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 '^NSURANCE LAWS 
 
 STATE OF TEXAS 
 
 DIGEST OF 192 
 
 BY 
 
 ED. HALL 
 
 COMMISSIONER OF INSURANCE AND BANKING 
 
 VON BOECKMANN- JONES CO., PHISTEnd, APSTIN, TEXAS 
 
 1922 
 
GIFT OF 
 
INSURANCE LAWS 
 
 STATE OF TEXAS 
 
 DIGEST OF 1921 
 
 BY 
 
 ED. HALL 
 
 COMMISSIONER OF INSURANCE AND BANKING 
 
 VON BOECKMANN-JONES CO., PRINTERS, AUSTIN, TEXAS 
 
 1922 
 
 A1-122-2000-L 
 
TABLE OF CONTENTS. 
 
 PAGE 
 
 Chapter I Commissioner of Insurance and Banking, Sections 1-8. 5 
 
 Chapter II Duties of the Commissioner, Sections 9-48 6 
 
 Chapter III Incorporation of Insurance Companies Home Com- 
 panies, Sections 49-67 16 
 
 Chapter IV Life, Health and Accident Insurance Companies 
 
 Home, Sections 68-120 19 
 
 Chapter V Life, Health and Accident Insurance Companies 
 
 Foreign, Sections 121-131 42 
 
 Chapter VI Investments and Premium Eeceipts Taxes on Life 
 
 Insurance Companies, Sections 132-148 46 
 
 Chapter VII Assessment or Natural Premium Companies, Sec- 
 tions 149-151 _ 54 
 
 Chapter VIII Mutual Life Insurance Companies, Sections 152- 
 
 169 55 
 
 Chapter IX Fire and Marine Companies, Sections 170-221 61 
 
 Chapter X Live Stock Insurance, Section 222 83 
 
 Chapter XI Casualty Insurance Companies, Sections 223-248 ... 84 
 
 Chapter XII Fidelity, Guaranty and Surety Companies, Sections 
 
 249-262 ". 92 
 
 Chapter XIII General Provisions applies to various companies, 
 
 Sections 263-295 100 
 
 Chapter XIV Workmen's Compensation Act, Sections 296-390. . . 110 
 
 Chapter XV Mutual Assessment Accident Insurance Home 
 
 Companies, Sections 391-407 143 
 
 Chapter XVI Mutual Fire, Lightning, Hail and Storm Insur- 
 ance Companies Their regulation, government and control, 
 Sections 408-427 149 
 
 Chapter -XVII Mutual Hail Insurance Companies, Sections 428- 
 
 437 157 
 
 Chapter XVIII Beciprocal Indemnity Contracts Begulation 
 
 thereof Powers of Commissioner, Sections 438-450 160 
 
 Chapter XIX Printers Mutual Fire and Storm Insurance Asso- 
 ciations, Sections 451-453 164 
 
 Chapter XX Mutual plan of Insurance against loss or damage 
 resulting from Burglary, Eobbery, and loss of Money and Se- 
 curities in Transportation, Sections 454-461 165 
 
 Chapter XXI Agents Definition of Powers Eestrictions 
 
 Penalties, Sections 462-484 167 
 
 Chapter XXII Fraternal Beneficiary Associations, Sections 485- 
 
 526 174 
 
 Chapter XXIII Eegulating the Sale of Stock of Corporations, 
 
 Sections 527-550 (Blue Sky Law) 196 
 
 Chapter XXIV Anti-Trust Law, Sections 551-573 203 
 
 Chapter XXV Eegulating the Business of Insurance Issued on the 
 
 Llodys Plan, Sections 574-584 211 
 
 Chapter XXVI Co-Operative Savings and Contract Loan Compa- 
 nies, Sections 585-622 .^ 215 
 
 468972 
 
INSURANCE LAWS 
 
 A COMPILATION OF THE STATUTES OF THE STATE OF TEXAS 
 WHICH BEAR UPON THE SUBJECT OF INSURANCE 
 
 DIGEST OF 1 92 1 
 
 CHAPTER I. 
 
 COMMISSIONER OF INSURANCE AND BANKING. 
 Appointment of. 
 
 SECTION 1. The Governor shall appoint, by and with the advice 
 and consent of the Senate, a Commissioner of Insurance and Banking, 
 who shall be a citizen of the State and experienced in matters of insur- 
 ance. (R. S., Art. 4485.) 
 
 Term of Office. 
 
 2. The Commissioner of Insurance and Banking shall hold his office 
 for the term of two years, and until the appointment and qualification 
 of his successor. (R. S., Art. 4486.) 
 
 Vacancies in Office, How Filled. 
 
 3. The Governor may fill any vacancy occurring in the office of 
 Commissioner of Insurance and Banking, and report the name of the 
 person so appointed to the Senate, if in session, or at the next succeed- 
 ing session of the Legislature. Should the Senate fail to confirm the 
 appointment made by the Governor within ten days after being advised 
 thereof, then the said office shall be deemed vacant and a new appoint- 
 ment shall be made until the office is filled. (R. S., Art. 4487.) 
 
 Oath and Bond. 
 
 4. Within fifteen days after notice of his appointment, and before 
 entering upon the duties of his office, he shall take the oath of office 
 prescribed by the Constitution, and shall give a bond to the State of 
 Texas in the sum of five thousand dollars, with two or more good and 
 sufficient sureties, to be approved by the Governor, and conditioned 
 for the faithful discharge of the duties of his office, which oath and 
 bond shall be filed in the office of the Secretary of State. (R. S., Art. 
 4488.) 
 
 Clerks, May Appoint. 
 
 5. Said Commissioner may appoint a competent chief clerk and 
 such other clerks as the labors of his office may require; and all clerks 
 shall be removable at the pleasure of the Commissioner. (R. S., Art. 
 4489.) 
 
 Chief Clerk, Duties of. 
 
 6. The chief clerk shall possess all the power and perform all the 
 duties attached by law to the office of Commissioner during the neces- 
 
6 INSURANCE LAWS OF TEXAS. 
 
 sary or unavoidable absence of the Commissioner, or his inability to act 
 from any cause. The Commissioner shall be responsible for the acts of 
 his chief clerk, who shall, before entering upon the duties of his position, 
 take the oath required of the Commissioner; he may also be required 
 by the Commissioner to enter into bond with security, payable to said 
 Commissioner for the faithful performance of the duties of his position. 
 (R. S., Art. 4490.) 
 
 Shall Be Styled Commissioner of Insurance and Banking, and Have a Seal. 
 
 7. The said Commissioner shall be styled the Commissioner of Insur- 
 ance and Banking and shall have a seal of office, the design of which shall 
 consist of a star with five points with letters composing the word "Texas" 
 arranged between the respective points thereof; said seal to be not less 
 than one and a half and not more than two inches in diameter, and on 
 the margin "Department of Insurance and Banking," or an intelligible 
 abbreviation thereof. Such seal thus formed and impressed shall be the 
 seal of office of the Department of Insurance and Banking. (R. S., 
 Art. 4491.) 
 
 Ineligibility of Certain Persons. 
 
 8. No person who is a director, officer or agent of, or directly or 
 indirectly interested in, any insurance company, except as insured, shall 
 be a commissioner or clerk; and it shall be unlawful for such commis- 
 sioner, or any person employed by him, or in any way connected with 
 his office, to purchase all or any part of any mine or mineral land, to be 
 in any manner interested in such purchase, during the term of his office 
 or employment. (R. S., Art. 4492.) 
 
 CHAPTER II. 
 
 DUTIES OF THE COMMISSIONER. 
 
 9. In addition to the duties required of the Commissioner of Insur- 
 ance and Banking, he shall perform other duties as follows: (R. S., 
 Art. 4493.) 
 
 Shall Execute the Laws. 
 
 10. (1) To see that all laws respecting insurance and insurance 
 companies are faithfully executed. (R. S., Art. 4493, Subdivision 1.) 
 
 File Articles of Incorporation and Other Papers. 
 
 11. (2) To file and preserve in his office all acts or articles of incor- 
 poration of insurance companies and all other papers required by law 
 to be deposited with him, and, upon application of any party interested 
 therein to furnish certified copies thereof upon payment of the fees 
 prescribed by law. (R. S., Art. 4493, Subdivision 2.) 
 
 Shall Calculate Net Value of Policies. 
 
 12. (3) He shall, as soon as practicable, in each year, calculate or 
 cause to be calculated in his office, by an officer or employe of his depart- 
 ment, the net value on the 31st day of December of the previous year 
 
INSURANCE LAWS OF TEXAS. 7 
 
 of all the policies in force on that day in each life or health insurance 
 company doing business in this State, upon the basis and in the manner 
 prescribed by law. (R. S., Art. 4493, Subdivision 3.) 
 
 Shall See That Company Has Net Value of Policies on Hand. 
 
 13. (4) Having determined the net value of all the policies in 
 force, it shall be his duty to see that the company has in safe securities 
 of the class and character required by the laws of this State the amount 
 of said net value of all its policies, after all its debts and claims against 
 it and at least one hundred thousand dollars of surplus to policyholders 
 have been provided for. (R. S., Art. 4493, Subdivision 4.) 
 
 May Accept the Valuation of Commissioners of Other States. 
 
 14. (5) He may accept the valuation made by the Insurance Com- 
 missioner of the State under whose authority a life insurance company 
 was organized when such valuation has been properly made on sound 
 and recognized principles, as a legal basis as above; provided, the com- 
 pany shall furnish to him a certificate of the Insurance Commissioner of 
 such States, setting forth the value calculated on the data designated 
 above of all the policies in force in the company on the previous 31st day 
 of December, and stating that after all other debts of the company and 
 claims against it at that time, and one hundred thousand dollars surplus 
 to policyholders, were provided for, the company had in safe securities of 
 the character required by the laws of this State, an amount equal to the 
 net value of all its policies in force, and that said company ' is entitled 
 to do business in its own State. (R. S., Art. 4493, Subdivision 5.) 
 
 Shall See That Companies Furnish Certificates. 
 
 15. (6) Every life insurance company doing business in this State 
 during the year for which the statement is made that fails promptly to 
 furnish the certificate aforesaid, shall be required to make full detailed 
 lists of policies and securities to the Insurance Commissioner, and shall 
 be liable for all charges and expenses consequent upon not having fur- 
 nished said certificate. (R. S., Art. 4493, Subdivision 6.) 
 
 Shall Calculate the Reserve on Fire Insurance. 
 
 16. (7) For every company doing fire insurance business in this 
 State he shall calculate the reinsurance reserve for unexpired fire risks 
 by taking 50 per cent of the premiums received on all unexpired risks 
 that have less than one year to run, and a pro rata of all premiums 
 received on risks that have more than one year to run; provided, that, 
 when the reinsurance reserve, calculated as above, is less than 40 per cent 
 of all the premiums received during the year, the reinsurance reserve 
 in this case shall be the whole of the premiums received on all of its 
 unexpired risks. For every company transacting any kind of insurance 
 business in this State for which no basis is prescribed by law, he shall 
 calculate the reinsurance reserve upon the same basis prescribed in this 
 section [article] as to companies transacting fire insurance business. 
 (R. S., Art. 4493, Subdivision 7.) 
 
 Note. A title and guaranty company insuring titles to real estate, issuing 
 contracts for a specified number of years, for which it collects a single premium 
 
8 INSURANCE LAWS OF TEXAS. 
 
 at once (not annually) must set aside as a reserve 50 per cent of such single 
 premium and maintain the same during the entire life of the contract. (Opin- 
 ion of Attorney General, February 27, 1912.) 
 
 Shall Charge Premiums in Marine and Inland Insurance. 
 
 17. (8) In marine and inland insurance he shall charge all the 
 premiums received on unexpired risks as a reinsurance reserve. (E. S., 
 Art. 4493, Subdivision 8.) 
 
 Duties When Company's Capital Is Impaired. 
 
 18. (9) Having charged against a company other than life, the 
 reinsurance reserve, as prescribed by the laws of this State and adding 
 thereto all other debts and claims against the company, he shall, in 
 case he finds the capital stock of the company impaired to the extent 
 of 20 per cent, give notice to the company to make good its whole capital 
 stock within sixty days, and if this is not done he shall require the 
 company to cease to do business within this State, and shall thereupon, 
 in case the company is organized under authority of the State, imme- 
 diately institute legal proceedings to determine what further shall be 
 done in the case. (E. S., Art. 4493, Subdivision 9.) 
 
 Shall Publish Result of Examinations. 
 
 19. (10) The Commissioner shall publish the result of his exami- 
 nation of the affairs of any company whenever he deems it for the interest 
 of the public. (E. S., Art. 4493, Subdivision 10.) 
 
 Shall Suspend or Revoke Certificate of Authority. 
 
 20. (11) He shall suspend the entire business of any company of 
 this State and the business within this State of any other company 
 during its non-compliance with any provision of the laws relative to 
 insurance or when its business is being fraudulently conducted, by 
 suspending or revoking the certificate granted by him; and he shall 
 give notice thereof to the Insurance Commissioner or other similar officer 
 of every State and shall publish notice thereof; provided, that he shall 
 give such company at least ten days' notice in writing of his intention 
 to suspend its right to do business or revoke the certificate of authority 
 granted by him, stating specifically the reason why he intends to so 
 suspend, or revoke such certificate of authority. (E. S., Art. 4493, 
 Subdivision 11.) 
 
 Shall Report to Attorney General. 
 
 21. (12) He shall report promptly and in detail to the Attorney 
 General any violation of law relative to insurance companies or the 
 business of insurance. (E. S., Art. 4493, Subdivision 12.) 
 
 Shall Furnish Blanks. 
 
 22. (13) He shall furnish to the companies required to report to 
 him the necessary blank forms for the statements required. (E. S., 
 Art. 4493, Subdivision 13.) 
 
INSURANCE LAWS OF TEXAS. 9 
 
 Siiall Keep Records. 
 
 23. (14) He shall preserve in a permanent form a full record of 
 his proceedings and a concise statement of the condition of each com- 
 pany or agency visited or examined. (R. S., Art. 4493, Subdivision 14.) 
 
 Shall Give Certified Copies. 
 
 24. (15) At the request of any person, and on the payment of the 
 legal fee, he shall give certified copies of any record or papers in his 
 office when he deems it not prejudicial to public interest, and shall give 
 such other certificates as are provided for by law. (R. S., Art. 4493, 
 Subdivision 15.) 
 
 Shall Report Annually to Governor. 
 
 25. (16) He shall report annually to the Governor the names and 
 compensations of his clerks, the receipts and expenses of his department 
 for the year, his official acts, the conditions of companies doing business 
 in this State, and such other information as will exhibit the affairs of 
 said department. (R. S., Art. 4493, Subdivision 16.) 
 
 . The Printing Board is without authority to decline to have the report 
 of the Commissioner printed. (Opinion of Attorney General, May 6, 1918.) 
 
 Shall Send Copy of Reports to. 
 
 26. (17) He shall send a copy of such annual report to the in- 
 surance commissioner or other similar officer of every State, and to each 
 company doing business in the State. (R. S., Art. 4493, Subdivision 
 17.) 
 
 Shall Report Laws to Commissioners of Other States, When. 
 
 27. (18) On request he shall communicate to the insurance com- 
 missioner or other similar officer of any other State, in which the sub- 
 stantial provisions of the law of this State relative to insurance have 
 been or shall be enacted, any facts which by law it is his duty to ascer- 
 tain respecting the companies of this State doing business within such 
 other State. (R. S., Art. 4493, Subdivision 18.) 
 
 Shall See That No Company Does Life Business, When. 
 
 28. (19) He shall see that no company is permitted to transact the 
 business of life insurance in this State whose charter authorizes it to do 
 a fire, marine, lightning, tornado or inland insurance business, and that 
 no company authorized to do a life or health insurance business in this 
 State be permitted to take fire, marine or inland risks. (R. S., Art. 
 4493, Subdivision 19.) 
 
 Shall Admit Mutual Companies, When. 
 
 29. (20) The Commissioner of Insurance and Banking shall admit 
 into this State mutual insurance companies organized under the laws of 
 other States and who have $200,000 assets in excess of liabilities en- 
 gaged in cyclone, tornado, hail and storm insurance. (R. S., Art. 4493, 
 Subdivision 20.) 
 
10 INSURANCE LAWS OF TEXAS. 
 
 May Change Form of Annual Statement. 
 
 30. The Commissioner of Insurance and Banking may from time to 
 time make such changes in the forms of the annual statements required 
 of insurance companies of any kind as shall seem to him best adapted 
 to elicit a true exhibit of their condition and methods of transacting 
 business; provided, that such terms and requirements shall elicit only 
 such information as shall pertain to the business of the company. (R. S., 
 Art. 4494.) 
 
 Duties When Parties Refuse to Appear and Testify. 
 
 31. Whenever any person shall refuse to appear and testify, or to 
 give information authorized by this chapter to be demanded by the 
 Commissioner of Insurance, such Commissioner may file his application 
 under oath with any district judge or district court within this State 
 where said witness is summoned to appear, and it shall be the duty of 
 said judge to summon said witness, administer oaths as required by law 
 and require answers to such questions, and such judge or court shall 
 have power to punish for contempt as now provided by law. (R. S., 
 Art. 4495.) 
 
 Sheriff and Other Peace Officers Shall Execute Service. 
 
 32. Sheriffs and other peace officers of this State shall execute pro- 
 cess directed to them by the Commissioner of Insurance and make 
 return thereof to him as in the case of process issued from any of the 
 courts. (R. S., Art. 4496.) 
 
 Shall Issue Certificate of Authority, When Shall Revoke Certificate 
 When Suit Removed to Federal Court. 
 
 33. Should the Commissioner of Insurance and Banking be satisfied 
 that any company applying for a certificate of authority has in all 
 respects fully complied with the law, and that, if a stock company, its 
 capital stock has been fully paid up; that it has the required amount 
 of capital or surplus to policyholders, it shall be his duty to issue to 
 such company a certificate of authority under the seal of his office, 
 authorizing such company to transact insurance business, naming therein 
 the particular kind of insurance, for the period of not less than three 
 months nor extending beyond the last day of February next following 
 the date of such certificate. And if any such insurance company 
 organized under the laws of any State, or country, after having obtained 
 a certificate of authority from the Commissioner of Insurance and Bank- 
 ing, or other officer authorized to issue such permit to do business in this 
 State, shall bring in any Federal court any suit or action against any 
 citizen of this State, or shall remove any suit or action heretofore or 
 hereafter commenced in any court of this State, to which it is a party, 
 to any Federal court, the Commissioner of Insurance and Banking shall 
 forthwith revoke and recall the certificate of authority of such insurance 
 company to do and transact business in this State, and no renewal, of 
 authority shall be granted to such insurance company to do business 
 in this State for a period of three years after such revocation, and such 
 insurance company shall thereafter be prohibited from transacting any 
 
INSURANCE LAWS OF TEXAS. 11 
 
 business in this State until again duly authorized by law. (R. S., 
 Art. 4497.) 
 
 Note. (1) Fidelity, guaranty and surety companies and insurance companies 
 are subject to the provisions in regard to removal or bringing of suits in Fed- 
 eral court. (Opinion of Attorney General, April 15, 1909.) 
 
 (2) A foreign life insurance company must have all its capital stock, author- 
 ized by its charter, fully paid up, before it can obtain a license to do busi- 
 ness in Texas. (Opinion of Attorney General, August 27, 1913.) 
 
 (3) The statute authorizing revocation of license for filing suit in, or re- 
 moving suit to, a Federal court, does not apply to fraternal beneficiary soci- 
 eties. Such statute, however, is not unconstitutional. (Opinion of Attorney 
 General, May 5, 1915.) 
 
 (4) A company which does only a fidelity, guaranty and surety business is 
 not required to have its entire authorized capital paid up in order to obtain 
 a certificate of authority to do business in Texas. (Opinion of Attorney Gen- 
 eral, June 1, 1915.) 
 
 Shall Compute Reserve Liability of Companies. 
 
 34. It shall be the duty of the Commissioner of Insurance and 
 Banking, as soon as practicable, in each year, to compute the reserve 
 liability on the 31st day of December of the preceding year of every 
 company organized under the laws of this State or authorized to trans- 
 act business in this State, which has outstanding policies of insurance 
 on the lives of citizens of this State in accordance with the following 
 rules: 
 
 1. The net value on the first day of December of the preceding 
 year of all outstanding policies of life insurance in the company issued 
 prior to the first day of January, 1910, shall be computed according 
 to the terms of said policies on the basis of the American Experience 
 Table of Mortality and 4 per cent interest per annum. 
 
 2. The net value on the last day of December of the preceding year 
 of all policies of life insurance issued after the 31st day of December, 
 1909, upon the basis of the Actuaries' or Combined Experience Table 
 of Mortality, with 4 per cent interest per annum; provided, that the 
 policies of any such life insurance company thereafter issued upon the 
 reserve basis of an interest rate lower than 4 per cent shall be computed 
 upon the basis of the American Experience Table of Mortality with 
 interest at such lower rate per annum; provided, that any company 
 which on January 1, 1909, was writing policies on the basis of 4J per 
 cent may continue on that basis until January 1, 1912, and its policies 
 shall be so valued. 
 
