders of such corporation, with the right in the corporation to exchange said bonds, securities, or evidence of bank deposit for others of like value. Such corporations shall also, as a condition precedent to issuing any contracts of insurance, obtain the written certificate of the insurance commissioner that it has complied with the requirements of this act ; and that the name of the corporation is not the same as that of any other corporation of this or other states, as indicated by the insur- ance department reports in his office ; nor shall the commissioner approve any name or title so closely resembling another as to mislead the public. No corporation formed hereunder shall have legal existence after one year from the date of its articles, unless its organization has been com- pleted, and business commenced ; nor shall any corporation or individual solicit, or cause to be solicited, any business, until such corporation shall have complied with the provisions of section 633 of the Political Code of this state. What contracts of insurance shall specify. Sec. 3. The contracts of insurance issued by such corporation shall specify the sum or sums to be paid upon the happening of the contin- gency insured against, and when such payments will be made. Unless the contract shall have been invalidated by fraud or by breach of its conditions, the corporation shall be obligated to pay the beneficiary the amount or amounts specified in its contract at the time or times therein named, and such indebtedness shall be a lien upon all the property of such corporation, with priority over all indebtedness thereafter incurred, except as hereinafter provided in case of insolvency. Failure to make such payment within thirty days after notice, at the home office, by mail, as provided by law, of final judgment, unless waiver is made by the beneficiary, shall constitute a forfeiture of the right to do business. Reserve fund required. Sec. 4. Every domestic corporation organized or doing business under this act shall accumulate a reserve or emergency fund, which shall at all times be not less than the largest benefit contracted to be paid by it to any one person. Every existing domestic corporation must accumulate such fund within one year from the date when this act takes effect, and any corporation organized hereunder within one year from the date of its certificate of incorporation. Such fund, to the extent of the largest amount contracted to be paid by any such corporation to any one person, shall be so invested and deposited, as provided in section two hereof, with the right in the corporation to exchange any such securities for others of equal value. The deposit required by section two of this act shall constitute a part of the reserve required by this section, at the option of such corporation. When any corporation doing business here- under shall discontinue business, this fund shall be returned to such LIVE STOCK INSURANCE. 107 corporation, or so disposed of as may be determined by the superior court of the county, or city and county, in which is its principal place of business. Foreign corporations, conditions required. Sec. 5. Corporations organized under the laws of any other state or country to transact the business of mutual assessment or live stock insurance, must, as a condition precedent to transacting business in this state, deposit with the insurance commissioner of this state a certified copy of its charter, or other instrument, required by its home author- ities ; a statement, under oath, of its president or secretary, of its busi- ness for the preceding year, in such form as may be required by the insurance commissioner of this state; an appointment of a general agent, service upon whom shall bind the corporation; a certificate that for the next preceding twelve months it has paid, in full, the maximum amount named in its contracts of insurance; a certificate from the proper officer of its state or government that like corporations of this state are legally entitled to do business in such state or country ; copies of its contracts of insurance and applications, which must show that the liabilities of its members are not limited to fixed premiums; and evi- dence, satisfactory to the insurance commissioner, that the corporation has accumulated a fund equal to that required of like corporations in this state constituting a reserve or surplus fund held in trust for the benefit of its contract holders, and so invested and held as required by the laws of the state or government under which such corporation was organized. The insurance commissioner shall thereupon issue a license to such corporation to do business in this state. This license must be renewed annually, and may be revoked whenever it is ascertained that the statements required to be made by this section are not true. Upon such revocation, notice thereof shall be given by the insurance commis- sioner, by publication in some newspaper published in the city and county of San Francisco, for two weeks, daily, and no new contracts shall be made by such company in this state. When any other state or country imposes any additional license, fees, taxes, or penalties upon any corporation organized or doing business under this act, like license, fees, taxes, or penalties shall be imposed upon corporations of the same kind, and their agents, of such state or country doing business in this state. Limitations of contract Applications for insurance Penalty for false state- ments. Sec. 6. No corporation doing business under this act (except acci- dent or casualty corporations) shall issue a contract of insurance upon the life of any animal after it has passed its fifteenth birthday. Every such contract of insurance shall be founded upon written application therefor, and (except when the application is for health, accident, or casualty insurance only, or for one hundred dollars life insurance, or less) such application shall be accompanied by the report of a reputable veterinarian, containing a detailed statement of his examination of the animal, and showing the animal to be in good health, and recommend- ing the issuance of a contract of insurance. Any solicitor, agent, employee, examining veterinarian, or other person making a false or fraudulent statement to any corporation doing business under this act, with reference to any application for insurance, or for the purpose of 108 INSURANCE LAWS OF CALIFORNIA. obtaining any money or benefit from such corporation, shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or by imprisonment in the county jail for not less than thirty days nor more than one year, or by both such fine and imprisonment, in the discretion of the court ; and any person who shall make a false statement of any material fact or thing in a sworn statement as to the death or disability of an animal of the contract holder in any such corporation, for the pur- pose of procuring or aiding the beneficiary or beneficiaries, or contract holder, in procuring the payment of a benefit named in the contract, shall be guilty of perjury, and may be proceeded against and punished as provided by the statutes of this state in relation to the crime of perjury. Benefits not liable to attachment. Sec. 7. The money, benefit, annuities, endowment, charity, relief, or aid to be paid as provided by the contracts issued by any corporation doing business under this act, shall not be liable to attachment or other process, and shall not be seized, taken, appropriated, or applied by any legal or equitable process, nor by operation of law, to pay any debts or liability of the contract holder, or any beneficiary named thereunder. Annual statement to be filed. Sec. 8. Every domestic and foreign corporation doing business under this act, shall annually, on or before the first day of February, file with the insurance commissioner, in such form as he shall prescribe, a statement of its affairs for the year ending on the preceding thirty- first day of December. The insurance commissioner, in person or by duly authorized deputy, shall have the power of examination into the affairs of any domestic corporation doing business or claiming to do business under this act, at any time, in his discretion, and shall make such examination at least once a year. When corporation may have license revoked. Sec. 9. If the insurance commissioner, after examination of the affairs of a corporation, shall find that such corporation is not doing its business in conformity to this act, or that it is doing a fraudulent or unlawful business, or that it is not carrying out its terms of contract, or that it can not within three months from the date of notice of default pay its obligations, he shall cite the president, secretary, manager, or general agent of said corporation, or all of them, to appear before him (stating the time and place) to show cause why the authority of such corporation to do business shall not be revoked ; and if they can not show cause, then he shall report the facts to the attorney general of this state, who shall commence proceedings in the proper court to restrain said corporation from doing any further business. Assessments, notice of to be mailed. Sec. 10. No policy or certificate issued by any corporation or asso- ciation doing business under the provisions of this act shall lapse or be lapsed for the non-payment of any assessment, dues, or premiums, unless the corporation or association has first mailed to the insured under such policy or certificate, at his or her last given post office address, a notice setting forth the amount to be paid, and the time the same is due and payable ; and such notice shall be mailed at least fifteen days before the FRATERNAL BENEFIT SOCIETIES. 109 assessment is due (provided that such corporations doing business under this act as collect specific amounts at specific dates, as contained in the contract, shall not be compelled to send such notices), and an affidavit made by the officer, bookkeeper, or clerk of any such corporation having charge of the mailing of notices, setting forth the facts as they appear on the records in the office of the said corporation, showing that such notice was mailed and the date of mailing, shall constitute conclusive evidence of the mailing of such notice. Fees for filing statements, etc. SeC. 12. The fees for filing statements, certificates, or other docu- ments required by this act, or for any service or act of the insurance commissioner, and the penalties for any violation of this act, shall, except as otherwise provided herein, be the same as provided in the laws of this state relating to life insurance companies, and shall be disposed of as provided by such law. Expenses of insurance commissioner, how paid. Sec. 13. And for all lawful expenses under this act, or by reason of any of its provisions, in the prosecution of any suit or proceedings, or otherwise, for the enforcement of the provisions of this act, the insur- ance commissioner must present bills duly certified by him, and accom- panied with vouchers, to the state board of examiners, who must allow the same, and direct payment thereof to be made; and the state controller shall draw warrants therefor on the state treasurer for the payment of the same to the insurance commissioner, in addition to the ordinary contingent expenses, which warrant shall be payable out of the general fund. Time act shall take effect. Sec. 14. This act shall take effect immediately. An act for the regulation and control of fraternal benefit societies. [Approved May 1, 1911; Stats. 1911, p. 1320.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. Fraternal benefit societies defined. Any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit, and having a lodge system with ritual- istic form of work and representative form of government, and which shall make provision for the payment of benefits in accordance with section 5 hereof, is hereby declared to be a fraternal benefit society. Sec. 2. Lodge system defined. Any society having a supreme gov- erning or legislative body and subordinate lodges or branches by what- ever name known, into which members shall be elected, initiated and admitted in accordance with its constitution, laws, rules, regulations, and prescribed ritualistic ceremonies, which subordinate lodges or branches shall be required by the laws of such society to hold regular or stated meetings at least once in each month, shall be deemed to be operating on the lodge system. Sec. 3. Representative form of government defined. Any such societv shall be deemed to have a representative form of government 110 INSURANCE LAWS OF CALIFORNIA. when it shall provide in its constitution and laws for a supreme legisla- tive or governing body, composed of representatives elected either by the members or by delegates elected directly or indirectly by the mem- bers, together with such other members as may be prescribed by its con- stitution and laws ; provided, that the elective members shall constitute a majority in number and have not less than two thirds of the votes, nor less than the votes required to amend its constitution and laws; and provided, further, that the meetings of the supreme or governing body, and the election of officers, representatives or delegates shall be held as often as once in four years. The members, officers, representatives or delegates of a fraternal benefit society shall not vote by proxy. Sec. 4. Exemptions. Except as herein provided, such societies shall be governed by this act and shall be exempt from all provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose, and no law hereafter enacted shall apply to them, unless they be expressly designated therein. Sec. 5. Benefits. Subsection 1. Every society transacting busi- ness under this act shall provide for the payment of death benefits, and may provide for the payment of benefits in case of temporary or perma- nent physical disability, either as the result of disease, accident or old age ; provided, the period of life at which the payment of benefits for dis- ability on account of old age shall commence, shall not be under seventy years, and may provide for monuments or tombstones to the memory of its deceased members and for the payment of funeral benefits. Such society shall have the power to give a member, when permanently disabled or on attaining the age of seventy, all or such portion of the face value of his certificate as the laws of the society may provide ; pro- vided, that nothing in this act contained shall be so construed as to prevent the issuing of benefit certificates for a term of years less than the whole of life which are payable upon the death or disability of the member occurring within the term for which the benefit certificate may be issued. Such society shall, upon written application of the member, have the power to accept a part of the periodical contributions in cash, and charge the remainder, not exceeding one half of the periodical con- tribution, against the certificate with interest payable or compounded annually at a rate not lower than four per cent per annum; provided, that this privilege shall not be granted except to societies which have readjusted or may hereafter readjust their rates of contributions and to contracts affected by such readjustment. Subsection 2. Any society which shall show by the annual valuation hereinafter provided for that it is accumulating and maintaining the reserve necessary to enable it to do so, under a table of mortality not lower than the American Experience Table and four per cent interest may grant to its members, extended and paid-up protection or such withdrawal equities as its constitution and laws may provide ; provided, that such grants shall in no case exceed in value the portion of the reserve to the credit of such members to whom they are made. Sec. 6. Beneficiaries. The payment of death benefits shall be con- fined to wife, husband, relative by blood to the fourth degree, father-in- law, mother-in-law, son-in-law, daughter-in-law, stepfather, stepmother, stepchildren, children by legal adoption, or to a person or persons dependent upon the member ; provided, that if after the issuance of the FRATERNAL BENEFIT SOCIETIES. Ill original certificate the member shall become dependent upon an incor- porated charitable institution, he shall have the privilege with the con- sent of the society, to make such institution his beneficiary. Within the above restrictions each member shall have the right to designate his bene- ficiary, and, from time to time, have the same changed in accordance with the laws, rules or regulations of the society, and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of the said member ; provided, that any society may, by its laws, limit the scope of beneficiaries within the above classes. Sec. 7. Qualifications for membership. Any society may admit to beneficial membership any person not less than sixteen and not more than sixty years of age, who has been examined by a legally qualified physician and whose examination has been supervised and approved in accordance with the laws of the society ; provided, that any beneficiary member of such society who shall apply for a certificate providing for disability benefits, need not be required to pass an additional medical examination therefor. Nothing herein contained shall prevent such society from accepting general or social members. Sec. 8. Certificate. Every certificate issued by any such society shall specify the amount of benefit provided thereby, and shall provide that the certificate, the charter or articles of incorporation, or, if a vol- untary association, the articles of association, the constitution and laws of the society and the application for membership and medical examina- tion, signed by the applicant, and all amendments to each thereof, shall constitute the agreement between the society and the member, and copies of the same certified by the secretary of the society, or corresponding officer, shall be received in evidence of the terms and conditions thereof and any changes, additions or amendments to said charter or articles of incorporation, or articles of association, if a voluntary association, con- stitution or laws duly made or enacted subsequent to the issuance of the benefit certificate shall bind the member and his beneficiaries, and shall govern and control the agreement in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for membership. Sec. 9. Funds. Subsection 1. Any society may create, maintain, invest, disburse and apply an emergency, surplus or other similar fund in accordance with its laws. Unless otherwise provided in the contract, such funds shall be held, invested, and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire indi- vidual rights therein or become entitled to any apportionment or the surrender of any part thereof, except as provided in subsection 2 of section 5 of this act. The funds from which benefits shall be paid and the funds from which the expenses of the society shall be defrayed, shall be derived from periodical or other payments by the members of the society and accretions of said funds ; provided, that no society, domestic or foreign, shall hereafter be incorporated or admitted to transact busi- ness in this state, which does not provide for stated periodical contribu- tions sufficient to provide for meeting the mortuary obligations con- tracted, when valued upon the basis of the National Fraternal Congress Table of Mortality as adopted by the National Fraternal Congress, August 23, 1899, or any higher standard with interest assumption not 112 INSURANCE LAWS OF CALIFORNIA. more than four per cent per annum, nor write or accept members for temporary or permanent disability benefits except upon tables based upon reliable experience, with an interest assumption not higher than four per cent per annum. Subsection 2. Deferred payments or installments of claims shall be considered as fixed liabilities on the happening of the contingency upon which such payments or installments are thereafter to be paid. Such liability shall be the present value of such future payments or install- ments upon the rate of interest and mortality assumed by the society for valuation, and every society shall maintain a fund sufficient to meet such liability regardless of proposed future collections to meet any such liabilities. Sec. 10. Investments. Every society shall invest its funds only in securities permitted by the laws of this state for the investment of the assets of life insurance companies; provided, that any foreign society permitted or seeking to do business in this state, which invests its funds in accordance with the laws of the state in which it is incorporated, shall be held to meet the requirements of this act for the investment of funds. Sec. 11. Distribution of funds. Every provision of the laws of the society for payment by members of such society, in whatever form made, shall distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money col- lected for mortuary or disability purposes or the net accretions of either or any of said funds shall be used for expenses. Sec. 12. Organization. Seven or more persons, citizens of the United States, and a majority of whom are citizens of this state, who desire to form a fraternal benefit society, as defined by this act, may make and sign (giving their addresses) and acknowledging before some officer competent to take acknowledgment of deeds, articles of incorpo- ration, in which shall be stated : First The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company already transacting business in this state as to mislead the public or to lead to confusion. Second The purpose for which it is formed which shall not include more liberal powers than are granted by this act; provided, that any lawful social, intellectual, educational, charitable, benevolent, moral or religions advantages may be set forth among the purposes of the society and the mode in which its corporate powers are to be exercised. Third The names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the gen- eral control and management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body which election shall be held not later than one year from the date of the issuance of the permanent certificate. Such articles of incorporation and duly certified copies of the consti- tution and laws, rules and regulations, and copies of all proposed forms of benefit certificates, applications therefor and circulars to be issued by such society, and a bond in the sum of five thousand dollars, with sureties approved by the insurance commissioner conditioned upon the return of the advanced payments, as provided in this section, to applicants, if the FRATERNAL BENEFIT SOCIETIES. 113 organization is not completed within one year, shall be filed with the insurance commissioner, who may require such further information as he deems necessary, and if the purposes of the society conform to the requirements of this act, and all provisions of law have been complied with the insurance commissioner, shall so certify and retain and file the articles of incorporation, and furnish the incorporators a preliminary certificate authorizing said society to solicit members as hereinafter pro- vided. Upon receipt of said certificate from the insurance commissioner said society may solicit members for the purpose of completing its organ- ization and shall collect from each applicant the amount of not less than one regular monthly payment, in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such appli- cant a receipt for the amount so collected. But no such society shall incur any liability other than for such advanced payments, nor issue any benefit certificate nor pay or allow, or offer or promise to pay or allow, to any person any death or disability benefit until actual bona fide appli- cations for death benefit certificates have been secured upon at least five hundred lives for at least one thousand dollars each, and all such appli- cants for death benefits shall have been regularly examined by legally qualified practicing physicians, and certificates of such examinations have been duly filed and approved by the chief medical examiner of such society, nor until there shall be established ten subordinate lodges or branches into which said five hundred applicants have been initiated, nor until there has been submitted to the insurance commissioner, under oath of the president and secretary, or corresponding officers of such society, a list of such applicants, giving their names, addresses, date examined, date approved, date initiated^ name and number of the subor- dinate branch of which each applicant is a member, amount of benefits to be granted, rate of stated periodical contributions which shall be suffi- cient to provide for meeting the mortuary obligation, contracted, when valued for death benefits upon the basis of the National Fraternal Con- gress Table of Mortality, as adopted by the National Fraternal Congress August 23, 1899, or any higher standard at the option of the society, and for disability benefits by tables based upon reliable experience and for combined death and permanent total disability benefits by tables based upon reliable experience, with an interest assumption not higher than four per cent per annum, nor until it shall be shown to the insur- ance commissioner by the sworn statement of the treasurer, or corre- sponding officer of such society, that at least five hundred applicants have each paid in cash at least one regular monthly payment as herein provided per one thousand dollars of indemnity to be affected, which payments in the aggregate shall amount to at least twenty-five hundred dollars, all of which shall be credited to the mortuary or disability fund on account of such applicants, and no part of which may be used for expenses. Said advanced payments shall, during the period of organiza- tion be held in trust, and, if the organization is not completed within one year as hereinafter provided, returned to said applicants. The insur- ance commissioner may make such examination and require such further information as he deems advisable, and upon presentation of satisfac- tory evidence that the society has complied with all the provisions of law he shall issue to such society a certificate to that effect. Such certificate shall be prima facie evidence of the existence of such society at the date 8 IN 114 INSURANCE LAWS OF CALIFORNIA. of such certificate. The insurance commissioner shall cause a record of such certificate to be made and a certified copy of such record may be given in evidence with like effect as the original certificate. No prelim- inary certificates granted under the provisions of this section shall be valid after one year from its date, or after such further period, not exceeding one year, as may be authorized by the insurance commissioner upon cause shown, unless the five hundred applicants herein required have been secured and the organization has been completed as herein provided, and the articles of incorporation and all proceedings there- under shall become null and void in one year from the date of said pre- liminary certificate, or at the expiration of said extended period, unless such society shall have completed its organization and commenced busi- ness as herein provided. When any domestic society shall have dis- continued business for the period of one year, or has less than four hundred members, its charter shall become null and void. Every such society shall have the power to make a constitution and by-laws for the government of the society, the admission of its members, the manage- ment of its affairs and the fixing and readjusting of the rates of con- tribution of its members from time to time ; and it shall have the power to change, alter, add to or amend such constitution and by-laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society. Sec. 13. Powers retained; reincorporation; amendments, Any so- ciety now engaged in transacting business in this state may exercise, after the passage of this act, all of the rights conferred thereby, and all of the rights, powers and privileges now exercised or possessed by it under its charter or articles of incorporation not inconsistent with this act, if incorporated ; or, if it be a voluntary association, it may incorpo- rate hereunder. But no society already organized shall be required to reincorporate hereunder, and any such society may amend its articles of incorporation from time to time in the manner provided therein or in its constitution and laws and all such amendments shall be filed with the insurance commissioner, and shall become operative upon such filing, unless a later time be provided in such amendments or in its articles of incorporation, constitution or laws. Sec. 14. Mergers and transfers. No domestic society shall merge with -or accept the transfer of the membership or funds of any other society unless such merger or transfer is evidenced by a contract in writing, setting out in full the terms and conditions of such merger or transfer, and filed with the insurance commissioner of this state, together with a sworn statement of the financial condition of each of said societies, by its president and secretary, or corresponding officers, and a certificate of such officers, duly verified under oath of said officers of each of the contracting societies, that such merger or transfer has been approved by a vote of two thirds of the members of the supreme legislative or governing body of each of said societies. Upon the submission of said contract, financial statements and certificates, the insurance commis- sioner shall examine the same, and, if he shall find such financial state- ments to be correct and the said contract to be in conformity with the provisions of this section, and that such merger or transfer is just and equitable to the members of each of said societies, he shall approve said merger or transfer, issue his certificate to that effect and thereupon FRATERNAL BENEFIT SOCIETIES. 