 3. In every case in which the actual premium charged for an insur- 
 ance is less than the net premium for such insurance computed ace 3rd- 
 ing to its respective tables of mortality and rate of interest aforesaid, 
 the company shall also be charged with the value of annuity, the amount 
 of which shall equal the difference between the premium charged and 
 that required by the rules above stated and the term of which in years 
 shall equal the number of future annual payments, due on the insur- 
 ance at the date of the valuation. (R. S., Art. 4498.) 
 
 Note. A life insurance company has outstanding contracts containing the 
 following provisions: 
 
 "On the first day of August of each year, during the continuance of this con- 
 tract, the company shall compute the number of thousands of insurance in force 
 
12 INSURANCE LAWS OF TEXAS. 
 
 written for a period of ten years from and after August 1, 1906, in the State 
 of Texas, upon which there shall have been paid in cash during the preceding 
 year one full annual premium, two semi-annual or four quarter-annual pre- 
 miums. 
 
 "The company further agrees on the dates aforesaid to credit said member 
 with such a sum of money from the expense element of premiums paid on in- 
 surance written in said State, during said period, after said date, as shall be 
 obtained by dividing an amount of money equal to one dollar for each one thou- 
 sand dollars of insurance in force at said dates, written during said period, 
 after August 1, 1906, by the number of said members' contracts in force at the 
 time of such distribution. 
 
 "The amount so credited to said member shall each year, on the anniversary 
 of the date of this contract, or within sixty days thereafter, provided this con- 
 tract be then in force, be paid to him by said company, subject to the 
 
 agreement of said member in his application herefor." 
 
 The amount which may be properly charged on December 31st any year against 
 the company as a liability on account of the issuance of such contracts is the 
 amount of money credited to the various special contract holders on August 1st 
 of any such year the last distribution period. The money paid in after that 
 date and which is being held in a general fund for coming distribution dates, 
 should not be charged as a liability. (Opinion of Attorney General, January 
 30, 1912.) 
 
 Shall Calculate Reinsurance Reserve. 
 
 35. On the 31st day of December of each and every year, or as soon 
 thereafter as may be practicable, the Commissioner of Insurance and 
 Banking shall have calculated in his office the reinsurance reserve for all 
 unexpired risks of all insurance companies organized under the laws of 
 this State, or transacting business in this State, transacting any kind of 
 insurance other than life, fire, marine, inland, lightning or tornado in- 
 surance, by taking 50 per cent of the gross premiums on all unexpired 
 risks that have less than one year to run and a pro rata of all premiums 
 received on risks that have more than one year to run. (E. S., Art. 
 4499.) 
 
 Shall Examine Companies Have Free Access to Books May Revoke or 
 Modify Certificate Expenses for Examinations. 
 
 36. The Commissioner of Insurance and Banking shall, at the end 
 of each two years, or oftener if he deems necessary, in person or by 
 one or more examiners commissioned in writing, visit each company 
 organized under the laws of this State and examine its financial con- 
 dition and its ability to meet its liabilities. He shall have free access 
 to all the books and papers of the company or agents thereof relating 
 to the business and affairs of such company, and shall have power to 
 summon and examine under oath the officers, agents and employes of 
 such company and any other person within the State relative to the 
 affairs of such insurance company. He may revoke or modify any 
 certificate of authority issued by him when any conditions or require- 
 ments prescribed by law for granting it no longer exist; provided, that 
 he shall give such company at least ten days' notice in writing of his 
 intention to revoke or modify such certificate of authority issued by 
 him, stating specifically the reasons why he intends to revoke or modify 
 such certificate. The expense of every such examination shall be paid 
 by the company so examined, but the Commissioner shall not make 
 any charge for services except for traveling or other actual expenses 
 
INSURANCE LAWS OF TEXAS. 13 
 
 and shall furnish the company with an itemized statement of such 
 expenses. (E. S., Art. 4500.) 
 
 Powers and Duties of Commissioner in Case of Examination. 
 
 37. The Commissioner of Insurance and Banking, for the purpose 
 of examination authorized by law, has power, either in person or by 
 one or more examiners by him commissioned in writing: 
 
 1. To require free access to all books and papers within this State 
 of any insurance companies or the agents thereof doing business within 
 this State. 
 
 2. To summon and examine any person within this State, under 
 oath, which he or any examiner may administer, relative to the affairs 
 and conditions of any insurance company. 
 
 3. To visit at its principal office, wherever situated, any insurance 
 company doing business in this State, for the purpose of investigating 
 its affairs and conditions, and shall revoke the certificate of authority 
 of any such company in this State refusing to permit such examination. 
 The reasonable expenses of all such examinations shall be paid by the 
 company examined. 
 
 4. He may revoke or modify any certificate of authority issued by 
 him when any conditions prescribed by law for granting it no longer 
 exist. 
 
 5. He shall also have power to institute suits and prosecutions either 
 by the Attorney General or such other attorney as the Attorney Gen- 
 eral may designate, for any violations of the Jaw of this State relat- 
 ing to insurance, and no action shall be brought or maintained by any 
 person other than the Commissioner of Insurance and Banking for clos- 
 ing up the affairs or to enjoin, restrain or interfere with the prosecution 
 of the business of any such insurance company organized under the laws 
 of this State. (E. S., Art. 4501.) 
 
 f- 
 Transfer of Securities, Must Be Countersigned. 
 
 38. No transfer by the Commissioner of Insurance of securities of 
 any kind, in any way held by him in his official capacity, shall be valid 
 unless countersigned by the Treasurer of the State. (E. S., Art. 4502.) 
 
 State Treasurer, Duty in Regard to Transfers. 
 
 39. It is the duty of the State Treasurer 
 
 (1) To countersign any -such transfer presented to him by the Com- 
 missioner. 
 
 (2) To keep a record of all transfers, stating the name of the trans- 
 feree, unless transferred in blank, and a description of the security. 
 
 (3) Upon countersigning, to advise by mail the company concerned 
 the particulars of the transaction. 
 
 (4) In his annual report to the Legislature, to state the transfers 
 and the amount thereof countersigned by him. (E. S., Art. 4503.) 
 
 Free Access to Records, Books, Etc., Given to Commissioner and State 
 Treasurer. 
 
 40. For the purpose of verifying the correctness of records, the Com- 
 missioner of Insurance shall be entitled to free access to the Treas- 
 
14 INSURANCE LAWS OF TEXAS. 
 
 urer's records required by the preceding article, and the Treasurer shall 
 be entitled to free access to the books and other documents of the 
 Insurance Department relating to securities held by the Commissioner. 
 (E. S., Art. 4504.) 
 
 Instruments Executed and Copies of Papers Made Evidence. 
 
 41. Every instrument executed by the Commissioner of Insurance 
 of this State, or of any other State in which the substantial provisions 
 of the laws of this State relating to insurance have been or shall be en- 
 acted, pursuant to authority conferred by law, and authenticated by his 
 seal of office, shall be received as evidence, and copies of papers and rec- 
 ords in his office certified by him and so authenticated shall be received 
 as evidence with the same effect as the originals. (E. S., Art. 4505.) 
 
 Commissioner Authorized to Make Inquiries of Companies. 
 
 42. The Commissioner of Insurance is authorized to address any 
 inquiries to any insurance company in relation to its business and con- 
 dition, or any matter connected with its transaction, which he may deem 
 necessary for the public good, or for a proper discharge of his duty 
 and it shall be the duty of the company so addressed to promptly answer 
 such inquiries in writing. (E. S., Art. 4506.) 
 
 Commissioner's Report. 
 
 43. It shall be the duty of the Commissioner to cause the informa- 
 tion contained in the annual statements of companies to be arranged in 
 tabular form, and prepare the same in a single document for printing 
 and submit the same to the Legislature as a portion of his regular report 
 to that body. (E. S., Art. 4507.) 
 
 Valid Final Judgment Insurance Company's Certificate of Authority 
 Revoked, When. 
 
 44. Should any insurance company fail or neglect to pay off and 
 discharge any execution, issued upon a valid final judgment against 
 said company, within thirty days after the notice of the issuance thereof,, 
 then in that event the certificate of authority of said company to trans- 
 act business of insurance shall be revoked, canceled and annulled, and 
 said company shall be prohibited from transacting business of insurance 
 in this State until said execution be satisfied. (E. S., Art. 4508.) 
 
 Note. Commissioner cannot revoke permit for failure to pay judgment un- 
 less it be a final and also a valid judgment. As long as there is pending an 
 independent original suit to determine the validity of a default judgment, it 
 is not final and Commissioner cannot revoke permit. Commissioner cannot de- 
 termine validity of judgment while suit is pending to set it aside, nor pass- 
 upon the jurisdiction of the courts with reference to such suit. (Opinion of 
 Attorney General, September 30, 1915.) 
 
 Commissioners to Give Certificates, Attested by Seal. 
 
 45. It shall be the duty of the Secretary of State, Commissioner 
 of the General Land Office, Comptroller, Treasurer, Commissioner of 
 Agriculture, Commissioner of Insurance and Banking, State Librarian, 
 Adjutant General and Attorney General to furnish any person who 
 may apply for the same, with a copy of any paper, document or record 
 
INSURANCE LAWS OF TEXAS. 15 
 
 in their respective offices, and also to give certificates, attested by the 
 seals of their respective offices, certifying to any fact or facts contained 
 in the papers, documents or records of their offices, to any person apply- 
 ing for the same. (E. S., Art. 3833.) 
 
 Fees. 
 
 46. It shall be lawful for the officers named in the preceding article 
 to demand and receive the following fees for the services mentioned 
 therein : 
 
 For copies of any paper, document or record in their offices in 
 the English language, including certificate and seal, and for 
 each hundred words $ 15 
 
 For copies of any paper, document or record in their offices, in 
 any other language than the English, including certificate and 
 seal, for each hundred words 25 
 
 For each translated copy of any paper, document or record in 
 their offices, including certificate and seal, for each hundred 
 words 30 
 
 For the copy of any plat or map in their offices, such fee as may 
 be established by the officer in whose office the same is made, 
 to be determined with reference to the amount of labor re- 
 quired. 
 
 For each certificate not otherwise provided for 50 
 
 (R. S., Art. 3834.) 
 
 47. The Commissioner of Insurance and Banking shall charge and 
 receive for the use of the State the following fees, towit: 
 
 For filing each declaration or certified copy of charter of insur- 
 ance company $ 25 00 
 
 Note.- Companies must pay $25 filing fee for each amended declaration or 
 certified copy. (Attorney General's opinion, November 4, 1901.) 
 
 For filing the annual statement of an insurance company, or 
 
 certificate in lieu thereof 20 00 
 
 For certificate of authority and certified copy thereof 1 00 
 
 For every copy of any paper filed in his department, for each 
 
 folio 20 
 
 For affixing his official seal and certifying to the same 100 
 
 For valuing policies of life insurance companies, for each one 
 
 million of insurance or fraction thereof 10 00 
 
 For official examinations of companies under the law, the actual 
 
 expense incurred, and ten dollars a day, not to exceed 250 00 
 
 (R. S., Art. 3844.) 
 
 Note. Filing fees should be returned to an insurance company if license is 
 not granted. (Opinion of Attorney General, April 14, 1908.) 
 
 Shall Keep Fee Book and Bender Account of Fees Quarterly. 
 
 48. It shall be the duty of the Secretary of State, Commissioner of 
 General Land Office, Comptroller, Treasurer, Commissioner of Agricul- 
 ture, Commissioner of Insurance and Banking, State Librarian, Adju- 
 tant General and Attorney General, respectively, to keep fee books in 
 their several offices, in which they shall enter all the fees received for 
 
16 INSURANCE LAWS OF TEXAS. 
 
 any of the services named in this chapter, and they shall quarterly file 
 with the Comptroller an account of all fees so received by them., respec- 
 tively; which accounts shall be verified by the affidavit of the officer ren- 
 dering the same, and such officer shall, also at the end of each quarter, 
 pay over to the Treasurer of the State all moneys received by them > 
 respectively, under the provisions of this chapter. (E. S., Art. 3836.) 
 
 CHAPTEE III. 
 
 INCOKPOEATION OF INSURANCE COMPANIES HOME COMPANIES. 
 
 Formation of Company. 
 
 49. Any number of persons desiring to form a company for the 
 purpose of transacting insurance business shall adopt and sign articles 
 of incorporation, and submit the same to the Attorney General, and 
 if said articles shall be found by him to be in accordance with the laws 
 of this State, and of the United States, he shall attach thereto his cer- 
 tificate to that effect, whereupon such articles shall be deposited with 
 the Commissioner of Insurance and Banking. (E. S., Art. 4705.) 
 
 Note. The business of guaranteeing titles to land is insurance business, and 
 a corporation organized and chartered under this statute for such purpose 
 must conduct its business under the supervision of the Insurance Department. 
 (Opinion of Attorney General, May 1, 1913.) 
 
 Articles of Incorporation Shall Contain. 
 
 50. Such articles shall contain 
 
 (1) The name of the company, and the name selected shall not be 
 so similar to that of any other insurance company as to be likely to 
 mislead the public. 
 
 Note. Courts must pass upon question of similarity of names. (Attorney 
 General's opinion, July 1, 1902.) 
 
 (2) The locality of the principal business office of such company. 
 
 (3) The kind of insurance business which the company proposes to 
 engage in, 
 
 (4) The amount of its capital stock, which shall in no case be less 
 than one hundred dollars. (E. S., Art. 4706.) 
 
 Note. A corporation issuing certificates guaranteeing and warranting titles 
 to real estate is an insurance company and its charter should be filed with 
 Commissioner of Insurance and Banking. (Opinion of Attorney General, Jan- 
 uary 29, 1910.) 
 
 Duty of Commissioner of Insurance When Articles Are Deposited With 
 Him. 
 
 51. When the said articles of incorporation have been deposited 
 with the Commissioner of Insurance and Banking, and the law in all 
 other respects has been complied with by the company, the Commissioner 
 shall make an examination, or cause one to be made by some competent 
 and disinterested person appointed by him for that purpose; and if it 
 shall be found that the capital stock of the company, to the amount 
 
INSURANCE LAWS OF TEXAS. 17 
 
 required by law, has been paid in, and is possessed by it, in money or in 
 such stock, notes, bonds or mortgages as are required by law, and that 
 the same is the bond fide property of such company, and that such com- 
 pany has in all respects complied with the law relating to insurance, 
 then the Commissioner of Insurance and Banking shall issue to such 
 company a certificate of authority to commence business as proposed in 
 their articles of incorporation. (R. S., Art. 4707.) 
 
 Note. Certificates of stock issued by a fire insurance company, which stock 
 was not paid for in cash, but in a certificate of deposit of a bank due at a 
 future time, were unlawfully issued, and should be canceled. (Opinion of 
 Attorney General, November 13, 1912.) 
 
 Company Shall Certify Under Oath That the Capital Is Bona Fide Its 
 Property. 
 
 52. The corporators or officers of any such company shall be required 
 to certify under oath to the Commissioner of Insurance and Banking 
 that the capital exhibited to the person making the examination is the 
 bona fide property of the company so examined, which certificates shall 
 be filed and recorded in the office of the Commissioner of Insurance and 
 Banking. (R. S., Art. 4708.) 
 
 Where Examination Is Made by Other Than Commissioner. 
 
 53. If the examination be made by any other person than the Com- 
 missioner of Insurance and Banking, the finding shall be certified under 
 the oath of the person making such examination, and such finding and 
 certificate shall be filed and recorded in the office of the Commissioner 
 of Insurance and Banking. (R. S., Art. 4709.) 
 
 Stock Divided Into Shares. 
 
 54. The stock of any company organized under the laws of this 
 State shall be divided into shares of one hundred dollars each. (R. S., 
 Art. 4710.) 
 
 Capital Stock Shall Consist of What. 
 
 55. The capital stock of a company shall consist : 
 
 ( 1 ) In lawful money of the United States ; or 
 
 (2) In the bonds of this State or any county or incorporated town 
 or city thereof, or the stock of any national bank; or 
 
 Heal Estate Must Be Worth Double Amount Loaned on It. 
 
 (3) In first mortgages upon unencumbered real estate in this State, 
 the title to which is valid and the market value of which is double the 
 amount loaned thereon, exclusive of buildings, unless such buildings are 
 insured in some responsible company and the policy or policies trans- 
 ferred to the company taking such mortgage. (R. S., Art. 4711.) 
 
 Surplus Money May Be Invested, How Current Value of Investment. 
 
 56. The surplus money of a company over and above its paid-up 
 capital stock may be invested in or loaned upon the pledge of public 
 stocks or bonds of the United States, or any of the States, or stocks, 
 bonds, or other evidence of indebtedness of any solvent dividend-paying 
 
18 INSURANCE LAWS OF TEXAS. 
 
 corporation, or in bills of exchange or other commercial notes or bills, 
 except its own stock; provided always that the current market value of 
 such stocks, bonds, notes, bills, or other evidences of indebtedness shall 
 be at all times during the continuance of such loans at least 20 per cent 
 more than the sum loaned thereon. (E. S., Art. 4712.) 
 
 Note. The title guaranty companies are insurance companies and are subject 
 to the insurance laws. A title guaranty company may invest part of its capital 
 in an abstract plant to be used as incident to its business. It cannot sell ab- 
 stracts to the public. It cannot invest any part of its capital in stock of an 
 abstract company, but may invest its surplus in such stock as an investment, 
 but not for the purpose of conducting the business of an abstract company. 
 (Opinion of Attorney General, June 11, 1913.) 
 
 Company May Change and Reinvest Stock. 
 
 57. A company may change and reinvest its capital stock in like 
 securities as occasion may from time to time require. (E. S., Art. 
 4713.) 
 
 Number and Qualification of Directors. 
 
 58. The affairs of any company organized under the laws of this 
 State shall be managed by not more than thirteen nor fewer than seven 
 directors, all of whom shall be stockholders in the company. (E. S., 
 Art. 4714.) 
 
 Election of Directors. 
 
 59. Within thirty days after the subscription books of the company 
 have been filed, a majority of the stockholders shall hold a meeting for 
 the election of directors, each share entitling the holder thereof to one 
 vote; and the directors then in office shall continue in office until their 
 successors have been duly chosen and have accepted the trust. (E. S., 
 Art. 4715.) 
 
 Annual Meeting for Election of. 
 
 60. The annual meeting for the election of directors of a company 
 shall be held during the month of January, as the by-laws of the com- 
 pany may direct. (E. S., Art. 4716.) 
 
 Special Meetings for Election of. 
 
 61. If from any cause the stockholders should fail to elect directors 
 at an annual meeting, they may hold a special meeting for that pur- 
 pose, by giving thirty days' notice thereof in some newspaper in general 
 circulation in the county in which the principal office of the company 
 is located, and the directors chosen at such special meeting shall con- 
 tinue in office until their successors are duly elected and have accepted. 
 (E. S., Art. 4717.) 
 
 Quorum of Stockholders. 
 
 62. No meeting of stockholders shall elect directors or transact such 
 other business of the company unless there shall be present at such 
 meeting, in person or by proxy, a majority in value of the stockholders 
 equal to two-thirds of the stock of such company. (E. S., Art. 4718.) 
 
INSURANCE LAWS OF TEXAS. 19 
 
 Directors Shall Choose President and Other Officers. 
 
 63. The directors shall choose by ballot from their own number a 
 president and such other officers as the by-laws of the company may 
 designate, who shall perform such duties, receive such compensation 
 and give such security as the by-laws of such company may require. 
 (E. S., Art. 4719.) 
 
 Directors to Make By-Laws. 
 
 64. The directors may ordain and establish such by-laws and regu- 
 lations, not inconsistent with law, as shall appear to them necessary 
 for regulating and conducting the business of the company. (R. S., 
 Art. 4720.) 
 
 Shall Keep a Record of Transactions. 
 
 65. It shall be the duty of the directors to keep a full and correct 
 record of their transactions, which shall at all times during business 
 hours be open to the inspection of the stockholders and other persons 
 interested therein. (R. S., Art. 4721.) 
 
 Shall Fill Vacancies What Shall Constitute a Quorum. 
 
 66. The directors shall fill all vacancies which shall occur in the 
 board or in any of the offices of the company, and a majority of the 
 board shall constitute a quorum for the transaction of business. (R. S., 
 Art. 4722.) 
 
 General Incorporation Law Shall Apply. 
 
 67. The laws relating to and governing corporations in general shall 
 apply to and govern insurance companies incorporated in this State 
 in so far as the same may not be inconsistent with the provisions of 
 this title. (R. S., Art. 4723.) 
 
 CHAPTER IV. 
 
 LIFE, HEALTH AND ACCIDENT INSURANCE COMPANIES HOME. 
 
 Terms Denned. 
 
 68. A life insurance company shall be deemed to be a corporation 
 doing business under any charter involving the payment of money or 
 other thing of value, conditioned on the continuance or cessation of 
 human life, or involving an insurance, guaranty, contract or pledge for 
 the payment of endowments or annuities. An accident insurance com- 
 pany shall be deemed to be a corporation doing business under any char- 
 ter involving the payment of money or other thing of value, conditioned 
 upon the injury, disablement or death of persons resulting from travel- 
 ing or general accidents by land or water. A health insurance company 
 shall be deemed to be a corporation doing business under any charter 
 involving the payment of any amount of money or other thing of value, 
 conditioned upon loss by reason of disability due to sickness or ill health. 
 When consistent with the context and not obviously used in a different 
 sense, the term "company' 5 or "insurance company," as used herein, 
 
20 INSURANCE LAWS or TEXAS. 
 
 includes all corporations engaged as principals in the business of life, 
 accident or health insurance. The term "home" or domestic company, 
 as used herein, designates those life, accident or life and accident, health 
 and accident, or life, health and accident insurance companies incorpo- 
 rated and formed in this State. The term "foreign company" means any 
 life, accident or health insurance company organized under the laws 
 of any other State or Territory of the United States, or foreign country. 
 The term "home office" of a company means its principal office within 
 the State or country in which it is incorporated and formed. The "in- 
 sured" or "policyholder" is the person on whose life a policy of insurance 
 is effected. The "beneficiary" is the person to whom a policy of insur- 
 ance effected is payable. By the term "net assets" is meant the funds of 
 the company available for the payment of its obligations in this State, 
 including uncollected premiums not more than three months past due 
 and deferred premiums on policies actually in force, after deducting 
 from such funds all unpaid losses and claims for losses, and all other 
 debts, exclusive of capital stock. The "profits" of a company are that 
 portion of its funds not required for the payment of losses and expenses, 
 nor set apart for any other purpose required by law. (E. S., Art. 4724.) 
 
 Note. A contract of an insurance company in which the company undertakes 
 to indemnify the mayor of a city for the benefit of every person who shall sus- 
 tain bodily injury through the negligent operation of an automobile, and for 
 the benefit of every passenger injured or negligently allowed to be injured by 
 an employe of the principal, is an accident or casualty insurance policy rather 
 than a surety bond. (Opinion of Attorney General, August 8, 1921.) 
 
 Who May Incorporate What Articles of Incorporation Shall Contain. 
 
 69. Any three or more citizens of this State who shall be known as 
 corporators, may associate themselves for the purpose of forming a life 
 insurance company, or accident insurance company, or life and acci- 
 dent, health and accident, or life, health and accident insurance com- 
 pany, provided, that no such company shall transact more than one 
 of the foregoing classes of business, except in separate and distinct 
 departments. In order to form such a company the corporators shall 
 sign and acknowledge its articles of incorporation before any officer 
 authorized to take acknowledgments to deeds, and file the same in the 
 office of the Commissioner of Insurance and Banking. Such articles of 
 incorporation shall specify: 
 
 (a) The name and place of residence of each of the incorporates. 
 
 (b) The name of the proposed company, which shall contain the 
 words "insurance company" as a part thereof, and which must not so 
 closely resemble the name of any existing company transacting insur- 
 ance business in this State as to mislead the public. 
 
 Note. ( 1 ) The Commissioner of Insurance and Banking has no authority to 
 pass upon question of similarity of names. (Opinion of Attorney General, 
 August 25, 1906.) 
 
 (2) A foreign or domestic corporation is not entitled to the use of the same 
 or a similar corporate name in the same general territory as would render de- 
 ception of the public as well as injury to the first user of the corporate name 
 probable. (Opinion of Attorney General, June 16, 1921.) 
 
 (c) The location of its home office. 
 
 (d) The kind or kinds of insurance business it purposes to transact. 
 
INSURANCE LAWS OF TEXAS. 21 
 
 (e) The amount of its capital stock, not less than $100,000, all of 
 which capital stock must be subscribed and fully paid up and in the 
 hands of the corporators before said articles of incorporation are filed, 
 such capital stock to be divided into shares of $100 each. 
 
 Note. (1) A share of stock of a life insurance company cannot be divided 
 and sold in fractional parts of a share. (Opinion of Attorney General, August 
 3, 1909.) 
 
 (2) Stock, paid for in notes or other evidence of promise to pay, cannot 
 be lawfully issued, and unless fully paid for and issued, it cannot be voted. 
 A stock subscription agreement, failing to show what portion of money paid 
 under it is used for promotion and commissions for selling the stock, is fraud- 
 ulent. (Opinion of Attorney General, September 10, 1909.) 
 
 (f) The period of time it is to exist, which shall not exceed five 
 hundred years. 
 
 (g) The number of shares of such capital stock. 
 
 (h) Such other provisions not inconsistent with the law as the cor- 
 porators may deem proper to insert therein. (R. S., Art. 4725.) 
 
 Fee for Filing Articles of Incorporation Duties of Commissioner When 
 Articles Are Filed. 
 
 70. When such articles of incorporation are filed with the Com- 
 sioner of Insurance and Banking, together with an affidavit made by 
 two or more of its incorporators that all the stock has been subscribed 
 in good faith and fully paid for, together with a charter fee of $20, 
 it shall be the duty of the Commissioner to submit such articles of 
 incorporation to the Attorney General for examination, and if he ap- 
 proves the same as conforming with the law he shall so certify and 
 deliver such articles of incorporation, together with his certificate of ap- 
 proval attached thereto, to the Commissioner of Insurance and Banking, 
 who shall, upon receipt thereof, record the same in a book kept for that 
 purpose, and upon receipt of a fee of $1.00 he shall furnish a certified 
 copy of the same to the corporators, upon which they shall be a body 
 politic and corporate, and may proceed to complete the organization of 
 the company, for which purpose they shall forthwith call a meeting of 
 the stockholders, who shall adopt by-laws for the government of the 
 company, and elect a board of directors, not less than five, composed of 
 stockholders, which board shall have full control and management of 
 the affairs of the corporation, subject to the by-laws thereof as adopted 
 or amended from time to time by the stockholders or directors and to 
 the laws of this State. The board of directors so elected shall serve until 
 the second Tuesday in March thereafter, on which date annually there- 
 after there shall be held an annual meeting of the stockholders at the 
 home office, and a board of directors elected for the ensuing year. At 
 all meetings of the stockholders, each stockholder shall be entitled to 
 one vote for each share of stock fully paid up appearing in his name on 
 the books of the company, which vote may be given in person or by 
 written proxy. The majority of the paid-up capital stock at any meet- 
 ing of the stockholders shall constitute a quorum. (R. S., Art. 4726.) 
 
 Charter May Be Amended Capital Stock May Be Increased or Reduced. 
 
 71. At any regular meeting or called meeting of the stockholders 
 
22 INSURANCE LAWS OF TEXAS. 
 
 they may, by resolution, provide for any lawful amendment to the 
 charter or articles of incorporation,, and such amendment, accompanied 
 by a copy of such resolution duly certified by the president and secretary 
 of the company, shall be filed and recorded in the same manner as the 
 original charter, and shall thereupon become effective. Stockholders 
 representing a majority of the capital stock of any such company may in 
 such manner also increase or reduce the amount of its capital stock; 
 provided, that the capital stock shall in no case be reduced to less than 
 $100,000 fully paid up. A statement of any such increase or reduction 
 shall be signed and acknowledged by two officers of the company and 
 filed and recorded along with the certified copy of the resolution of the 
 stockholders provided therefor in the same manner as the charter or 
 amendment thereto. For any such increase or reduction the company 
 may require the return of the original certificates as other evidences of 
 stock in exchange for new certificates issued in lieu thereof. (K. S., 
 Art. 4727.) 
 
 Note. (1) A charter cannot be amended prior to meetings of stockholders 
 called by the corporators for adoption of by-laws and election of board of 
 directors. The corporators cannot sell or assign their right or interest in the 
 charter nor in the unorganized corporation. The assignee of such corporators, 
 acting alone or with the corporators who did not assign or sell out, cannot 
 amend the charter nor call a meeting of stockholders to adopt by-laws and elect 
 a board of directors. The subscribers to the capital stock are not stockholders 
 and cannot amend the charter prior to being called together by the corporators 
 to adopt by-laws and elect a board of directors. After being called together by 
 the corporators, and after the adoption of by-laws and election of a board of 
 directors, the subscribers to the stock thereupon become stockholders and may 
 amend the charter, notwithstanding the fact that no certificate of authority to 
 do business has been issued. (Opinion of Attorney General, April 2, 1910.) 
 
 (2) A life insurance company having amended its charter and reduced its 
 capital stock from $150,000 to $100,000, the par value of each share being $100, 
 should recall the certificates of stock representing the reduction and cancel 
 them. Should a shareholder own a number of shares not capable of being so 
 divided as to leave his interest in the capital stock as a multiple of 100, he 
 should retain the whole shares and the company should issue to him a cer- 
 tificate of interest showing the fractional part of a share of which he is owner. 
 (Opinion of Attorney General, February 18, 1919.) 
 
 (3) The reduction of its capital stock by a life insurance company for the 
 purpose of distributing ratably among its stockholders the proceeds of such re- 
 duction would be for an illegal purpose, in that it would be the payment of a 
 dividend from funds other than profits made by said company as prohibited by 
 Articles 4738 and 4763 of the Revised Statutes of Texas. (Opinion of Attorney 
 General, February 16, 1920.) 
 
 Fractional Shares of Stock May Be Voted Whenever Capital of Company 
 Shall Have Been Reduced as Provided by Law. 
 
 72. Whenever any corporation organized under the laws of the State 
 of Texas shall reduce its capital stock under the provisions of law ap- 
 plying thereto, and by reason thereof, fractional shares of its stock 
 shall be issued to or held by any of its stockholders, the holder of any 
 such fractional share or shares shall be entitled to vote the same at any 
 meeting of the stockholders in accordance with the proportionate or 
 ratable value of such share or shares. (Sec. 1, Chap. 112, Acts Thirty- 
 sixth Legislature.) 
 
INSURANCE LAWS OF TEXAS. 23 
 
 Shares of Stock Shall Be Transferable. 
 
 73. The shares of stock of such company shall be transferable on 
 its books in accordance with law and the by-laws of the company by 
 the owner in person or his authorized agent, and every person becom- 
 ing a stockholder by such transfer shall succeed to all rights of the 
 former holder of the stock transferred, by reason of such ownership. 
 (E. S., Art. 4727.) 
 
 Shall Be Examined When Certificate of Authority Issued. 
 
 74. When the first meeting of the stockholders shall be held and 
 the officers of the company elected it shall be the duty of the president 
 or secretary to notify the Commissioner of Insurance and Banking, 
 and he shall thereupon immediately make or cause to be made at the 
 expense of the company a full and thorough examination thereof, and 
 if he shall find that all of the capital stock of the company, amounting 
 to not less than $100,000, has been fully paid up and is in the custody 
 of the officers, either in cash or securities of the class in which such 
 companies are authorized by this chapter to invest or loan their funds, 
 he shall issue to such company a certificate of authority to transact such 
 kind or kinds of insurance business within this State as such officers 
 may apply for and as may be authorized by its charter, which certificate 
 shall expire on the last day of February next after the date of its 
 issuance. Before such certificate is issued not less than two officers of 
 such company shall execute and file with the Commissioner of Insurance 
 and Banking a sworn schedule of all the assets of the company exhibited 
 to him upon such examination, showing the value thereof, together with 
 a sworn statement that the same are bona fide, the unconditional and 
 unencumbered property of the company and are worth the amounts 
 stated in such schedule. No original or first certificate of authority 
 shall be granted except in conformity herewith, regardless of the date 
 of filing of the articles of incorporation with the Commissioner of In- 
 surance and Banking. (E. S., Art. 4728.) 
 
 Annual Statement, Shall Contain Commissioner May Change Form of. 
 
 75. Each life insurance company, or accident insurance company, 
 or life and accident, health and accident, or life, health and accident 
 insurance company, organized under the laws of this State, shall, after 
 the first day of January of each year and before the first day of March 
 following, and before the renewal of its certificate of authority to trans- 
 act business, prepare under oath of two of its officers, and deposit in the 
 office of Commissioner of Insurance and Banking, a statement accom- 
 panied with the fee for filing annual statements of $10, showing the 
 condition of the company on the 31st day of December the next pre- 
 ceding, which shall include a statement in detail, showing the character 
 of its assets and liabilities on that date, the amount and character of 
 business transacted, moneys received and how expended during the year, 
 and the number and amount of its policies in force on that date in Texas, 
 and the total amount of all policies in force; and the Commissioner of 
 Insurance and Banking may from time to time make such changes in the 
 form and requirements of the annual statements of companies as shall 
 seem to him best adapted to elicit from the companies a true exhibit of 
 
4 INSURANCE LAWS OF TEXAS. 
 
 their condition and methods of conducting business, and such state- 
 ment shall also contain and set forth an exhibit of the investments of 
 such company; provided, that such terms and requirements shall elicit 
 only such information as shall pertain to the business of the company. 
 (E. S., Art. 4729.) 
 
 Renewal Certificate of Authority, Issued When. 
 
 76. Whenever any life insurance company or accident insurance 
 company or life and accident, or health and accident, or life, health 
 and accident insurance company transacting insurance business in this 
 State shall have filed its annual statement in accordance with the pre- 
 ceding article, showing a condition which entitles it to transact busi- 
 ness in this State in accordance with the provisions of this chapter, the 
 Commissioner of Insurance and Banking shall, upon receipt of a fee 
 of $1.00, issue a renewal certificate of authority to such company, 
 which shall expire on the last day of February of the subsequent year. 
 (R. S., Art. 4730.) 
 
 Shall Receive Certified Copy of Certificate of Authority for Agents. 
 
 77. Any such company organized under the laws of this State, hav- 
 ing received authority from the Commissioner of Insurance and Bank- 
 ing to transact business in this State, shall receive from such Commis- 
 sioner upon written request therefor a certified copy of this certificate 
 of authority for each of its agents in this State. (R. S., Art. 4731.) 
 
 Actions by Company or Policyholder. 
 
 78. Actions may be maintained by a company organized under the 
 laws of this State against any of its policyholders, stockholders, or other 
 persons for any cause relating to the business of such company, and 
 actions may also be prosecuted and maintained by any policyholder or 
 the heirs or legal representative of any such policyholder against the 
 company for losses which accrue on any policy, but no action shall be 
 brought or maintained by any person other than the Commissioner of 
 Insurance and Banking of this State for the enjoining, restraining 
 or interfering with the prosecution of the business of the company. 
 (R. S., Art. 4732.) 
 
 Laws Relating to Corporations Shall Govern. 
 
 79. The laws relating to and governing corporations in general shall 
 apply to and govern companies organized under this chapter, in so far 
 as the same are pertinent and not in conflict with the provisions of this 
 chapter. (R. S., Art. 4733.) 
 
 May Invest in or Loan Upon, What Securities. 
 
 80. A life insurance company organized under the laws of this State 
 may invest in or loan upon the following securities, viz. : 
 
 (a) It may invest any of its funds or accumulations in the bonds 
 of the United States, or of any State, county or city of the United 
 States, or the bonds of any independent or common school district, or 
 first mortgage bonds of any dividend-paying railroad or electric rail- 
 
INSURANCE LAWS or TEXAS. 25 
 
 way company duly incorporated under the laws of the United States 
 or any State thereof. 
 
 (b) It may loan any of its funds and accumulations, taking as 
 security therefor such collateral as under the previous subdivision it 
 may invest in; and upon first liens upon real estate, the title to which 
 is valid, and the value of which is double the amount loaned thereon ; 
 provided, that if any part of such value is in buildings, such build- 
 ings shall be insured against loss by fire for at least 50 per cent of the 
 value thereof, with loss clause payable to such company. It may also 
 make loans upon the security of or purchase its own policies, but no 
 loan on any policy shall exceed the reserve value thereof. No invest- 
 ment or loan, except policy loans, shall be made by any such insurance 
 company unless the same shall first have been authorized by the board 
 of directors, or by committee charged with the duty of supervising such 
 investments or loans. No such company shall subscribe to, or participate 
 in, any underwriting of the purchase or sale of securities or property 
 or enter into any such transaction for such purpose or sell on account 
 of such company jointly with any other person, firm or corporation; 
 nor shall any such company enter into any agreement to withhold from 
 sale any of its property; but the disposition of its property shall be at 
 all times within the control of its board of directors. Every such com- 
 pany possessed of assets not authorized by this chapter shall dispose of 
 the same within five years after July 10, 1909, unless such time is ex- 
 tended for good cause by the Commissioner of Insurance and Banking. 
 (E. S., Art. 4734.) 
 
 Note. (1) A company may invest its funds in a portion of a series of notes 
 or bonds, secured by first lien on real estate -worth double amount of entire 
 loan. (Opinion of Attorney General, August 10, 1910.) 
 
 (2) A life insurance company cannot invest in bonds of the Republic of 
 Mexico. (Opinion of Attorney General, November 3, 1910.) 
 
 (3) A life insurance company may make loan to a church, where it is 
 secured by bonds constituting a first lien on real estate. (Opinion of Attorney 
 General, June 17, 1911.) 
 
 (4) A home life insurance company cannot lawfully count, as admitted 
 assets, time certificates of deposit which are not due or payable on demand by 
 the bank issuing them. (Opinion of Attorney General, April 2, 1912.) 
 
 (5) A life insurance company, chartered in Texas, may lawfully borrow 
 money and pledge its assets as security, and the excess of such collateral may 
 be regarded as available or admitted assets of the company. An investment in 
 paper secured by real estate worth less than double amount of loan is not 
 void, but is unauthorized and therefore an ultra vires act, but where amount 
 is small and is part of purchase and sale of an office building is not ground 
 for withholding permit to the company or declining to consider the investment 
 as part of its available assets. (Attorney General's opinion, March 15, 1915.) 
 
 (6) Loans made by a company to its agents are without authority of law. 
 "Advances" may be divided into three classes: First, gifts which would be 
 clearly unlawful ; second, money advanced in anticipation of a debt to mature 
 at some future time, and if in insignificant amounts, they would probably be 
 lawful, otherwise they would be in open violation of the law; and, third, money 
 put in the hands of an agent to be expended in the management of the business 
 of his principal, and advances made in this way and for this purpose would be 
 lawful. Whether or not an "advance" is a lawful one, or whether a loan is in 
 violation of law is a question of fact. (Attorney General's opinion, August 9, 
 1916.) 
 
26 INSURANCE LAWS OF TEXAS. 
 
 Real Estate, May Hold. 
 
 81. Every such insurance company may secure, hold and convey 
 real property only for the following purposes and in the following 
 manner : 
 
 1. One building site and office building for its accommodation in 
 the transaction of its business and for lease and rental. 
 
 2. Such as shall have been acquired in good faith by way of secur- 
 ity for loans previously contracted, or for moneys due. 
 
 3. Such as shall have been conveyed to it in the satisfaction of 
 debts previously contracted in the course of its dealings. 
 
 4. Such as shall have been purchased at sales under judgment or 
 decrees of court, or mortgage, or other liens held by such company. 
 
 Note. (1) A company may invest in a lot, for an office building, upon 
 which there is an encumbrance, provided the company definitely undertakes to 
 pay off the encumbrance. (Opinion of Attorney General, August 10, 1910.) 
 
 (2) The word "purchase," in this statute, means acquired either by pur- 
 chase or rental. A life insurance company has the right to secure, hold and 
 convey a lease on a building for a period of time, with option of purchase at 
 expiration of lease. .The aggregate amount to be paid for the lease extend- 
 ing over a long period of time is not a debt which could amount to an impair- 
 ment of the capital of the company. Ownership of such building or lease is 
 a chattel real and, as such, is real property and the investment is lawful. 
 (Opinion of Attorney General, June 22, 1914.) 
 
 All such real property specified in Subdivisions 2, 3 and 4, of this 
 article, which shall not be necessary for its accommodation in the con- 
 venient transaction of its business shall be sold and disposed of within 
 five years after the company shall have acquired title to the same, or 
 within five years after the -same shall have ceased to be necessary for 
 the accommodation of its business, and it shall not hold such property 
 for a longer period unless it shall procure a certificate from the Com- 
 missioner of Insurance and Banking that its interests will suffer ma- 
 terially by the forced sale thereof; in which event the time for the sale 
 may be extended to such time as the Commissioner shall direct in such 
 certificate. (E. S., Art. 4735.) 
 
 Directors Shall Not Receive Money in Connection With Nor Be Interested 
 in Purchase, Loan or Sale of Company. 
 
 82. No director or officer of any insurance company transacting busi- 
 ness in this State, or organized under the laws of this State, shall re- 
 ceive any money or valuable thing for negotiating, procuring, recom- 
 mending or aiding in any purchase or sale by such company of any 
 property or any loan from such company, nor be pecuniarily interested, 
 either as principal, co-principal, agent or beneficiary, in any such pur- 
 chase, sale or loan; provided, that nothing contained in this article shall 
 prevent a life insurance corporation from making a loan upon a policy 
 held therein by the borrower not in excess of the reserve value thereof. 
 Any person violating any provisions of this article shall be guilty of 
 a misdemeanor, and upon conviction .thereof shall be punished by fine 
 of not less than $300 nor more than $1000. (E. S., Art. 4736. P. C., 
 Art. 687.) 
 
 Note. (1) See Section 113. 
 
 (2) It is unlawful for a company to buy securities from or sell securities 
 
INSURANCE LAWS OF TEXAS. 27 
 
 to or loan money to a banking or other corporation in which the officers or 
 directors of the life insurance company are interested as stockholders, officers 
 or directors. (Opinion of Attorney General, August 10, 1910.) 
 