115 the said contract of merger or transfer shall be of full force and effect. In case such contract is not approved, the fact of its submission and its contents shall not be disclosed by the insurance commisioner. Sec. 15. Annual license. Societies which are now authorized to transact business in this state may continue such business until the first day of July next succeeding the passage of this act, and the authority of such societies may thereafter be renewed annually, but in all cases to terminate on the first day of the succeeding July ; provided, however, the certificate of authority shall continue in full force and effect until the new certificate o"f authority be issued or specifically refused. For each such certificate of authority or renewal the society shall pay the insurance commisioner ten dollars. A duly certified copy or duplicate of such certificate of authority shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this act. Sec. 16. Admission of foreign society. No foreign society now transacting business, organized prior to the passage of this act, which is not now authorized to transact business in this state, shall transact any business herein without a certificate of authority from the insurance commisioner. Any such society shall be entitled to a certificate of authority to transact business within this state upon filing with the insurance commissioner a duly certified copy of its charter or articles of association; a copy of its constitution and laws, certified by its sec- retary or corresponding officer, a power of attorney to the insurance commissioner as hereinafter provided ; a statement of its business under oath of its president and secretary, or corresponding officers, in the form required by the insurance commissioner, duly verified by an examination made by the supervising insurance official of its home state or other state satisfactory to the insurance commissioner of this state ; a certificate from the proper official in its home state, province or country that the society is legally organized; a copy of its contract, which must show that benefits are provided for by periodical, or other payments by, per- sons holding similar contracts, and upon furnishing the insurance com- missioner such other information as he may deem necessary to a proper exhibit of its business and plan of working and upon showing that its assets are invested in accordance with the laws of the state, territory, district, province or country where it is organized, he shall issue a cer- tificate of authority to such society to do business in this state until the first day of the succeeding July and such certificate of authority shall, upon compliance with the provisions of this act, be renewed annually, but in all cases to terminate on the first day of the succeeding July; provided, however, that certificate of authority shall continue in full force and effect until the new certificate of authority be issued or specifically refused. Any foreign society desiring admission to this state shall have the qualifications required of domestic societies organized under this act and have its assets invested as required by the laws of the state, territory, district, country, or province where it is organized. For each such certificate or renewal the society shall pay the insurance commissioner twenty dollars. When the insurance commissioner refuses to issue a certificate of authority to any society, or revokes its certificate of authority to do business in this state, he shall reduce his ruling, order or decision to writing and file the same in his office, and shall furnish a copy thereof, together with a statement of his reasons, to the officers 116 INSURANCE LAWS OF CALIFORNIA. of the society, upon request, and the action of the insurance commis- sioner shall be reviewable by proper proceedings in any court of com- petent jurisdiction within the state; provided, however, that nothing contained in this or the preceding section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein. Sec. 17. Power of attorney and service of process. Every society, whether domestic or foreign, now transacting business in this state shall, within thirty days after the passage of this act, and every such society hereafter applying for admission, shall, before being licensed, appoint in writing the insurance commissioner and his successors in office to be its true and lawful attorney, upon whom all legal process in any action or proceeding against it shall be served, and in such writing shall agree that any lawful process against it which is served upon such attorney shall be of the same legal force and validity as if served upon the society and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by said insurance commissioner shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted. Service shall only be made upon such attorney, must be made in duplicate upon the insurance com- missioner or in his absence upon the person in charge of his office and shall be deemed sufficient service upon such society ; provided, however, that no such service shall be valid or binding against any such society when it is required thereunder to file its answer, pleading or defense in less than thirty days from the date of mailing the copy of such service to such society. When legal process against any such society is served upon said insurance commissioner he shall forthwith forward by regis- tered mail one of the duplicate copies prepaid and directed to its secre- tary or corresponding officer. Legal process shall not be served upon any such society except in the manner provided herein. Sec. 18. Place of meeting; location of office. Any domestic society may provide that the meetings of its legislative or governing body may be held in any state, district, province or territory wherein such society has subordinate branches and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state. But its principal office shall be located in this state. Sec. 19. No personal liability. Officers and members of the supreme, grand or any subordinate body of any such incorporated society shall not be individually liable for the payment of any disability or death benefit provided for in the laws and agreements of such society, but the same shall be payable only out of the funds of such society and in the manner provided by its laws. Sec. 20. Waiver of the provisions of the laws. The constitution and laws of the society may provide that no subordinate body, nor any of its subordinate officers or members shall have the power or authority to waive any of the provisions of laws and constitution of the society, and the same shall be binding on the society and each and every member thereof and on all beneficiaries of members. Sec. 21. Benefits not attachable. No money or other benefit, charity or relief or aid to be paid, provided or rendered by any such society FRATERNAL BENEFIT SOCIETIES. 117 shall be liable to attachment, garnishment or other process, or be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment. Sec. 22. Constitution and laws; amendment. Every society trans- acting business under this act shall file with the insurance commissioner a duly certified copy of all amendments of or additions to its constitu- tion and laws within ninety days after the enactment of the same. Printed copies of the constitution and laws as amended, changed or added to, certified by the secretary or corresponding officer of the society shall be prima facie evidence of the legal adoption thereof. Sec. 23. Annual reports. Every society transacting business in this state shall annually, on or before the first day of March, file with the insurance commissioner in such form as he may require, a statement under oath of its president and secretary or corresponding officers, of its condition and standing on the thirty-first day of December next pre- ceding, and of its transactions for the year ending on that date and also shall furnish such other information as the insurance commissioner may deem necessary to a proper exhibit of its business and plan of working. The insurance commissioner may at other times require any further statement he may deem necessary to be made relating to such society. In addition to the annual report herein required, each society shall annually report to the insurance commissioner a valuation of its certifi- cates in force on December 31st, last preceding, excluding those issued within the year for which the report is filed, in cases where the contribu- tions for the first year in whole or in part are used for current mortality and expenses ; provided, the first report of valuation shall be made as of December 31st, 1912. Such report of valuation shall show, as contingent liabilities, the present mid-year value of the promised benefits provided in the constitution and laws of such society under certificates then sub- ject to valuation ; and, as contingent assets, the present mid-year value of the future net contributions provided in the constitution and laws as the same are in practice actually collected. At the option of any society, in lieu of the above, the valuation may show the net value of the certifi- cates subject to valuation hereinbefore provided and said net value, when computed in case of monthly contributions may be the mean of the terminal values for the end of the preceding and of the current insur- ance years. Such valuation shall be certified by a competent account- ant or actuary, or at the request and expense of the society, verified by the actuary of the department of insurance of the home state of the society, and shall be filed with the insurance commissioner within ninety days after the submission of the last preceding annual report. The legal minimum standard of valuation for all certificates, except for dis- ability benefits, shall be the National Fraternal Congress Table of Mor- tality as adopted by the National Faternal Congress August 23, 1899, or at the option of the society, any higher table, or, at its option, it may use a table based upon the society 's own experience of at least twenty years and covering not less than one hundred thousand lives with interest assumption not more than four per centum per annum. Each such valuation report shall set forth clearly and fully the mortality and interest basis and the method of valuation. Any society providing for 118 INSURANCE LAWS OF CALIFORNIA. disability benefits shall keep the net contributions for such benefits in a fund separate and apart from all other benefit and expense funds and the valuation of all other business of the society ; provided, that where a combined contribution table is used by a society for both death and permanent total disability benefits, the valuation shall be according to tables of reliable experience and in such case a separation of the funds shall not be required. The valuation herein provided for shall not be considered or regarded as a test of the financial solvency of the society, but each society shall be held to be legally solvent so long as the funds in its possession are equal to or in excess of its matured liabilities. Beginning with the year 1914 a report of such valuation and an explana- tion of the facts concerning the condition of the society thereby dis- closed shall be printed and mailed to each beneficiary member of the society not later than June 1st of each year, or, in lieu thereof, such report of valuation and showing of the society 's condition as thereby dis- closed may be published in the society 's official paper and the issue con- taining the same mailed to each beneficiary member of the society. The laws of such society shall provide that if the stated periodical contribu- tions of the members are insufficient to pay all matured death and dis- ability claims in full and to provide for the creation and maintenance of the funds required by its laws additional, increased or extra rates of contribution shall be collected from the members to meet such defi- ciency ; and such laws may provide that, upon the written application or consent of the member, his certificate may be charged with its propor- tion of any deficiency disclosed by valuation, with interest not exceeding five per centum per annum. Sec. 23a. Provisions to insure future security. If the valuation of the certificates, as hereinbefore provided, on December 31st, 1917, shall show that the present value of future net contributions, together with the admitted assets, is less than ninety per centum of the present value of the promised benefits and accrued liabilities, such society shall be required thereafter to reduce such deficiency not less than five per centum of the total deficiency on said December 31st, 1917, at each suc- ceeding triennial valuation. If at any succeeding triennial valuation such society does not show such percentage of improvement, the insur- ance commissioner shall direct that it thereafter comply with the require- ments herein specified. If the next succeeding triennial valuation after the receipt of such notice shall show that the society has not made the percentage of improvement required herein, the insurance commis- sioner may, in the absence of good cause shown for such failure, insti- tute proceedings for the dissolution of such society, in accordance with the provisions of section 24 of this act, or, in the case of a foreign society, he may cancel its certificate of authority to transact business in this state. Any such society, shown by any triennial valuation, subse- quent to December 31, 1917, not to have made the improvements herein required shall, within one year thereafter, complete such deficient im- provements, or thereafter, as to all new members admitted, be subject, so far as stated rates of contribution are concerned, to the provisions of sec- tion 12 of this act, applicable in the organization of new societies ; pro- vided, that the contributions and funds of such new members shall be kept separate and apart from the other funds of the society until the required improvement shall be shown by valuation. If such required FRATERNAL BENEFIT SOCIETIES. 119 improvement is not shown by the succeeding triennial valuation, then the said new members may be placed in a separate class and their certifi- cates valued as an independent society in respect of contributions and funds. Sec. 24. Examination of domestic societies. The insurance com- missioner, or any person he may appoint shall have the power of visita- tion and examination into the affairs of any domestic society. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society and may sum- mon and qualify as witness under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and conditions of the society. The expense of such examination shall be paid by the society examined, upon statement furnished by the insurance commissioner, and the examination shall be made at least once in three years. Whenever after examination the insurance commissioner is satisfied that any domestic society has failed to comply with any pro- visions of this act, or is exceeding its powers, or is not carrying out its contracts in good faith, or is transacting business fraudulently or when- ever any domestic society, after the existence of one year or more, shall have a membership of less than four hundred (or shall determine to discontinue business), the insurance commissioner may present the facts relating thereto to the attorney general, who shall, if he deem the cir- cumstances warrant, commence an action in quo warranto in a court of competent jurisdiction, and such court shall thereupon notify the officers of such society of a hearing, and it shall then appear that such society should be closed, said society shall be enjoined from carrying on any further business and some person shall be appointed receiver of such society, and shall proceed at once to take possession of the books, papers, moneys and other assets of the society and shall forthwith, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled thereto. No such proceedings shall be commenced by the attorney general against any such society until after notice has been duly served on the chief executive officers of the society and a reasonable opportunity given to it, on a date to be named in said notice, to show cause why such proceedings should not be com- menced. Sec. 25. Application for receiver, etc. No application for injunc- tion against or proceedings for the dissolution of or the appointment of a receiver for any such domestic society or branch thereof shall be entertained by any court in this state unless the same is made by the attorney general. Sec. 26. Examination of foreign societies. The insurance commis- sioner or any person whom he may appoint, may examine any foreign society transacting or applying for admission to transact business in this state. The said insurance commissioner may employ assistants, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society, and may summon and qualify as witness under oath and examine its officers, agents and employees and other persons in relation to the affairs, trans- actions and condition of the society. He may, in his discretion, accept in lieu of such examination the examination of the insurance depart- 120 INSURANCE LAWS OF CALIFORNIA. ment of the state, territory, district, province or country where such society is organized. The actual expenses of examiners making any such examination shall be paid by the society upon statement furnished by the insurance commissioner. If any such society or its officers refuse to submit to such examination or to comply with the provisions of the section relative thereto, the authority of such society to write new busi- ness in this state shall be suspended or license refused until satisfactory evidence is furnished the insurance commissioner relating to the con- dition and affairs of the society, and during such suspension the society shall not write new business in this state. Sec. 27. No adverse publication. Pending, during or after an exam- ination or investigation of any such society, either domestic or foreign, the insurance commissioner shall make public no financial statement, report or finding, nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any such society, until a copy thereof shall have been served upon such society, at its home office, nor until such society shall have been afforded a reasonable opportunity to answer any such financial statement, report or finding and to make such showing in connection therewith as it may desire. Sec. 28. Revocation of license. When the insurance commissioner on investigation is satisfied that any foreign society transacting business under this act has exceeded its powers, or has failed to comply with any provisions of this act, or is conducting business fraudulently, or is not carrying out its contracts in good faith he shall notify the society of his findings, and state in writing the grounds of his dissatisfaction, and after reasonable notice require said society, on a date named, to show cause why its license should not' be revoked. If on the date named in said notice such objections have not been removed to the satisfaction of the said insurance commissioner, or the society does not present good and sufficient reasons why its authority to transact business in this state should not at that time be revoked, he may revoke the authority of the society to continue business in this state. All decisions and findings of the insurance commissioner made under the provisions of this section may be reviewed by proper proceedings in any court of competent juris- diction, as provided in section 16 of this act. Sec. 29. Exemption of certain societies. Nothing contained in this act shall be construed 'to affect or apply to grand or subordinate lodges of Masons, Odd Fellows or Knights of Pythias (exclusive of the insur- ance department of the supreme lodge Knights of Pythias), and the Junior Order of United American Mechanics (exclusive of the benefi- ciary degree or insurance branch of the national council Junior Order United American Mechanics) or societies which limit their membership to any one hazardous occupation, nor to similar societies which do not issue insurance certificates, nor to an association of local lodges of a society now doing business in this state which provides death benefits not exceeding three hundred dollars to any one person, or disability benefits not exceeding three hundred dollars in any one year to any one person, or both, nor to any contracts of reinsurance business on such plan in this state, nor to domestic societies which limit their membership to the employees of a particular city or town, designated firm, business house or corporation, nor to domestic lodges, orders or associations of a FRATERNAL BENEFIT SOCIETIES. 121 purely religious, charitable and benevolent description, which do not provide for a death benefit of more than one hundred dollars, or for disability benefits of more than one hundred and fifty dollars to any one person in any one year ; provided, always that any such domestic order or society which has more than five hundred members, and provides for death or disability benefits, and any such domestic lodge, order or society which issues to any person a certificate providing for the payment of benefits, shall not be exempt by the provisions of this section, but shall comply with all the requirements of this act. The insurance commis- sioner may require from any society such information as will enable him to determine whether such society is exempt from the provisions of this act. No society, which is exempt by the provisions of this section from the requirement of this act shall give or allow or promise to give or allow, to any person any compensation for procuring new members. Any fraternal benefit society, heretofore organized and incorporated and operating within the definition set forth in sections 1, 2 and 3, of this act, providing for benefits in case of death or disability resulting solely from accidents, but which does not obligate itself to pay death or sick benefits, may be licensed under the provisions of this act, and shall have all the privileges and shall be subject to all the provisions and regulations of this act, except that the provisions of this act requiring medical examinations, valuations of benefit certificates, and that the cer- tificate shall specify the amount of benefits, shall not apply to such society. Sec. 30. Taxation. Every fraternal benefit society organized or licensed under this act is hereby declared to be a charitable and benev- olent institution, and all of its funds shall be exempt from all and every state, county, district, municipal and school tax, other than taxes on real estate and office equipment. Sec. 31. Penalties. Any person, officer, member or examining physi- cian of any society authorized to do business under this act who shall knowiDgly or wilfully make any false or fraudulent statement or repre- sentation in or with reference to any application for membership, or for the purpose of obtaining money from or benefit in any society trans- acting business under this act, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or imprisonment in the county jail for not less than thirty days nor more than one year, or both, in the discretion of the court ; and any person who shall wilfully make a false statement of any material fact or thing in a sworn state- ment as to the death or disability of a certificate holder in any such society for the purpose of procuring payment of a benefit named in the certificate of such holder, and any person who shall wilfully make any false statement in any verified report or declaration under oath required or authorized by this act, shall be guilty of perjury, and shall be pro- ceeded against and punished as provided by the statutes of this state in relation to the crime of perjury. Any person who shall solicit member- ship for, or in any manner assist in procuring membership in any fra- ternal benefit society not licensed to do business in this state, or who shall solicit membership for, or in any manner assist in procuring mem- bership in any such society not authorized as herein provided, to do business as herein defined in this state shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not less than 122 INSURANCE LAWS OF CALIFORNIA. fifty nor more than two hundred dollars. Any society, or any officer, agent or employee thereof neglecting or refusing to comply with, or violatinb any of the provisions of this act, the penalty for which neglect, refusal or violation is not specified in this section, shall be fined not exceeding two hundred dollars upon conviction thereof. Sec. 32. All acts and parts of acts inconsistent with this act are hereby repealed. An act defining certain classes of contracts for the exchange of indemnity, pre- scribing regulations therefor and fixing a license fee. [Approved May 1, 1911 ; Stats. 1911, p. 1279.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. Individuals, partnerships or corporations may exchange reciprocal or interinsuranee contracts providing indemnity among each other from loss or from other damages in accordance with the following provisions of this act ; provided, that no individual, partnership or corpo- ration thus exchanging indemnity shall assume on any single risk an amount greater than ten per cent of the net financial rating of such individual, partnership or corporation ; such financial rating to be shown by the reports of a commercial agency having at least one hundred thou- sand members. Sec. 2. Such individuals, partnerships or corporations so contract- ing among themselves shall have the power to appoint an attorney, agent or other representative and shall, through their attorney, agent or other representative, file with the insurance commissioner of this state a certifi- cate in writing, verified by the oath of said attorney, agent or other rep- resentative, setting forth : (a) The name or title by which said individuals, partnerships or cor- porations intending to make such contracts shall be known. The insur- ance commissioner may rejeet any name or title so submitted when the same is an interference with or too similar to one already appropriated or likely to mislead the public in any respect and, in such case, a name not liable to such objection must be chosen. (b) A verified copy of the form of policy, contract or agreement under or by which such indemnity is to be exchanged. (c) A verified copy of the form of power of attorney or other author- ity of any said attorney, agent or other representative setting forth the character of such representation and the authority of such represen- tative. (d) The location of the office or offices through which said policies, contracts or agreements are to be issued. (e) Such attorney in fact shall also file a stipulation or agreement in writing that any notice, provided by law or by any insurance policy, proof of loss, summons or other process may be served upon the attorney in fact or upon the insurance commissioner of the State of California, in all actions or in other legal proceedings against such individuals, partnerships or corporations thus exchanging indemnity under the pro- visions of section 1 of this act. All notices, proofs of loss, summons or other legal process so served shall give jurisdiction over the persons of such individuals, partnerships or corporations thus exchanging in- demnity. Whenever such service of notice, proofs of loss, summons or CONTRACTS FOR EXCHANGE OP INDEMNITY. 