 (3) A life insurance company may lease a property from another corpora- 
 tion, notwithstanding certain officers of the insurance company are also officers 
 and large stockholders of the other corporation. (Opinion of Attorney Gen- 
 eral, March 27, 1911.) 
 
 (4) The president of a fire insurance company may lawfully sell the capital 
 stock of his company on commission. (Opinion of Attorney General, August 
 3, 1911.) 
 
 (5) A life insurance company ordinarily has no authority to buy or sell 
 its own stock. Exigencies, however, might arise where the buying of its own 
 stock would be to the interest of the company, and where such occasions arise 
 and there is no fraud in the transaction, it would probably not be in violation 
 of law. In such cases, the certificate of authority of the company should not 
 be revoked by the Commissioner, but the company should be required to file 
 with him a transcript of all minutes, correspondence and other papers connected 
 with the transaction. (Opinion of Attorney General, February 19, 1914.) 
 
 (6) An accident and health insurance company organized under Texas laws, 
 any of whose officers or directors are likewise officers or directors of a loan 
 and trust company cannot lawfully make such loan and trust company its fiscal 
 agent. The fact that the officers or directors of such insurance company are 
 stockholders of a loan and trust company would not prevent the insurance 
 company from employing such loan and trust company as its fiscal agent. 
 (Opinion of Attorney General, April 16, 1914.) 
 
 (7) As a general rule, the directors of a life insurance company could not 
 lawfully be the directors of a corporation lessee of the life insurance company; 
 but where the stockholders of the life insurance company authorize some of its 
 directors to organize and become directors in a corporation for the purpose of 
 taking over a lease made by such insurance company to an individual, in order 
 that the individual's part of the contract under the lease might be carried out 
 and the insurance company's interest therein preserved, the general rule would 
 not apply. (Opinion of Attorney General, December 17, 1915.) 
 
 (8) A life insurance company would have no authority to purchase its own 
 stock and hold same subject to resale at a price not in excess of the price paid 
 for it, and where no one would be benefited except the stockholder selling his 
 stock. (Opinion of Attorney General, April 8, 1921.) 
 
 May Reinsure. 
 
 83. Any life insurance company organized under the laws of this 
 State may reinsure in any insurance company authorized to transact 
 business in this State any risk or part of a risk which it may assume; 
 provided, that no such company shall have the power to so reinsure 
 its entire outstanding business until the contract therefor shall be sub- 
 mitted to the Commissioner of Insurance and Banking and be by him 
 approved as protecting fully the interests of all the policy holders. (R. S., 
 Art. 4737.) 
 
 Note. A foreign life insurance company may lawfully reinsure the business 
 of a Texas life insurance company which deposits securities covering its re- 
 serves with the Commissioner of Insurance and Banking. (Opinion of Attor- 
 ney General, January 16, 1915.) 
 
 Dividends, Shall Not Pay, Except From Profits. 
 
 84. No life insurance company organized under the laws of this 
 State shall declare or pay any dividends to its policyholders except 
 from the profits made by such company; provided, that this shall not 
 prohibit the issuance of policies guaranteeing a definite payment, or 
 
28 INSURANCE LAWS OF TEXAS. 
 
 reduction in premiums, not exceeding the expense of loading on said 
 premiums, but where said reduction exceeds said expense loading the 
 proper reserve therefor must be held by the company to provide for 
 the deficiency so arising in the net premium; and, provided further, 
 that this shall not apply to payments to holders of special or board 
 contracts heretofore issued. No such life insurance company shall de- 
 clare or pay any dividends to its stockholders except from the profits 
 made by said company, not including surplus arising from the sale of 
 stock. (R. S., Art. 4738.) 
 
 Note. The issuance of guaranteed dividend policies is not prohibited. (Opin- 
 ion of Attorney General, January 5, 1911.) 
 
 Salaries, Shall Not Pay Excessive. 
 
 85. No domestic life insurance company shall pay any salary, com- 
 pensation or emolument to any officer, trustee or director thereof, nor 
 any salary, compensation or emolument amounting in any year to 
 more than $5000 to any person, firm or corporation, unless such pay- 
 ment be first authorized by a vote of the board of directors of such 
 life insurance company; provided, that the limitation as to time con- 
 tained herein shall not be construed as preventing a life insurance com- 
 pany from entering into contracts with its agents for the payment of 
 renewal commissions. No such company shall grant any pension to 
 any officer, director or trustee thereof, or to any member of his family 
 after his death. (R. S., Art. 4739.) 
 
 Shall Not Make Disbursements Without Voucher. 
 
 86. No domestic life insurance company shall make any disburse- 
 ment of $100 or more unless the same be evidenced by a voucher signed 
 by or on behalf of the person, firm or corporation receiving the money, 
 and correctly describing the consideration for the payment. If the ex- 
 penditure be for both services and disbursements, the voucher shall set 
 forth the seryice rendered and statement of the disbursement made. 
 If the expenditure be in connection with any matter pending before any 
 Legislature or public body or before any department or officer of any 
 State or government, the voucher shall correctly describe, in addition, 
 the nature of the matter and of the interest of such company therein. 
 When such voucher cannot be obtained, the expenditure shall be evi- 
 denced by a paid check or an affidavit describing the character and ob- 
 ject of the expenditure and stating the reasons for not obtaining such 
 voucher. (R. S., Art. 4740.) 
 
 Policies Shall Contain. 
 
 87. No policy of life insurance shall be issued or delivered in this 
 State, or be issued by a life insurance company organized under the 
 laws of this State, unless the same shall contain provisions substantially 
 as follows: 
 
 1. A provision that all premiums shall be payable in advance either 
 at the home office of the company, or to an agent of the company upon 
 the delivery of a receipt signed by one or more of the officers who are 
 designated in the policy. 
 
 2. A provision for a grace of at least one month for the payment 
 
INSURANCE LAWS OF TEXAS. 29 
 
 of every premium after the first, which may be subject to an interest 
 charge, during which month the insurance shall continue in force, which 
 provision may contain a stipulation that if the insured shall die during 
 the period of grace the overdue premium will be deducted in any settle- 
 ment under the policy. 
 
 Note. The grace provision, above referred to, is not limited to policies pro- 
 viding for an annual premium, but must be in, and applies to, policies in which 
 the premium is payable monthly, quarterly or semi-annually, and such grace 
 period applies immediately when the date for payment of each premium, except 
 the first, occurs. (Opinion of Attorney General, December 17, 1912.) 
 
 3. A provision that the policy or policy and application shall con- 
 stitute the entire contract between the parties and shall be incontest- 
 able not later than two years from its date except for non-payment of 
 premiums, and which provision may or may not, at the option of the 
 company, contain an exception for violations of the conditions of the 
 policy relating to naval and military services in time of war. 
 
 Note. If application is made part of contract it must be attached to policy. 
 (Department ruling.) 
 
 4. A provision that all statements made by the insured shall, in the 
 absence of fraud, be deemed representations, and not warranties. 
 
 5. A provision that, if the age of the insured has been understated, 
 the amount payable under the" policy shall be such as the premium paid 
 would have purchased at the correct age. 
 
 6. A provision that after three full years' premiums have been paid 
 the company, at any time while the policy is in force, will advance 
 upon proper assignment of the policy and upon the sole security thereof 
 at a specified rate of interest a sum equal to, or at the option of the 
 owner of the policy, less than the legal reserve at the end of the cur- 
 rent policy year on the policy and on any dividend additions thereto, 
 less than, a sum not more than two and one-half per centum of the 
 amount insured by the policy and of any dividend addition thereto; 
 and that the company may deduct from such loan value any existing 
 indebtedness on the policy and any unpaid balance of the premium 
 for the current policy year and may collect interest in advance on the 
 loan to the end of the current policy year; which provision may further 
 provide that such loans may be deferred for not exceeding six months 
 after application therefor is made. It shall further be stipulated in the 
 policy that failure to repay any such advance or to pay interest shall 
 not void the policy until the total indebtedness thereon to the company 
 shall equal or exceed the loan value. No condition other than is herein 
 provided shall be exacted as a prerequisite to any such advance. This 
 provision shall not be required in term insurances nor in pure endow- 
 ments issued or granted as original policies, or in exchange for lapsed 
 or surrendered policies, and no provision herein required shall compel 
 any company to loan on any policy an amount greater than 97 per 
 centum of the face value thereof, including net dividend additions 
 thereto. 
 
 7. A provision which, in event of default in premium payments, 
 after premium shall have been paid for three full years, shall secure 
 to the owner of the policy a stipulated form of insurance, the net value 
 
30 INSURANCE LAWS OF TEXAS. 
 
 of which shall be at least equal to the reserve at the date of default on 
 the policy and on any dividend additions thereto, specifying the mor- 
 tality table and rate of interest adopted for computing such reserves, 
 less a sum not more than 2J per cent of the amount insured by the 
 policy and of any existing dividend additions thereto, and less any 
 existing indebtedness to the company on the policy. Such provision 
 shall stipulate that the policy may be surrendered to the company at 
 its home office within one month from date of default for a specified 
 cash value, at least equal to the sum which would otherwise be avail- 
 able for the purchase of insurance, as aforesaid, and may stipulate that 
 the company may defer payment for not more than six months after 
 the application therefor is made. This provision shall not be required 
 in term insurances. 
 
 8. A table showing in figures the loan values, and the options avail- 
 able under the policies each year upon default in premium payments 
 during the first twenty years of the policy, or the period during which 
 premiums are payable, beginning with the year in which such values and 
 options become available. 
 
 9. A provision that if, in event of default in premium payments, 
 the value of the policy shall be applied to the purchase of other insur- 
 ances; and if such insurance shall be in force and the original policy 
 shall not have been surrendered to the company and canceled, the policy 
 may be reinstated within' three years from such default, upon evidence 
 of insurability satisfactory to the company and payments of arrears of 
 premiums with interest. 
 
 Note. Reinstatement clause not necessary in policies of term insurance. (De- 
 partment ruling.) 
 
 10. A provision that, when a policy shall become a claim by the 
 death of the insured, settlement shall be made upon receipt of due proof 
 of death, and the right of the claimant to the proceeds, or not later than 
 two months after the receipt of such proof. 
 
 11. A table showing the amounts of installments in which the policy 
 may provide its proceeds may be payable. 
 
 Note. A monthly income policy, payable one hundred dollars per month for 
 two hundred and forty months, need not contain a table of amounts of install- 
 ments,, as the face of the policy shows the installments in which it is payable 
 and is the only table necessary under this law. Where the policy provides 
 for commutation and stipulates that the commuted value, at the option of the 
 insured, may be paid in a lump sum, if such option is exercised then the 
 monthly income provisions would not constitute a table of installments, and 
 as the policy would not then be payable in installments, no installment table 
 is necessary. Where the policy does not provide that its benefits may be pay- 
 able in installments, no installment table is necessary. The statute does not 
 require that all life insurance policies be payable in installments at the option 
 of the insured or beneficiary. Where a policy is issued without provision for 
 payment of benefits in installments, then no table of installments should be 
 inserted in the policy. (Opinion of Attorney General, June 16, 1919.) 
 
 Any of the foregoing provisions or portions thereof not applicable to 
 single premium policies shall, to that extent, not be incorporated therein. 
 (E. S., Art. 4741.) 
 
INSURANCE LAWS OF TEXAS. 31 
 
 Note. (1) Subdivisions 4 and 5 of above section, and specifications of mor- 
 tality table and rate of interest not necessary in paid-up policies issued upon 
 default in premium payments. (Department ruling.) 
 
 (2) Issuance of guaranteed dividend policies are not prohibited. (Opinion 
 of Attorney General, January 5, 1911.) 
 
 Policies Shall Not Contain. 
 
 88. No policy of life insurance shall be issued or delivered in this 
 State, or be issued by a life insurance company incorporated under the 
 laws of this State if it contains any of the following provisions : 
 
 1. A provision limiting the time within which any action at law or 
 in equity may be commenced to less than two years after the cause of 
 action shall accrue. 
 
 2. A provision by which the policy shall purport to be issued or to 
 take effect more than six months before the original application for 
 insurance was made, if thereby the insured would rate at any age younger 
 fhan his age at date when the application was made, according to his 
 age at nearest birthday. 
 
 3. A provision for any mode of settlement at maturity of less value 
 than the amounts insured on the face of the policy, plus dividend ad- 
 ditions, if any, less any indebtedness to the company on the policy, 
 and less any premium that may by the terms of the policy be de- 
 ducted; provided, that any company may issue a policy promising a 
 benefit less than the full benefit in case of the death of the insured by 
 his own hand while sane or insane, or by following stated hazardous 
 occupations. This provision shall not apply to purely accident and 
 health policies; none of the foregoing provisions relating to policy 
 forms shall apply to policies issued in lieu of or in exchange for any 
 other policy issued before July 10, 1909. (E. S., Art. 4742.) 
 
 Note. ( 1 ) Some benefit, however small, must be provided in case of suicide. 
 (Department ruling.) 
 
 (2) A rider on a life insurance policy providing that "Death caused by 
 smallpox is a risk not covered by this policy unless the insured submits proof 
 to the company of a successful vaccination," is in violation of above provision. 
 (Opinion of Attorney General, June 12, 1912.) 
 
 (3) The life insurance companies cannot agree upon a uniform policy at a 
 uniform rate, to be sold for the benefit of the students loan fund or the as- 
 sured, as this controverts the anti-trust laws of this State. The students loan 
 fund could not retain the proceeds of a policy in its favor, because it would 
 have no insurable interest in the life of the assured. (Opinion of Attorney 
 General, December 11, 1914.) 
 
 Policies of Foreign Companies May Contain. 
 
 89. The policies of a life insurance company not organized under 
 the laws of this State may contain any provision which the law of the 
 State, Territory, district or country under which the company is organ- 
 ized prescribes shall be in such policies when issued in this State, and 
 the policies of a life insurance company organized under the laws of 
 this State may, when issued or delivered in any other State, Terri- 
 tory, district or country, contain any provision required by the laws 
 of the State, Territory, district or country in which the same are is- 
 sued, anything in this chapter to the contrary notwithstanding. (R. S., 
 Art. 4743.) 
 
32 INSURANCE LAWS OF TEXAS. 
 
 Interest of Beneficiary Forfeited if Interested in Causing Ueath of Insured. 
 
 90. That the interest of a beneficiary in a life insurance policy or 
 contract heretofore or hereafter issued shall be forfeited when the bene- 
 ficiary is the principal or an accomplice in wilfully bringing about the 
 death of the insured. However,, providing when such is the case, the 
 nearest relative of insured shall receive said insurance. (Sec. 1, Chap. 
 16, Acts Thirty-sixth Legislature.) 
 
 Taxes, Shall Pay. 
 
 91. Insurance companies incorporated under the laws of this State 
 shall hereafter be required to render for State, county and municipal 
 taxation all of their real estate as other real estate is rendered, and all 
 of the personal property of such insurance companies shall be valued 
 as other property is valued for assessment in this State in the follow- 
 ing manner: From the total valuation of its assets shall be deducted 
 the reserve, being the amount of the debts of insurance companies By 
 reason of their outstanding policies in gross, and from the remainder 
 shall be deducted the assessed value of all real estate owned by the com- 
 pany and the remainder shall be the assessed taxable value of its per- 
 sonal property. Home insurance companies shall not be required to 
 pay any occupation or gross receipt tax. (E. S., Art. 4764.) 
 
 Note. A life insurance company in rendering its personal assets for tax- 
 ation, in making the deduction on account of its real estate, is permitted to 
 deduct the "assessed" valuation of such real estate, and not an appraised value, 
 which might be different in amount from the assessed valuation. (Opinion of 
 Attorney General, June 15, 1912.) 
 
 Venue of Suits on Policies (Home and Foreign Companies). 
 
 92. Suits on policies may be instituted and prosecuted against any 
 life insurance company, or accident insurance company, or life and acci- 
 dent, or health and accident, or life, health and accident insurance com- 
 pany, in the county where .the home office of such company is located, 
 or in the county where loss has occurred, or where the policyholder or 
 beneficiary instituting such suit resides. (E. S., Art. 4744.) 
 
 Service of Process. 
 
 93. Process in any civil suit against any domestic life insurance 
 company, or accident insurance company, or life and accident, health 
 and accident, or life, health and accident insurance company, may be 
 served only on the president, or any active vice-president or secretary 
 or general counsel residing at the city of the home office of the com- 
 pany, or by leaving a copy of same at the home office of such company 
 during business hours. (E. S., Art. 4745.) 
 
 Losses Shall Be Paid When (Home and Foreign Companies). 
 
 94. In all cases where a loss occurs and the life insurance company, 
 or accident insurance company, or life and accident, health and acci- 
 dent, or life, health and accident insurance company liable therefor 
 shall fail to pay the same within thirty days, after demand therefor, 
 such company shall be liable to pay the holder of such policy, in addi- 
 tion to the amount of the loss, 12 per cent damages on the amount 
 
INSURANCE LAWS OF TEXAS. 33 
 
 of such loss, together with reasonable attorney fees for the prosecution 
 and collection of such loss. (E. S., Art. 4746.) 
 
 Certificate Shall Be Declared Null and Void Upon Failure to Pay Losses 
 (Home and Foreign Companies). 
 
 95. Should any life insurance company, accident insurance com- 
 pany, life and accident, health and accident, or life, health and accident 
 insurance company fail to pay off and satisfy any execution that may 
 lawfully issue on any final judgment against said company within thirty 
 days after the officer holding such execution has demanded payment 
 thereof from any officer or attorney of record of such company, in this 
 State, or out of it, such officer shall immediately certify such demand 
 and failure to the Commissioner of Insurance and Banking, and there- 
 upon the Commissioner shall forthwith declare null and void the cer- 
 tificate of authority of such company, and such company shall be pro- 
 hibited from transacting any business in this State until such execution 
 shall be fully satisfied and discharged, and until such Commissioner 
 shall renew his certificate of authority to such company. (K. S., Art. 
 4747.) 
 
 Companies Cannot Transact Business of Both Fire, Marine, Etc., and 
 Life and Health (Home and Foreign Companies). 
 
 96. It shall be unlawful for any life insurance company, accident 
 insurance company, life and accident, health and accident, and life, 
 health and accident insurance company to take any kind of risks, or 
 issue any policies of insurance, except those of life, accident or health, 
 nor shall the business of life, accident or health insurance in this State 
 be in anywise conducted or transacted by any company which in this 
 or any other State or country is engaged or concerned in the business 
 of marine, fire or inland insurance. (E. S., Art. 4748.) 
 
 May Deposit With State Treasurer Commissioner Shall Approve Deposit 
 Situs of Property for Taxation. 
 
 97. Any life insurance company, accident insurance company, life 
 and accident, health and accident, or life, health and accident insurance 
 company, organized under the laws of this State, may at its option 
 deposit with the Treasurer of this State securities equal to amount of 
 its capital stock, and may at its option withdraw the same, or any 
 part thereof, first having deposited in the treasury in lieu thereof other 
 securities equal in value to those withdrawn. Any such securities, before 
 being so originally deposited or substituted, shall be approved by the 
 Commissioner of Insurance and Banking, and when any such deposit 
 is made the Treasurer shall execute to the company making the deposit a 
 receipt therefor, giving such description to such securities as will identify 
 the same, and such company shall have the right to advertise such fact 
 or print a copy of the Treasurer's receipt on the policies it may issue, 
 and the proper officers or agents of each insurance company making 
 such deposit shall be permitted at all reasonable times to examine such 
 securities and to detach coupons therefrom and to collect interest thereon 
 under such reasonable rules and regulations as may be prescribed by the 
 Treasurer and the Commissioner of Insurance and Banking of this 
 State. The deposit herein provided for, when made by any company. 
 
34 INSURANCE LAWS OF TEXAS. 
 
 shall thereafter be maintained as long as said company shall have out- 
 standing any liability to its policyholders. For the purpose of State, 
 county and municipal taxation the situs of all personal property be- 
 longing to such companies shall be at the home office of such company. 
 (E. S., Art. 4749.) 
 
 Note. (1) A life insurance company in making the deposit above author- 
 ized, may execute a conveyance in trust of its home office building to the State 
 Treasurer, and after approval by the Commissioner of Insurance and Banking, 
 may deposit such conveyance in trust with the State Treasurer. The convey- 
 ance should be recorded in the county where the building is situated, and should 
 be properly authorized by resolution of the company's board of directors, or by 
 a duly appointed and authorized finance committee acting for the company. 
 (Opinion of Attorney General, January 6, 1912.) 
 
 (2) A life insurance company may deposit and the Commissioner of In- 
 surance and Banking may approve for deposit securities worth more than the 
 capital stock of the company, and such securities may be appraised at their 
 market value at the time of the deposit, and not merely to the amount of the 
 capital stock. As a part of such deposit, the company may convey in trust to 
 the State Treasurer its home office lot and building, which may be appraised 
 and approved by the Commissioner of Insurance and Banking at its market 
 value at the time of the deposit. Such approval as to valuation may be changed 
 at any time by the Commissioner, and the amount of the deposit thereby in- 
 creased or reduced whenever any change in the market value of the property 
 occurs. (Opinion of Attorney General, January 30, 1912.) 
 