123 other process shall be made upon the insurance commissioner, he must within ten days thereafter, transmit by mail, postage paid, a copy of such notice, proof of loss, or summons or other process to the attorney in fact so appointed by such individuals, partnerships or corporations so contracting among themselves and shall be addressed to such attorney in fact at the home or principal office through which such policies are to be issued. The sending of such copy by the insurance commissioner shall be a necessary part of the service of the notice, proof of loss, sum- mons or other process. When any notice, summons or other legal process is served upon the insurance commissioner pursuant to the provisions of this section, the service as to such individuals, partnerships, or corpora- tions thus exchanging indemnity shall be deemed complete at the end of sixty days after the date of the mailing of such copy of such notice, proof of loss, summons or other legal process to the attorney in fact as herein provided for. (/) The attorney, agent or other representative shall, whenever and as often as the same shall be requested, file with the insurance commis- sioner a statement verified by his oath to the effect that he has examined the commercial rating of the individuals, partnerships or corporations, composing the subscribers in such reciprocal or interinsurance exchange as shown by a commercial agency having at least one hundred thou- sand subscribers and that, from such examination, it appears that no subscriber of such exchange has assumed on any single risk an amount of liability greater than ten per cent of the net financial rating of such subscriber when such risk was assumed. (g) There shall also be filed with the insurance commissioner by any said attorney, agent or other representative, a written stipulation to the effect that all insurance written by him upon property situated within this state shall be deemed to be business done in this state and within the terms and subject as to taxation to the provisions of section 14 of article 13 of the constitution of this state. Sec. 3. The agent, attorney or other representative by or through whom are issued or negotiated any policies of or contracts or agreements for any insurance or indemnity of the character referred to in section one of this act shall procure from the insurance commissioner a certifi- cate of authority stating that all the requirements of this act have been complied with and upon such compliance and the payment of a fee of fifty dollars the insurance commissioner shall issue such certificate. Such certificate must be renewed annually, for which a fee of ten dollars shall be paid. Any such certificate so issued as above may be revoked or suspended by the insurance commissioner if any of such individuals, partnerships or corporations exchanging indemnity under the provisions of this act fail to comply with any or all of the requirements of this act. Sec. 4. The attorney in fact of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange shall file with the insurance commissioner of this state, on or before the first of March of each year, upon forms to be prepared by the insurance com- missioner, a statement which must exhibit the condition and affairs of such exchange on the 31st day of December then next preceding. Sec. 5. The insurance commissioner, whenever he deems necessary, must make an examination of the condition and affairs relating to the exchange of indemnity of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange and must make 124 INSURANCE LAWS OF CALIFORNIA. such an examination before issuing its original certificate of authority to do business in this state ; or where the home office of the interinsur- ance or reciprocal exchange is located outside of the State of California, and when such interinsurance or reciprocal exchange is licensed by the insurance commissioner or department of the state where such home office is located, the insurance commissioner shall accept as satisfactory a certificate of compliance issued by the insurance commissioner or department of the state where said home office is located. Such exam- ination shall verify the certificate and statement filed by the attorney in fact. Such exchange must open its books and papers for the inspection of the insurance commissioner and shall otherwise facilitate such exam- ination and the commissioner may administer oaths and examine under oath any person relative to the contracts of such exchange, and if he finds the books to have been carelessly or improperly kept or posted he must employ sworn experts to rewrite, post and balance the same at the expense of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange. Such examination must be conducted in the county where such individuals, partnerships or corpo- rations composing such reciprocal or interinsurance exchange has its principal office and must be private. Whenever the commissioner shall make such examination as aforesaid the same must be at the expense of the individuals, partnerships and corporations composing such recip- rocal or interinsurance exchange; such expense to be paid in advance, and in the event of refusal to pay such expenses the insurance commis- sioner may refuse to issue any such certificate of authority and must revoke any existing certificate of authority authorizing such individuals, partnerships and corporations composing such reciprocal or interinsur- ance exchange to execute such contracts of indemnity. Sec. 6. Unincorporated interindemnity companies who do not issue policies of insurance, who do not charge expenses of management except in liquidation of losses, nor accept premiums from its members shall be exempt from the provisions of this act. Sec. 7. All policies and insurance contracts or contracts of indem- nity upon a risk or risks situated in the State of California, held by an individual, partnership or corporations as a subscriber of any reciprocal or interinsurance exchange which exchange is not authorized to do busi- ness in the State of California shall be null and void ; provided, that any insurance agreement or agreement for indemnity on goods in transit or the property of common carriers used by such common carriers in the transaction of their business as such carriers shall be deemed not ren- dered void. Sec. 8. For the purpose of taxation under the provisions of section 14 of article 13 of the constitution of the State of California all con- tracts of indemnity upon risks located in this state between individuals, partnerships and corporations under the provisions of this act shall be deemed to be contracts of insurance upon business done in this state under and subject to the provisions of such section 14 article 13 of the constitution of the State of California. Sec. 9. Individuals, partnerships and corporations exchanging recip- rocal or interinsurance contracts providing indemnity among each other shall be exempt from the provisions of other insurance laws of this state. Sec. 10. This act shall take effect July 1, 1911. STANDARD FORM OF FIRE INSURANCE POLICY. 125 An act to establish a standard form of fire insurance policy and to prevent vari- ations therefrom, excepting under certain stated conditions and restrictions. [Approved March 18, 1909; Stats. 1909, p. 404.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. The following is adopted as a standard form of fire insur- ance policy for the State of California : CALIFORNIA STANDARD FORM FIRE INSURANCE POLICY. No Amount $ Rate No other insurance permitted except by agreement endorsed hereon or added hereto. (Here insert name of company, and place of its main office in Cali- fornia, and name of state or country under which incorporated or organized.) IN CONSIDERATION of the stipulations herein named and of dollars premium does insure for the term of from the day of , 19 . . . . , at noon, to the day of , 19 . . . , at noon against all loss or damage by fire, except as hereinafter pro- vided. To an amount not exceeding dollars to the following described property while located and contained as described herein, and not else- where, to wit : The company will not be liable beyond the actual cash value of the interest of the insured in the property at the time of loss or damage nor exceeding what it would then cost the insured to repair or replace the same with material of like kind and quality; said cash value to be esti- mated without allowance for any increased cost of repair or reconstruc- tion by reason of any ordinance or law regulating repair or construction of buildings, and without compensation for loss resulting from interrup- tion of business or manufacture. This policy is made and accepted subject to the foregoing stipulations and conditions and those hereinafter stated, which are hereby specially referred to, and made part of this policy, together with such other pro- visions, agreements or conditions as may be endorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except by writing endorsed hereon or added hereto, and no person, unless duly authorized in writing, shall be deemed the agent of this company. This policy shall not be valid until countersigned by the duly author- ized agent of the company, at In witness whereof, this company has executed and attested these presents (here insert name of company) by { Countersigned at , this day of , 19 . . . ; Agent. 126 INSURANCE LAWS OF CALIFORNIA. STIPULATIONS AND CONDITIONS SPECIALLY REFERRED TO. Property not covered, (a) This company shall not be liable for loss to accounts, bills, currency, evidences of debt or ownership or other documents, money, notes or securities; nor, (6) unless liability is specif- ically assumed hereon, for loss to bullion, casts, curiosities, drawings, dies, jewels, manuscripts, medals, models, patterns, pictures, scientific apparatus, business or store or office furniture or fixtures, sculptures, frescoes, decorations, or property held on storage or for repair. Hazards not covered. This company will not be liable for loss by (a) theft; or (b) by neglect of the insured to use all reasonable means to save and preserve the property at and after a fire, or when the prop- erty is endangered by fire; or (c) (unless fire ensues, and in that event for the damage by fire only) by explosion of any kind or lightning ; or (d) by invasion, insurrection, riot, civil war, or commotion, or (except as hereinafter provided) by military or usurped power, or order of any civil authority, but the company will be liable (unless otherwise pro- vided by endorsement hereon or added hereto) if the property is lost or damaged, by fire or otherwise, by civil authority or military or usurped power exercised to prevent the spread of fire not originating from a cause excepted hereunder and which fire otherwise probably would have caused the loss of or damage to the insured property. Matters avoiding policy. This entire policy shall be void, (a) if the insured has concealed or misrepresented any material fact or circum- stances concerning this insurance or the subject thereof; or, (b) in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss. Unless otherwise provided by agreement endorsed hereon or added hereto, this entire policy shall be void, (a) if the insured now has or shall procure any other insurance, whether valid or not, on property covered in whole or in part by this policy, or (6) if the interest of the insured be other than unconditional and sole ownership, or (c) if the subject of insurance be a building on ground not owned by the insured in fee simple, or (d) if with the knowledge of the insured foreclosure proceedings be commenced or notice given of sale of any property cov- ered by this policy by virtue of any mortgage or trust deed, or (e) if this policy be assigned before a loss. Matters suspending insurance. Unless otherwise provided by agree- ment endorsed hereon or added hereto this company shall not be liable for loss or damage occurring (a) while the hazard be materially increased by any means within the control of the insured; or (b) if the subject of insurance be a manufacturing establishment, while it is operated in whole or in part at night later than ten o'clock or while it ceases to be operated beyond the period of ten consecutive days; or (c) while mechanics or artisans are employed in building or altering or repairing the described premises for more than fifteen days at any one time; or (d) while illuminating gas or vapor be generated in the described build- ing (or adjacent thereto) for use therein; or (e) while there be kept, used or allowed on the described premises (any usage or custom of trade or manufacture to the contrary notwithstanding) calcium carbide, phos- phorus, dynamite, nitro-glycerine, fireworks or other explosives; or exceeding one quart each of benzine, gasoline, naphtha or ether; or more STANDARD FORM OF FIRE INSURANCE POLICY. 127 than twenty-five pounds of gunpowder; or (/) while a building herein described whether intended for occupation by owner or tenant is vacant or unoccupied beyond the period of ten (10) consecutive days ; (g) while the interest in, title to or possession of the subject of insurance is changed excepting: (1) by the death of the insured; (2) a change of occupancy of building without material increase of hazard; and (3) transfer by one or more several copartners or coowners to the others. Such suspension shall not extend the term of this policy nor create any right for refund of the whole or any portion of premium, nor affect the respective rights of cancellation. Chattel mortgage. Unless otherwise provided by agreement in writing endorsed hereon or added hereto this company shall not be liable for loss or damage to any property insured hereunder while encumbered by a chattel mortgage, but the liability of the company upon other property hereby insured shall not be affected by such chattel mortgage. Fallen building clause. Unless otherwise provided by agreement endorsed hereon or added hereto, if a building or any material part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease. Removal when endangered by fire. Should any of said property be necessarily removed because of danger from fire, and there is no other insurance thereon, that part of this policy in excess of the value of the insured property remaining in the original location, or, if there is other insurance thereon, that part of this policy in excess of its proportion of the value of the insured property remaining in the original location, shall, for the ensuing five days only, cover said removed property in its new location or locations. Cancellation. This policy shall be canceled at any time at the request of the insured, in which case the company shall, upon surrender of this policy, refund the excess of paid premium above the customary short rates for the expired time. This policy may be canceled at any time, without tender of unearned portion of premium, by the company by giving five (5) days' written notice of cancellation to the insured and to any mortgagee or other party to whom, with the written consent of the company, this policy is made payable, in which case the company shall, upon surrender of the policy or relinquishment of liability thereunder, refund the excess of paid premium above the pro rata premium for the expired time. Duty of insured in case of loss. When a loss occurs the insured must give to this company written notice thereof without unnecessary delay ; and shall protect the property from further damage ; forthwith separate the damaged and undamaged personal property and put it in the best possible order ; and without unnecessary delay make a complete inventory stating as far as possible the quantity and cost of each article, and the amount claimed thereon. Within sixty days after the commencement of the fire the insured shall render to the company at its main office in California named herein preliminary proof of loss consisting of a written statement signed and sworn to by him setting forth: (a) his knowledge and belief as to the origin of the fire ; ( b ) the interest of the insured and of all others in the property; (c) the cash value of the different articles or properties and the amount of loss thereon ; (d) all incumbrances thereon ; (e) all other 128 INSURANCE LAWS OF CALIFORNIA. insurance, whether valid or not, covering any of said articles or prop- erties; (/) a copy of the descriptions and schedules in all other policies unless similar to this policy, and in that event, a statement as to the amounts for which the different articles or properties are insured in each of the other policies; (g) any changes of title, use, occupation, loca- tion or possession of said property since the issuance of this policy; (h) by whom and for what purpose any building herein described, and the several parts thereof, were occupied at the time of the fire. If the company claims that the preliminary proof of loss is defective and within five days after the receipt thereof (without admitting the amount of loss or any part hereof) notifies in writing the insured, or the party making such proof of loss, of the alleged defects (specifically stating them) and requests that they be remedied by verified amend- ments the insured or such party within ten days after the receipt of such notification and request must comply therewith or, if unable so to do, present to the company an affidavit to that effect. The insured shall also furnish, if required, as far as it is practicable to obtain the same, verified plans and specifications of any buildings, fixtures or machinery destroyed or damaged; and the insured shall exhibit to any person designated in writing by this company all that remains of any property herein described and shall submit to examina- tion under oath, as often as required, by any such person, and subscribe to the testimony so given and shall produce to such person for examina- tion all books of account, bills, invoices and other vouchers, and permit extracts and copies thereof to be made, and in case the originals are lost certified copies, if obtainable, shall be produced. Ascertainment of amount of loss. This company shall be deemed to have assented to the amount of the loss claimed by the* insured in his preliminary proof of loss, unless within twenty days after the receipt thereof, or, if verified amendments have been requested, within twenty days after their receipt, or within twenty days after the receipt of an affidavit that the insured is unable to furnish such amendments, the company shall notify the insured in writing of its partial or total dis- agreement with the amount of loss claimed by him and shall also notify him in writing of the amount of loss, if any, the company admits on each of the different articles or properties set forth in the preliminary proof or amendments thereto. If the insured and this company fail to agree, in whole or in part, as to the amount of loss within ten days after such notification, this com- pany shall forthwith demand in writing an appraisement of the loss or part of loss as to which there is a disagreement and shall name a com- petent and disinterested appraiser, and the insured within five days after receipt of such demand and name, shall appoint a competent and disin- terested appraiser and notify the company thereof in writing, and the two so chosen shall before commencing the appraisement, select a com- petent and disinterested umpire. The appraisers together shall estimate and appraise the loss or part of loss as to which there is a disagreement, stating separately the sound value and damage, and if they fail to agree they shall submit their dif- ferences to the umpire, and the award in writing duly verified of any two shall determine the amount or amounts of such loss. The parties to the appraisement shall pay the appraisers respectively STANDARD FORM OF FIRE INSURANCE POLICY. 129 appointed by them and shall bear equally the expense of the appraise- ment and the charges of the umpire. If for any reason not attributable to the insured, or to the appraiser appointed by him, an appraisement is not had and completed within ninety days after said preliminary proof of loss is received by this com- pany, the insured is not to be prejudiced by the failure to make an appraisement, and may prove the amount of his loss in an action brought without such appraisement. Options of company in case of loss. This company may, at its option, take all or any part of the property for which insurance hereunder is claimed at its ascertained or appraised value, and may also, at its option, in satisfaction of its liability hereunder, repair, rebuild or replace any building or structure or machine or machinery used therein, with other of like kind and quality, within a reasonable time, upon giving notice within twenty days of its intention so to do after the receipt by it of the preliminary proof of loss, or if verified amendments have been requested, within twenty days after their receipt, or, within twenty days after the receipt of an affidavit that the insured is unable to furnish such amendments. There can be no abandonment to this company of any property. Apportionment of loss. This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by, and expenses of, removal from the premises endangered by fire, than the amount hereby insured bears to the entire insurance cover- ing such property whether valid or not, or by solvent or insolvent insurers. Loss when payable. A loss hereunder shall be payable in thirty days after the amount thereof has been ascertained either by agreement or by appraisement ; but if such ascertainment is not had or made within sixty days after the receipt by the company of the preliminary proof of loss, then the loss shall be payable in ninety days after such receipt. Non-waiver by appraisal or examination. This company shall not be held to have waived any provision or condition of this policy or any for- feiture thereof, by assenting to the amount of the loss or damage or by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for. Subrogation. If this company shall claim that the fire was caused by the act or neglect of any person or corporation, this company shall, on payment of the loss be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment. Time for commencement of action. No suit or action on this policy for the recovery of any claim shall be sustained, until after full com- pliance by the insured with all of the foregoing requirements, nor unless begun within fifteen months next after the commencement of the fire. Definitions. Wherever in this policy the word "insured" occurs, it shall be held to include the legal representatives of the insured in case of his death, and wherever the word "loss" occurs, it shall be deemed the equivalent of "loss or damage," and wherever the words "the time of loss or damage" are used they shall be deemed the equivalent of "the time of the commencement of the fire." 9 IN 130 INSURANCE LAWS OF CALIFORNIA. Sec. 2. There shall be printed on the outside fold of said policy in type not smaller than small pica the following words in this form : READ THIS POLICY. Ins. Co. is liable only for actual cash value. Policy is void in case of any fraud, false swearing, mis- representation or concealment about material facts. Policy is void, unless otherwise agreed in writing, if 1st. It is assigned before loss ; 2nd. Insured has or shall procure other insurance ; 3rd. Any change occurs in location of property ; 4th. Insured building is on ground not owned in fee simple by insured ; 5th. Insured is not sole and unconditional owner. Policy is suspended, unless otherwise agreed in writing, if 6th. Described building becomes vacant or unoccupied for ten days ; 7th. Mechanics are employed more than fifteen days in repairing same; 8th. Property is or becomes encumbered by chattel mort- gage; 9th. Illuminating gas or vapor is generated in or adjacent to described building; 10th. Explosives or prohibited qualities of gasoline, etc., are kept on premises. Insurance ceases if described building or any material part falls except as result of fire. Policy does not cover certain enumerated personal property. Note particularly duty of insured in case of loss ; Also provisions avoiding or suspending policy, including changes of ownership or possession. Sec. 3. By special agreement endorsed on the policy or added thereto the provisions regarding appraisement or apportionment of loss may be waived and the valuations of all or any of the insured property in case of total loss may be agreed upon in advance of loss. Sec. 4. Said standard form of policy shall be plainly printed and no portion thereof shall be in type smaller than small pica and subheads shall be in type larger than pica, and the lines of the policy shall be numbered consecutively. Sec. 5. This act shall not apply to any company organized under an act entitled ' ' An act to provide for the organization and management of county fire insurance companies, ' ' approved April 1, 1897, or amend- ments to that act, but all other fire insurance policies on property in California shall be on said standard form, and, except as herein pro- vided, shall not contain additions thereto. No parts of the standard form shall be omitted therefrom. Sec. 6. The blanks "in said standard form shall be appropriately filled. The company may add to the standard form any matter relat- ing to its financial condition, directors, officers, stockholders and his- tory, and the address of its home office and principal office in the United States; also in red ink any provisions respecting any limita- tion of liability of the company, its stockholders or members which STANDARD FORM OF FIRE INSURANCE POLICY. 131 it is required or permitted by the law of the state or country of its organization to insert in its policies. Sec. 7. Clauses may be added to the standard form providing for and defining the rights, duties and obligations of mortgagees, assignees and other parties who have acquired or may acquire an interest in, right to or lien upon the insured property. Sec. 8. No clause shall be inserted or rider attached affecting the standard form liability of the insurer for loss or damage by fire occa- sioned either directly or indirectly by earthquake, hurricane, volcanic action or other disturbance of nature, unless the same shall be printed in red ink in type larger than small pica and at the head of the policy there shall be printed in red ink in large bold-faced type the words, "This policy contains limitations of liability not permitted in the Cali- fornia standard form." Sec. 9. Clauses may be added to the standard form (a) covering property and risks not otherwise covered; (b) assuming greater liability than is otherwise imposed on the insurer; (c) granting insured permits and privileges not otherwise provided; (d) waivers of any of the mat- ters avoiding the policy or suspending the insurance; (e) waivers of any of the requirements imposed on the insured after loss. Sec. 10. Except as herein otherwise provided clauses may be attached to the standard form by separate riders in type larger than pica impos- ing specified duties and obligations upon the insured and limiting the liability of the insurer. Sec. 11. Any insurers, other than corporations, issuing policies on property in California, shall use the standard form, changing only such words as refer to the corporation or company or to officers or agents of the corporation or company, and in regard to its organization ; and such other insurers may substitute in place of such words having peculiar reference to corporations, appropriate words having similar reference to themselves. Sec. 12. Any insurer, or the agent countersigning or issuing a fire insurance policy covering in whole or in part property in California varying from the California standard form of policy except as herein provided is guilty of a misdemeanor but any policy so issued shall not- withstanding be binding upon the company issuing the same. Sec. 13. This act shall take effect and be in force from and after the first day of August, 1909. Clauses limiting the liability of the insurer or imposing specified duties and obli- gations upon the insured may be printed on -separate sheets, and thus attached as riders or such clauses may be placed upon the same sheet of paper clearly separating the same. If the last plan be adopted, however, I would suggest that such clause be introduced as follows : The first clause be introduced by the words, "Rider No. 1," the second clause, "Rider No. 2," and so on. Each clause should be introduced with its appropriate rider number : Opinion of the Attorney General, August 19, 1909. 132 INSURANCE LAWS OF CALIFORNIA. PILINGS AND FEES SECRETARY 01= STATE. POLITICAL CODE. PART III. TITLE I. CHAPTER III. ARTICLE V. Fees of secretary of state. Exceptions. Disposition of fees. State library fund. Sec. 409. The secretary of state, for services performed in his office, must charge and collect the following fees : 1. For a copy of any law, resolution, record, or other document on file in his office, twenty cents per folio. 2. For comparing a copy of any law, resolution, record, or other docu- ment or paper with the original, or the certified copy of the original, on file in his office, five cents per folio. 3. For affixing certificate and seal of state, unless otherwise provided for, two dollars. 4. For filing articles of incorporation, if the capital stock amounts to twenty-five thousand dollars or less, fifteen dollars; if the capital stock amounts to over twenty-five thousand dollars and not over seventy-five thousand dollars, twenty-five dollars; if the capital stock amounts to over seventy-five thousand dollars, and not over two hundred thousand dollars, fifty dollars ; if the capital stock amounts to over two hundred thousand dollars, and not over five hundred thousand dollars, seventy- five dollars; if the capital stock is over five hundred thousand dollars, and not over one million dollars, one hundred dollars; if the capital stock is over one million dollars, fifty dollars additional for every five hundred thousand dollars or fraction thereof of capital stock over and above one million dollars; for filing articles of incorporation without capital stock, except cooperative associations, five dollars; for filing articles of incorporation of cooperative associations, formed under the act of eighteen hundred and ninety-five, and acts supplementary thereto or amendatory thereof, fifteen dollars. 5. For recording articles of incorporation, twenty cents per folio. 6. For issuing certificate of incorporation, three dollars. 7. For filing certificate of increase of capital stock, five dollars for every fifty thousand dollars or fraction thereof of such increase. 8. For filing certificate of decrease of capital stock, five dollars. 9. For filing notice of removal of principal place of business, five dollars. 10. For filing amended articles of incorporation, unless otherwise provided for, five dollars. 11. For filing certificate of creation of bonded indebtedness, or increase or decrease thereof, five dollars. 12. For issuing certificate of increase or decrease of capital stock, three dollars. 13. For filing certificate of continuance of existence, five dollars. PILINGS AND FEES OF SECRETARY OF STATE. 133 14. For issuing certificate of continuance of existence, three dollars. 15. For filing- claim to trade-mark, and issuing certificate of filing, five dollars. 16. For issuing certificate of filing of any document, not otherwise provided for, three dollars. 17. For filing certificate of increase or decrease of number of directors, five dollars. 18. For issuing certificate of increase or decrease of number of direct- ors, three dollars. 19. For receiving and recording each official bond, five dollars. 20. For filing notice of appointment of agent, five dollars. 21. For each commission, passport, or other document signed by the governor and attested by the secretary of state (pardons, military com- missions, commissions issued to non-salaried state officers, and extra- dition papers excepted), five dollars. 22. For each patent for land issued by the governor, if for one hun- dred and sixty acres or less, one dollar; and for each additional one hundred and sixty acres, or fraction thereof, one dollar. 23. For issuing certificate of official character, two dollars. 24. For recording miscellaneous documents or papers, twenty cents per folio. 25. For filing certified copy of order and decree of court, changing name, or certified copy of order and decree of court, dissolving a corpo- ration, five dollars. No member of the legislature or state officer shall be charged for any search relative to matters appertaining to the duties of his office; nor shall he be charged any fee for a certified copy of any law or resolution passed by the legislature relative to his official duties. All fees collected by the secretary of state must, at least once of each week, be paid into the state treasury. Three thousand five hundred dollars of such monthly returns shall be credited to and constitute the state library fund, and the balance shall be paid into the general fund of the state. Enacted March 12, 1872. Amended, Stats. 1881, p. 65; Stats. 1895, p. 63 ; Stats. 1901, p. 86 ; Stats. 1903, p. 27 ; Stats. 1905, p. 623 ; Stats. 1907, p. 352. Amended and changed from 416 to 409, Stats. 1911, p. 573. 134 INSURANCE LAWS OF CALIFORNIA. CIVIL CODE. DIVISION I. PART IV. TITLE I. CHAPTER VI. Designation of person on whom process may be served. Service on the secre- tary of state, when valid. Sec. 405. Every corporation other than those created by or under the laws of this state must, at the time of filing the certified copy of its articles of incorporation, file in the office of the secretary of state a des- ignation of some person residing within this state upon whom process issued by authority of or under any law of this state may be served. A copy of such designation, duly certified by the secretary of state, is suffi- cient evidence of such appointment. Such process may be served on the person so designated or, in the event that no such person is desig- nated, then on the secretary of state, and the service is a valid service on such corporation. Enacted, Stats. 1905, p. 630. Amended, Stats. 1907, p. 558. Foreign corporation must file certified copy of articles of incorporation (in office of secretary of state). Sec. 408. Every corporation organized under the laws of another state, territory, or of a foreign country, which (1) is now doing business in this state, or (2) is maintaining an office herein, or (3) w T hich shall hereafter do business in this state, or (4) maintain an office herein, or (5) which shall enter this state for the purpose of doing business herein, must file in the office of the secretary of state of the State of California (1) a certified copy of its articles of incorporation, or (2) of its charter, or (3) of the statute or statutes, or (4) legislative, or executive, or gov- ernmental act or acts creating it, in cases where it has been created by charter, or statute, or legislative, or executive, or governmental act, duly certified by the secretary of state, or other officer authorized by the law of the jurisdiction under which such corporation is formed to certify such copy, and (5) a certified copy thereof, duly certified by the secre- tary of state of this state, (a) in the office of the county clerk of the county where its principal place of business is located, and .(b) also where such corporation owns property. Enacted, Stats. 1905, p. 630. Amended, Stats. 1907, p. 559. Foreign corporations, fees to be paid by, on filing certified copies of articles of incorporation. Sec. 409. For filing and issuing a certified copy as required in sec- tion 408 of this code, corporations formed under the laws of another state, or of a territory, or of a foreign country, must pay the same fees as are paid by corporations formed under the laws of this state. Enacted, Stats. 1905, p. 631. TAXATION OF INSURANCE COMPANIES. 135 An act to carry into effect the provisions of section fourteen of article thirteen of the constitution of the State of California as said constitution was amended November 8, 1910, providing for the separation of state from local taxation, and providing for the taxation of public service and other corpora- tions, banks and insurance companies for the benefit of the state, all relating to revenue and taxation. [Approved April 1, 1911 ; Stats. 1911, p. 530.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Subjects taxed exclusively for state purposes. Section 1. Taxes levied, assessed and collected as hereinafter pro- vided upon railroads, including street railways, whether operated in one or more counties; sleeping car, dining car, drawing-room car and palace car companies, refrigerator, oil, stock, fruit, and other car- loaning and other car companies operating upon railroads in this state ; companies doing express business on any railroad, steamboat, vessel, or stage line in this state; telegraph companies; telephone companies; com- panies engaged in the transmission or sale of gas or electricity; insur- ance companies ; banks, banking associations, savings and loan societies, and trust companies ; and taxes upon all franchises of every kind and nature, shall be entirely and exclusively for state purposes, and shall be assessed and levied by the state board of equalization, and collected in the manner hereinafter provided. The word "company" and the word "companies" as used in this act shall include persons, partnerships, joint stock associations, companies, and corporations. Public service corporations, how taxed. Sec. 2. All railroad companies, including street railways, whether operated in one or more counties ; all sleeping car, dining car, drawing- room car and palace car companies, all refrigerator, oil, stock, fruit, and other car-loaning, and other car companies, operating upon the railroads in this state ; all companies doing express business on any railroad, steam- boat, vessel, or stage line in this state ; all telegraph and telephone com- panies engaged in the transmission or sale of gas or electricity shall annually pay to the state a tax upon their franchises, roadways, road- beds, rails, rolling stock, poles, wires, pipes, canals, conduits, rights of way, and other property, or any part thereof, used exclusively in the operation of their business in this state, computed as follows : Said tax shall be equal to the percentages hereinafter fixed upon the gross receipts from operation of such companies and each thereof within this state. When such companies are operating partly within and partly without this state, the gross receipts within this state shall be deemed to be all receipts on business beginning and ending within this state, and a pro- portion, based upon the proportion of the mileage within this state to the entire mileage over which such business is done, of receipts on all busi- ness passing through, into, or out of this state. The percentages above mentioned shall be as follows: On all railroad companies, including street railways, four per cent ; on all sleeping car, dining car, drawing-room car, palace car companies, refrigerator, oil, stock, fruit, and other car-loaning, and other car companies, three per cent; on all companies doing express business on any railroad, steam- boat, vessel or stage line, two per cent ; on all telegraph and telephone companies, three and one half per cent ; on all companies engaged in the 136 INSURANCE LAWS OF CALIFORNIA. transmission or sale of gas or electricity, four per cent. Such taxes shall be in lieu of all other taxes and licenses, state, county, and municipal, upon the property above enumerated of such companies except as other- wise provided in section fourteen of article thirteen of the constitution of this state, and as provided in section twenty-two of article four of said constitution. The word "municipal" as used in this act shall apply to incorporated towns and cities formed under article eleven of the consti- tution of this state and to none other. Tax on insurance companies. Sec. 3. Every insurance company or association doing business in this state shall annually pay to the state a tax of one and one half per cent upon the amount of the gross premiums received upon its business done in this state, less return premiums and reinsurance in companies or associations authorized to do business in this state; provided, that there shall be deducted from said one and one half per cent upon the gross premiums the amount of any county and municipal taxes paid by such companies on real estate owned by them in this state. This tax shall be in lieu of all other taxes and licenses, state, county, and munic- ipal, upon the property of such companies, except county and municipal taxes on real estate, and except as otherwise provided in the consti- tution of this state ; provided, that when by the laws of any other state or country, any taxes, fines, penalties, licenses, fees, deposits of money, or of securities, or other obligations or prohibitions, are imposed on insurance companies of this state, doing business in such other state or country, or upon their agents therein, in excess of such taxes, fines pen- alties, licenses, fees, deposits of money, or of securities, or other obliga- tions or prohibitions, imposed upon insurance companies of such other state or country, so long as such laws continue in force, the same obli- gations and prohibitions of whatsoever kind must be imposed by the insurance commissioner upon insurance companies of such other state or country doing business in this state. The amount paid to the beneficiary under a return premium policy would not be a return premium within the meaning of section 3 of the foregoing act. The amount paid to a policyholder, as the surrender value of his policy, should be deducted from the gross premium as a return premium, it being the return of an unearned premium. Concerning mutual insurance companies that return at the end of the year the amount not necessary for the expenses during that year, we are of the opinion that the amount returned at the end of the year as not necessary for the expenses of that year should be deducted as a return premium. There seems to be no difference between this and the so-called dividend. Regarding the so-called dividend returned at the end of each year, I am of the opinion that this question should be answered the same as that in reference to mutual insurance companies. If it were a dividend, as we ordinarily understand the term, that is to say, earnings distributed to the stockholders of the corporation, then clearly it should be taxed. We are of the opinion that the true rule is that the so-called dividends are to be regarded as premiums returned as unused and unearned : Opinion of the Attorney. General, May 24, 1911. Tax on state and national banks. Sec. 4. The shares of capital stock of all banks, organized under the laws of this state, or of the United States, or of any other state and located in this state, shall be assessed and taxed to the owners or holders thereof by the state board of equalization, in the manner hereinafter provided, in the city or town where the bank is located and not else- where. There shall be levied and assessed upon such shares of capital TAXATION OF INSURANCE COMPANIES. 137 stock an annual tax, payable to the state, of one per centum upon the value thereof. The value of each share of stock in each bank, except such as are in liquidation, shall be taken to be the amount paid in thereon, together with its pro rata of the accumulated surplus and undivided profits. The value of each share of stock in each bank which is in liquidation shall be taken to be its pro rata of the actual assets of such bank. This tax shall be in lieu of all other taxes and licenses, state, county, and municipal, upon such shares of stock and upon the property of such bank, except county and municipal taxes on real estate and except as otherwise provided in the constitution of this state. In deter- mining the value of the capital stock of any bank there shall be deducted from the value, as defined above, the value, as assessed for county taxes, of any real estate, other than mortgage interests therein, owned by such bank and taxed for county purposes. The banks shall be liable to the state for this tax and the same shall be paid to the state by them on behalf of the stockholders in the manner and at the time hereinafter provided, and they shall have a lien upon the shares of stock and upon any dividends declared thereon to secure the amount so paid. The moneyed capital, reserve, surplus, undivided profits, and all other property belonging to unincorporated banks or bankers of this state, or held by any bank located in this state which has no shares of capital stock, or employed in this state by any branches, agencies, or other rep- resentatives of any banks doing business outside of the State of Cali- fornia, shall be likewise assessed and taxed to such banks or bankers by the said board of equalization, in the same manner as above provided for incorporated banks, and taxed at the same rate that is levied upon the shares of capital stock of incorporated banks, as provided in the first paragraph of this section. In the case of a branch, an agency, or other representative of any bank doing business outside of this state, the capital of said branch, agency, or representative used in this state shall be taken to be the average amount owed by the said branch, agency. or representative to the bank of which it is a branch, agency, or repre- sentative during the year ending the first Monday in March. The value of said property shall be determined by taking the entire property invested in such business, together with all reserve, surplus, and undi- vided profits, at their full cash value, and deducting therefrom the value as assessed for county taxes of any real estate, other than mortgage inter- ests therein, owned by such bank or banker and taxed for county pur- poses. Such taxes shall be in lieu of all other taxes and licenses, state, county, and municipal, upon the property of the banks and bankers men- tioned in this section, except county and municipal taxes on real estate, and except as otherwise provided in the constitution of this state. All moneyed capital and property of the banks and bankers mentioned in this paragraph shall be assessed and taxed at the same rate as an incor- porated bank, provided for in this section. In determining the value of the moneyed capital and property of the banks and bankers mentioned in this section, the said state board of equalization shall include and assess to such banks all property and everything of value owned or held by them which would go to make up the value of the capital stock of such banks and bankers, if the same were incorporated and had shares of capital stock. The word ' banks ' ' as used in this act shall include bank- ing associations, unincorporated banks and bankers, branches, agencies 138 INSURANCE LAWS OF CALIFORNIA. or other representatives of any banks doing business outside of the State of California ? savings and loan societies, and such trust companies, as conduct the business of receiving money on deposit, but shall not include building and loan associations. Nothing in this act shall be construed to relieve any bank in this state from the payment of the charges for examination as provided in section one hundred and twenty three of an act entitled ' An act to define and regulate the business of banking, ' ' approved March 1st, 1909, or in any acts amendatory thereof. Tax on franchises. Sec. 5. All franchises, other than those of the companies mentioned in sections two, three and four of this act, shall be assessed at their actual cash value, after making due deduction for good will, in the manner hereinafter provided, and shall.be taxed at the rate of one per centum each year, and the taxes collected thereon shall be exclusively for the benefit of the state. These franchises shall include the actual exercise of the right to be a corporation and to do business as a corporation under the laws of this state and the actual exercise of the right to do business as a corporation in this state when such right is exercised by a corpora- tion incorporated under the laws of any other state or country, also the right, authority, privilege, or permission to maintain wharves, ferries, toll roads, and toll bridges, and to construct, maintain or operate, in, under, above, upon, through or along any streets, highways, public places, or waters, any mains, pipes, canals, ditches, tanks, conduits or other means for conducting water, oil, or other substances. Nothing in this section contained shall be construed to release any corporation from the payment of the annual license tax as provided for by an act entitled : "An act relating to revenue and taxation, providing for a license tax upon corporations, and making an appropriation for the purpose of carrying out the objects of this act ' ' approved March 20, 1905, and the acts amendatory thereof. Municipal charges for special franchises not released. Sec. 6. Nothing in this act shall be construed to release any company from the payment of any amount agreed to be paid or required by law to be paid, now or hereafter, for any special privilege or franchise granted by any of the municipal authorities of this state. "Gross receipts from operation" denned. Sec. 7. The term "gross receipts from operation" as used in section two of this^act is hereby defined to include all sums received from busi- ness done within this state, during the year ending the thirty-first day of December last preceding, including the company 's proportion of gross receipts from any and all sources on account of business done by it within this state, in connection with other companies described in sec- tion 2 of this act. In case of companies operating partly within and partly without this state, the gross receipts within this state shall be deemed to be all receipts on business beginning and ending within this state, and the pro- portion based upon the proportion of the mileage within this state to the entire mileage over which such business is done, of receipts on all busi- ness passing through, into or out of this state. TAXATION OF INSURANCE COMPANIES. 139 No deduction shall be allowed from the gross receipts from operation for commissions, rebates, or other repayments, except only such refunds as arise from errors or overcharges ; nor shall any deduction be allowed for payments from gross receipts to other companies for any purpose whatsoever, except such refunds as arise from errors or overcharges. Income derived from property not defined in this act as operative property shall not be included in the gross receipts for the purpose of determining the tax on the property and franchises provided for in section two of this act. "Operative property" defined. Sec. 8. 1. The term "operative property" as used in this act shall include : (a) In the case of railroad companies, including street railways: The franchises, roadway, roadbed, rails, rolling stock, rights of way, sidings, spur tracks, switches, signal systems, cranes and structures used in loading and unloading cars, fences along the right of way, poles, wires, conduits, power lines, piers, used exclusively in the operation of the railroad business, depot grounds and buildings, ferryboats, tugs and car-floats used exclusively in the operation of the railroad business ; machine shops, repair shops, round houses, car barns, power houses, substations, and other buildings, used in the operation of the railroad business and so much of the land on which said shops, houses, barns, and other buildings are situate as may be required for the convenient use and occupation of said buildings. (b) In the case of sleeping car, dining car, drawing-room car and palace car companies, refrigerator, oil, stock, fruit, and other car-loan- ing, and other car companies operating upon railroads in this state : The franchises, cars, and other rolling stock. (c) In the case of companies doing express business on any railroad, steamboat, vessel, or stage line in this state : The franchises, cars, trucks, wagons, horses, harness, and safes. (d) In the case of telegraph and telephone companies doing business in this state : The franchises, rights of way, poles, wires, pipes, conduits, cables, switchboards, telegraph and telephone instruments, batteries, gen- erators, and other electrical appliances, and exchange and other build- ings used in the telegraph and telephone business and so mnch of the land on which said buildings are situate as may be required for the con- venient use and occupation of said buildings. (e) In the case of companies engaged in the transmission or sale of gas or electricity: The franchises, towers, poles, wires, pipes, canals, tunnels, ditches, flumes, aqueducts, conduits, rights of way, dams, reser- voirs, water and water rights used exclusively in the business of the transmission or sale of gas or electricity ; transformers, substations, gas- holders, gas and electric generators, switches, switchboards, meters, elec- trical and gas appliances, oil tanks, power plants, power houses, and other buildings and structures used in the operation of the business of the transmission or sale of gas or electricity and so much of the land on which said buildings and structures are situate as may be required for the convenient use and operation of said buildings ; provided, that the operative property of the companies enumerated in this section, shall also include any other property not above enumerated that may be reasonably necessary for use by said companies exclusively in the opera- 140 INSURANCE LAWS OF CALIFORNIA. tion and conduct of the particular kinds of business enumerated in sec- tion two of this act. The operative property mentioned in subdivisions (a), (b), (c), )d), and (e), of this section shall not be subject to taxation for county, municipal, or district purposes except as otherwise provided for in the constitution and laws of this state; provided, however, that when any piece or parcel of property in this state owned by any of the companies mentioned in section two of this act is used partially by such company for any use reasonably necessary to the operation of any of the lines of business enumerated in section two of this act, and such property is also partially rented to or used by others or is partially used by the company for some other lines of business not among those so enumerated, or for purposes not reasonably necessary to the operation of any of said enu- merated lines of business, it shall be considered operative property in that proportion only which that part of the property mentioned in this proviso used by the company in the operation of any of said enumerated lines of business bears to the whole of the property mentioned in this proviso. 2. Any property of the classes mentioned in this section owned by a company constructing a new railroad, street railway, telegraph or tele- phone system, or plant or system for the transmission or sale of gas or electricity, no part of which new road, line, plant, or system is in opera- tion, and the same classes of property when held by an operating com- pany solely for the construction of a new railroad or railway line, a new telegraph or telephone system, or a new plant or system for the trans- mission or sale of gas or electricity, and not to be used for betterments or additions to roads, lines, plants, or systems already under operation, shall not be considered operative property and shall be subject to assess- ment and taxation for county, municipal, and district purposes. The property of any company mentioned in this section shall be deemed to be in operation as to such part of the new road, line, plant, or system as may be in use as soon as it offers and renders service to the public for com- pensation ; provided, however, that the state board of equalization shall finally determine the fact of such operation and the liability of any such company to be taxed upon its gross receipts as provided in section two of this 'act. 3. When any property in this state belonging to a company of the classes named in this section is rendering no service to the public in this state, even though it may be rendering service to the public in some other state or states, such property shall not be considered as operative property, and shall be subject to assessment and taxation for county, municipal, and district purposes. 4. The state board of equalization shall have power to make rules and issue instructions not inconsistent w T ith the constitution and laws of this state for the guidance of assessors in determining what is operative prop- erty and what is non-operative property of companies named in this section. Report of public service companies. Sec. 9. Such person or officer, as the state board of equalization may designate, of each of the companies mentioned in section two of this act, shall, on or before the first Monday in March of each year, file with the said board a report signed and sworn to by one or more of said persons TAXATION OF INSURANCE COMPANIES. 141 or officers, showing in detail for the year ending the thirty-first day of December last preceding, the various items as follows : 1. The name of the company, its nature, whether a person or persons, a partnership (with names of partners), an association, or corporation, and under the laws of what state, territory or country organized, the nature of its business, the location of its principal place of business, the names and post office addresses of its president, secretary, auditor, treasurer, superintendent, and general manager, the location of its prin- cipal place of business in this state, the name and post office address of its chief officer or managing agent in this state, and the names and addresses of all subsidiary companies whose property and business are operated by it and the names and addresses of any company of which it may be subsidiary. 