 (3) In depositing registered bonds, it is sufficient for the insurance com- 
 pany to accompany the same by a declaration of trust. It is not necessary 
 that the title to such registered bonds be transferred to or vested in the State 
 Treasurer, who is a mere holder or inactive trustee. (Opinion of Attorney Gen- 
 eral, May 4, 1918.) 
 
 May Deposit Commissioner May Appraise Deposit. 
 
 98. Any life insurance company now incorporated, or which may 
 hereafter be incorporated under the laws of this State, may deposit with 
 the Commissioner of Insurance and Banking of the State of Texas, for 
 the common benefit of all the holders of its policies and annuity bonds, 
 securities of the kinds in which by the laws of this State it is permitted 
 to invest or loan its funds, equal to the legal reserve on all its outstand- 
 ing policies in force, which securities shall be held by said Commissioner 
 in trust for the purpose and objects herein specified. Any such company 
 may deposit lawful money of the United States in lieu of the securities 
 above referred to, or any portion thereof and may also, for the purposes 
 of such deposit, convey to said Commissioner in trust the real estate in 
 which any portion of its said reserve may be lawfully invested, and in 
 such case said Commissioner shall hold the title thereto in trust until 
 other securities in lieu thereof shall be deposited with him, whereupon 
 he shall reconvey the same to such company; said Commissioner may 
 cause any such securities or real estate to be appraised and valued prior 
 to their being deposited with or conveyed to him in trust as aforesaid; 
 the reasonable expense of such appraisement or valuation to be paid by 
 the company. (R. S., Art. 4750.) 
 
 Note. (1) A company having invested in a building site, upon wh'ch there 
 is an encumbrance, for office purposes, may convey its equity in such site at the 
 properly appraised value, to the Commissioner in trust as a part of its reserve 
 deposit, and may be credited with the amount of such appraised value. When 
 portions of the encumbrance are paid off, the company will be entitled to 
 
INSURANCE LAWS OF TEXAS. 35 
 
 credits on its reserve deposits for the amounts of the encumbrance so dis- 
 charged as they are paid off or discharged. As the building on the site pro- 
 gresses, the amount expended for construction, from time to time, may be ap- 
 praised, and the company will be entitled to credit on its reserve deposit i<>r 
 the amount so expended in construction, or such proportion of said amount as 
 the Commissioner shall determine to be the increase in value of the property 
 as a result of such expenditure. (Opinion of Attorney General, August 10, 
 1910.) 
 
 (2) A foreign life insurance company may lawfully reinsure the business of 
 a Texas life insurance company which deposits securities under above section 
 of the law. (Opinion of Attorney General, January 16, 1915.) 
 
 (3) It is not within the province of the Commissioner of insurance and 
 Banking to give his consent for a company to discontinue the practice of regis- 
 tering policies and depositing securities against its reserve, and there is no 
 provision in the law authorizing such discontinuance. (Opinion of Attorney 
 General, July 6, 1921.) 
 
 Policies Shall Have Upon Face Commissioner Shall Sign Policy. 
 
 99. After making the deposit mentioned above, no company shall 
 thereafter issue a policy of insurance or endowment or annuity bond, 
 except policies of industrial insurance, unless it shall have upon its 
 face a certificate substantially in the following words : "This policy 
 is registered and approved securities equal in value to the legal reserve 
 hereon are held in trust by the Commissioner of Insurance and Banking 
 of the State of Texas." Which certificate shall be signed by such Com- 
 missioner and sealed with the seal of his office. (R. ., Art. 4751.) 
 
 Policies Shall Have Printed Thereon. 
 
 100. All policies and bonds of each kind and class issued and the 
 forms thereof filed in the office of said Commissioner shall have printed 
 thereon some appropriate designating letter or figure, combination of 
 letters or figures or terms identifying the particular form of contract, 
 together with the year of adoption of such form, and whenever any 
 change or modification is made in the form of contracts, policy or bond, 
 the designating letters, figures or terms and year of adoption thereon 
 shall be correspondingly changed. (R. S., Art. 4751.) 
 
 Commissioner Shall Keep Record of Policies Commissioner Shall Value 
 Policies. 
 
 101. The Commissioner of Insurance and Banking shall prepare and 
 keep such registers thereof as will enable him to compute their value 
 at any time. Upon written proof, attested by the president or vice- 
 president and secretary of the company which shall have issued such 
 policies or annuity bonds, that any of them have been commuted or 
 terminated, the Commissioner shall commute or cancel them upon his 
 register, and until such proof is furnished all registered contracts shall 
 be considered in force for the purposes of this chapter. The net value of 
 every policy or annuity bond, according to the standard prescribed by the 
 laws of this State for the valuation of policies of life insurance com- 
 panies, when the first premium shall have been paid thereon, less the 
 amount of such liens as the company may have against it (not exceed- 
 ing such value), shall be entered opposite the record of said policy or 
 annuity bond in the register aforesaid at the time such record is made. 
 On the first day of January of each year, or within sixty days thereafter, 
 
36 INSURANCE LAWS or TEXAS. 
 
 the Commissioner shall cause the policies and annuity bonds of each 
 company accepting the terms of this chapter to be carefully valued, and 
 the actual value thereof at the time fixed for such valuation, less such 
 liens as the company may have against it, not exceeding such value, shall 
 be entered upon the register opposite the record of such policy or bond, 
 and the Commissioner shall furnish a certificate of the aggregate of such 
 value to the company. (E. S., Art. 4751.) 
 
 Commissioner Shall Cancel Mutilated Policies. 
 
 102. It stall be -the duty of the Commissioner to cancel mutilated 
 or surrendered policies and annuity bonds issued by any such company 
 and register other like policies or bonds issued in lieu thereof. (E. S., 
 Art. 4751.) 
 
 Shall Make Additional Deposits. 
 
 103. Each company which shall have made the deposit herein pro- 
 vided for shall make additional deposits from time to time, in amounts 
 not less than five thousand dollars, and of such securities as are per- 
 mitted by this chapter to be deposited, so that the market value of the 
 securities deposited shall always be equal to the net value of the policies 
 and annuity bonds, issued by said company, less such liens as the com- 
 pany may have against them, not exceeding such net value. So long 
 as any company shall maintain its deposits as herein prescribed at an 
 amount equal to or in excess of the net value of its policies and annuity 
 bonds as aforesaid, it shall be the duty of said Commissioner to sign 
 and affix his seal to the certificate before mentioned on every policy 
 and annuity bond presented to him for that purpose by any company 
 so depositing. (E. S., Art. 4751.) 
 
 Commissioner Shall Keep Record of Securities. 
 
 104. The Commissioner shall keep a careful record of the securities 
 deposited by each company, showing by item the amount and market 
 value thereof. If at any time it shall appear therefrom that the value 
 of the securities held on deposit is less than the actual value of the 
 policies and annuity bonds issued by such company and then in force, 
 it shall be unlawful for the Commissioner to execute the certificate 
 on any additional policies or annuity bonds of such company until it 
 shall have made good the deficit. (E. S., Art. 4751.) 
 
 Deposits May Be Increased. 
 
 105. Any company depositing under the provisions of this act may 
 increase its deposits at any time by making additional deposits of not 
 less than five thousand dollars of such securities as are authorized by 
 this chapter. Any such company whose deposits exceed the net value of 
 all policies and annuity bonds it has in force, less such liens (not ex- 
 ceeding such net value), as the company may hold against them, may 
 withdraw such excess, and it may withdraw any of such securities at 
 any time by depositing others of equal value and of the character 
 authorized by this chapter in their stead, and it may collect the interest, 
 coupons, rents and other income on the securities deposited as the same 
 accrue. (E. S., Art. 4751.) 
 
INSURANCE LAWS OF TEXAS. 37 
 
 Commissioner Shall Keep Securities. 
 
 106. The securities deposited under this chapter by each company 
 shall be placed and kept by the Commissioner of Insurance and Banking 
 of the State in some secure, safe deposit fireproof box or vault in the 
 city or town in or near which the home office of the company is located, 
 and the officers of the company shall have access to such securities for 
 the purpose of detaching interest coupons and crediting payment and 
 exchanging securities as above provided, under such reasonable rules 
 and regulations as the Commissioner may establish. (R. S., Art. 
 4751.) 
 
 Fees for Making Deposit. 
 
 107. Every company making deposit under the provisions of this 
 chapter shall pay to the Commissioner of Insurance and Banking for 
 each certificate placed on registered policies or annuity bonds issued by 
 the company after the original or first deposit is made hereunder, a fee 
 of 25 cents, and the fee so received shall be disposed of by said Commis- 
 sioner as follows: 
 
 (1) The payment of the annual rent or hire of the safety deposit 
 fireproof box above provided. 
 
 (2) Payment for the services of a competent and reliable representa- 
 tive of said Commissioner, to be appointed by him, who shall have direct 
 charge of the securities and safety box containing same, and through 
 whom and under whose supervision the insurance company may have 
 access to its securities for the purpose above provided. The sum paid 
 such representative shall not exceed sixty dollars per annum for each 
 company. 
 
 (3) The balance of such fees shall be paid to or deposited with 
 the State Treasurer to the credit of the general fund. (R. S., Art. 
 4752.) 
 
 Note. The fees collected for certificates on registered policies are a special 
 fund in the hands of the Commissioner to be used by him primarily to defray 
 expenses incurred in the keeping of the securities. Any excess over the amount 
 of the necessary expense becomes the property of the State and must be deposited 
 in the Treasury by the Commissioner. The Commissioner should retain these 
 fees and pay therefrom the expenses authorized by the statute, and at intervals 
 when a surplus is ascertained to be on hand, he should deposit same in the 
 Treasury. These funds should not be deposited on the day they are received. 
 The surplus only, if any, belongs to the State and should be deposited in the 
 Treasury. (Opinion of Attorney General, April 8, 1919.) 
 
 Securities May Consist of Capital Stock. 
 
 108. Any life insurance company organized under the laws of this 
 State and making the deposit provided for by this chapter, may include 
 as a part thereof securities representing its capital stock, and any de- 
 posits of its securities heretofore or hereafter made in compliance with 
 the laws of this State representing its capital stock, and shall only be 
 required to deposit in addition thereto the remainder of its total reserve 
 on outstanding policies and annuity bonds after deducting therefrom the 
 amount of its capital stock securities so deposited. (R. S., Art. 4753.) 
 
33 INSURANCE LAWS OF TEXAS. 
 
 Deposits Must Be Constantly Maintained. 
 
 109. Deposits of securities made hereunder to the value of the re- 
 serve on all outstanding policies and annuity bonds shall be added to and 
 maintained from time to time as the reserve values increase, by the 
 company issuing such contracts, or by any company which may reinsure 
 or assume them, and such securities shall be held by the Commissioner 
 of Insurance and Banking and his successors in office in trust for the 
 benefit of such policies and annuity bonds so long as the same shall 
 remain in force. No company making the deposit provided for herein 
 shall reinsure its outstanding business, or the whole of any one or more 
 of its risks except in or with a company or companies incorporated and 
 organized under the laws of this State, or a company having permission 
 to do business in this State. (E. S., Art. 4743.) 
 
 Note. (1) A foreign life insurance company, while doing business in Texas 
 under certificate of authority, had securities on deposit with the State Treas- 
 urer and with the Commissioner of Insurance and Banking as required by law. 
 It merged with another foreign company under a new charter and a new name. 
 The merged or consolidated company has no authority to do business in Texas 
 :and does not seek to do business in this State. Under these circumstances, the 
 ^consolidated company may substitute its securities for those on deposit those 
 on deposit being withdrawn upon the deposit of new securities of equal value, 
 when approved for deposit. (Opinion of Attorney General, March 10, 1912.) 
 
 (2) A foreign life insurance company, which has reinsured policies of a 
 Texas company which is depositing its reserve with the Commissioner, and 
 which foreign company afterwards merged with another foreign company, the 
 consolidated company not being authorized to do business in Texas, may with- 
 draw securities in excess of the reserve on the reinsured policies. The reserve 
 which must be covered by the deposit must be calculated down to the date of 
 withdrawal in determining the excess amount which may be withdrawn. (Opin- 
 ion of Attorney General, August 1, 1914.) 
 
 Commissioner Shall Compute and Charge Extra Reserve (Home and For- 
 eign Companies). 
 
 110. If any life insurance company doing business under the law 
 of this State has written or assumed risks that are substandard or extra 
 hazardous, and has charged therefor more than its published rates of 
 premium, the Commissioner of Insurance and Banking shall in valuing 
 such policies, compute and charge such extra reserve thereon as is war- 
 ranted by reason of the extra hazard assumed and the extra premium 
 charged. (R. S., Art. 4754.) 
 
 Companies Shall Not Pay Commissions to Officers. 
 
 111. No life insurance company transacting business in this State 
 shall pay or contract to pay, directly or indirectly, to its president, 
 vice-president, secretary, treasurer, actuary, medical director or other 
 physician charged with the duty of examining risks or applications for 
 insurance or to any officer of the company other than an agent or solic- 
 itor, any commission or other compensation contingent upon the writing 
 
 % or procuring of any policy of insurance in such company or procuring 
 an application therefor by any person whomsoever, or contingent upon 
 the payment of any renewal premium, or upon the assumption of any 
 life insurance risk by such company, and should any company violate 
 the provisions of this section, it shall be the duty of the Commissioner 
 
INSURANCE LAWS OF TEXAS. 3!) 
 
 of Insurance and Banking to revoke its certificate of authority to trans- 
 act business in this State. (R. S., Art. 4755.) 
 
 Note. There is no lawful reason why a number of agents of a life insurance 
 company may not associate themselves into a limited or general partnership. 
 The officers and directors of a company, however, could not lawfully enter such 
 a partnership or relation of agency to their own company in conflict with 
 Article 4755 of the Revised Statutes of Texas, which prohibit the officers and 
 directors of a company from being paid any commission for their services as 
 agents. (Opinion of Attorney General, July 5, 1921.) 
 
 Provisions Shall Govern Co-operative Companies. 
 
 112. The provisions of Article 4750 to Article 4755, Sections 98 
 to 111, this digest, inclusive, shall likewise apply to and govern co- 
 operative life insurance companies organized under the laws of this 
 State. (R. S., Art. 4756.) 
 
 Funds Shall Be Deposited in the Name of the Company. 
 
 113. Any director, member of a committee or officer or any clerk 
 of a home company who is charged with the duty of .handling or in- 
 vesting its funds shall not deposit or invest such funds except in the 
 corporate name of such company; shall not borrow the funds of such 
 company; shall not be interested in any way in any loan, pledge, secu- 
 rity, or property of such company, except as stockholder; shall not take 
 or receive to his own use any fee, brokerage, commission, gift or other 
 consideration for or on account of a loan made by or on behalf of such . 
 company. (R. S., Art. 4757.) 
 
 Note. See Section 82. 
 
 Capital Stock, Impairment of Duties of Commissioner When Impaired. 
 
 114. Any such insurance company transacting business within this 
 State whose capital stock shall become impaired to the extent of 33J 
 per cent thereof, computing its liabilities according to the terms of this 
 chapter shall make good such impairment within sixty days by reduc- 
 tion of its capital stock (provided such capital stock shall in no case 
 be less than $100,000) or otherwise, and failure to make good such 
 impairment within said time shall forfeit its rights to write new business 
 in this State until said impairment shall have been made good ; and 
 provided that the Commissioner of Insurance and Banking may apply 
 to any court of competent jurisdiction for the appointment of a receiver 
 to wind up the affairs of such company when its capital stock shall 
 become impaired to the extent of 50 per cent thereof, computing its 
 policy liabilities according to the American Experience Table of Mor- 
 tality and 4J per cent interest; and, provided further, that no company 
 shall write new business in Texas when its net surplus to policyholders 
 is less than $100,000. (R. S., Art. 4758.) 
 
 Note. See reference to opinion of Attorney General under Section 230. 
 
 Form of Policies Shall Be Filed With Commissioner (Home and Foreign 
 Companies). 
 
 115. Life insurance companies shall within five days after the issu- 
 ance of and the placing upon the market any form of policies of life 
 
40 INSURANCE LAWS OF TEXAS. 
 
 insurance, file a copy of such form of policy with the Department of 
 Insurance and Banking. (E. S., Art. 4759.) 
 
 Note. (1) The laws of Texas do not authorize the Commissioner to approve 
 or disapprove the forms of life insurance policies. (Opinion of Attorney Gen- 
 eral, May 20, 1915.) 
 
 (2) There is no law which authorizes the Commissioner to either approve 
 or disapprove a life insurance policy. He is merely required to file such policy. 
 However, he should not file a policy which in any way violates any statutory 
 provision. (Opinion of Attorney General, June 16, 1919.) 
 
 Commissioner Shall Approve Form of Industrial, Accident or Health 
 Policy (Home and Foreign Companies). 
 
 116. No insurance company transacting business in this State shall 
 hereafter be permitted to issue or sell any policy of industrial life in- 
 surance, or any policy of accident or health insurance, until the form 
 thereof has been submitted to the Commissioner of Insurance and Bank- 
 ing. If the Commissioner of Insurance and Banking shall approve the 
 form of such policy as complying with the requirements of the laws of 
 this State, the same may thereafter be issued and sold. If he shall dis- 
 approve the same, any such company may institute a proceeding in any 
 court of competent jurisdiction to review his action thereon. (E. S., 
 Art. 4760.) 
 
 Note. (1) Policies of industrial insurance are not subject to provisions of 
 Sections 86 and 87. (Department ruling.) 
 
 (2) An accident policy was properly disapproved by the Commissioner 
 because it contained the following provision in the application: "I hereby 
 apply for a policy * * * to be based on the following statements, all of 
 which I warrant to be complete and true * * *, and I agree that if any 
 of said statements shall be untrue * * * said policy of insurance shall be 
 null and void"; on the ground that the law provides that a policy shall be 
 null and void in case of misrepresentation only when the misrepresentation is 
 material, while the agreement quoted attempts to make the policy void whether 
 the untrue statements be material or not. 
 
 A provision in an accident policy requiring written notice of accident to be 
 given at the home office of the company within fifteen days from date of in- 
 jury "(subject, however, to any statutory provision respecting such notice)," 
 was also properly disapproved by the Commissioner because the policy should 
 not require such notice to be given within less than ninety days as provided 
 by Texas statute, notwithstanding the parenthetical expression. (Opinion of 
 Attorney General, December 2, 1910.) 
 
 (3) An accident policy which requires notice of the accident or injury to 
 be delivered to an agent "authorized to receive the same," is more restrictive 
 than the statute requires and should not be approved. A provision in such a 
 policy requiring notice of accident to be given within five days is contrary to 
 the statute and should not be approved. (Opinion of Attorney General, April 
 17, 1914.) 
 
 (4) A workmen's compensation policy is an accident policy, and the form 
 must be filed with, and approved by, the Commissioner before it can be law- 
 fully issued in Texas. Any company failing to obtain such approval before 
 issuing in Texas should have its license revoked. (Opinion of Attorney Gen- 
 eral, June 22, 1914.) 
 
 (5) The Commissioner is not required to approve or disapprove a policy 
 issued by a reciprocal association. (Opinion of Attorney General. June 12, 
 1919.) 
 
INSURANCE LAWS OF TEXAS. 41 
 
 Certificate of Authority, Must Have. 
 
 117. No foreign or domestic insurance company shall transact any 
 insurance business in this State, other than the lending of money, unless 
 it shall first procure from the Commissioner of Insurance and Banking 
 a certificate of authority stating that the requirements of the laws of this 
 State have been fully complied with by it, and authorizing it to do busi- 
 ness in this State. Such certificate of authority shall expire on the last 
 day of February in each year, and shall be renewed annually so long as 
 the company shall continue to comply with the laws of the State, such 
 renewals to be granted upon the same terms and consideration as the 
 original certificate. (E. S., Art. 4761.) 
 
 Companies May Be Incorporated to Transact Monthly and Weekly Insur- 
 ance Premium Plan, With Capital of $25,000. 
 
 118. Companies may be incorporated in the manner prescribed by 
 this chapter for the incorporation of life, accident and health insurance 
 companies generally, which shall have power only to transact business 
 within the State of Texas, and to write insurance only on the weekly 
 or monthly premiums plan, and to issue no policy promising to pay 
 more than one thousand dollars in the event of the death of the injured 
 from natural causes, nor more than two thousand dollars in the event of 
 death of any person from accidental causes, which may issue combined or 
 separately, life, accident or health insurance policies with not less than 
 an actual paid up capital of twenty-five thousand dollars, provided, that 
 all such companies shall be subject to all the laws regulating life in- 
 surance companies in this State not inconsistent with the provisions of 
 this article (section) ; and provided further, that such companies shall 
 not be permitted to invest their assets in other than Texas securities as 
 defined by the laws of this State regulating the investments of life 
 insurance companies. (E. S., Art. 4762.) 
 
 Note. A life insurance company cannpt amend its charter, reducing its cap- 
 ital stock below $100,000, nor thereby place itself in a position where it can 
 transact business by authority or above provision on the industrial plan. (Opin- 
 ion of Attorney General, August 20, 1910.) 
 
 Dividends, Unlawful Commissioner Shall Revoke Authority. 
 