2. Each of the companies mentioned in section two of this act shall report, in such detail as the state board of equalization shall prescribe, all of its property in this state which comes under the definition of operative property in section eight of this act. When any such company operates both within and without this state it shall report the mileage over which it operates both within and without this state. It shall also report the location of said property within this state by counties, cities and counties, municipalities, and districts, in such manner and in such detail as said board of equalization shall prescribe. It shall also, at the same time, furnish a duplicate of the report covering so much of said property as is located in any county, city and county, municipality, or district, to the assessor of the county, city and county, city, or district in which such property is located. The state board of equalization may require the filing in its office of maps descriptive of all the operative property of any such companies, and may prescribe the form and size of such maps and the details to be shown therein, and may require that similar maps descriptive of the operative property within each county, city and county, municipality, or district, shall be filed in the assessor 's office in each county, city and county, city, or district in which any of said property is located. 3. The amount of capital stock issued, and the amount of money received therefor, showing separately the capital stock issued and the money received therefor of the operating company and of each subsid- iary company in this state. 4. The dividends paid during the year ending the thirty-first day of December last preceding, the surplus fund, if any, on said thirty-first day of December, or between such periods as the state board of equaliza- tion may determine, those of the operating company and of each sub- sidiary company in this state to be shown separately. 5. The funded and floating debts and the rate of interest thereon, showing separately the debts of the operating company and of each sub- sidiary company in this state, on the thirty-first day of December last preceding. 6. The market value of the stock and of the outstanding bonds, or, when said stock or bonds have no market value, the actual value thereof, for such periods and for such dates as the state board of equalization shall prescribe. 7. The amounts expended for improvements during the year ending 142 INSURANCE LAWS OF CALIFORNIA. the thirty-first day of December last preceding, how expended and the character of the improvements. 8. The gross receipts from operation within this state for the year ending the thirty-first day of December last preceding, the gross receipts from such classes of business as .the state board of equalization may designate, to be reported separately ; also, where the property and busi- ness are partly within and partly without this state, the gross receipts for said period on all business beginning and ending entirely within this state, and that proportion of the gross receipts from all business passing through, into, or out of this state, which the mileage within this state bears to the total mileage over which such interstate business is done as further defined in section seven of this act. 9. The operating and other expenses. 10. The balances of profit and loss, between such periods as the state board of equalization may determine. 11. Such other matters as the state board of equalization may deem necessary in order to enable it to assess and levy the taxes provided for in section fourteen of article thirteen of the constitution of this state. Each such company shall include in its report the property and busi- ness of all subsidiary companies as that term is hereinafter defined in this section, whose property and business are operated by it, whether by virtue of a lease, an operating contract or agreement, or by virtue of control through the ownership of stock or otherwise, even though such subsidiary companies maintain an independent legal existence and sepa- rate accounts. The term "subsidiary company" is hereby defined as applying to a company which is merged in the operating system of an operating com- pany in any of the ways above stated, whose property and franchises would be taxable under section two of this act if the same were operated independently. No separate report need be rendered by a subsidiary company whose property, franchises, and operations are fully and com- pletely covered by the report of an operating company, unless the state board of equalization shall deem such a separate report necessary. Each such company operating the property and business of a sub- sidiary company in some line of business to which a different per- centage of the gross receipts is applied by section two of this act from that applied by said section two to the gross receipts of the operating company, shall report such receipts of the subsidiary company sep- arately. Assessor to report to state board property improperly claimed as operative property. Sec. 10. If any assessor finds in the report of the operative prop- erty in his county, city and county, municipality, or district, furnished to him by any of the companies as required in section nine of this act, any piece or parcel of property which he regards as non-operative property, or partially operative and partially non-operative, he shall, within thirty days after receiving such report, notify the state board of equalization thereof by mail, which notice shall contain a general description of the property and the assessor's reasons for regarding the same as non-operative property. He shall also mail a copy of the notice to the company whose property is involved. The said board shall TAXATION OF INSURANCE COMPANIES. 143 investigate the nature of the property and its use, and, if an agreement between the said board, the assessor, and the company as to the proper classification of such property can not be reached, then the said board shall, under such rules of notice as it may deem reasonable, set a date for a hearing, at which the assessor and the company may be present or represented. At such hearing the board shall, from the evidence pre- sented and from the best information it can obtain, decide the matter in dispute, and determine whether such property is operative or non- operative or in what proportion operative and in what proportion non- operative. The said board shall enter its decision in its minutes, and shall send a copy thereof to the assessor and the company, and also to the proper officer of any city affected thereby. Said decision shall be binding upon all parties, the state, the county, city and county, munic- ipality, or district, and the company, unless set aside by a court of com- petent jurisdiction, and each such assessor must note the decision on his assessment roll, and must assess such property accordingly. If the state board of equalization shall find in the report of operative property furnished to said board by any company under the provisions of section nine of this act, any piece or parcel of property which said board regards as non-operative property, or partially operative and par- tially non-operative, the board shall, within thirty days after receiving such report, notify said company thereof in writing, which notice shall contain a general description of the property and the reasons for regard- ing the same as non-operative. It shall also mail a copy of the notice to any assessor in whose county, city and county, municipality, or district the property is located. If an agreement between the said board, the assessor, and the company as to the proper classification of such prop- erty can not be reached, then the said board shall, under such rules of notice as it may deem reasonable, set a date for a hearing, at which the assessor and the company may be present or represented. At such hear- ing the board shall, from the evidence presented and from the best infor- mation it can obtain, decide the matter in dispute, and determine whether such property is operative or non-operative, or in what propor- tion operative and in what proportion non-operative. The said board shall enter its decision in its minutes, and shall send a copy thereof to the assessor and the company, and also to the proper officer of any city affected thereby. Said decision shall be binding upon all parties, the state, the county, city and county, municipality, or district, and the com- pany, unless set aside by a court of competent jurisdiction, and each such assessor must note the decision on his assessment roll and must assess the property accordingly. Insurance commissioner to report. Sec. 11. The insurance commissioner of this state must on or before the last day of March in each year, make and file with the state board of equalization a report showing : 1. All companies, domestic and foreign, and all firms, associations, or persons, engaged in the business of insurance in this state. 2. The total amount of the gross premiums received from its business in this state by each of said companies, firms, associations, and persons during the year ending the thirty-first day of December last preceding. 3. The amount of return premiums paid on business done in this state and the amount of reinsurance on business done in this state paid to 144 INSURANCE LAWS OF CALIFORNIA. other insurance companies or associations authorized to do business in this state, by said companies, firms, associations, and persons, during said year. 4. The amount of any county and municipal taxes paid during said year by such companies on real estate owned by them in this state, and where said real estate is located. In making this report he shall list separately all those companies, firms, associations, or persons, which under the second proviso in subdi- vision (b) of section fourteen of article thirteen of the constitution and of section three of this act, are subject to a tax at a rate higher than one and one half per cent on their gross premiums, or to any additional tax or burden, and shall indicate in each case the amount and character of said tax or burden. Every company, firm, association, or person engaged in the business of insurance in this state shall file with the insurance commissioner on or before the first Monday in March in each year such statements in addition to, or in modification of, the statements required to be rendered under the provisions of article sixteen of chapter three of title one of part three of the Political Code as said insurance commissioner shall deem necessary to enable him to prepare the report required of him in this section and said statements shall be verified in the same manner as is provided for the verification of other statements by insurance companies in section six hundred and ten of the Political Code, except that, those filed by foreign companies shall be verified by the oath of the manager thereof residing within this state. Bank reports. Sec. 12. The president, secretary, treasurer, cashier, or such other officer as the state board of equalization may determine, of every bank referred to in section fourteen of article thirteen of the constitution of this state, shall on the first Monday in March or within ten days there- after make and file with the state board of equalization a sworn state- ment showing the condition of said bank at the close of business on the first Monday in March, and showing the amount of its authorized capital stock, the number of shares issued and the par value thereof, the amount received for stock issued, the amount of its surplus and undivided profits, if any, a complete list of the names and residences of its stock- holders and the number of shares held by each as of record on the books of the bank at the close of business on the first Monday in March ; or, in the case of unincorporated banks and bankers, of banks having no capital stock and of branches, agencies, or other representatives of banks doing business outside of this state, the moneyed capital, reserve, sur- plus, undivided profits, and other taxable property, as further defined in section fourteen of article thirteen of the constitution of this state, used by them in the banking business in this state, also a description of the real estate, other than mortgage interests therein, and the value of each piece thereof as assessed for the purpose of county taxation for the then current fiscal year. Branches, agencies, or other representatives of banks doing business outside of this state, shall report the average amount owed by said branches, agencies, or other representatives, to the banks of which they are branches, agencies, or representatives, during the year ending the first Monday in March, also a description of the real estate other than mortgage interests therein, and the value TAXATION OF INSURANCE COMPANIES. 145 of each piece thereof as assessed for the purpose of county taxation for the then current fiscal year. The state board of equalization shall pre- scribe the form of reports, the manner of their verification, and may require the submission of tax receipts, or copies thereof certified to be correct by any notary public, in order to verify the statements as to the assessed value of the real estate, and may require such further infor- mation or statements as said board may deem necessary. Secretary of state to report corporations, etc. Sec. 13. The secretary of state shall before the first day of April in the year one thousand nine hundred and eleven report to the state board of equalization the names, principal place of business, date of incorporation, term of existence, number of charter, and the funded debt if any, and the then authorized capital stock of all corporations whether formed under the laws of this state or of some other state or country, a copy of whose articles of incorporation is on file in his office, and which are authorized to do business in this state, and at such times thereafter and as often as the state board of equalization shall deter- mine, report to said board the same information concerning all new corporations whether formed under the laws of this state or of any other state or country a copy of whose articles of incorporation shall have been filed in his office together with the amount of the capital stock thereof and also the names and principal place of business of all corpo- rations filing designation of agents or certificates of increase or decrease of capital stock in his office with the amount of the increase or decrease of the capital stock thereof. Owners of franchises to report. Sec. 14. The owner or holder of every franchise subject to taxation as provided in section five of this act, shall within ten days after the first Monday in March in each year make a written report to the state board of equalization, signed and sworn to by the holder or owner himself, if an individual, or by one of the copartners if such owner or holder is a copartnership, or by the president or vice-president and the .treasurer or secretary if the owner is a corporation, containing such a concise state- ment or description of every franchise possessed or enjoyed on said day by such owner or holder, as the state board of equalization may prescribe, a copy of the law, grant, ordinance, or contract under which the same is held, or if possessed or enjoyed under a general law, a reference to such law, a statement of any condition, obligation, or burden imposed upon such franchise, or under which the same is enjoyed, and containing also : 1. The name of the company, its nature, whether a person or persons, a partnership (with names of partners), an association, or corporation, and under the laws of what state, territory, or country organized, the nature of its business, the location of its principal place of business, the names and post office addresses of its president, secretary, auditor, treas- urer, superintendent, and general manager, the location of its principal place of business in this state, the name and post office address of its chief officer or managing agent in this state, and the names and addresses of all subsidiarv companies whose property and business are operated by it. 2. The amount of its authorized capital stock, the amount thereof 10 IN 146 INSURANCE LAWS OF CALIFORNIA. issued and outstanding on the first Monday in March, and the amount paid in thereon or the value of the property received therefor. 3. The funded and floating debts and the interest paid thereon show- ing separately the debts of the operating company and of any subsidiary companies in this state on the thirty-first day of December last pre- ceding. 4. The market value of the stock and of the outstanding bonds, or, when said stock or bonds have no market value, the actual value thereof, for such periods and for such dates as the state board of equalization shall prescribe. 5. The assessed value of its property as assessed for the current fiscal year in each county, city and county, and city in the state for the pur- poses of taxation, and if any property of such corporation be assessed and taxed outside of the State of California the place where assessed, the amount of such assessment and taxes there paid during such current fiscal year. In case the company, person, firm, association, or corporation making such report can not or does not fairly and fully state the facts and mat- ters contained in the foregoing subdivisions 1 to 5 inclusive, then such company, person, firm, association, or corporation must render an addi- tional report cntaining the following matters, to wit : 6. The dividends paid during the year ending the thirty-first day of December last preceding, the surplus fund, if any, on said thirty-first day of December, or between such periods as the state board of equaliza- tion may determine. Those of the operating company and of each sub- sidiary company in this state to be shown separately. 7. The gross receipts from all sources for the year ending the thirty- first day of December last preceding, from the entire property and busi- ness, the gross receipts from such classes of business as the state board may designate, to be reported separately ; also, where the property and business are partly within and partly without this state, the gross receipts for said period on all business beginning and ending entirely within this state, and that proportion of the gross receipts from all busi- ness passing through, into, or out of this state, which the mileage within this state bears to the total mileage over which such interstate business is done as further defined in section seven of this act. 8. The operating and other expenses. 9. The balances of profit and loss, between such periods as the state board of equalization may determine. 10. Such other matters as the state board of equalization may deem necessary in order to enable it to assess and levy the taxes provided for in section fourteen of article thirteen of the constitution of this state. The state board of equalization shall ascertain and determine from the foregoing reports or from the best information it can obtain the actual cash value on the first Monday in March of each such franchise, and shall assess and levy the taxes thereon in accordance with the pro- visions of subdivision (d) of section fourteen of article thirteen of the constitution of this state. Assessor to report to state board. Sec. 15. Every assessor or auditor shall, in the manner, at the times, and for the year required by the state board of equalization, report to TAXATION OP INSURANCE COMPANIES. 147 said board upon such forms as may be prescribed by said board the valuation placed by him upon the property of any company subject to an assessment upon its franchise under the provisions of this act. Arbitrary assessment in case of failure or refusal to report. Sec. 16. If any company mentioned in section one of this act shall fail or refuse to furnish to the state board of equalization within the time prescribed in this act the verified report provided for in this act, the state board of equalization must note such failure or refusal in the record of assessments for state taxes hereinafter in this act provided for, and must make an estimate of the amount of the gross receipts, gross premiums, value of the shares of capital stock, or value of the franchises, of such company and must assess the same at the amount thus estimated, which assessment shall be the assessment upon which the taxes upon the property or franchise of the company for such year shall be levied and collected as provided for in this act. And if in the succeeding year any such company shall again fail or refuse to furnish the verified report required by this act, the state board shall make an estimate of the amount of the gross receipts, gross premiums, value of the shares of capital stock, or value of the franchise of such company, which estimate shall not be less than twice the amount of the estimate made by said board in the previous year, and shall note such failure or refusal as above provided, and the said estimate so made shall be the assessment upon which the taxes upon the property or franchise of the company for such year shall be levied and collected as provided for in this act. In case of each succeeding consecutive failure or refusal the said board shall follow the same procedure until a true statement shall be furnished. Any company failing or refusing to make and furnish any report pre- scribed in this act or rendering a false or fraudulent report shall be guilty of a misdemeanor and subject to a fine of not less than three hundred dollars and not exceeding five thousand dollars for each such offense. Any person required to make, render, sign, or verify any report, who makes any false or fraudulent report, with intent to defeat or evade the assessment required by this act to be made, shall be guilty of a mis- demeanor, and shall for each such offense be fined not less than three hundred dollars and not more than five thousand dollars, or be impris- oned not exceeding one year in the county jail of the county where said report was verified, or be subject to both said fine and imprisonment, at the discretion of the court. Extension of time for filing report. Sec. 17. The state board of equalization may, for good cause shown, by order entered upon its minutes, extend for not exceeding thirty days, the time fixed in this act for filing any report herein provided for ; pro- vided, however, that for the year one thousand nine hundred and eleven the said board may extend the period herein mentioned for not exceeding sixty days. State board to meet for assessment. Sec. 18. The state board of equalization must meet at the state capitol on the first Monday in March in each year, and continue in open session from day to day, Sundays and holidays excepted, until the first Monday in July. Between the first Monday in March and the third 148 INSURANCE LAWS OP CALIFORNIA. Monday before the first Monday in July the board must assess and levy the taxes as and in the manner provided for in this act and in section fourteen of article thirteen of the constitution of this state. The assess- ments must be made to the company, person, or association owning or operating the property subject to said tax, or, in the case of banks, banking associations, savings and loan societies and trust companies, to the stockholders therein. If the name of the owner is unknown to the board, such assessment must be made to unknown owners. Clerical errors occurring or appearing in the name of any company, person, association, or stockholder whose property is correctly assessed shall not invalidate the assessment; provided, however, that if any bank shall by resolution of its board of directors, request the state board of equal- ization to assess to and in the name of such bank so requesting, the entire taxable value of all the shares of the capital stock of such bank, as determined by said state board, instead of assessing such shares to and in the name of the individual stockholders or shareholders owning the same, and if such bank shall promise that it will, upon being notified by said state board, of such assessment thereof to said bank, and of the amount of taxes to be paid upon such assessment, pay such taxes at the times when taxes assessed and levied under this act are due and pay- able, which request to assess said bank and promise to pay said tax shall be in substantially the following form : The state board of equalization is hereby instructed to assess in the name of this bank and not to the individual stockholders or shareholders therein, the taxable value of all the shares of capital stock in this bank and such bank hereby promises to pay to the state treasurer the amount of the tax levied upon such assessment when such taxes are due and payable under the laws of this state. By (here insert official signing.) Then the state board may assess the capital stock to and in the name of such bank and said promise to pay the taxes shall be binding upon such bank and collection of such taxes from such bank may be enforced in the manner and by the same method as is provided for the collection of other taxes assessed and levied under this act. On the third Monday before the first Monday in July the said board shall publish a notice in one daily newspaper of general circulation pub- lished at the state capital, in one daily newspaper of general circulation published in the city and county of San Francisco, and in one daily newspaper of general circulation published in the city of Los Angeles, that the assessment of property for state taxes has been completed, and that the record of assessments for state taxes will be delivered to the controller on the first Monday in July, and that if any company, person, or association is dissatisfied with the assessment made by the board, it may, at any time before the taxes thereon shall become due and payable, apply to the board to have the same corrected in any particular. The board shall have power at any time on or before the first Monday in July to correct the record of assessments for state taxes and may increase or decrease any assessment therein if in its judgment the evi- dence presented or obtained warrants such action. TAXATION OF INSURANCE COMPANIES. 149 Record of assessments for state taxes. Sec. 19. The state board of equalization must prepare each year a book, in one or more volumes, to be called the ' ' record of assessments for state taxes, ' in which must be entered, either in writing or printing, or by both writing and printing, each assessment and levy made by said board upon the property and franchises mentioned in section one of this act, describing the property assessed, and such assessments shall be classified and entered, in such separate parts of said record as the board shall prescribe. On the first Monday in July the secretary of the state board of equalization must deliver to the controller of state the record of assessments for state taxes, certified to by the chairman and secretary of the board, which certificate shall be substantially as follows : "We, , chairman, and , secretary, of the .state board of equalization of the State of California do hereby certify that between the first Monday in March and the first Monday in July, 19 , the state board of equalization made diligent inquiry and exam- ination to ascertain all property and companies subject to assessment and taxation for state purposes, as required by the constitution of this state; that said board has faithfully complied with all the duties imposed upon it by the constitution and laws of the State of California ; that said board has not imposed any unjust or double assessment through malice or ill will, or otherwise ; nor allowed any company or property to escape a just assessment through favor or reward, or other- wise. ' ' But the failure to subscribe such certificate to such record of assess- ments for state taxes, or any certificate, shall not in any manner affect the validity of any assessment. Such record of assessments shall con- stitute the warrant for the controller to collect the taxes assessed and levied upon the property and franchises mentioned in section one of this act. Sec. 20. The taxes assessed and levied as provided in section four- teen of article thirteen of the constitution of this state, and in and by the provisions of this act, shall be due and payable on the first Monday in July in each year, and one half hereof shall be delinquent on the sixth Monday after said first Monday in July at six o'clock p. m., and unless paid prior thereto, fifteen per cent shall be added to the amount thereof, and unless paid prior to the first Monday in February next thereafter at six o'clock p. m., an additional five per cent shall be added to the amount thereof; and the unpaid portion, or the remaining one half of said taxes shall become delinquent on the first Monday in February next succeed- ing the day upon which they become due and payable, at six o'clock p. m. ; and if not paid prior thereto five per cent shall be added to the amount thereof; provided, that all taxes provided for or levied under this act which are not fully secured by real property are due and pay- able at the time the assessment is made. When in the opinion of the state board of equalization any of the taxes provided for in this section are not a lien upon real property sufficient to secure the payment of the taxes, said board may direct the controller, or his duly authorized rep- resentative, to collect the same at any time before the first Monday in August thereafter, and the controller may collect the taxes by seizure and sale of any property owned by the company against whom the tax is assessed. 150 INSURANCE LAWS OF CALIFORNIA. The sale of any property so seized shall be made at public auction and of a sufficient amount of the property to pay the taxes, penalties and costs, and be made after one week's notice of the time and place of such sale given by publication in a newspaper of general circulation published in the county where the property seized is situate, or if there be no news- paper of general circulation published in such county, then by posting of such notice in three public places in such county. Said notice shall contain a description of the property to be sold together with a state- ment of the amount of the taxes, penalties and costs due thereon and the name of the owner of said property and a further statement that unless the taxes, penalties and costs are paid on or before the day fixed in said notice for such sale of said property, or so much thereof as may be neces- sary to pay said taxes, penalties and costs, said property will be sold in accordance with law and said notice. On payment of the price bid for any property sold, the delivery thereof with bill of sale executed by the controller vests the title in the purchaser. The unsold portion of any property so seized, may be left at the place of sale at the risk of the owner. All of the proceeds of any such sale in excess of the taxes, pen- alties, and costs, must be returned to the owner of the property sold, and until claimed must be deposited in the state treasury subject to the order of the owner thereof, his heirs, or assigns. Within ten days after the receipt of the record of assessments for state taxes, the controller must begin the publication of a notice to appear daily for two weeks, in one daily newspaper of general circula- tion published at the state capital, in one daily newspaper of general circulation published in the city and county of San Francisco, and in one daily newspaper of general circulation published in the city of Los Angeles, specifying : 1. That he has received from the state board of equalization the record of assessments for state taxes. 2. That the taxes therein assessed are due and payable on the first Monday in July and that one half thereof will be delinquent on the sixth Monday after the first Monday in July at six o'clock p. m., and that unless paid to the state treasurer at the capitol prior thereto, fifteen per cent will be added to the amount thereof, and unless paid prior to the first Monday in February next thereafter at six o'clock p. m., an additional five per cent will be added to the amount thereof ; and that the remaining one half of said taxes will become delinquent on the first Monday in February next succeeding the day upon which they became due and payable, at six o'clock p. m. ; and if not paid to the state treas- urer at the capitol prior thereto, five per cent will be added to the amount thereof. Taxes a lien. Sec. 21. The taxes levied under the provisions of this act shall con- stitute a lien upon all the property and franchises of every kind and nature belonging to the companies subject to taxation for state pur- poses, which lien shall attach on the first Monday in March of each year. Every tax herein provided for has the effect of a judgment against the company, and every lien created by this act has the effect of an execu- tion duly levied against all property of the delinquent ; the judgment is not satisfied nor the lien removed until such taxes, penalties, and costs are paid, or the property sold for the payment thereof. TAXATION OF INSURANCE COMPANIES. 151 Taxes to be paid to state treasurer. Sec. 22. All taxes assessed and levied as provided in this act shall be paid to the state treasurer, upon the order of the controller, without deduction for any taxes assessed and levied to pay the principal and interest of any bonded indebtedness mentioned in subdivision (e) of section fourteen of article thirteen of the constitution of this state, and the amount due to the cities, cities and counties, counties, towns, town- ships, and districts on account of said taxes assessed and levied for such bonded indebtedness shall be paid to said cities, cities and counties, counties, towns, townships, or districts in the manner hereinafter in this act provided. The controller must mark the date of payment of any tax on the rec- ord of assessments for state taxes. He must give a receipt to the person paying any tax, or any part of any tax, specifying the amount of the assessment and the tax, or part of tax, paid, and the amount remaining unpaid, if any, with a description of the property assessed; provided, that the receipt for the second half of the taxes may refer, by number or in any other intelligible manner, to the receipt given for the first half of said taxes, in lieu of a description of the property assessed. Whenever any taxes, penalties, or costs collected and paid to the state treasurer under the provisions of this act, shall have been paid more than once, or shall have been erroneously or illegally collected, or when any taxes shall have been collected and paid pursuant to this act upon a computation erroneously made by reason of clerical mistake of the officers or employees of the state board of equalization, or shall have been computed in a manner contrary to law, the state board of equaliza- tion shall certify to the state board of examiners the amount of such taxes, penalties, or costs, collected in excess of what was legally due, from whom they were collected or by whom paid, and if approved by said board of examiners, the same shall be credited to the company or person to whom it rightfully belongs, at the time of the next payment of taxes. No claim for such credit shall be so audited, approved, allowed, or paid unless presented within one year after the payment sought to be refunded. Protest of taxes. Sec. 23. Any. company, person, or association dissatisfied with any assessment made by the state board of equalization may bring an action against the state treasurer for the recovery of any taxes, penalties, or costs paid on such assessment, but no such action may be brought later than the third Monday in February next following the day on which the taxes were due, nor unless such company, person or association shall have filed with the state controller at the time of payment of such taxes a written protest stating whether the whole assessment is claimed to be void, or if a part only, what part, and the grounds upon which such claim is founded ; and when so paid under protest the payment shall in no case be regarded as voluntary. Whenever under the provisions of this section an action is commenced against the state treasurer, a copy of the complaint and of the summons must be served upon the treasurer, or his deputy. At the time the treasurer demurs or answers, he may demand that the action be tried in the superior court of the county of Sacramento, which demand must be granted. The attorney general must defend the action. The provisions of the Code of Civil Procedure 152 INSURANCE LAWS OF CALIFORNIA. relating to pleadings, proofs, trials, and appeals are applicable to the proceedings herein provided for. A failure to begin such action within the time herein specified shall be a bar against the recovery of such taxes. Controller to send notice of delinquent taxes. Sec. 24. Within ten days after the first Monday in February, the controller shall send by mail to the last known address of any company whose taxes are delinquent a notice of the amount of said taxes, penalties, and costs, and that if the said taxes, penalties, and costs are not paid on or before the first Monday in March next thereafter at six o'clock p. m., the delinquent company if it be a domestic corporation will forfeit its charter to the state, and that if the delinquent company be a foreign corporation it will forfeit its right to do business in this state. If the taxes, penalties, and costs are not paid within the time specified in said notice, the controller shall, on said first Monday in March at six o'clock p. m., mark on the record of assessments for state taxes opposite the assessment of the delinquent company the words "charter forfeited to the state, ' ' if the delinquent company be a domestic corporation, and thereupon said charter shall be so forfeited, and if the delinquent com- pany be a foreign corporation the words ' ' right to do business forfeited ' ' and thereupon said right to do business shall be so forfeited. He shall at once report to the secretary of state the name and number of charter of each corporation whose charter or right to do business has been forfeited for non-payment of taxes, and the secretary of state shall at once report the same to the governor. The governor shall forthwith issue his proclamation, declaring that the charters of such domestic corporations have been forfeited and the right of such foreign corpora- tions to do business in this state has been forfeited. Said proclamation shall be filed immediately in the office of the secretary of state, and the secretary of state shall immediately cause a copy of said proclamation to be published in one issue of one daily newspaper of general circula- tion published at the state capital, of one daily newspaper of general circulation published in the city and county of San Francisco, and of one daily newspaper of general circulation published in the city of Los Angeles. The secretary of state shall thereupon transmit a certified copy of the proclamation to each county clerk in this state, who shall file the same in his office. Any such corporation making subsequent payment of all taxes, penalties, and costs due the state, and in addition thereto an amount equal to the taxes levied under this act for the year in which such forfeiture occurred, for each year subsequent to such forfeiture and to the time of such redemption, shall be relieved of such forfeiture, and the controller shall notify the secretary of state thereof, and the secretary of state shall annually on the first Monday in April transmit to the county clerk of each county in this state a list of the corporations so paying, and which have been relieved of such forfeiture, which list shall be by said county clerk filed in his office ; provided, the rehabilitation of a corporation under the provisions of this act shall be without prejudice to any action, defense or right which accrued by reason of the original forfeiture ; and provided, that in case the name of any corporation which has suffered the forfeiture prescribed in this act, or a name so closely resembling the name of such corporation as will tend to deceive, has been adopted by any other corporation since TAXATION OF INSURANCE COMPANIES. 153 the date of said forfeiture, then said corporation having suffered such forfeiture shall be relieved therefrom pursuant to the terms of this section only upon the adoption by said corporation seeking revivor of a new name, and in such case nothing in this act contained shall be con- strued as permitting such corporation to be revived or carry on any business under its former name; and such corporation shall have the right to use its former name or take such new name only upon filing an application therefor with the secretary of state and upon the issuing of a certificate to such corporation by the secretary of state setting forth the right of such corporation to take such new name or use its former name, as the case may be ; provided, however, that the secretary of state shall not issue any certificate permitting any corporation to take or use the name of any corporation heretofore organized in this state, and which has not suffered a forfeiture prescribed by this act, or to make or use a name so closely resembling the name of such corpora- tion heretofore organized in this state as will tend to deceive. The provisions of title 9, part 3 of the Code of Civil Procedure, in so far as they conflict with this section, are not applicable to corporations seeking revivor under this act. The controller may, within sixty days after the first Monday in March bring an action in a court of competent jurisdiction in the county of Sacramento in the name of the people of the State of California, to collect any delinquent taxes, together with any penalties, or costs, which have not been paid in accordance with the provisions of this act and appearing delinquent upon the record of assessments for state taxes hereinbefore in this act provided for. The attorney general must prose- cute such action, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings herein provided for. In # such action a writ of attachment may be issued, and no bond or affidavit previous to the issuing of said attachment is required. In the case of companies whose charters or right to do business has been forfeited under the pro- visions of this act, service of summons may be made upon the persons now provided for by law to be served as agents or officers of any of such companies and such persons shall be deemed to be the agents of such companies for all purposes necessary in order to prosecute such action. Payment of the taxes and penalties, or amount of the judgment recov- ered in such action must be made to the state treasurer. In such actions the record of assessments for state taxes, or a copy of so much thereof as is applicable in said action, duly certified by the controller, or by the secretary of the state board of equalization, showing unpaid taxes against any company, person or association assessed by the state board of equalization, is prima facie evidence of the assessment upon the property and franchises, the delinquency, the amount of the taxes, penalties, and costs due and unpaid to the state, and that the company, person, or association is indebted to the people of the State of California in the amount of taxes and penalties therein appearing unpaid, and that all the forms of law in relation to the assessment and levy of such taxes have been complied with. 154 INSURANCE LAWS OF CALIFORNIA. Powers and duties of state board. Sec. 25. In addition to the powers and duties prescribed in the Political Code, it is the duty of the state board of equalization, and the .said board shall have power, for carrying this act into effect : 1. To prescribe the forms upon which the reports required by sections 9. 12 and 14 of this act shall be made. 2. Whenever deemed necessary, to visit as a board, or by the indi- vidual members thereof, or to send its secretary or duly appointed representative to any portion of this state for the purpose of inspecting property and learning the value thereof, and of collecting information to enable it to justly assess and levy the taxes provided for in this act. 3. To call before it, or any mmber thereof, or before its secretary or duly appointed representative on such visit, any public officials, and to require him to produce any public record, papers or documents in their custody. 4. To issue subpoenas for the attendance of witnesses or the produc- tion of books before the board, or any member thereof ; which subpoenas must be signed by a member of the board, and may be served by any person. 5. To require any person having knowledge of the business of any of the companies mentioned in section fourteen of article thirteen of the constitution of this state, or having the custody of the books and accounts of such companies, to attend before the board or any member thereof, or before the secretary or the duly appointed representative of said board and bring with him for inspection any books, or papers, of such company in his possession or under his control, and to testify under oath touching any matter relating to the assessment to be made under this net. A member of the' board, its secretary, or duly appointed represen- tative is authorized to administer such oath. 6. Said board of equalization is hereby authorized and empowered to examine the books and accounts of all companies required by law to report to it and to employ an expert accountant or accountants to assist in the examination of the books and accounts of any such companies when in the judgment of said board the exigencies of the case may so require. 7. It shall be unlawful for any member or ex-member of the state board of equalization, or for any agent employed by it, or for the con- troller, or ex-controller, or for any person employed by him or for any person who may at any time have obtained such knowledge from any of the foregoing officers or persons, to divulge or make known in any manner whatever not provided by law, any of the following items of information concerning the business affairs of companies reporting to the said board : (a) Any information concerning the business affairs of any company which is gained during an examination of its books and accounts or in any other manner, and which information is not required to be reported to the state board of equalization in the reports or statements provided for in paragraphs numbered one to ten of section nine and paragraphs numbered one to ten of section fourteen of this act. (b) Any information, other than the assessment and the amount of taxes levied, obtained by the state board of equalization in accordance TAXATION OF INSURANCE COMPANIES. 155 with the provisions of this act, from any company other than any of those enumerated in sections two, three and four of this act. (c) Any particular item or items of information relating to the disposition of its earnings contained in the report of a quasi-public cor- poration which any such corporation may, by written communication specifying the items and presented at the time when it files its report, request shall be treated as confidential; provided, however, that if the governor shall direct that any of the information herein referred to be made public, then it shall no longer be unlawful to divulge or make known the same. Any violation of the provisions of this subdivision shall be a misde- meanor and shall be punished by a fine not exceeding five hundred dollars, or by imprisonment not exceeding six months, or both, at the discretion of the court. County auditors to report assessments of real estate of banks. Sec. 26. On the second Monday in August of each year the auditor of each county must report to the state board of equalization, in addition to the items required to be so reported by him under section three thou- sand seven hundred and twenty-eight of the Political Code, the value of each piece of real estate other than mortgage interests therein belonging to each bank in his county as assessed and equalized for purposes of county taxation. Whenever the state board of equalization is satisfied after investigation that any county assessor, or board of equalization, has assessed any real estate belonging to any bank above its full cash value and has thereby unjustly reduced the amount of taxes due the state from said bank, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county affected thereby as the said state board shall deem reasonable, equalize the assessed value of such real estate and shall upon completion of said equalization issue an order to said assessor or board of equalization and to the county auditor of the county in which said real estate is located, fixing the assessed value of said real estate. The value so equalized and fixed, and no other, shall be deemed the value, as assessed for county taxes, of such real estate, and the sole basis of taxation upon such real estate for county taxes. A copy of the order certified by the secretary of the state board of equalization shall be prima facie evidence of the regularity of all pro- ceedings of the board resulting in the action which is the subject matter of the order. State board to equalize assessments of real estate of insurance companies. Sec. 27. The state board of equalization shall immediately after the county and city assessments have been completed, ascertain the value of any real estate belonging to any insurance company as assessed and equalized for purposes of county and of city taxation. Whenever the staff board of equalization is satisfied after investigation that any county, city and county, city, or district assessor, or board of equaliza- tion, has assessed any real estate belonging to any insurance company above its full cash value and has thereby unjustly reduced the amount of taxes due the state from said insurance company, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county or the proper officer of the city affected as the board shall deem reasonable, equalize the assessed value of such real estate and shall 156 . INSURANCE LAWS OF CALIFORNIA. upon the completion of said equalization, issue an order to said assessor or board of equalization and to the county, city and county, city, or district auditor or clerk of the county, city and county, city, or district in which said real estate is located, fixing the assessed value of said real estate. The value so equalized and fixed, and no other, shall be deemed the value, as assessed for county, city and county, city, or district taxes, of such real estate, and the sole basis of taxation upon such real estate, for county, municipal and district taxes. A copy of the order certified by the secretary of the state board of equalization shall be prima facie evidence of the regularity of all proceedings of the board resulting in the action which is the subject matter of the order. Assessors to segregate on assessment roll. Sec. 28. Each county, city and county, city, and district assessor must segregate on his assessment roll, as directed by the state board of equalization : 1. The assessments made by the state board of equalization, and ap- portioned to the county, city and county, city, town, township, or dis- trict, upon the franchises, roadway, roadbed, rails and rolling stock of all railroads operated in more than one county in this state under the provisions of the Political Code as the same existed and were in force on the seventh day of November in the year one thousand nine hundred and ten ; and 2. The assessments made by said assessors of any other property enumerated in subdivisions {a), (b) and (d) of section fourteen of article thirteen of the constitution of this state, which is located in the county, or city and county, or any city, town, township, or district in which it is subject to taxation for paying the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township, or district prior to the eighth day of November in the year one thousand nine hundred and ten, as provided in sub- division (e) of section fourteen of article thirteen of the constitution of this state. Immediately upon completion of the assessment and equalization of property for the purposes of taxation in each year the auditor or clerk of each county, city and county ^ city, town, or district must transmit to the state board of equalization a duplicate of that part of the assessment roll containing the assessments and apportionments referred to in para- graphs one and two of this section. WJienever the state board of equalization is satisfied after investiga- tion that any county, city, or other assessor, or board of equalization, has assessed for taxation to pay the principal and interest of any bonded indebtedness created and outstanding by any county, city and county, city, town, township, or district prior to the eighth day of November in the year one thousand nine hundred and ten, as provided in subdivision (e) of section fourteen of article thirteen of the constitution of this state, any of the property taxes exclusively for state purposes as pro- vided in subdivisions (a), (b) and (d) of section fourteen of article thirteen of the constitution of this state, or has assessed for purposes of county, city and county, city, or district taxation the property other than the franchise of any company taxable for a franchise under subdivision {d) of said section and article of the constitution, above its full cash value and has thereby unjustly reduced the amount of taxes due the TAXATION OF INSURANCE COMPANIES. 157 state on such property, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county, or city and county, or to the city clerk of the city, affected thereby as the board shall deem reasonable, equalize the assessed value of such property, and shall issue an order to said assessor or board of equalization and to the county or city auditor or clerk of the county, city and county, or city in which the property is located, fixing the assessed value of such property. The value so equalized and assessed, and no other, shall be deemed the value of said property, and its assessment for taxes levied to pay the principal and interest of any such outstanding bonded indebtedness, and in the case of companies taxable for a franchise under said subdivision (d) of said section and article of the constitution shall be deemed the value of the said property, and its assessment for taxes for county, city and county, municipal and district purposes. When making the tax levy and fixing the rates of taxation for county, city and county, city, town, township, or district purposes, the board of supervisors of any county, or city and county, and the corresponding authority in any city, having bonded indebtedness issued and outstand- ing on the eighth day of November in the year one thousand nine hundred and ten, shall fix the tax rate for such bonded indebtedness separate and apart from all other tax rates, whether for subsequent bonded indebtedness or for other purposes. The county, city and county, or city auditor or clerk shall extend on the assessment roll agaipst the assessments segregated as herein pro- vided, the taxes necessary to pay the principal and interest of said bonded indebtedness at the same rate as said taxes for payment of prin- cipal and interest of said outstanding bonded indebtedness shall be levied upon the other classes of property within the same county, city and county, city, town, township, or district, and the amount of each such taxes shall be certified by said auditor or clerk to the controller and the amount so certified shall then be credited by the controller to the county, city and county, city, town, township, or district to which it is due ; and said amount shall be paid by said controller to the treasurer of such county, or city and county as provided in section twenty-nine of this act, and upon such payment said treasurer shall forthwith certify such fact to the tax collector who shall thereupon mark upon the assess- ment roll the date of payment and the words "paid by the state treas- urer." The city clerk or auditor shall in the certificate mentioned in this paragraph also state the date when taxes in such city shall become delinquent. State to pay part of principal and interest of outstanding bond debts. Sec. 29. The controller shall out of the taxes collected by him as provided in this act credit to the fund created by an act of the thirty- ninth session of the legislature entitled: "An act appropriating money for the purpose of payment of that part of the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township or district on the eighth day of Novem- ber in the year one thousand nine hundred and ten, which is provided for in section fourteen of article thirteen of the constitution of this state, and as provided in an act of the thirty-ninth session of the legisla- ture entitled 'An act to carry into effect the provisions of section four- teen of article thirteen of the constitution of the State of California as 158 INSURANCE LAWS OF CALIFORNIA. said constitution was amended November 8, 1910, providing for the separation of state from local taxation, and providing for the taxation of public service and other corporations for the benefit of the state, all relating to revenue and taxation,' " the money due to each county, city and county, city, town, township, or district on account of taxes to pay the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township or dis- trict, on the eighth day of November in the year one thousand nine hun- dred and ten. The controller shall in the months of October and March in each year settle with the treasurer of each county and city and county for the money collected by said controller under this section, for the moneys due said county or city and county and the townships and dis- tricts within such county or city and county, in the same manner as set- tlements are made between the county or city and county treasurers and the controller as provided for in section three thousand eight hundred and sixty-six of the Political Code. The controller shall at the same times, settle with each city and town for the moneys due such city or town for the purposes mentioned in this section, and when ready for such settlement shall notify the city or town treasurer of the amount of money due the city or town for said purposes, and that upon receipt of proper authority so to do, he will forward to said city or town treas- urer a warrant for the amount thereof; provided, however, that upon receipt of notice from any such city or town treasurer that any bond issue matures for principal or interest before, the date of such settle- ment, which notice shall state the amount thereof due from the state and the date of maturity, and that said amount due from the state is required in order to pay the same, the said controller must, before said date of maturity, forward his warrant to such city or town treasurer in the manner above provided for the amount ascertained by him to be due. The treasurer of the county or city and county shall forthwith, upon receipt by him of the moneys so hereinbefore directed to be paid by said controller, credit the amount so received by him to the county, city and county, township or district, respectively entitled thereto, and pay the same in the manner provided by law. Any excess paid by the controller to a county, city and county, city. town, or to a county or city and county or any township or district, over and above the state's share of the amount actually expended by such county, city and county, city, town, township or district, to pay the interest and principal of said bonded indebtedness in any year, shall be repaid to the state in such manner as the controller shall direct. State to reimburse counties. Sec. 30. Until the year one thousand nine hundred and eighteen the state shall reimburse any and all counties which sustain loss of revenue by the withdrawal of railroad property from county taxation for the net loss in county revenue occasioned by the withdrawal of railroad property from county taxation in the manner, at the times, and in the amounts specified in an act of the thirty-ninth session of the legislature entitled "An act to provide for the reimbursement of counties in this state which sustain net loss of revenue by the withdrawal of railroad property from county taxation, under the provisions of section fourteen of article thirteen of the constitution of this state." TAXATION OF INSURANCE COMPANIES. 