 119. It shall not be lawful for any insurance company organized 
 under the laws of this State to make any dividends except from surplus- 
 profits arising from its business, and in estimating such profits there 
 shall be reserved therefrom the lawful reserve on 'all unexpired risks, 
 and also the amount of all unpaid losses whether adjusted or unadjusted 
 and all other debts due and payable, or to become due and payable by 
 the company. Any dividends made contrary to the provisions of this 
 article shall subject the company making them to a forfeiture of its 
 charter, and the Commissioner of Insurance shall forthwith revoke its 
 certificate of authority; provided, that he shall give such company at 
 least ten days' notice in writing of his intention to revoke such cer- 
 tificate, stating specifically the reasons why he intends to revoke same. 
 (E. S., Art. 4763.) 
 
42 INSURANCE LAWS OF TEXAS. 
 
 Corporations, Partnerships, Joint Stock Associations or Trust Estates May 
 Be Beneficiaries in Life Insurance Policies. 
 
 120.. Any corporation, partnership, joint stock association or any 
 trust estate doing business for profit, may be named beneficiary in any 
 policy of insurance issued by a legal reserve life insurance company on 
 the life of any officer or stockholder of said corporation, joint stock 
 association or trust estate or any partnership or member thereof may 
 be the beneficiary in any policy of insurance issued by a legal reserve 
 life insurance company upon the life of any member of said partner- 
 ship, or any religious, educational, eleemosynary, charitable or benevolent 
 institution or undertaking may be named beneficiary in any policy of 
 life insurance issued by any legal reserve life insurance company upon 
 the life of any individual. The beneficiaries aforenamed shall have an 
 insurable interest for the full face of the policy and shall be entitled to 
 collect same. On all policies of life insurance heretofore issued by legal 
 reserve companies in which any of the aforenamed shall have been desig- 
 nated beneficiaries in the policies,, said beneficiaries shall have an in- 
 surable interest to the full extent of the face of the policy and be entitled 
 to collect same. (Sec. 1, Chap. 84, Acts 37th Leg.) 
 
 CHAPTER V. 
 
 XIFE, HEALTH AND ACCIDENT INSURANCE COMPANIES FOREIGN. 
 
 'Shall File Statement Statement Shall Contain. 
 
 121. Any life insurance company, or accident insurance company, 
 or life and accident, health and accident, or life, health and accident 
 insurance company, incorporated under the laws of any other State, 
 'Territory or country, desiring to transact the business of such insur- 
 ance in this State shall furnish said Commissioner of Insurance and 
 Banking with a written or printed statement under oath of the presi- 
 dent or vice-president or treasurer and secretary of such company, which 
 statement shall show: 
 
 (a) The name and locality of the company. 
 
 (b) The amount of its capital stock. 
 
 (c) Amount of its capital stock paid up. 
 
 (d) The assets of the company, including, first, the amount of 
 cash on hand and in the hands of other persons, naming such persons 
 and their residences; second, real estate unencumbered, where situated 
 and its value; third, the bonds owned by the company and how they 
 are secured, with the rate of interest thereon; fourth, debts due the 
 company secured by mortgage, describing the property mortgaged and 
 its market value; fifth, debts otherwise secured, stating how secured; 
 sixth, debts for premiums ; seventh, all other moneys and securities. 
 
 (e) Amount of liabilities to the company, stating the name of the 
 person or corporation to whom liable. 
 
 (f) Losses adjusted and due. 
 
 {g) Losses adjusted and not due. 
 
 (h) Losses adjusted. 
 
 (i) Losses in suspense and from what cause. 
 
INSURANCE LAWS OF TEXAS. 4? 
 
 (j) All other claims against the company, describing the same; 
 provided, that the Commissioner of Insurance and Banking may re- 
 quire any additional fact to be shown by such annual statement; each 
 such company shall be required to file a similar statement not later 
 than March 1st of each year. (E. S., Art. 4765.) 
 
 Articles of Incorporation and By-Laws Shall Be Filed. 
 
 122. Such foreign life insurance company, or accident insurance 
 company, or life and accident, health and accident, or life, health and 
 accident insurance company, shall accompany such statement with a 
 certified copy of its acts or articles of incorporation, and all amend- 
 ments thereto, and a copy of its by-laws, together with the name and 
 residence of each of its officers and directors, and all of which shall 
 be certified under the hand of the president or secretary of such com- 
 pany. (E. S., Art. 4766.) 
 
 Capital Stock, Shall Have. 
 
 123. No such foreign life insurance company, accident insurance 
 company, or life and accident, health and accident, or life, health and 
 accident insurance company, shall transact any business of insurance- 
 in this State unless such company is possessed of at least $100,000' 
 of actual paid up in cash money capital invested in such securities as 
 provided under the laws of the State, Territory or country of its crea- 
 tion ; and no mutual life insurance company or accident insurance com- 
 pany, or life and accident, health and accident, or life, health and 
 accident insurance company operating on the old line or legal reserve 
 basis, shall transact any business of insurance in this State, unless 
 such company is possessed of at least $100,000 of net surplus assets 
 invested in securities provided for under the, laws of the State, Terri- 
 tory or country of its creation., (E. S., Art. 4767.) 
 
 Note. The guaranty fund certificates of a foreign life insurance company- 
 which were issued by authority of a statute of the State in which the company 
 was incorporated and organized, and which certificates contain the following 
 provisions: 1st, the holders shall receive at least 6 per cent per annum inter- 
 est hereon from the expense fund of the company; 2nd, the claims of the 
 holders shall be inferior to the claims of the policyholders as against the funds 
 of the company, and 3rd, in case the company ceased to do business, upon the 
 winding up of the affairs of the company, the certificate holders shall be en- 
 titled to receive payment pro rata from the assets of the company after the 
 claims of the policy holders have been met; while these provisions and the issu- 
 ance of such certificates create a contingent liability of the company, such a 
 liability is not such a one as should be charged against the assets of the com- 
 pany in its statement of financial condition, in ascertaining whether or not it 
 has the net surplus assets required in above section. (Opinion of Attorney 
 General, October 24, 1912.) 
 
 bhall Make Deposits as Is Required of Companies of This State in Their 
 Home State. 
 
 124. Whenever the existing or future laws of any other State or 
 Territory of the United States, or of any other country, shall require 
 of life insurance companies, accident insurance companies, or life and 
 accident, health and accident, or life, health and accident insurance 
 companies, incorporated by this State, any deposit of securities in such 
 
44 INSURANCE LAWS OF TEXAS. 
 
 other State, Territory or country before transacting insurance busi- 
 ness therein, then, and in every such case, all insurance companies of 
 such State shall, before doing any insurance business in this State, be 
 required to make the same deposit of securities with the Treasurer of 
 this State. (E. S., Art. 4768.) 
 
 Shall Deposit With State Treasurer. 
 
 125. No foreign life insurance company, or accident insurance com- 
 pany, or life and accident, health and accident, or life, health and 
 accident insurance company incorporated by or organized under the 
 laws of any foreign government shall transact business in this State, 
 unless it shall first deposit and keep deposited with the Treasurer of 
 this State, for the benefit of the policyholders of such company, citi- 
 zens or residents of the United States, bonds or securities of the United 
 States or the State of Texas to the amount of $100,000. (E. S., Art. 
 4769.) 
 
 Deposit Liable for Judgment. 
 
 126. The deposit required by the preceding article (section) shall be 
 held liable to pay the judgments of policyholders in such company and 
 may be so decreed by the court adjudicating the same. (E. S., Art. 
 4770.) 
 
 deposit Not Required, When Shall File Certificate of Deposit. 
 
 127. If the deposit required by Article 4769 (Section 125) has been 
 made in any State of the United States, under the laws of such State 
 in such manner as to secure equally all the policyholders of such com- 
 pany who are citizens and residents of the United States, then no de- 
 posit shall be required in this State, but a certificate of such deposit 
 under the hand and seal of the officer of such other State with whom 
 the same has been made shall be filed with Commissioner of Insurance 
 and Banking. ; (E. S., Art. 4771.) 
 
 Assets Shall Be Invested In. 
 
 128. The assets of any company not organized under the laws of 
 this State shall be invested in securities or property of the same classes 
 permitted by the laws of this State as to home companies or by other 
 laws of this State in other securities approved by the Commissioner of 
 Insurance and Banking, as being of substantially the same grade. 
 (E. S., Art. 4772.) 
 
 Officer Making False Statement Guilty of. 
 
 129. Any officer of any insurance company not organized under 
 the laws of this State, who shall file with the Commissioner of Insur- 
 ance and Banking any statement, report or other paper required or 
 provided for by law to be so filed, which shall contain any material 
 statement or fact known to be false by the person filing the same, or 
 any person who shall execute or cause to be executed any such false 
 statement, report or other paper" to be so filed, shall be deemed guilty 
 of a felony and upon conviction shall be punished by imprisonment in 
 
INSURANCE LAWS OF TEXAS. 45 
 
 the penitentiary for a term of not less than one year. (P. C v Art. 
 693.) 
 
 Power of Attorney, Shall File. 
 
 130. That each life insurance company engaged in doing or de- 
 siring to do business in this State shall file with the Commissioner of 
 Insurance and Banking of this State an irrevocable power of attorney 
 duly executed, constituting and appointing the Commissioner of Insur- 
 ance and Banking of this State and his successors in office, or any 
 officer or board which may hereafter be clothed with the powers and 
 duties now devolving upon said Commissioner, its duly authorized agent 
 and attorney in fact for the purpose of accepting service for it or 
 being served with citation in any suit brought against it in any court 
 of this State, by any person, or by or to or for the use of the State 
 of Texas, and consenting that the service of any civil process upon 
 him as its attorney for such purpose in any such suit or proceeding 
 shall be taken and held to be valid, waiving all claim and right to 
 object to such service or to any error by reason of such service; and 
 such appointment, agency and power of attorney shall by its terms 
 and recitals provide that it shall continue and remain in force and 
 effect so long as such company continues to do business in this State 
 or to collect premiums of insurance from citizens of this State, and 
 so long as it shall have outstanding policies in this State, and until 
 all claims of every character held by the citizens of this State, or by 
 the State of Texas against such company shall have been settled. And 
 said power of attorney shall be signed by the president or a vice-presi- 
 dent and the secretary of such company, whose signatures shall be 
 attested by the seal of the company, and said officer signing the same 
 shall acknowledge its execution before an officer authorized by the 
 laws of this State to take acknowledgments; and the said power of 
 attorney shall be embodied in and approved by a resolution of the 
 board of directors of such company, and a copy of such resolution, 
 duly certified to by the proper officers of said company, shall be filed 
 with the said power of attorney in the office of the Commissioner of 
 Insurance and Banking of this State and shall be recorded by him in 
 a book kept for that purpose, there to remain a permanent record of 
 said department. (E. S., Art. 4773.) 
 
 Commissioner Shall Accept Service Duties When Accepting Same. 
 
 131. Whenever the Commissioner of Insurance and Banking of this 
 State shall accept service or be served with citation in any suit pend- 
 ing against any life insurance company in this State as provided by 
 the preceding article (Sec. 130) he shall immediately enclose the copy of 
 the citation served upon him, or a substantial copy thereof, in a letter 
 properly addressed to the general manager or general agent of the com- 
 pany against whom such service is had, if it shall have a general 
 manager or general agent within this State, and if not, then to the 
 home office of the company, and shall forward the same by registered 
 mail, postage prepaid, and no judgment by default shall be taken in 
 any such cause until after the expiration of at least ten days after 
 the general agent or general manager of such company, or the com- 
 
'J6 INSURANCE LAWS OF TEXAS. 
 
 pany at its home office, as the case may be, shall have received such 
 copy of such citation, and the presumption shall obtain until rebutted 
 that such notice was received by such agent or company in due course 
 of mail after being deposited in the mail at Austin. (E. S., Art. 
 
 4774.) 
 
 CHAPTEE VI. 
 
 INVESTMENT AND PREMIUM RECEIPTS TAXES OF LIFE INSURANCE 
 
 COMPANIES. 
 Shall Invest. 
 
 132. Each and every life insurance company now engaged or that 
 may hereafter engage in transacting the business of life insurance in 
 this State shall, as a condition of its right to transact such busi- 
 ness in this State, invest and keep invested in Texas securities, as 
 hereinafter defined and in Texas real estate as hereinafter provided, 
 a sum of money equal to at least 75 per cent of the aggregate amount 
 of the legal reserve required by the laws of the % State of its domicile 
 to be maintained on account of its policies of insurance in force writ- 
 ten upon the lives of citizens of this State, which reserve is herein- 
 after denominated as its "Texas Eeserves," and each such company 
 securing a certificate of authority to do business in this State shall 
 be deemed to have accepted such certificate subject to all of the con- 
 ditions and requirements of this chapter. (E. S., Art. 4775.) 
 
 Note. (1) Life insurance companies doing a re-insurance business only are 
 not required to invest their reserves in Texas securities. (Opinion of Attorney 
 General, January 17, 1911.) 
 
 (2) Foreign insurance companies must have their funds invested in securi- 
 ties of substantially the grade as is required of domestic companies, and unless 
 they do, they cannot receive a permit to transact business in this State. (Opin- 
 ion of Attorney General, August 9, 1916.) 
 
 Texas Securities, Definition of. 
 
 133. The phrase "Texas Securities" as used in this chapter shall 
 be held to include bonds of the State of Texas, or of any county, city, 
 town, school district or other municipality or subdivision which is 
 now or may hereafter be constituted or organized and authorized to 
 issue bonds under the Constitution and laws of this State, promissory 
 notes and other obligations, the payment of which is secured by a 
 mortgage, deed of trust or other valid lien upon unencumbered real 
 estate situated in this State, the title to which real estate is valid and 
 the market value for which is double . the amount loaned thereon, ex- 
 clusive of buildings, unless such buildings are insured and kept in- 
 sured in some company authorized to transact business in this State, 
 and the policy or policies transferred to the company taking such 
 mortgage or lien; the first mortgage bonds of any solvent corporation 
 incorporated under the laws of this State and doing business in this 
 State, which has not in five years next preceding the date of the in- 
 vestment by such company in such mortgage bonds defaulted for more 
 than three months in the payment of interest upon its bonds or in- 
 debtedness, the market value of which bonds is equal to the amount 
 
INSURANCE LAWS OB' TEXAS. 47 
 
 invested therein; and loans made to policyholders on the sole security 
 of the reserve values of their policies. And the investments required 
 by this act or any part thereof may be made by the purchase of not 
 more than one building site, and in the erection thereon of not more 
 than one office building or in the purchase at its reasonable market 
 value of such office building already constructed and the ground upon 
 which the same is located in any city of the State, having a popula- 
 tion of more than 4000 inhabitants. And all real estate owned by life 
 insurance companies in this State on December 31, 1909, and all there- 
 after acquired under the provisions of this chapter, or by foreclosure 
 of a lien thereon shall be treated, to the extent of its reasonable mar- 
 ket value, as a part of the investments required by this chapter. And 
 "Texas Securities" as used in the following sections of this chapter shall 
 be held to include every character of investment authorized by the terms 
 of this article (section). (E. S., Art. 4776.) 
 
 Note. A life insurance company, organized under the laws of Texas, may law- 
 fully invest its legal reserve in district road and bridge bonds issued by a sub- 
 division of a county. (Opinion of Attorney General, February 13, 1920.) 
 
 Bonds Issued Under Farm Loan Act Are Texas Securities. 
 
 134. All bonds issued under and by virtue of the Federal Farm Loan 
 Act, approved by the President of the United States July 17, 1916, 
 which is "An Act to provide capital for agricultural development, to 
 create standard forms of investments based upon farm mortgages; to 
 equalize rates of interest upon farm loans, to furnish a market for 
 United States bonds, to create government depositaries and financial 
 agents for the United States, and for other purposes," shall hereafter 
 be lawful investment for all fiduciary and trust funds in this State and 
 may be accepted as security for all public deposits where deposits of 
 bonds or mortgages are authorized by law to be accepted; such bonds 
 shall be lawful investment for all funds which may be lawfully invested 
 by guardians, administrators, trustees and receivers, for saving depart- 
 ments of banks incorporated under the laws of Texas, for banks, sav- 
 ings banks and trust companies chartered under the laws of Texas, and 
 for all insurance companies of every kind and character chartered or 
 transacting business under the laws of Texas, where investments are 
 required or permitted by the laws of this State; provided further, that 
 where such bonds are issued against and secured by promissory notes 
 or other obligations, the payment of which is secured by mortgage, deed 
 of trust or other valid lien upon unencumbered real estate situated in 
 this State, then such bond or bonds so issued and so secured shall be 
 regarded for investment purposes by insurance companies as "Texas 
 Securities/' within the meaning of the laws of this State governing 
 such investments. (Sec. 1, Chap. 63, Acts 35th Leg.) 
 
 Investments Shall Be Made, How. 
 
 135. The investments required by this chapter shall be made as 
 follows : 
 
 (a) Each life insurance company which had a certificate of au- 
 thority to transact business in this State April 2, 1909, the total amount 
 of whose investments in Texas securities as of December 31, 1908, was 
 
4S INSURANCE LAWS OF TEXAS. 
 
 equal to or exceeded 75 per cent of the amount of its Texas reserves 
 as of that date, shall have so invested not later than January 31st in 
 each year a sum of money equal to 75 per cent of the amount of its 
 Texas reserves as of the preceding December 31st. 
 
 (b) Each life insurance company which had a certificate of au- 
 thority to transact business in this State on April 2, 1909, the amount 
 of whose investments in Texas securities as of December 31, 1908, was 
 less than 75 per cent of the amount of its Texas reserves as of said 
 date, shall have so invested, not later than January 31st in each year, 
 a sum at least equal to 75 per cent of the amount by which its Texas 
 reserves as of December 31st preceding exceeded the amount of its 
 Texas reserves as of December 31, 1908, added to the amount of its 
 total investments in Texas securities as of said date; and each such 
 company shall, in addition, have so invested not later than January 
 31, 1910, a sum at least equal to 10 per cent of the amount by which 
 75 per cent of its Texas reserves as of December 31, 1908, exceeded 
 the amount of its investments in Texas securities as of said date, and 
 annually thereafter it shall have invested, not later than January 31st, 
 an additional 10 per cent of the amount of such excess until the total 
 amount of its investments in Texas securities shall at least equal 75 
 per cent of its Texas reserves. 
 
 (c) Each life insurance company not having a certificate of au- 
 thority to transact business in this State on April 2, 1909, or that may 
 thereafter discontinue writing new business under such certificate, shall, 
 if it again obtain a certificate of authority to transact business in 
 this State, be required to have invested in Texas securities annually 
 as above provided, a sum equal to 75 per cent of its Texas reserves; 
 provided, that if on December 31st preceding the issuance of such cer- 
 tificate of authority the amount of its investments in Texas securities 
 was less than 75 per cent of the amount of its Texas reserves, it 'shall 
 be required to have so invested annually, as above provided, -a sum 
 equal to 75 per cent of the increase in its Texas reserves since Decem- 
 ber 31st last preceding the issuance of its certificate of authority, added 
 to the amount of its total investment in Texas securities as of said 
 date; and in addition it shall, not later than January 31st in each 
 year after the issuance of its certificate of authority, have so invested 
 10 per cent of the amount by which 75 per cent of its Texas reserves 
 as of December 31st preceding the date of said certificate exceeded 
 the amount of its total investments in Texas securities as of that date, 
 and shall have invested annually thereafter, not later than January 
 31st, an additional 10 per cent of such excess until the total amount 
 of its investments in Texas securities shall at least equal 75 per cent 
 of the amount of its Texas reserves. The proportionate amount of 
 the Texas reserves required by this section to be invested in Texas 
 securities as of any date, shall thereafter be maintained; provided, 
 that such investment shall not be required to be made by any life 
 insurance company after it has ceased to do business of Ufa insur- 
 ance or to write policies of life insurance in this State, (E. S., Art. 
 4777.) 
 
INSURANCE LAWS OF TEXAS. 49 
 
 Shall File Report of Reserve. 
 
 136. That each life insurance company doing business in this State 
 shall, not later than ten days after January 31st of each year, file 
 with the* Commissioner of Insurance and Banking of this State, on 
 a blank prepared and furnished by him for that purpose, a report 
 showing the entire amount of the reserve on its entire business in force 
 in this State on December 31st preceding, and an itemized schedule 
 of its investments in Texas securities, which report shall be sworn to 
 by either the president or a vice-president and the secretary of such 
 company. Such report shall contain such other information as may 
 be required by the Commissioner to determine whether or not such 
 company has continuously and in good faith complied with this law, 
 and for that purpose the Commissioner may, whenever he shall deem 
 it proper, require such special or supplemental reports as he may deem 
 necessary. (E. S., Art. 4778.) 
 
 Shall File Report of Premiums. 
 