159 State not to pay county treasurers' expenses. Sec. 31. The provisions of section three thousand eight hundred and seventy-six of the Political Code shall not apply to the settlements made with the state treasurer under sections twenty-nine and thirty of this act, but the county board of supervisors may if it deem necessary allow the county treasurer the actual expenses incurred in collecting the money due the county from the state. Counties to reimburse loss to districts. Sec. 32. The board of supervisors of each county shall in the month of September of each year determine the amount of loss to each district in the county where loss is occasioned in such district by the withdrawal from local taxation of property taxed for state purposes only, and in the month of December next thereafter shall reimburse such district from the general fund of the county for one half of such loss, and in the month of May next thereafter shall reimburse such district from the general fund of the county for the remaining one half of such loss. All property in state subject to deficiency tax. Sec. 33. Any tax required to be levied for state purposes as pro- vided in subdivision (e) of section fourteen of article thirteen of the con- stitution as amended the eighth day of November in the year one thou- sand nine hundred and ten, to meet any deficiency in the state revenue shall be assessed, levied and collected on all property in the state, not exempt from taxation including the classes of property enumerated in this act, under the provisions of the Political Code relating to the assess- ment, levy and collection of state and county taxes as said provisions were in force on the seventh day of November in the year one thousand nine hundred and ten. Prior laws not repealed for certain purposes. Sec. 34. Nothing in this act shall be construed as repealing any laws in force prior to the eighth day of November in the year one thousand nine hundred and ten, relating to taxation, in so far as said laws may be necessary for the assessment, levy, and collection of state, county, city and county, municipal or district taxes, or in so far as said laws may be necessary for the assessment, levy and collection of the taxes provided for in section twenty-two of article four of the constitution as amended on the eighth day of November in the year one thousand nine hundred and ten ; or in so far as said laws may be necessary for the assessment, levy and collection of the taxes for state purposes, on all the property in the state, not exempt from taxation, to meet a deficiency in the reve- nues for the support of the state government, or to pay the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township, or district, both as pro- vided in subdivision (e) of section fourteen of article thirteen of the constitution as amended on the eighth day of November in the year one thousand nine hundred and ten. Sec. 35. This act shall take effect immediately. INDEX. 161 INDEX. A Page. Abandonment. (See Marine Insurance.) Accident insurance companies doing business on the assessment plan. (See Life, Health, Accident and Annuity or Endowment Insurance Companies doing- business on the assessment plan.) Accident and sick benefit associations. (See fraternal benefit societies.) Accident and health insurance companies. (See insurance companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do what other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code t 18 Accumulations. How may be invested. 421, Civ. Code 40 Acknowledgment. (See Agent; Process.) Actions. Not to be transferred to federal courts. 608, Pol. Code 23 For recovery of fines, taxes, assessments and penalties. 634, Pol. Code 36 Plaintiff may join different parties. 383, Code Civ. Pro 86 To recover insurance, what defendant claiming exemption must plead. 437, Code Civ. Pro 86 Acts. (See Statutes.) Of insurance commissioner may be reviewed by court. 631, Pol. Code 35 Actuary. Commissioner may employ. 601, Pol. Code 17 Commissioner may employ. 629, Pol. Code ' 34 Compensation of. 601, Pol Code 17 Compensation of. 629, Pol. Code 34 Must certify valuation of policies of fraternal benefit societies. 23, Act 117 Agents, general. Appointment of. 616, Pol. Code 28 Filing fee of appointment of. 605, Pol. Code 22 Service of process on. 616., Pol. Code 28 Appointment may be revoked. 616, Pol. Code (note) 28 Insurance by. 2589, Civ. Code 65 Agents and solicitors. License of. 633, Pol. Code 36 Fee. 605, Pol. Code 22 Alphabetical list of. 633, Pol. Code 36 Annual report. (See annual statement.) Insurance commissioner. 595, Pol. Code 11 Distribution of. 337, Pol. Code (note) 12 Annual statement. Filing fee. 605, Pol. Code 22 must be filed before engaging in business. 607, Pol Code 23 How verified. 610, Pol. Code 24 When to be filed. 611, Pol. Code 24 Publication of synopsis of. 611, Pol. Code 24 By companies other than life, must show. 612, Pol. Code 24 By life, health and accident companies. 613, Pol. Code 26 Insurance commissioner must furnish printed forms for. 615, Pol. Code 27 Penalty for failure to file. 617, Pol. Code 29 Of fraternal benefit societies. 23, Act 117 Annuity insurance on the assessment plan. (See Life, Health, Accident and Annuity or Endowment Insurance Companies doing business on the Assessment Plan.) 11 IL 162 INDEX. Arson. (See Crimes.) Page. Defined. 447, Pen. Code 90 Degrees of. 453, Pen. Code 91 First degree. 454, Pen. Code 91 Second degree. 454, Pen Code 91 Punishment of. 455, Pen. Code 91 Articles of incorporation. Filing fee. 605, Pol. Code 22 Changes in, filing fee. 605, Pol. Code 22 Must be filed before engaging in business. 607, Pol. Code 23 Of mutual benefit and life associations. 452a, Civ. Code 48 Assessment. Of companies for expenses commissioner's office. 606, Pol. Code 22 Payable on demand. 634&, Pol. Code 36 When directors may assess capital stock. 331, Civ. Code ! 39 Limitations on. 332, Civ. Code 39 Of mutual benefit and life associations. 453, Civ. Code 48 Assessment associations. (See Life, Health, Accident and Annuity or Endow- ment Insurance Companies doing business on the assessment plan.) Assessment live stock associations, or corporations. Contract defined. 1, Act 105 How may be formed. 2, Act 105 Investments. 2, Act 105 Condition precedent to issuing insurance. 2, Act 105 What contracts shall specify. 3, Act 106 Reserve fund required. 4, Act _ 106 Foreign corporation, conditions required. 5, Act 107 Limitations of contract. 6, Act 107 Applications for insurance. 6, Act 107 Penalty for false statements. 6, Act 107 Benefit not liable to attachment. 7, Act 108 Annual statement to be filed. 8, Act 108 When license may be revoked. 9, Act 108 Assessments, notice of to be mailed. 10, Act 108 Fees, for filing statement, etc. 12, Acl 109 Expenses of insurance commissioner how paid. 13, Act 109 Time act shall take effect. 14, Act __ 109 Assets. (See Capital; Capital Stock.) Attorney in fact. (See Inter-insurance Associations.) Attorneys. (See Agents; Process; Service of Process.) Attorney General. Must examine all documents. 596a, Pol. Code _ 15 Opinion of, governs commissioner. 596a, Pol. Code 15 Proceedings against fraternal benefit societies. 25, Act 119 Authority. (See Certificate; Certificate of Authority.) B Beneficiary associations. (See Fraternal Benefit Societies.) Exempt from insurance laws. 630, Pol. Code 35 Boiler and machinery insurance. (See Insurance companies.) How classified 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Bond. (See Sureties and Surety Corporations; Surplus Line Brokers.) Of insurance commissioner. 593, Pol. Code 7 Surplus line broker. 596, Pol. Code 13 Of insurance company. 623, Pol. Code 32 Fee for filing. 605, Pol. Code 22 Renewal of. 623, Pol. Code 32 When separate bonds must be given. 624, Pol. Code 32 Justification of sureties. 955, Pol. Code 37 Surety company may be accepted as sole surety. 955, Pol. Code 37 Surety may become liable for less than full penal sum. 956, Pol. Code 37 An act to facilitate the giving of, required by law. 1 to 4, Act 96 INDEX. 163 PAGE. Broker. (See Surplus Line Broker; Licenses; Bond, Surety Corporations.) Building. Defined. 448, Pen. Code _ 91 Inhabited, defined. 449, Pen. Code 91 Burglary insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 8 Capital, amount of 594, Pol Code 9 By-laws. Of mutual benefit and life associations. 453, Civ. Code 48 Amendments to, of fraternal benefit societies. 22, Act 117 C Capital. (See Capital Stock.) How to be invested. 421, Civ. Code 40 Time to be paid in. 424, Civ. Code 42 Fixed, what constitutes a deficiency in. 439, Civ. Code 45 Declaration of fixed, to be filed. 440, Civ. Code P 45 Capital Stock. (See capital.) Amount required of insurance company. 594, Pol. Code 7 Must be fully paid up. 594, Pol. Code 7 Must be exclusive of liabilities. 594, Pol. Code 7 Bonds can not be held in lieu of capital stock. 594, Pol. Code (note) 10 Impairment of. 602, Pol. Code 18 Assessment of, on insolvency. 604, Pol. Code 21 Assessment of, when directors may levy. 331, Civ. Code 39 Limitation on assessment of. 332, Civ. Code 39 Subscription to and how collected. 414, Civ. Code 39 Certificate of paid up, to be filed and when. 425, Civ. Code 42 Amount of, of mutual life, health and accident insurance companies. 437, Civ. Code 44 Certificate of increase of, to be filed with commissioner. 607, Pol. Code 23 Cash premiums. Mutual fire insurance company. 8, Act 103 Casualty insurance companies. (See Insurance companies; miscellaneous Insur- ance Companies.) Certificate. (See Licenses.) Fee for issuing. 605, Pol. Code 22 of unincorporated companies. 607, Pol. Code 23 Of deposit. 619, Pol. Code 30 Of paid up capital stock to be filed when. 425, Civ. Code 42 Of proof of loss, when dispensed with. 2637, Civ. Code 71 Certificate of authority. (See Licenses.) Company must procure. 596, Pol. Code 13 Expires when. 596, Pol. Code _ 13 When can not be granted or renewed. 596, Pol. Code 13 Revocation for insolvency. 603, Pol. Code 20 Commissioner may issue new, on restoration. 603a, Pol. Code 21 Fee for issuing annual. 605, Pol. Code _ 22 Certificate of compliance. Must be filed when. 607, Pol. Code ___ 23 Certified copies. (See Copies.) Fee for making. 605, Pol. Code _ 22 Charter. Copy must be filed. 607, Pol. Code 23 Civil actions. (See Actions.) Parties to. 383, Code Civ. Pro ( 86 Pleadings in. 437a, Code Civ. Pro . 86 Compensation. Of insurance commissioner and deputy. 589, Pol. Code 6 Compliance. (See Certificate of Compliance.) 1 64 INDEX. Concealment and representations. Page. What is. 2561, Civ. Code 61 Effect of. 2562, Civ. Code , 61 What must be disclosed. 2563, Civ. Code 61 Matters of opinion need not be communicated. 2564, Civ. Code 61 Materiality, test of. 2565, Civ. Code 61 Matters, each party is bound to know. 2566, Civ. Code 62 Waiver of communication of facts. 2567, Civ. Code 62 Interest of insured. 2568, Civ. Code 62 Intentional omission, fraudulent. 2569, Civ. Code 62 Matters of opinion. 2570, Civ. Code 62 Representation, oral or written. 2571, Civ. Code 62 Representation, when made. 2572, Civ. Code 62 Representation, how interpreted. 2573, Civ. Code 62 Representation, as to future. 2574, Civ. Code 63 Representation, how may affect policy. 2575, Civ. Code 63 Representation, may be withdrawn. 2576, Civ. Code 63 Representation, time intended by. 2577, Civ. Code '. 63 Representation, of information. 2578, Civ. Code 63 Representation, when deemed false. 2579, Civ. Code 63 Representation, effect of falsity. 2580, Civ. Code 63 Representation, materiality of, how determined. 2581, Civ. Code 63 Provisions as to modification. 2582, Civ. Code 64 When right to rescind may be exercised. 2583, Civ. Code 64 When intentionally false insurer may rescind. 2676, Civ. Code 75 Eventual falsity of, as to expectation. 2677, Civ. Code 75 Constitution. (See By-Laws.) Contracts. (See Policy.) Of life, health, accident and annuity or endowment insurance on the assessment plan, defined. 453d, e. g. Civ. Code 51, 52, 53 Of insurance. 2527, Civ. Code 56 Designation of parties in. 2538, Civ. Code 57 Who may make. 2539, Civ. Code 58 Who may be insured under. 2540, Civ. Code 58 Assignment of mortgage, under. 2541, Civ. Code 58 Transfer of insurance from a mortgagor to a mortgagee. 2542, Civ. Code__ 58 Right to rescind. 2583, Civ. Code 64 Contingent liability. Of members in mutual fire insurance companies. 4, Act 102 Copies. Fee for furnishing copies of papers. 605, Pol. Code 22 Fee for certifying to copies of papers. 605, Pol. Code 22 Costs. (See Fees and Costs.) County clerks. Insurance commissioner must certify to. 625a, Pol. Code 33 County fire insurance companies. Incorporation. 1, Act 9 ' Articles of incorporation. 2, Act 1 97 _ Certificate. 2, Act 9 ~ Directors, number of. 3, Act 98 Officers. 4, Act 98 Bonds and officers. 5, Act 98 By-laws and powers. 6, Act Membership. 7, Act 98 Risks. 8, Act " Risks, classification of. 9, Act Risks, limitation upon. 10, Act Losses, adjustment of. 11, Act 99 100 Deficiency, assessment for. 12, Act Assessment, notice of. 13, Act Assessment, neglect or refusal to pay. 14, Act Annual statement. 15, Act Withdrawal of member. 16, Act 101 100 101 INDEX. 165 County fire insurance companies Continued. Page. Report of officer. 17, Act 101 Dissolution. 18, Act w 101 Conflicting laws repealed. 19, Act 101 Credit insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code ,1 8 Insolvent, when. 602, Pol. Code 18 Crimes. (See Penalty; Arson.) Commissioner must certify facts to district attorney. 632, Pol. Code '__ 35 Against property. 447 to 455 and 548, 549, Pen. Code 90, 91, 92 Carrying on business without license. 435, Pen. Code 90 Insurance in unauthorized companies. 439, Pen. Code 90 Arson, defined. 447, Pen. Code 90 Cyclone insurance. (See Miscellaneous Insurance Companies.) D Definition. Of authorized companies. 596, Pol. Code 13 Of word "company." 634a, Pol. Code 37 Of building. 448, Pen. Code 91 Of inhabited building. 449, Pen. Code 91 Of night time. 450, Pen. Code 91 Of burning. 451, Pen. Code 91 Of insured. 1, Act 129 Of loss. 1, Act 129 Of time of loss or damage. 1, Act 129 Deposit by foreign companies. Amount required. 594, Pol. Code . 7 Kind of securities. 594a, Pol. Code; 421, Civ. Code 10, 40 With what official. 594a, Pol. Code 10 Existence, how certified. 594, Pol. Code 10 Value of securities. 594a, Pol. Code 10 For whose benefit. 594a, Pol. Code 10 How deposited with insurance commissioner. 594, Pol. Code 10 How withdrawn. 594a, Pol. Code 10 Certificate of deposit. 594a, Pol. Code 10 Fee for issuing certificate of. 605, Pol. Code 22 Fee for filing certificate. 605, Pol. Code i 22 Deposit. Fee for issuing certificate of. 605, Pol. Code 22 Fee for filing certificate. 605, Pol. Code 22 General provisions as to. 618, Pol. Code 29 Of mortgages, how made. 618, Pol. Code 29 Of stocks and bonds, fees for appraisal of. 618, Pol. Code 29 Certificate of. 619, Pol. Code 30 Withdrawal of, how made. 620, Pol. Code 30 Under retaliatory law. 622, Pol. Code 31 For benefit of registered policies. 634, Pol. Code 36 Deputy insurance commissioner. Salary of. 589, Pol. Code 6 Deviation. (See Voyage; Marine Insurance.) Is proper when. 2695, Civ. Code 77 Is improper when. 2696, Civ. Code 77 Insurer is exonerated by improper. 2697, Civ. Code 77 From standard form of policy. 12, Act . 131 Notwithstanding, policy valid. 12, Act 131 Directors. Liable for loss on insurance when. 418, Civ. Code ; i. 40 Liable on what policies. 418, Civ. Code '_ 40 Distribution. Of annual report. 595, Pol. Code (note) 12 166 INDEX. District attorney. Page. Commissioner must certify violations of law to. 632, Pol. Code 35 Dividends. Directors must make, when. 417, Civ. Code 40 What not to be treated as. 417, Civ. Code 40 Amounts to be reserved before making. 429-430, Civ. Code 43 Of title companies. 432, Civ. Code 43 Of mutual life, health and accident insurance companies. 452, Civ. Code 48 Double insurance. What is. 2641, Civ. Code 72 Contribution in case of. 2642, Civ. Code 72 E Endowment insurance companies doing business on the assessment plan. (See Life, Health, Accident and Annuity Insurance Companies Doing Business on the Assessment Plan.) Equalization, state board of. Insurance commissioner must report to. 11, Act 143 Time of meeting of. 18, Act 1 147 Protest of taxes to. 23, Act 151 Powers and duties of. 25, Act : 154 Must equalize assessments of real estate of insurance companies. 27, Act 155 Examination. Commissioner must make. 595, 597, Pol. Code 11, 15 Expenses of, how paid. 597, Pol. Code 15 Commissioner must keep statement. 600, Pol. Code 17 Annual, of securities deposited. 621, Pol. Code 31 Of domestic fraternal benefit societies. 24, Act 119 Of foreign fraternal benefit societies. 25, Act 119 Examining physician. (See Physician.) Exchange of Indemnity. Act 122 Expense. (See Insurance Commissioner.) Of examinations, how paid. 597, Pol. Code 15 Of insurance commissioner to be paid by companies, when. 606 Pol. Code_ 22 Experts. Commissioner may employ when. 597, Pol. Code 15 F Federal courts. Actions not to be transferred to. 608, Pol. Code 23 Fees and costs. Surplus line brokers. 596, Pol. Code 13 For filing annual statement. 605, Pol. Code 22 For filing articles of incorporation. 605, Pol. Code 22 For filing changes in articles of incorporation. 605, Pol. Codel 22 For filing bond of company. 605, Pol. Code 22 For filing appointment of agent and stipulation. 605, Pol. Code 22 For filing stipulation. 605, Pol. Code 22 For filing certificate of deposit of securities. 605, Pol. Code 22 For furnishing copies of papers. 605, Pol. Code 22 For certifying copies. 605, Pol. Code 22 For issuing certificate of deposit of securities. 605, Pol. Code 22 For registering policies of life insurance. 605, Pol. Code 22 For issuing annual certificate of authority. 605, Pol. Code 22 For issuing annual license to agents. 605, Pol. Code 22 For attaching seal to paper not specified. 605, Pol. Code 22 For issuing other certificates. 605, Pol. Code ! 22 Of secretary of state. 409, Pol. Code 132 Payments must be made on basis of gold coin. 627, Pol. Code 33 Fidelity insurance companies. (See Insurance companies.) How classified. 594, Pol. Code__ 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 INDEX. 167 Financial statement. (See Annual Statement.) Page. Fine. (See Penalty.) For failure to file annual statement. 617, Pol. Code 29 Fire insurance. Alteration without consent. 2753, Civ. Code 84 Alteration not increasing risk. 2754, Civ. Code 84 Subsequent acts of insured. 2755, Civ. Code 84 Measure of indemnity defined. 2756, Civ. Code 84 Policy, value of interest in. 2757, Civ. Code 84 Value of insured's interest, how may be fixed. 2757, Civ. Code 84 Fire insurance companies. (See Insurance Companies; Mutual Fire Insurance Companies; Foreign Insurance Companies; Standard Policy of.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Capital to be paid up, how and when. 424, Civ. Code 42 Property which may be insured. 426, Civ. Code 42 Limitation on risks. 428, Civ. Code 43 Dividends, amount to be reserved before making. 429-430, Civ. Code 43 Fire patrol. Duties and powers of underwriters. 453a, Civ. Code 49 Rights of way of and its officers. 453b, Civ. Code 49 Abandonment of building. 453a, Civ. Code 49 Assessment to maintain. 453c, Civ. Code 50 Expenses of, limit upon. 453c, Civ. Code 50 Fire insurance companies, may maintain. 453a, Civ. Code 49 Injuries to property of. 453b, Civ. Code 49 Laws affecting fire department apply to. 453b, Civ. Code 49 Maintenance of, statement of premiums. 453c, Civ. Code_ 50 Meeting of. 453c, Civ. Code 50 Obstruction of, on way to fire, punishment. 453b, Civ. Code 49 Power to enter building and take property. 453a, Civ. Code ' 49 Regular fire department not to be interfered with. 453a, Civ. Code 49 Right of way while running to fires. 453b, Civ. Code 49 Underwriters may maintain. 453a, Civ. Code 49 Fire underwriters. (See Fire Patrol.) Fly wheel insurance. (See Insurance Companies.) Foreign insurance companies. (See Taxes, Deposit and Insurance Companies.) Deposits by. 594a, Pol. Code 10 Examination of. 597, Pol. Code 15 Withdrawal of. 595, Pol. Code 11 Statement of, how verified. 610, Pol. Code 24 Forfeiture. (See Penalty.) Forms. Commissioner must prepare and furnish. 615, Pol. Code 27 Fraternal benefit societies. Exempt from insurance laws. 630, Pol. Code. 4, Act 35, 110 Exempt from taxation. 30, Act 121 Defined. 1, Act u 109 Lodge system, defined. 2, Act , 109 Representative form of government, defined. 3, Act 109 Benefits of. 5, Act 110 Beneficiaries. 6, Act ! 110 Membership, qualifications for. 7, Act 111 Certificates of membership. 8, Act 111 Funds of. 9, Act 111 Investments of. 10, Act 112 Funds of, distribution of. 11, Act 112 Organization of. 12, Act 112 Powers retained by societies now in business. 13, Act 114 Mergers and transfers. 14, Act 114 168 INDEX. Fraternal benefit societies Continued. Page. Licenses, annual. 15, Act , 115 Admission of foreign societies. 16, Act 115 Power of attorney to insurance commissioner. 17, Act 116 Service of process on. 17, Act 116 Place of meeting- of. 18, Act 116 No personal liability of officers or members. 19, Act 116 Subordinate lodge can not waive laws. 20, Act 116 Benefits not attachable. 21, Act 116 Amendments to constitution and laws. 22, Act 117 Reports of. 23, Act 117 Valuation of policies of. 23a, Act 118 Examinations of. 24, 26, Act 118 Publication of findings. 27, Act 120 Revocation of license of. 28, Act 120 "What societies are exempt. 29, Act 120 Taxation of. 30, Act 121 Penalties for violation of laws relating to. 31, Act 121 Fraud. Breach of warranty without. 2612, Civ. Code 68 Premiums returned for. 2619, Civ. Code 69 Relieves insurer. 2629, Civ. Code 70 Freightage. (See Marine Insurance.) What is. 2661, Civ. Code 74 Expected. 2662, Civ. Code 74 Interest in, what. 2663, Civ. Code 74 How affected by abandonment of ship. 2730, Civ. Code 81 Funds. (See Investments.) G General agents. (See Agents, General.) Appointment of, to be filed. 616, Pol. Code 2S Governor of State. Insurance commissioner is appointed by. 368, Pol. Code 5 Term of office of appointees of. 369, Pol. Code 5 Insurance commissioner must make annual report to. 595, Pol. Code 11 Health, accident and annuity or endowment insurance companies doing business on the assessment plan. (See Life, Health and Accident and Annuity or Endowment Insurance Companies Doing Business on the Assessment Plan.) Health insurance companies. (See Accident and Health Insurance Companies; Mutual Life Insurance Companies.) Implied warranties. (See Warranties.) Increase. (See Capital Stock.) Indemnity. (See Measure of Indemnity.) Information. (See Marine Insurance.) Must be communicated. 2669, Civ. Code 74 Material. 2670, Civ. Code 74 Presumed to have had knowledge. 2671, Civ. Code 75 Injunction. Attorney general must bring suit for. 25, Act 119 Inland navigation insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 When insolvent. 602, Pol. Code IS INDEX. 169 Insolvency. Page. Commissioner must examine companies. 597, Pol. Code 15 When companies are. 602, Pol. Code 18 Revocation of certificate of authority. 603, Pol. Code 20 Company may repair capital. 603a, Pol. Code 21 Commissioner must certify to attorney general. 604, Pol. Code 21 Procedings on. 604, 604a, Pol. Code 21, 22 Receiver may reinsure business. 604, Pol. Code 21 Who may commence proceedings. 604, Pol. Code 21 Laws applicable. 604a, Pol. Code 22 of fraternal benefit societies. 24, Act _ 119 Insurance in general. (See Concealment; Representation; Policy; Warranties; Premium; Loss; Notice of Loss; Reinsurance; Double Insurance; Insurance Companies.) What is. 2527, Civ. Code 56 What may be insured. 2531, Civ. Code 57 Of lottery unauthorized. 2532, Civ. Code 57 Usual kinds of. 2533, Civ. Code 57 Code provisions govern all kinds of. 2534, Civ. Code _ 57 Defining insurer of. 2538, Civ. Code 57 Who may insure. 2539, Civ. Code 58 Who may be insured. 2540, Civ. Code 58 On mortgaged property. 2541, Civ. Code 5S By mortgagor. 2542, Civ. Code 58 Insurance commissioner. How appointed. 368, Pol. Code 5 Term of office. 369, Pol. Code 5 Who are eligible. 588, Pol. Code 6 Salary of, and deputy. 589, Pol. Code 6 Rooms and expense. 591, Pol. Code 6 Location of office. 592, Pol. Code 7 Bond of. 593, Pol. Code 7 Duties of. 595, Pol. Code 11 Annual Report of. 595, Pol. Code 11 How distributed. 595, Pol. Code 11 Examination of companies. 595, 597, Pol. Code 11, 15 Where conducted. 597, Pol. Code _ 15 May employ experts to rewrite books. 597, Pol. Code 15 Must furnish information to policyholder. 598, Pol. Code 16 May supoena witnesses. 599, Pol. Code 17 Must keep record of proceedings. 600, Pol. Code 17 May employ actuary. 601, Pol. Code 17 Must revoke certificate of insolvent companies. 603, Pol. Code 20 Must report insolvency to attorney general. 604, Pol. Code 21 May assess companies. 606, Pol. Code 22 May reject name of company. 609, Pol. Code 24 Must furnish printed forms of annual statement. 615, Pol. Code 27 Service of process upon. 616, Pol. Code 28 Must deposit securities in state treasury. 618, Pol. Code 29 Must issue certificate of deposit. 619, Pol. Code 30 Must furnish information to assessors. 625, Pol. Code 33 Must certify list of surety companies to county clerk. 625a, Pol. Code 33 Must require compliance with general corporation laws. 626, Pol. Code 33 Acts may be reviewed by court. 631, Pol. Code 35 Must publish notice of withdrawal of companies. 631a, Pol. Code 35 Must certify violations of law to district attorney. 632, Pol. Code 35 Must keep alphabetical list of agents and solicitors. 633, Pol. Code 36 May commence actions for recovery of fines, etc. 634&, Pol. Code 37 What must report to state board of equalization. 11, Act 143 Insurance companies. (See under appropriate titles.) Classification of. 594, Pol. Code - 7 Certificate of authority of. 596, Pol. Code 13 Withdrawal of, from state. 595, Pol. Code '. 11 Examination of. 595, 597, Pol. Code 11, 15 Authorized, denned. 596, Pol. Code 13 170 INDEX. Insurance companies Continued. Page. Expense of organizing. 597, Pol. Code 15 Must furnish information to policyholder. 598, Pol. Code 16 Insolvency of. 602, Pol. Code 18 Revocation of certificate of authority. 603, Pol. Code 20 May repair capital. 603a, Pol. Code 21 Proceedings before judgment. 604, Pol. Code 21 Assessment for expenses by commissioner. 606, Pol. Code 22 Certificate by unincorporated companies. 607, Pol. Code 23 Must submit name to commissioner. 609, Pol. Code 24 How statements and reports are verified. 610, Pol. Code 24 Must file annual statements. 611, Pol. Code 24 What annual statement of companies other than life must show. 612, Pol. Code 24 What annual statement of life companies must show. 613, Pol. Code 26 Mutual, under act of 1851, may report how. 614, Pol. Code 27 Must appoint general agent. 616, Pol. Code 28 Must file stipulation for service of papers. 616, Pol. Code 28 Deposit of securities by. 618, Pol. Code 29 Withdrawal of deposit by. 620, Pol. Code 30 Deposits under retaliatory law. 622, Pol. Code 31 Taxation of. 622a, Pol. Code 31 Bond to be filed by. 623, Pol. Code 32 Must give separate bonds, when. 624, Pol. Code__ 32 Companies must comply with general corporation laws. 626, Pol. Code 33 Companies must furnish data for violation of life policies. 629, Pol. Code 34 Publication of notice of withdrawal. 631a, Pol. Code 35 Deposits for registered policies. 634, Pol. Code 36 Rate of taxes. 3, Act 136 Policies of, how issued and by whom signed. 416, Civ. Code 40 How capital and accumulations may be invested. 421, Civ. Code 40 Insurance companies other than life. (See Insurance Companies.) What annual statement must show. 612, Pol. Code 24 Insurance corporations. (See Insurance Companies.) Insurable Interest. (See Insurance in General.) What is. 2546, Civ. Code 59 What may consist. 2547, Civ. Code 59 Of carrier or depositary. 2548, Civ. Code 59 Mere expectancies. 2549, Civ. Code 59 Measure of, in property. 2550, Civ. Code 59 Insurance without, illegal. 2551, Civ. Code 59 When must exist. 2552, Civ. Code 60 Effect of transfer. 2553, Civ. Code 60 Transfer of, after loss. 2554, Civ. Code 60 Exception in case of several subjects in one policy. 2555, Civ. Code 60 In case of death of insurer. 2556, Civ. Code 60 In case of, between co-tenants. 2556, Civ. Code 60 Policy when void. 2558, Civ. Code 60 Inter-insurance associations. Who may exchange indemnity. 1, Act 122 Limit of liability on risk. 1, Act 122 May appoint attorney in fact. 2, Act 122 Papers to be filed by attorney in fact. 2, Act 122 Stipulation, form of. 2, Act 122 Statement to be filed. 2, Act 123 Certificate of authority. 3, Act 123 Fee for issuance and renewal. 3, Act 123 Annual statement. 4, Act 123 Commissioner must examine association. 5, Act 123 Unauthorized contract void. 7, Act 124 Taxation of. 8, Act 124 Exempt from other insurance laws. 9, Act 124 INDEX. 171 Investments. (See Capital.) Pagk. To be reported to commissioner. 421, Civ. Code 40 Of title insurance companies. 432, Civ. Code 43 Joint stock and mutual insurance companies. Must have assets in lieu of capital stock. 594, Pol. Code 7 L Liability insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code : 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Reserve required. 602a, Pol. Code 18 Licenses. (See Certificate of Authority; License Periods.) Surplus line broker. 596, Pol. Code 13 Surplus line broker, revocation of. 596, Pol. Code 13 Of surplus line broker can not issue when. 596, Pol. Code 13 Of agents and solicitors. 633, Pol. Code 36 Fee for annual license to agents and solicitors. 605, Pol. Code 22 Transaction of business without. 435, Pen. Code 90 Procurement of business for unlicensed foreign companies unlawful. 439, Pen. Code 90 License periods. Of broker, from July 1st to July 1st. 596, Pol. Code 13 Of insurance companies from July 1st to July 1st. 596 Pol. Code 13 Of agents and solicitors from July 1st to July 1st. 633, Pol. Code 36 Of fraternal societies from July 1st to July 1st. 15, Act 115 Life, health, accident and annuity or endowment insurance companies doing business on the assessment plan. Contracts which may be made by, denned. 453d, Civ. Code 51 Application, contract to be founded on. 453;, Civ. Code 54 Articles of incorporation, filing of. 453e, Civ. Code 52 Benefit societies exempt from provisions of. 453p, Civ. Code _ 56 Bonds or security, deposits with state treasurer. 453e-ft, Civ. Code 52, 53 Business, compliance with Political Code. 453e, Civ. Code 52 Business to be commenced within one year. 453e, Civ. Code 52 Certificate of insurance commissioner. 453e, Civ. Code 52 Contract of, defined. 453d, Civ. Code ^ 51 Contracts, membership and capital required. 453e, Civ. Code 52 Contracts, what to specify. 453a, Civ. Code 53 Corporations to carry on, law governing. 453e, Civ. Code 52 Discontinuance of business. 453ft, Civ. Code 53 Exempt, money obtained from corporation is. 453fc, Civ. Code 54 False statements to, punishment for. 453.?', Civ. Code 54 Fees, amount and disposition of. 453w, Civ. Code 55 Foreign coi-porations, conditions of doing business. 453i, Civ. Code 53 Foreign corporations, license to issue when. 453i, Civ. Code 53 Fraternal societies exempt from provisions of. 453p, Civ. Code 56 Insurance commissioner, duty to examine into. 453Z, Civ. Code 55 Insurance commissioner, expenses, allowance and payment of. 453o, Civ. Code 56 Insurance commissioner, proceedings by against. 453Z, Civ. Code 55 Investment of funds. 453e, Civ. Code 52 Lapsing of policies, notices. 453m, Civ. Code 55 Lien on property of, indebtedness on contract is. 453fr, Civ. Code 53 Name of. 453e, Civ. Code 52 Organization within one year. 453e, Civ. Code 52 Payment, time and effect of failure to pay. 453#, Civ. Code 53 Penalties, disposition of. 453rt, Civ. Code 55 Preexisting corporations, rights of. 4537% Civ. Code 52 172 INDEX. Life, health, accident, etc. companies Continued. Page. Priority of indebteddness under contract. 453-r/, Civ. Code 53 Reserve and emergency fund, disposition of. 4537i, Civ. Code 53 Reserve and emergency fund to be created. 4537i, Civ. Code 53 Revocation of power to do business. 4537, Civ. Code 55 Secret societies exempt from statute. 453p, Civ. Code 56 Statements to be filed annually. 4537, Civ. Code 55 Life and health insurance. (See Insurance in General.) Upon life when payable. 2762, Civ. Code 85 Insurable interest, extent of. 2763, Civ. Code 85 Assignee, interest of. 2764, Civ. Code 85 Transfer of policy. 2765, Civ. Code 85 Defining measure of indemnity. . 2766, Civ. Code 85 Life insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 What annual statement must show. 613, Pol. Code 26 Lightning insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Limitations. (See Risk.) On risk of fire and marine insurance companies. 428, Civ. Code 43 On risk taken by county fire insurance companies. 8, 10, Civ. Code 99 Live stock insurance companies. (See Miscellaneous Insurance Companies.) Lodge system. (See Fraternal Benefit Societies.) Loans. On policies. 421, Civ. Code 40 Loss. (See Notice of Loss.) What perils are insured against. 2626, Civ. Code 70 Incurred in rescuing from peril. 2627, Civ. Code 70 Perils excepted. 2628, Civ. Code 70 Negligence does not exonerate insurer. 2629, Civ. Code 70 May be total or partial. 2701, Civ. Code 78 When not total is partial. 2702, Civ. Code 78 May be actual or constructive. 2703, Civ. Code 78 Actual total. 2704, Civ. Code 78 Constructive total. 2705, Civ. Code 78 Presumed. 2706, Civ. Code 78 Upon actual total insured entitled to payment without notice of abandon- ment. 2709, Civ. Code 79 Average. 2711, Civ. Code 79 Insurance against total. 2712, Civ. Code 79 How marine insurer is liable upon partial. 2737, Civ. Code 82 Estimating, under open policy. 2741, Civ. Code 82 When vessel is insured against partial. 2742, Civ. Code 83 General average. 2744, Civ. Code 83 In case of a partial. 2746, Civ. Code S3 Total or partial. 2757, Civ. Code 84 Adjustment of, county fire insurance companies. 11, Act 99 M Machinery insurance. (See Boiler and Machinery Insurance Companies.) Marine insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code IS Capital to be paid up, how and when. 424, Civ. Code 42 Property which may be insured. 426, Civ. Code 42 INDEX. 173 Marine insurance companies Continued. Page. Limitation on risks. 428, Civ. Code 43 Dividends, amounts to be reserved before making. 429-430, Civ. Code 43 What is. 2655, Civ. Code 73 Owner of ship has insurable interest at all times. 2659, Civ. Code 73 Insurable interest of owner reduced by bottomry. 2660, Civ. Code 74 Freightage, what is. 2661, Civ. Code 74 Owner has insurable interest in expected freightage. 2662, Civ. Code 74 Interest in expected freightage what is. 2663, Civ. Code r i 74 Insurable interest in profits, what is. 2664, Civ. Code 74 Insurable intei-est of charterer. 2665, Civ. Code 1 74 Information by each party must be communicated. 2669, Civ. Code 74 Information of the belief or expectation of a third person. 2670, Civ. Code 74 Presumption of knowledge of loss. 2671, Civ. Code 75 Concealment, effect of. 2672, Civ. Code 75 Concealments, various kinds. 2672, Civ. Code 75 Representation intentionally. 2676, Civ. Code 75 Eventual falsity of representation as to expectation. 2677, Civ. Code 75 Implied warranty that ship is seaworthy. 2681, Civ. Code 75 Seaworthiness, what is. 2682, Civ. Code 75 Seaworthiness, exists when. 2683, Civ. Code 76 Seaworthiness, requisites required. 2684, Civ. Code 76 Seaworthiness, degrees of at different states of. 2685, Civ. Code 76 Unseaworthiness during voyage. 2686, Civ. Code 76 Ship seaworthy may at times be unseaworthy. 2687, Civ. Code 76 Ship to carry requisite documents. 2688, Civ. Code 76 Voyage must conform to course fixed by mercantile usage. 2692, Civ. Code 77 Course when not fixed by mercantile usage. 2693, Civ. Code 77 Course of voyage, deviation in. 2694, Civ. Code 77 Course when proper. 2695, Civ. Code 77 Course when improper. 2696, Civ. Code 77 Insurer, exonerated when. 2697, Civ. Code 77 Total and partial loss. 2701, Civ. Code t 78 Partial loss, what is. 2702, Civ. Code 78 Actual and constructive total loss. 2703, Civ. Code 78 Actual total loss, what is. 2704, Civ. Code 78 Constructive total loss, what is. 2705, Civ. Code 78 Presumed total loss, what is. 2706, Civ. Code 78 When master must transfer cargo. 2707, Civ. Code 78 Insurer, bound for damages when cargo is transferred. 2708, Civ. Code 79 Infeurer is entitled to payment upon actual total loss. 2709, Civ. Code 79 Average loss. 2711, Civ. Code 79 When confined in terms to an actual total loss. 2712, Civ. Code__ 79 Abandonment, what is. 2716, Civ. Code 79 Insured may abandon when. 2717, Civ. Code 80 Abandonment must neither be partial nor conditional. 2718, Civ. Code 80 Abandonment when it may be made. 2719, Civ. Code 80 Abandonment how becomes ineffectual. 2720, Civ. Code 80 Abandonment how made. 2721, Civ. Code 80 Abandonment requisites of notices of. 2722, Civ. Code 80 Sustained only upon cause specified. 2723, Civ. Code Abandonment equivalent to transfer. 2724, Civ. Code Insurer entitled to salvage, when. 2725, Civ. Code Agents of the insured become agents of the insurer. 2726, Civ. Code Abandonment, acceptance of not necessary. 2727, Civ. Code Abandonment, acceptance when conclusive. 2728, Civ. Code Abandonment accepted, irrevocable. 2729, Civ. Code Abandonment of ship affects freightage, how. 2730, Civ. Code Insurer liable when refuses to accept valid abandonment. 2731, Civ. Code Loss may be recovered if insured omits to abandon. 2732, Civ. Code Valuation, when conclusive. 2736, Civ. Code 82 Insurer is liable for partial loss, when. 2737, Civ. Code 82 Insured is entitled to profits, when. 2738, Civ. Code 82 Valuation in policy apportioned when part only is exposed. 2739, Civ. Code 82 174 INDEX. Marine insurance companies Continued. Page. Loss of profits insured and valuation fixes their amount, when presumed. 2740, Civ. Code 82 Estimating loss under an open policy, rules of. 2741, Civ. Code 82 Cargo when damaged. 2742, Civ. Code 83 Liability of insurer for expenses and labor. 2743, Civ. Code 83 Liability of insurer on contribution. 2744, Civ. Code 83 Contribution, demand against others for. 2745, Civ. Code 83 Partial loss of ship or equipment, depreciation. 2746, Civ. Code 83 Medical examinations. Of member of fraternal benefit society. 7, Act 111 Measure of indemnity. Valuation in policy of marine insurance when conclusive. 2736, Civ. Code 82 Marine insurer upon partial loss. 2737, Civ. Code 82 Profits. 2738, Civ. Code 82 Valuation apportioned. 2739, Civ. Code 82 Valuation applied to profits. 2740, Civ. Code 82 Estimating loss under open policy. 2741, Civ. Code 82 Arrival of thing damaged. 2742, Civ. Code 83 Labor and expenses. 2743, Civ. Code 83 General average. 2744, Civ. Code 83 Contribution. 2745, Civ. Code 83 One third new for old. 2746, Civ. Code 83 In fire insurance policy. 2756, Civ. Code 84 Under policy of life or health insurance. 2766, Civ. Code 85 Miscellaneous insurance companies. How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do what other kinds of insurance. 594, Pol. Code 7 Includes cyclone, tornado, windstorm and lightning insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Mortuary fund. (See Reserve Fund; Fraternal Benefit Societies.) Mutual benefit and life associations. Formation of a. 452a, Civ. Code 48 Levying of assessments of and limits thereon. 453, Civ. Code 48 Annual payments. 453, Civ. Code 48 Articles of incorporation of. 452a, Civ. Code 48 By-laws of. 453, Civ. Code 48 Members, number of. 452a, Civ. Code . 48 Powers and liabilities. 453, Civ. Code '- 48 Purpose of. 452a, Civ. Code 48 Mutual fire insurance companies. (See Insurance Companies.) May adopt by-laws. 2, Act . 102 Policyholder becomes member of corporation. 3, Act 102 Assets of an organization. 4, Act - 102 Expenses, limitation of. 5, Act 102 Amount of single risk. 6, Act 103 Admission of foreign companies. 7, Act , 103 May issue non-assessable policies, when. 8, Act , 103 Premiums to be paid in cash. 8, Act _ 103 Assessment by. 9, Act , 104 Withdrawal or cancellation of policy. 10, Act 104 Dividends, when declared. 11, Act 104 Statement, annual, must be filed. 12, Act. 104 Insolvent when. 13, Act 104 Organization of. 13, Act 104 Laws applicable to. 14, Act _ , 105 Taxation of. 14, Act 105 Mutual insurance companies. (See Mutual Fire Insurance Companies; Mutual Life Insurance Companies.) Assets required in lieu of capital stock. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Organized under act of 1851, may report how. 614, Pol. Code 27 INDEX. 175 Mutual life insurance companies. (See Life Insurance Companies.) Page. Assets required. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Capital stock, amount of. 437, Civ. Code 44 Guarantee, fund of. 437, Civ. Code 44 Guarantee fund of shall consist of. 438, Civ. Code 44 Fixed capital. 439, Civ. Code 45 Declaration of fixed capital. 440, Civ. Code 45 Guarantee notes and interest, how disposed of. 441, Civ. Code 45 Insured to be entitled to note, when. 442, Civ. Code 46 Number of directors may be altered, how. 443, Civ. Code 46 By-laws of may provide protection of stockholders. 445, Civ. Code 46 Premiums of, how payable. 446, Civ. Code . 46 Policy of to contain, what provisions. 450, Civ. Code > 46 Dividends of, how made. 452, Civ. Code 48 N Name. Of company, commissioner may reject. 609, Pol. Code 24 Nationality. (See Neutrality.) Neutrality. Shipment must carry papers of. 2688, Civ. Code 76 Newspaper. Publication of statement in. 611, Pol. Code 24 Of general circulation. 611, Pol. Code 24 Weekly. 611, Pol. Code 24 Notice of loss. (See Loss.) Insurer exonerated when. 2633, Civ. Code 71 Preliminary proofs. 2634, Civ. Code 71 Waivers of defects in. 2635, Civ. Code 71 Waivers of delay in presentation. 2636, Civ. Code 71 Certificate of, when dispensed with. 2637, Civ. Code 71 Notice. (See Publication; Newspapers.) Commissioner must give on insolvency. 603, Pol. Code 20 Service on general agent. 616, Pol. Code 28 O Office. Expenses of. 591, Pol. Code 6 Office of insurance commissioner must be located in San Francisco. 592, Pol. Code 7 Organization of insurance companies. Limit of expenses on. 597, Pol. Code 15 Over-insurance. (See Premiums; Marine Insurance.) Owner. Partner or part. 2590, Civ. Code___ ; 65 Successive. 2592, Civ. Code 65 Transfer. 2593, Civ. Code 65 P Penalty. (See Arson; Crimes; Fines.) For disobedience to order of commissioner. 599, Pol. Code 17 For failure to file annual statement. 617, Pol. Code 29 Payable on demand of insurance commissioner. 634&, Pol. Code 37 Arson. 455, Pen. Code 91 Burning or destroying property insured. 548, Pen. Code 92 Presenting false proofs upon policy. 549, Pen. Code 92 Performance. (See Warranties.) When breach of future does not avoid policy. 2609 Civ. Code 67 Permit. (See Certificate of Authority; Licenses.) 176 INDEX. Physician. Page. Must examine applicants for membership to fraternal benefit societies. 7, Act. 111 Plate glass insurance companies. How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code rj 7 Insolvent, when. 602, Pol. Code 18 Policy. (See Policies; Policyholder.) Lost. 598, Pol. Code 16 How issued and by whom signed. 416, Civ. Code 40 Of life insurance corporations to contain what provisions. 450, Civ. Code 46 Defined.* 2586, Civ. Code 64 What must be stated in. 2587, Civ. Code 64 Whose interest covered by. 2588, Civ. Code 65 By agent or trustee, insurance. 2589, Civ. Code 65 By part owner, insurance. 2590, Civ. Code 65 General terms. 2591, Civ. Code 65 Successive owners. 2592, Civ. Code 65 Transfer of. 2593, Civ. Code 65 Is opened or valued. 2594, Civ. Code 65 Open, denned. 2595, Civ. Code 65 Value, denned. 2596, Civ. Code 66 Running, defined. 2597, Civ. Code 66 Effect of receipt in. 2598, Civ. Code 66 Agreement not to transfer when void. 2599, Civ. Code 66 Earned premium on, when. 2616, Civ. Code 68 When entitled to return of premium. 2617, Civ. Code 68 When not entitled to return of premium. 2618, Civ. Code .. 69 Premium returnable when. 2619, Civ. Code 69 Policy of insurance. Insurer must exhibit to commissioner, lost policy. 598, Pol. Code 16 Registration of life. 634, Pol. Code 36 Fee for registration of. 605, Pol. Code : 22 Life, must contain what provisions. 450, Civ. Code 46 Policy Holder. May obtain information. 598, Pol. Code 16 Port Wardens. Sales of wrecks and merchandise for foreign underwriters. 2507, Pol. Code 38 Notice of sale, how given. 2508, Pol. Code t 38 Must not be interested in insurance. 2509, Pol. Code 38 Premiums. Company collecting for more than one company must give separate bond for each company. 624, Pol. Code 32 When earned, defined. 2616, Civ. Code 68 Return," defined. 2617, Civ. Code 68 Not allowed, when. 2618, Civ. Code 69 Return of for fraud. 2619, Civ. Code 69 Return of over-insurance by several insurers. 2620, Civ. Code 69 Contributions to, on over-insurance by simultaneous policies. 2621, Civ. Code 69 Contribution to, returned on successive policies. 2622, Civ. Code 69 Principal agent. (See Agent, General.) Process. (See Agent, General; Service of Process.) Service on general agent. 616, Pol. Code 28 Profits. What not to be treated as 417, Civ. Code 40 When separately insured what portion recoverable. 2738, Civ. Code 82 Valuation applied to. 2740, Civ. Code 82 Property. (See Real Estate; Investments.) INDEX. 177 Proofs. PAGE. Preliminary, of loss. 2634, Civ. Code 71 Waivers of defects in notice. 2635, Civ. Code 71 Delay in presentation of. 2636, Civ. Code . 71 Publication. (See Newspapers.) Of synopsis of Annual Statement. 611, Pol. Code 24 Q Qualifications. Of insurance company to obtain certificate of authority. 607, Pol. Code 23 R Real Estate. (See Property; Investments.) "What a company may purchase. 415, Civ. Code 40 State Board to equalize assessments of. 27," Act 155 Receipt. Acknowledgment of evidence of payment of premium. 2598, Civ. Code 66 Receiver. Apointment of. 604, Pol. Code 21 Powers of. 604, Pol. Code , 2 21 For Fraternal Benefit Societies. 25, Act lift Record. Insurance commissioner must keep. 600, Pol. Code 17 Registration of Life Policies. How registered. 634, Pol. Code 36 Fee for registering. 605, Pol. Code 22 Deposit of securities for benefit of. 634, Pol. Code 36 Reinsurance. Of business by receiver. 604, Pol. Code 21 What is. 2646, Civ. Code 72 Information must be communicated. 2647, Civ. Code 73 Presumed to be a contract of indemnity against liability. 2648, Civ. Code_ 73 Original insured has no interest in. 2649, Civ. Code i 73 Renewal. (See Certificate of Authority; Certificate of Compliance; Licenses.) Representation. (See Concealment and Representation; Marine Insurance.) Report. (See Annual Report; Annual Statement.) Surplus line broker. 596, Pol. Code 13 Of company, how verified. 610, Pol. Code , 24 Of mutual companies organized under act of 1851. 614, Pol. Code 27 Reserve. (See Reinsurance Reserve.) Required of liability insurance companies. 602a, Pol. Code 19 Required of other companies. 602, Pol. Code , 18 Retaliatory Law. (See Taxation.) Applying foreign discriminatory law. 622, Pol. Code __ 31 Valuation of policies of life insurance. 628, Pol. Code . 34 When appliable to companies of other states. 3, Act 136 Revocation. (See Licenses; Certificates of Authority.) Risk. Limitation on. 428, Civ. Code 43 When alteration increases. 2753, Civ. Code . 84 When alteration does not increase. 2754, Civ. Code . _ 84 May be issued upon what by county fire insurance companies. 8, Act 99 When acts of insured do not increase. 2755, Civ. Code 84 County fire insurance companies must classify. 9, Act ._ ._. 99 Limitations upon, by county fire insurance companies. R 10, Act 99 12 IL 178 INDEX. s Seaworthiness. (See Marine Insurance; Voyage.) Page. Warranty of. 2681, Civ. Code 75 What is. 2682, Civ. Code 75 At what time must exist. 2683, Civ. Code 76 What things are required to constitute. 2684, Civ. Code 76 When a ship becomes unseaworthy. 2686, Civ. Code 76 Different degrees of on voyage. 2685, Civ. Code 76 For purposes of insurance on cargo. 2687, Civ. Code _ 76 Salary. (See Compensation.) Seal of office. Fee for attaching. 605, Pol. Code 22 Secret benevolent associations. (See Fraternal Benefit Societies.) Exempt from insurance. 630, Pol. Code 35 Secretary of State. Fees of. 409, Pol. Code 132 Foreign corporations. 408-409, Civ. Code 134 Service on, when valid. 405, Civ. Code 134 Securities. (See Deposit.) Annual examination of. 621, Pol. Code 31 Service of Process. (See Agents; Process.) How made on insurance commissioner. 616, Pol. Code 28 When deemed complete. 616, Pol. Code 28 How made on general agent. 616, Pol. Code 28 Sprinkler insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do what other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Standard form of fire insurance policy. Liability limited. 1, Act 125 Policy must be countersigned by agent. 1, Act 125 What property not covered. 1, Act 125 What hazards not covered. 1, Act , 126 Policy void when. 1, Act 126 Policy suspended, when. 1, Act 126 Insurer not liable when. 1, Act 127 Deduction for removal when endangered by fire. 1, Act 127. Policy may be canceled when. 1, Act 127 Duty of insured in case of loss. 1, Act 127 Ascertainment of amount of loss. 1, Act :_ 128 Options of company in case of loss. 1, Act __ 129 Apportionment of loss. 1, Act 129 Loss, when payable. 1, Act 129 Non-waiver of appraisal or examination. 1, Act 4 129 Subrogation. 1, Act 129 Time for commencement of action. 1, Act 129 Insured, defined. 1, Act 129 Loss, defined. 1, Act 129 Time of loss or damage, defined. 1, Act 129 What shall be printed on outside of policy. 2, Act 130 Apportionment of loss may be waived when. 3, Act 130 Size of type to be used. 4, Act __: 130 County mutuals need not use standard form. 4, Act '. 130 What may be added to policy. 6-7-9-10, Act 130-131 Rider affecting standard form. 8, Act 131 Change in wording may be made, when. 11, Act 131 Deviation from standard form. 12, Act 131 Punishment for violation of. 12, Act 131 Policy violating standard form valid against company. 12, Act 131 Act effective, when. 13, Act 131 INDEX. 179 Statement. (See Annual Statement; Annual Report.) Page. Must be made on basis of gold coin. 627, Pol. Code 33 State Treasurer. (See Treasury of State.) Statutes. Act of March 26, 1868 93 Act to facilitate the giving of bonds required by law 96 Act to require payment of certain premiums to counties by fire insurance companies not organized under laws of state 97 Act to provide for the organization and management of county fire insur- ance companies 97 Act providing for the organization and management of mutual fire insur- ance companies 102 Act providing for the insuring of livestock on the assessment plan 105 An Act for the regulation and control of fraternal benefit societies 109 An Act defining certain classes of contracts for the exchange of indemnity, prescribing regulations therefor and fixing license fee 122 Act to establish standard form of fire insurance policy, etc 125 An Act taxing corporations 135 Steam boiler insurance. (See Boiler and Machipery Insurance Companies.) Stipulation for service of papers. Fee for filing. 605, Pol. Code 22 Companies must file. 616, Pol. Code 28 Is irrevocable (Note). 616, Pol. Code 28 Stock. (See Capital Stock.) Directors may asesss, when. 331, Civ. Code 39 Limitation on amount of assessment. 332, Civ. Code 39 Subscriptions. To capital stock, opened and how collected. 414, Civ. Code 39 Payment of. 424, Civ. Code 42 Summons. (See Service of; Process.) Sureties. (See Bond.) Of surplus line broker. 596, Pol. Code 14 Surety company may be accepted as sole surety. 955, Pol. Code 37 May become liable for less than full penal sum. 956, Pol. Code 37 Surety corporations. May become sureties on undertakings and bonds. 1056, C. C. P 87 Not required to justify. 1057, C. C. P 87 May justify, how. 1057, C. C. P 89 Surety companies. (See Surety Corporations; Fidelity and Surety Companies; Insurance Companies.) Commissioner must certify list of to county clerks. 625a, Pol. Code 33 May be sole surety. 955, Pol. Code 37 Surplus. (See Profits.) Surplus line broker. Who is. 596, Pol. Code 13 How licensed. 596, Pol. Code 13 Fee. 596, Pol Code 13 Bond of. 596, Pol. Code 13 Report of insurance procured, canceled, etc. 596, Pol. Code 13 Annual report. 596, Pol. Code 13 Tax on premiums. 596, Pol. Code 13 Revocation of license of. 596, Pol. Code 13 New license cannot be issued, when. 596, Pol. Code 13 Surplus line law. (See Surplus Line Broker.) T Tables of mortality. In determining solvency of life company. 602, Pol. Code 18 Valuation of policies of life insurance. 629, Pol. Code 34 Of fraternal benefit societies. 5, Act 110 Rates of fraternal benefit societies must be based on what. 12, Act 112 180 INDEX. Taxation. (See Taxes.) Page. Of insurance companies. 622, Pol. Code 31 What are subject to. 1, Act ___ 135 Of insurance companies. 3, Act . 1 .- 136 Rate of. 3, Act "136 Retaliatory provision. 3, Act 136 Deductions allowed. 3, Act 136 Insurance commissioner must report, what. 11, Act : 143 To be paid to state treasurer. 22, Act 1 151 Protest of. 23, Act i 151 Controller to send notice of. 24, Act 152 Of inter-insurance associations. 8, Act 124 Taxes. (See Taxation.) Surplus line. 596, Pol. Code 13 Must be paid on basis' of gold coin. 627, Pol. Code 33 Payable on demand of insurance commissioner. 634&, Pol. Code 37 Commissioner may commence action for. 634&, Pol. Code 37 Rate of. 3, Act ! 136 Application of retaliatory law. 3, Act , 136 Team and vehicle insurance companies. (See Insurance Companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do what other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code , 18 Term of office. (See Insurance Commissioner.) Title insurance companies. How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 18 Dividends, amounts to be reserved before making. 432, Civ. Code 43 Dividends, declared on what. 432, Civ. Code 43 Surplus fund. 432, Civ. Code 43 Funds may be invested in plant. 432, Civ. Code 43 Tornado insurance. (See Miscellaneous Insurance Companies.) Treasurer. (See Treasury of State.) Treasury of State. Securities must be deposited in. 594a, Pol. Code 10 Taxes payable to. 22, Act 151 Trustees. Insurance by agent or. 2589, Civ. Code 65 U Undertaking. (See Bond; Surety Corporations.) Underwriters. (See Fire Patrol.) Unseaworthy. (See Seaworthy; Marine Insurance.) Unreasonable delay in repairing exonerates insurer. 2686, Civ. Code 76 V Valuations. Commissioner may employ actuary to make. 601, Pol. Code 17 Retaliatory provisions as to. 628, Pol. Code 34 Companies must furnish data for. 629, Pol. Code 34 Upon what tables of mortality. 629, Pol. Code 34 Of policies of fraternal benefit societies. 23, Act j. 117 Voyage. (See Marine Insurance; Deviation.) INDEX. 181 W Warranties. Page. Is expressed or implied. 2603, Civ. Code 66 Form of. 2604, Civ. Code 67 Express, must be in policy. 2605, Civ. Code 67 May relate to past, present or future. 2606, Civ. Code 67 Past or present, defined. 2607, Civ. Code 67 Future, defined. 2608, Civ. Code 67 Breach of future. 2609, Civ. Code 67 Breach of, avoids policy. 2610, Civ. Code 68 Breach of immaterial provision. 2611, Civ. Code 68 Warden. (See Port Warden.) Wind Storm Insurance. (See Miscellaneus Iusurance Companies.) Withdrawal of Companies. Proceedings on. 595, Pol. Code 11 Publication of notice of. 631a, Pol. Code 35 Workmen's collective insurance. (See Miscellaneous Insurance.) Wrecks. (See Marine Insurance.) Sale of, by port wardens. 2507, Civ. Code 38 Notice of sale, how given. 2508, Civ. Code 38