 137. Each life insurance company not organized under the laws 
 of this State transacting business in this State shall on or before the 
 first day of March make a report to the Commissioner of Insurance 
 and Banking of this State, which report shall be sworn to by either the 
 president or vice-president and secretary or treasurer of such company, 
 and which shall show the gross amount of premiums collected during 
 the year ending on December 31st preceding from citizens of this State 
 upon policies of insurance and each such company shall pay annually 
 an occupation tax equal to 3 per cent of such gross premium receipts; 
 provided, that when the report of the investment in Texas securities, 
 as defined by law, of any such companies as of December 31st of any 
 year, shall show that it has invested on said date as much as 30 per 
 cent of its total Texas reserves, as defined by law, in promissory notes 
 or other obligations secured by mortgage, deed of trust or other lien 
 on Texas real estate, the rate of occupation tax shall be reduced to 2.6 
 per cent; and when such report shall show that such company has so 
 invested on said date as much as 60 per cent of its total Texas reserve, 
 the rate of such occupation tax shall be reduced to 2.3 per cent; and 
 when such a report shall show that such company has so invested, on 
 said date, as much as 75 per cent of its total Texas reserve, the rate of 
 such occupation tax shall be reduced to 2 per cent; provided, that all 
 such companies shall in any event make the investments in Texas se- 
 curities in proportion to the amount of Texas reserves as required by 
 law. Such occupation taxes shall be for and on account of the business 
 transacted within this State during the calendar year in which such 
 premiums were collected or for that portion thereof during which the 
 company shall have transacted business in this State while this act was 
 in force and effect. (E. S., Art. 4779.) 
 
 Note. ( 1 ) Reserves on life insurance policies represent what the company 
 issuing the policies must at all times have on hand to meet its liabilities on 
 its policies. In determining the percentage of total Texas reserves which must 
 be invested in Texas real estate securities to secure a reduction of taxes, no de- 
 duction should be made from amount of legal reserve on Texas policies on ac- 
 count of Texas policy loans. (Opinion of Attorney General, May 1, 1914.) 
 
 (2) A life insurance company doing business under the assessment or nat- 
 
50 INSUHANCE LAWS OF TEXAS. 
 
 ural premium plan is required to pay occupation taxes, as required by above 
 Section 137. (Opinion of Attorney General, June 27, 1914.) 
 
 (3) Certain bonds issued by the Union Terminal Company of Dallas, although 
 secured by mortgage on the real estate and other property of the Terminal Com- 
 pany as an investment of a life insurance company, come under the class of 
 securities described in the statute as bonds of a corporation, and are not of the 
 same class of securities as those referred to in Articles 4776 and 4779 of the 
 Revised Statutes as "promissory notes and other obligations the payment of 
 which is secured by a mortgage, deed of trust, or other lien on Texas real estate," 
 etc. The mere fact that the bonds of a railway company or other corporation 
 are secured by property including real estate does not take them out of their 
 classification as corporation or railroad bonds. (Opinion of Attorney General, 
 July 19, 1921.) 
 
 Commissioner's Duties on Receiving Report. 
 
 138. Upon the receipt of sworn statements showing the gross pre- 
 mium receipts of such company the Commissioner of Insurance and 
 Banking of this State shall certify to the Treasurer of this State the 
 amount of taxes due by such company for the preceding year; which 
 taxes shall be paid to the State Treasurer for the use of the State by 
 such company. Upon his receipt of such certificate and the payment 
 of such tax, the Treasurer shall execute a receipt therefor, which re- 
 ceipt shall be evidence of the payment of such taxes and no such life 
 insurance company shall receive a certificate of authority to do busi- 
 ness in this State until such taxes are paid. If upon the examination 
 of any company, or in any other manner, the Commissioner of Insur- 
 ance and Banking shall be informed that the gross premium receipts 
 of any year exceed in amount those shown by the report thereof thereto- 
 fore made as above provided, it shall be the duty of such Commissioner 
 to file with the State Treasurer a supplemental certificate showing 
 the additional amount of taxes due by such company, which shall be 
 paid by such company upon notice thereof. It shall be the duty of 
 the State Treasurer of this State, if within fifteen days after the re- 
 ceipt by him of any certificate or supplemental certificate provided for 
 by this article the taxes due as shown thereby have not been paid, to 
 report the facts to the Attorney General, who shall immediately insti- 
 tute suit in the proper court of Travis county to recover such taxes. 
 (R. S., Art. 4780.) 
 
 Other Occupation Tax Shall Not Be Paid. 
 
 139. No occupation tax other than herein imposed shall be levied 
 by the State or any county, city or town upon any life insurance com- 
 pany herein subject to the occupation tax in proportion to its gross 
 premium receipts or its agents. The occupation tax imposed by this 
 act upon life insurance companies shall be the sole occupation tax 
 which any company doing business in this State under the provisions 
 of this chapter shall be required to pay. (R. S., Art. 4781.) 
 
 Companies 'Accepting Certificate Shall Hereafter Pay Occupation Tax. 
 
 140. Each life insurance company not organized under the laws 
 of this State hereafter granted a certificate of authority to transact 
 business in this State shall be deemed to have accepted such certifi- 
 cate and to transact such business hereunder subject to the condi- 
 tions and requirements that after it shall cease to transact new busi- 
 
INSURANCE LAWS OF TEXAS. 51 
 
 ness in this State under a certificate of authority and so long as it 
 shall continue to collect renewal premiums from citizens of this State 
 it shall be subject to the payment of the same occupation tax in pro- 
 portion to its gross premiums during any year from, citizens of this 
 State as is or may be imposed by law on such companies transacting 
 new business within this State under certificate of authority during 
 such year; provided, that the rate of such, tax to be so paid by any 
 such company shall never exceed the rate imposed by this chapter upon 
 insurance companies transacting business in this State, and each such 
 company shall make the same reports of its gross premium receipts 
 for each such year and within the same period as is or may be required 
 of such companies holding certificates of authority; and shall at all 
 times be subject to examination by the Commissioner of Insurance and 
 Banking or some one selected by him for that purpose, in the same 
 way and to the same extent as is or may be required of companies 
 transacting new business under certificates of authority in this State, 
 the expenses of such examination to be paid by the company examined; 
 and the respective duties of the Commissioner of Insurance and Bank- 
 ing in certifying the amount of such taxes and of the State Treasurer 
 and Attorney General in their collection shall be the same as are or 
 may be prescribed respecting taxes due from companies authorized to 
 transact new business within this State. (E. S., Art. 4782.) 
 
 Companies Heretofore, Now or Hereafter Doing Business Shall Report 
 After Ceasing to Do Business. 
 
 141. Any life insurance company which has heretofore been, may 
 now be, or may hereafter be engaged in writing policies of insurance 
 upon the lives of citizens of this State which has heretofore ceased 
 or may hereafter cease writing such policies and which does not now 
 or may not hereafter have a certificate of authority to transact the 
 business of life insurance in this State but which has continued or 
 may continue to collect renewal or other premiums upon such .policies 
 shall, before it may again obtain a certificate of authority to transact 
 the business of life insurance in this State, report under oath to the 
 Commissioner of Insurance and Banking of this State, the gross amount 
 of premiums so collected from citizens of this State upon policies of 
 insurance during each calendar year since the end of the period covered 
 by the last preceding report by such company of gross premium re- 
 ceipts upon which it paid an occupation tax, and shall pay to the 
 State a sum equal to the percentage of its gross premium receipts for 
 each such year that was required by law to be paid as occupation taxes 
 by companies doing business in this State during such year or years 
 and upon the payment of such sum and securing a certificate of author- 
 ity to do business in this State the penalties provided for the failure 
 to pay such taxes and make such reports in the past shall be remitted. 
 (R. S., Art. 4783.) 
 
 May Maintain Agents After Failing to Renew Certificate. 
 
 142. Any company which shall fail to renew its certificate of au- 
 thority or continue to write new business in this State shall, never- 
 theless, have the right to maintain an agent or agents in Texas for 
 
52 INSURANCE LAWS OF TEXAS. 
 
 the purpose of collecting renewal premiums on outstanding business 
 written by it under certificate of authority,, and also for the purpose 
 of making investments as provided by this chapter. (E. S., Art. 4784.) 
 
 Duties of Commissioner When Company Fails to Comply With Provisions 
 of La"w. 
 
 143. If any life insurance company, while holding a certificate of 
 authority to transact business in this State, shall fail or refuse to com- 
 
 ly with any of the provisions or requirements of this chapter, it shall 
 the duty of the Commissioner of Insurance and Banking, upon ascer- 
 taining such fact, to notify such company by registered letter, prop- 
 erly addressed and mailed, or by any other form, of actual notice in 
 writing delivered to an executive officer of such company, of his inten- 
 tion to revoke its certificate of authority to transact business in this 
 State at the expiration of thirty days after the mailing of such regis- 
 tered letter, or the date upon which such actual notice is served; and 
 if such provision or requirements are not fully complied with upon 
 the expiration of said thirty days, it shall be the duty of the Commis- 
 sioner of Insurance and Banking to revoke the certificate of authority 
 of such company, and in case of such revocation such company shall 
 not be entitled to receive another certificate of authority for a period 
 of one year and until it shall have fully and in good faith complied 
 with all such provisions and requirements of this chapter. Any company 
 feeling itself aggrieved by the action of the Commissioner in revoking 
 its certificate of authority to do business in this State may bring suit 
 against him in the court of Travis county having jurisdiction thereof, 
 to annul and vacate the order revoking such certificate. (R. S., Art. 
 4785.) 
 
 Penalty for Failure to Make Investment. 
 
 144. If any company shall intentionally fail or refuse to make the 
 investments required by this chapter or make any report required by 
 this chapter, or to make any special report requested by the Commis- 
 sioner of Insurance and Banking under the authority of this chapter, 
 or generally to comply with any provision or requirement of this chap- 
 ter while holding a certificate of authority to transact business in this 
 State, or after it shall cease to write new business or cease to hold such 
 certificate, such failure or refusal shall subject such company, in addi- 
 tion to the penalty provided in the preceding article (Section 143), 
 in cases of which said article (section) may be applicable to the pay- 
 ment of a penalty of $25 per day for each day that such company shall 
 remain in default after the Commissioner of Insurance and Banking 
 shall notify such company of such default, in the manner provided in 
 the preceding article (Section 143 hereof), to be recovered in a suit to 
 be brought by the Attorney General in behalf of. the State in the dis- 
 trict court of Travis county. And in any suit that may be brought to 
 recover such penalty or penalties there shall be a prima facie presump- 
 tion subject to rebuttal that any default that may have occurred was 
 intentional, and that the notice required by this chapter was given and 
 the burden of proof shall be on the defendant company to prove that 
 the investments required by this chapter were made as herein required 
 
INSURANCE LAWS OF TEXAS. 53 
 
 whenever the question of whether or not such investments were thus 
 made is in issue. (R. S., Art. 4786.) 
 
 Companies Organized in This State May Deposit. 
 
 145. Any life insurance company organized under the laws of this 
 State may, at its option, deposit with the Treasurer of this State se- 
 curities in which its capital stock is invested, or securities equal in 
 amount to its capital stock of the class in which the law of this State 
 permits insurance companies to invest their capital stock, and may, at 
 its option, withdraw the same or any part thereof, first having de- 
 posited with the Treasurer in lieu thereof other securities of like class 
 and equal amount and value to those withdrawn. Any such securities 
 before being so originally deposited or substituted shall be approved 
 by the Commissioner of Insurance and Banking, and when any such 
 deposit is made the Treasurer shall execute to the company making 
 such deposit a receipt therefor, giving such description of said stock 
 or securities as will identify the same, and stating that the same are 
 held on deposit as the capital stock investments of such company, and 
 such company shall have the right to advertise such fact or print a 
 copy of the Treasurer's receipt on the policies it may issue; and the 
 proper officers or agent of each insurance company making such de- 
 posit shall be permitted at all reasonable times to examine such securi- 
 ties and to detach coupons therefrom and to collect interest thereon, 
 under such reasonable rules and regulations as may be prescribed by 
 the Treasurer and the Commissioner of Insurance and Banking of 
 this State. The deposit herein provided for, when made by any com- 
 pany, shall thereafter be maintained so long as said company shall have 
 outstanding any liability to its policyholders in this State. (R. S., 
 Art. 4787.) 
 
 Note. See Section 97 and notes thereunder. 
 
 Investment in Texas Securities Does Not Apply To. 
 
 146. The provisions of this chapter requiring investment in Texas 
 securities shall not apply to any life insurance company the total amount 
 of whose Texas reserve does not exceed $5000, or to any such company 
 doing only a reinsurance business in this State, but all of the other 
 provisions of this chapter shall apply to such companies. (R. S., Art. 
 4788.) 
 
 Fraternal Beneficiary Association Exempt. 
 
 147. The provisions of this chapter shall not be held to apply to 
 fraternal beneficiary associations, as defined by the laws of this State. 
 (R. S., Art. 4789.) 
 
 Companies Desiring to Loan Funds May Secure Permit. 
 
 148. That any life insurance company not desiring to engage in 
 the business of writing life insurance in this State, but desiring to 
 loan its funds in this State, may obtain a permit to do so by complying 
 with the laws of this State relating to foreign corporations engaged 
 in loaning money in this State without being required to secure a cer- 
 tificate of authority to write life insurance in this State. (R. S., Art. 
 4790.) 
 
54 INSURANCE LAWS OF TEXAS. 
 
 CHAPTEE VII. 
 
 ASSESSMENT OR NATURAL PREMIUM COMPANIES. 
 
 Life and Casualty Companies Assessment of Natural Premium Admis- 
 sion of. 
 
 149. Companies or associations organized under the laws of any 
 other State of the United States, carrying on the business of life or cas- 
 ualty insurance on the assessment or natural premium plan, and having 
 cash assets of a sum not less than one hundred thousand dollars, invested 
 as required by the laws of this State regulating other insurance com- 
 panies, shall be licensed by the Commissioner of Insurance and Banking 
 to do business in this State, and be subject only to the provisions of this 
 chapter; provided, however, that such company or association shall first 
 file with the Commissioner of Insurance and Banking a certified copy of 
 its charter, a written agreement appointing the Commissioner of Insur- 
 ance and Banking and his successor in office to be its true and lawful at- 
 torney, upon whom all lawful process in any action or proceeding against 
 it may be served; a certificate under oath of its president and secretary 
 that it is paying, and for the twelve months next preceding has paid, 
 the maximum amount named in its policies or certificates in full, a state- 
 ment under oath of its president and secretary of its business for the 
 year ending December 31, preceding; a certified copy of its constitution 
 and by-laws and a copy of its policy and application; a certificate from 
 the proper authority in its home State that said company or association 
 is legally entitled to do business in. such home State and has at least one 
 hundred thousand dollars surplus assets subject to its indebtedness. It 
 shall be the duty of the Commissioner of Insurance and Banking to issue 
 a license to any company or association complying with the provisions 
 of this chapter, and every such company or association shall annually 
 thereafter, before such license is renewed, file with the Commissioner of 
 Insurance and Banking, on or before the first day of March, a statement 
 under oath of its president and secretary, or like officers, of its business 
 for the year ending December 31st preceding. (B. S., Art. 4791.) 
 
 . (1) Power of attorney to Commissioner not revocable. (Attorney 
 General's opinion, December 10, 1900.) 
 
 (2) This article does not require $200,000 assets over all liabilities, but 
 only $100,000 over all liabilities. (Attorney General's opinion, February 14, 
 1895, and March 13, 1895.) 
 
 (3) The provision in above Section 149 that foreign assessment companies 
 are subject only to the provisions of this Act, means as to admission into the 
 State and does not exempt such companies from taxes and other regulatory 
 laws. (Opinion of Attorney General, June 27, 1914.) 
 
 Schedule of Tees. 
 
 150. Every such company or association shall pay to the Commis- 
 sioner of Insurance and Banking, for the use of the State, the follow- 
 ing fees: For filing copy of its charter, twenty-five dollars; for filing 
 statement preliminary to admission, twenty dollars; for filing each an- 
 nual statement after admission, twenty dollars; for license to company 
 or association, one dollar. (E. S., Art. 4792.) 
 
I NSI i; \\ri-: LAWS OF Ti:x \s. 55 
 
 Exemptions. 
 
 151. The provisions of this chapter shall in nowise apply to mutual 
 benefit organizations doing business in this State through lodges or 
 councils, such as the order of Chosen Friends, Knights of Honor, or 
 kindred organizations. (R. S., Art. 4793.) 
 
 CHAPTER VIII. 
 
 MUTUAL LIFE INSURANCE COMPANIES. 
 
 Requisites for Obtaining Charter and Certificate of Authority to Do Busi- 
 ness. 
 
 152. Nine or more persons, residents of the State of Texas, may 
 form a mutual life insurance company for the purpose of insuring the 
 lives of individuals on the mutual, level premium, legal reserve plan, 
 subject to the conditions and limitations prescribed in this chapter, by 
 executing and acknowledging before some officer authorized to take ac- 
 knowledgments to conveyances of real estate, articles of incorporation 
 for that purpose. Such articles shall set forth : 
 
 1. The name and residence of each of the incorporate rs. 
 
 2. The name of the proposed company, which shall contain the 
 words, "Mutual Life Insurance Company," as a part thereof, and which 
 shall not be so similar to that of any other life insurance company or 
 association now authorized to transact business in this State as to mis- 
 lead the public. 
 
 3. The location of the principal office from which the business of 
 the company is to be transacted. 
 
 4. The number of directors and the name and place of residence of 
 each of those who are to serve until the first regular election of directors 
 as provided by this chapter. Such articles of incorporation shall be 
 filed with the Commissioner of Insurance and Banking, who shall im- 
 mediately submit them to the Attorney General for his examination and 
 approval as complying in all respects with the law. If the Attorney 
 General approves them, he shall so certify thereon in writing, and re- 
 turn them to the Commissioner of Insurance and Banking, who shall 
 file the same in his office and issue to the coihpany a certificate of au- 
 thority, to which shall be attached a certified copy of the articles of 
 incorporation, authorizing it to receive applications for insurance as 
 provided in this chapter, and to collect premiums thereon, and to issue 
 receipts therefor; which certificate shall expressly state that such com- 
 pany is not authorized to issue policies of insurance or transact any 
 business other than that specifically authorized therein until it has re- 
 ceived bona fide applications for insurance on the lives of at least two 
 hundred individuals for not less than five hundred dollars, each, 
 aggregating at least two hundred thousand dollars of insurance, 
 on which the aggregate net premiums shall be equal to the largest 
 net risk assumed on any one life, which applications have been 
 approved by a competent physician and on which the first annual pre- 
 miums at adequate rates have been paid to the company, nor until these 
 facts shall have been fully shown to the Commissioner of Insurance and 
 Banking, and he shall have issued to the company a certificate of au- 
 
56 INSURANCE LAWS OF TEXAS. 
 
 thority to transact business as a mutual life insurance company. If 
 this showing is not made within six months after the date upon which 
 such articles of incorporation are filed with the Commissioner of In-] 
 surance and Banking, it shall be his duty to cancel the certificate of] 
 authority of such company to receive applications for insurance, and to j 
 notify each incorporator of such action. When the Commissioner of] 
 Insurance and Banking shall be notified that any such company has 
 complied with all the foregoing provisions of this article, he shall make, 
 or cause to be made, at the expense of such company, an examination 
 thereof; and if he shall find that the law has been in all respects fully 
 complied with, it shall be his duty to issue to it a certificate of authority 
 to transact the business of a mutual life insurance company, in accord- 
 ance with the terms of this chapter. (E. S., Art. 4809, as amended by 
 Chap. 77, Acts 37th Leg.) 
 
 Directors Officers Meetings Voting Powers of Policy-holders. 
 
 153. The business of a mutual life insurance company shall be con- 
 trolled and directed by a board of directors consisting of not less than 
 five nor more than twenty-five members, who shall be elected annually 
 as provided in this chapter, those to serve until the first annual election 
 to be named in the charter, and who shall hold office until their suc- 
 cessors shall be elected and qualified, or until they shall be removed 
 for improper practices. Such board of directors shall elect the officers 
 of the company, which shall be a president and such number of vice- 
 presidents as their by-laws may provide ; a secretary, a treasurer, a med- 
 ical director and such other officers as the by-laws may provide for, and 
 shall fix the compensation of all such officers. The duties of all officers 
 shall be prescribed by the by-laws. The by-laws governing the company 
 until the date of its first annual meeting, as provided by this chapter, 
 shall be adopted by the board of directors at their first meeting after 
 the certificate of authority shall be issued authorizing the company to 
 transact the business of a mutual life insurance company. There shall 
 be an annual meeting of all the policyholders of each mutual life insur- 
 ance company at the home office of such company, or at such other 
 place as may be properly announced to the policyholders, on the second 
 Tuesday in March after it shall have received a certificate of authority 
 to transact the business of life insurance, and annually thereafter, at 
 which the directors shall be elected for the succeeding year, and at which 
 by-laws for the government of the company, not inconsistent with the 
 provisions of this chapter or with the laws of this State may be adopted, 
 and at which the existing by-laws may be repealed or amended. At such 
 annual meeting every policyholder shall be entitled to one vote for each 
 five hundred dollars of insurance held by him; and any policyholder 
 may execute his proxy authorizing and entitling the holder to exercise 
 his voting powers, unless such proxy shall be revoked previous to such 
 annual meeting. The president, secretary and treasurer shall each give 
 bond for the protection of the policyholders in amount and with securi- 
 ties to be approved by the Commissioner of Insurance and Banking, 
 conditioned for the faithful performance of their respective duties. 
 (E. S., Art. 4810, as amended by Chap. 77, Acts 37th Leg.) 
 
INSURANCE LAWS OP TEXAS. 
 
 57 
 
 Lvestments and Deposits of Moneys Penalty for Violation of These Re- 
 quirements. 
 
 154. Mutual life insurance companies shall invest their funds in 
 >rdance with the provisions of Articles 4734 and 4735, Chapter 2, 
 
 this title, concerning investments of life insurance companies in this 
 Jtate; all moneys of mutual life insurance companies, coming into the 
 ids of any officer or officers thereof, when not invested as prescribed 
 the above named articles, shall be deposited in the name of such com- 
 iy or companies in some bank or banks which are subject to either 
 Jtate or national regulation and supervision, and which have been 
 ipproved by the Commissioner of Insurance and Banking as depos- 
 itories therefor. Any officer or director of any such company who shall 
 lowingly and wilfully violate or assent to the violation of the pro- 
 isions of this section shall be deemed guilty of a felony, and upon con- 
 dction thereof shall be punished by imprisonment in the penitentiary 
 for a term of not less than one nor more than five years. (E. S., Art. 
 ill, as amended by Chap. 77, Acts 37th Leg.) 
 
 >mpany May Borrow Money or Incur Debt Only 'as Herein Provided. 
 
 155. No mutual life insurance company shall have the power except 
 provided in this chapter, to borrow money for any purpose other than 
 
 e payment of death losses. No such company shall have the power 
 to incur any debt or any account except under policies issued by it or 
 for money borrowed to pay death losses, for which any portion of its 
 its over and above that which may represent or be derived from the 
 mse loading of the premiums collected by it, shall in any event be 
 ibject to execution upon a judgment therefor. (R. S., Art. 4812, as 
 icnded by Chap. 77, Acts 37th Leg.) 
 
 ianner of Valuing Policies. 
 
 156. The Commissioner of Insurance and Banking shall annually 
 [make valuations of all outstanding policies of mutual life insurance 
 companies as of December 31, of each year, in accordance with the one 
 year preliminary term method based upon the American Experience 
 Table of Mortality and 3J per cent interest per annum, assuming an 
 average risk exposure of six months on all new policies issued within 
 each calendar year. (E. S., Art. 4813, as amended by Chap. 77, Acts 
 37th Leg.) 
 
 | Method of Computing Net Premiums, Which Net Premiums Shall Not Be 
 Used for Expenses. 
 
 157. The net premiums upon all policies issued by any such company 
 I shall be computed in accordance with the provisions of Article 4813, 
 this chapter and title, the net premiums on all new policies issued to be 
 obtained by deducting from the total premium paid the amount of 
 the premium in their return premium as above provided and allow- 
 
 |ing the remainder of the first annual premium as expense loading; 
 I no portion of such net premium collected upon any such policy shall 
 lever be used or applied for the payment of any expenses of the company 
 of any kind or character, or for any other purpose than the payment of 
 death losses, surrender values, or lawful dividends to policyholders, loans 
 on policies, or for the purposes of such investments of the company as 
 
58 INSURANCE LAWS OF TEXAS. 
 
 are prescribed in the laws of this State. (E. S., Art. 4814, as amended 
 by Chap. 77, Acts 37th Leg.) 
 
 Company May Maintain a Contingency Reserve in Excess of Net Value 
 of Its Policies. 
 
 158. Every mutual life insurance company may maintain and set 
 aside, before declaring any dividends to policy holders, in addition to an 
 amount equal to the net value of all its policies, computed as required 
 by this chapter, a contingency reserve not exceeding the following re- 
 spective percentages of said net values, towit: When said net values 
 are less than one hundred thousand dollars, 20 per centum thereof, or 
 the sum of ten thousand dollars, whichever is the greater, the percentage 
 thereof measuring the contingency reserve shall decrease one-half of one 
 per cent for each one hundred thousand dollars of said net values up to 
 one million dollars, and thereafter, one-half of one per cent for each 
 additional one million dollars of said net values; provided, that as the 
 said net values of said policies increase, and as the maximum percentage 
 measuring the contingency reserve decrease, such company may main- 
 tain the contingency reserve already accumulated hereunder, although 
 for the time being it may exceed the maximum percentage herein pre- 
 scribed, but may not add to the contingency reserve when the addition 
 will bring it beyond the maximum percentage. (R. S., Art. 4815, as 
 amended by Chap. 77, Acts 37th Leg.) 
 
 Company May Declare Dividends to Policyholders on Approval of Com- 
 missioner. 
 
 159. Every mutual life insurance company organized under this 
 chapter shall make an annual accounting and apportionment of divisible 
 surplus to each policyholder, beginning not later than the end of the 
 second policy year on all policies issued ; and each such policyholder shall 
 be entitled to and credited with or paid such a portion of the entire 
 divisible surplus as has been contributed thereto by his policy. Upon 
 the thirty-first day of December of each year, or as soon thereafter as 
 may be practicable, every such company shall well and truly ascertain 
 the surplus earned by it during such year; and, after setting aside from 
 such surplus the contingency reserve provided in this chapter, it shall 
 apportion to each of its policies upon which all premiums due and pay- 
 able for at least one year have been paid, the proportion of the remainder 
 of such surplus which has been contributed by each such policy, and 
 shall immediately submit a detailed report of such apportionment under 
 oath of its president or secretary to the Commissioner of Insurance and 
 Banking. If such Commissioner shall find such apportionment to be 
 equitable and just to the policyholders and to be in accordance with 
 the provisions of this chapter, he shall approve the same, and it shall 
 become effective; and, if he shall not approve such apportionment, he 
 shall make such changes therein as he shall deem equitable and just and 
 necessary to make the same comply with the provisions of this chapter, 
 and shall certify such changes to such company, whereupon such appor- 
 tionment as changed by the Commissioner shall become effective. Each 
 dividend declared as aforesaid shall be paid in cash, or in the equivalent 
 of its cash value in any option stated in the policy and selected by the 
 policyholder, notice of which selection by the policyholder shall be given 
 
INSURANCE LAWS OF TEXAS. 50 
 
 to the company in writing. (R. S., Art. 4816, as amended by Chap. 77, 
 Acts 37th Leg.) 
 
 Company May Bo Business in Texas and Other States Must Have Its 
 Policy Forms Approved by the Commissioner Cannot Issue Policies 
 in Excess of Five Thousand Dollars Until Its Insurance in Force Is 
 Ten Million Dollars. 
 
 160. Mutual life insurance companies are authorized to transact 
 business throughout the State of Texas, and in other States to which 
 they may be admitted; they shall issue no policies except upon the par- 
 ticipating plan with dividends payable annually as elsewhere provided 
 in this chapter; the forms of all policies issued by any such company 
 shall be approved by the Commissioner of Insurance and Banking, and 
 all such policies shall have plainly written on both the face and the re- 
 verse sides thereof the words, "The form of this policy is approved by the 
 Commissioner of Insurance and Banking of the State of Texas"; and 
 it shall be the duty of the Commissioner to revoke the certificate of au- 
 thority of any company which shall issue any policy except upon such 
 form so approved. No such company shall issue any policy or policies 
 by which, after deducting reinsurance, if any, it shall be bound for more 
 than five thousand dollars upon any one life at any time when the total 
 amount of its insurance in force is less than ten million dollars. (R. S., 
 Art. 4817, as amended by Chap. 77, Acts 37th Leg.) 
 
 Medical Examinations Are Required. 
 
 161. No mutual life insurance company shall enter into any contract 
 of insurance amounting to $500 or more, upon the life of any person, 
 without having previously made a medical examination, prescribed by 
 its medical director and approved by its board of directors, of the in- 
 sured, by a duly qualified and licensed practitioner, and without his cer- 
 tificate that the insured was in sound health at the date of examination. 
 Any officer or agent or employe of such company violating the provi- 
 sions of this section or effecting or attempting to effect a contract of 
 insurance contrary to the provisions hereof shall be deemed guilty of 
 a misdemeanor, and shall be punished by a fine of not less than one hun- 
 dred nor more than five hundred dollars or by imprisonment in the 
 county jail for not less than six months or by both such fine and im- 
 prisonment. (R. S., Art. 4818, as amended by Chap. 77, Acts 37th Leg.) 
 
 No Deductions Shall Be Made on Policies Where Premiums Are Paid at 
 Periods Less Than Annual. 
 
 162. The policies issued by a mutual life insurance company shall 
 provide, in the event that premiums are payable other than annually, 
 that no deduction shall be made from the amount due on any policy in 
 the event that the death of the policyholder shall occur prior to the due 
 date of any premium less than annual. (R. S., Art. 4819, as amended 
 by Chap. 77, Acts 37th Leg.) 
 
 Policies Shall Contain Table of Guaranteed Values. 
 
 163. Each policy issued by a mutual life insurance company shall 
 contain a table of guaranteed values, which shall become iioii-forfei table 
 not later than upon the payment of the third full annual premium; such 
 
60 INSURANCE LAWS OF TEXAS. 
 
 tables of values shall be drawn in accordance with the provisions of 
 Article 4741, Chapter 2, of this title. (E. S., Art. 4820, as amended by 
 Chap. 77, Acts 37th Leg.) 
 
 Company Shall File Animal Statement and Obtain Certificate of Authority. 
 
 164. Mutual life insurance companies organized under the provisions 
 of this chapter shall file their annual statements with the Commissioner 
 of Insurance and Banking, and receive from him their certificates of 
 authority to transact the business of life insurance, in accordance with 
 the provisions of Articles 4729 and 4730, Chapter 2, of this title. (E. S., 
 Art. 4821, as amended by Chap. 77, Acts 37th Leg.) 
 
 Company's Agents Must Be Licensed Commissions of Agents Shall Not 
 Be in Excess of Expense Loading. 
 
 165. Any mutual life insurance company organized under the pro- 
 visions of this chapter, having received authority from the Commissioner 
 of Insurance and Banking to transact business in this State shall receive 
 from such Commissioner, upon written request therefor, a certificate of 
 authority for each of its agents in this State. Contracts between such 
 companies and such agents shall not provide for commissions or other 
 compensation to such agents in excess of the expense loading in the pre- 
 miums of policies issued upon the applications procured by such agents, 
 collected therefor, and paid to the company in cash. (E. S., Art. 4822, as 
 amended by Chap. 77, Acts 37th Leg.) 
 
 Company Is Required to Be Examined. 
 
 166. It shall be the duty of the Commissioner of Insurance and Bank- 
 ing to have made, once in each calendar year, a thorough and full exam- 
 ination of the affairs of each mutual life insurance company, the report 
 of which examination shall be made to such Commissioner under oath ; 
 and it shall be the duty of the Commissioner of Insurance and Banking, 
 if he shall approve the report of such examination, to furnish the com- 
 pany with certificate of approval. The expense of each such examination 
 shall be borne by the company examined. (E. S., Art. 4823, as amended 
 by Chap. 77, Acts 37th Leg.) 
 
 Officers, Directors or Policyholders May Advance Money for Promotion, 
 But No Commissions for promotion Shall Be Permitted Receiver May 
 Be Appointed. 
 
 167. Any officer, director, or policyholder of a mutual life insurance 
 company, or any other person, may advance to such company any sum 
 or sums of money for the purpose of promoting or conserving its busi- 
 ness, or to enable it to comply with any requirements of the law; and 
 such money, together with such interest thereon as may have been agreed 
 upon, not exceeding 10 per cent per annum, shall be payable only out 
 of the surplus remaining after providing for all reserves and other liabili- 
 ties, and shall not otherwise be a liability or claim against the company 
 or any of its assets. No commission or promotion expenses shall be paid 
 in connection with the advance of any such money to the company, and 
 the amount of such advance shall be reported in each annual statement 
 as provided in Article 4821, this chapter and title. At any time when 
 the liabilities of any such company, computing its reserve liability upon 
 
INSURANCE LAWS OF TEXAS. 61 
 
 the American Experience Table of Mortality and 3 per cent per annum 
 interest, shall be in excess of its assets, the company shall cease the issu- 
 ance of new policies until the impairment in its reserve shall be made 
 good. Whenever the liabilities of any such company, computing its re- 
 serve liability upon the American Experience Table of Mortality and 
 4J per cent interest per annum, exceed its assets, the Commissioner of 
 Insurance and Banking may request the Attorney General to file suit 
 in the name of the State in the district court of the county in which 
 such company is located for the appointment of a receiver to terminate 
 and liquidate the affairs of the company, and such action may be main- 
 tained. In any such action such district court, or judge thereof, in 
 vacation, shall have the power, if in his opinion the interests of the 
 policyholders of the company require it, to enter an order for the re- 
 insurance of all outstanding risks of such company in some other life 
 insurance company authorized to do business in this State upon such 
 terms and conditions as may be approved by the Commissioner of In- 
 surance and Banking, and by such court, or the judge thereof, in vaca- 
 tion; and such court or judge may for that purpose direct the convey- 
 ance of the entire assets of any such company, or any portion thereof, 
 to such reinsuring company in consideration of such reinsurance. (R. S., 
 Art. 4824, as amended by Chap. 77, Acts 37th Leg.) 
 
 For Taxation Purposes the Reserve of the Company Shall Be Treated as 
 Debts Due to Policyholders. 
 
 168. For the purposes of State, county and city taxation, the amount 
 of the reserve and contingency reserve of all mutual life insurance com- 
 panies shall be treated as debts due by them to their policyholders; and 
 the total value of their property for such purposes shall be ascertained 
 by deducting from the total amount of their gross assets the amount of 
 such reserves and contingency reserves. (R. S., Art. 4825, as amended 
 by Chap. 77, Acts 37th Leg.) 
 
 Articles 4724 to 4774, Inclusive, Revised Statutes of Texas, and All Laws 
 in Conflict With This Chapter Are Repealed. 
 
 169. The provisions of Articles 4724 to 4774, inclusive, in Chapter 2 
 of this title, when not in conflict with the several articles of this chap- 
 ter, shall likewise apply to and govern mutual life insurance companies 
 organized under the provisions of this chapter. All laws and parts of 
 laws in conflict with this act are hereby repealed; provided, that such 
 repeals and the provisions of this act shall not apply to or affect any 
 company or association now organized and doing business under the 
 laws of this State. (R. S., Art. 4826, as amended by Chap. 77, Acts 37th 
 Leg.) 
 
 CHAPTER IX. 
 
 FIKE AND MARINE COMPANIES. 
 May Do What. 
 
 170. It shall be lawful for any insurance company doing business 
 in this State under the proper certificate of authority, except a life 
 or health insurance company to insure houses, buildings and all other 
 
62 INSURANCE LAWS OF TEXAS. 
 
 kinds of property against loss or damage by fire, and to take all kinds 
 of insurance on goods, merchandise or other property in the course of 
 transportation, whether on land or water, or any vessel' afloat, wher- 
 ever the same may be; to lend money on bottomry or respondentia; and 
 to cause itself to be insured against any loss or risk it may have incurred 
 in the course of its business and upon the interest which it may liave in 
 any property by means of any loan or loans which it may have made on 
 bottomry or respondentia; and generally to do and perform all other 
 matters and things proper to promote these objects; to insure automo- 
 biles or other motor vehicles, whether stationary or being operated under 
 their own power, against all or any of the risks of fire, lightning, wind 
 storms, hail storms, tornadoes, cyclones, explosions, transportation by 
 land or water, theft and collisions upon filing with the Commissioner of 
 Insurance and Banking of the State, notification of their purpose to 
 do so. (Acts Thirty-third Legislature, Chapter 108, Section 1.) 
 
 Note. (1) The notification of the company's purpose to engage in any par- 
 ticular kind of insurance must be in the form of an amendment to its charter. 
 (Opinion of Attorney General, June 27, 1913.) 
 
 (2) A mutual fire insurance company, organized under the laws governing 
 mutual fire insurance companies, cannot amend its charter so as to authorize 
 it to do any other kinds of insurance than such as are mentioned in said law 
 governing mutual fire insurance companies, and cannot therefore avail itself of 
 the provisions of Chapter 108, Acts of the Thirty-third Legislature, which refers 
 only to capital stock companies, and not to mutual companies. (Opinion of 
 Attorney General, August 8, 1914.) 
 
 Capital Stock May Be Reduced, When. 
 
 171. Whenever the joint stock of any fire, fire and marine, or marine 
 insurance company of this State becomes impaired, the Commissioner 
 of Insurance and Banking may, in his discretion, permit the said com- 
 pany to reduce its capital stock and par value of its shares in proportion 
 to the extent of impairment, but in fixing such reduced capital no sum 
 exceeding twenty-five thousand dollars shall be deducted from the assets 
 and property on hand, which shall be retained as surplus assets, and no 
 part of such assets and property shall be distributed to the stockholders, 
 nor shall the capital stock of a company in any case be reduced to an 
 amount less than one hundred thousand dollars. (E. S., Art. 4863.) 
 
 Company Must Make Good Its Whole Capital Stock. 
 
 172. Any fire, marine or inland insurance company having received 
 notice from the Commissioner of Insurance and Banking, to make good 
 its whole capital stock within sixty days, shall forthwith call upon its 
 stockholders for such amounts as shall make its capital equal to the 
 amount fixed by the charter of such company. (E. S., Art. 4864.) 
 
 What Course Shall Be Taken When Stockholder Fails to Pay. 
 
 173. In case any stockholder of such fire, marine or inland insurance 
 company shall neglect or refuse to pay the amount so called for, after 
 notice personally given, or by advertisement for such time and in such 
 manner as said Commissioner shall approve, it shall be lawful for said 
 company to require the return of the original certificate of stock held 
 by such stockholder, and in lieu thereof to issue new certificates for such 
 
INSURANCE LAWS OF TEXAS. G,3 
 
 number of shares as such defaulting stockholders may be entitled to, in 
 the proportion that the ascertained value of the funds of said company 
 may be found to bear to the original capital of said company ; the value 
 of such shares, for which new certificates are issued, to be ascertained 
 under the direction of said Commissioner, and the company shall pay 
 for the fractional part of shares. (R. S., Art. 4865.) 
 
 Company May Create and Dispose of New Stock. 
 
 174. It shall be lawful for such fire, marine or inland insurance 
 company to create new stock and dispose of the same, and to issue new 
 certificates therefor to any amounts sufficient to make up the original 
 capital of the company. (R. S., Art. 4866.) 
 
 Texas Companies When Insurance Companies Organized Under the Laws 
 of the State Shall Purchase or Hold Real Estate. 
 
 175. No fire, marine or inland insurance company organized under 
 the laws of the State shall purchase or hold any real estate except 
 
 (1) Such as shall be requisite for its convenient accommodation in 
 the transaction of its business. 
 
 (2) Such as shall have been mortgaged to it in good faith by way 
 of security for loans previously contracted or for money due. 
 
 (3) Such as shall have been conveyed to it in satisfaction of debts 
 previously contracted in the legitimate business of the company or for 
 money due. 
 
 (4) Such as shall have been purchased at sales under judgments, 
 decrees or mortgages, obtained or made for such debts. All lands pur- 
 chased or held in violation of this article shall be forfeited to the State. 
 (R. S., Art. 4869.) 
 
 Shall File Bond. 
 
 176. Every fire insurance company not organized under the laws 
 of this State applying for a certificate of authority to transact any 
 kind of insurance in this State shall, before obtaining such certificate, 
 file with the Commissioner of Insurance and Banking, a bond, with 
 good and sufficient surety or sureties to be approved by the Commis- 
 sioner of Insurance and Banking, payable to the Commissioner of In- 
 surance and Banking, and his successors in office, in a sum equal to 25 
 per cent of its premiums collected from citizens or upon property in 
 this State during the preceding calendar year, as shown by its annual 
 reports for such year; provided, however, the bond in no case shall ex- 
 ceed fifty thousand dollars, nor be less than ten thousand dollars, con- 
 ditioned that said company will pay all its lawful obligations to citizens 
 of this State. Such bonds shall be subject to successive suits by citi- 
 zens of this State so long as any part of the same shall not be exhausted 
 and the same shall be kept in force unimpaired until all claims of citi- 
 zens of this State arising out of obligations of said company have been 
 fully satisfied. (R. S., Art. 4870.) 
 
 Note. ( 1 ) Bond cannot be canceled nor can Commissioner furnish evidence 
 of cancellation. (Opinion of Attorney General, December 29, 1909.) 
 
 (2) Companies doing only a marine business are not required to give bond. 
 (Opinion of Attorney General, July 23. 1910.) 
 
 (3) Bond is based upon, and in amount must be one-fourth of the gross 
 
64 INSURANCE LAWS OF TEXAS. 
 
 premium receipts of the company for the preceding year, and such gross pre- 
 mium receipts are defined to be the premium receipts reported to the Commis- 
 sioner in the annual statement of the company less returned premiums and 
 reinsurance in authorized companies. (Opinion of Attorney General, March 19, 
 1912.) 
 
 (4) Insuring automobiles against fire is fire insurance and a company writ- 
 ing such insurance is subject to the laws governing fire insurance, and if a 
 foreign company, it must give the bond required of foreign fire insurance com- 
 panies. (Opinion of Attorney General, March 14, 1914.) 
 
 Bond Shall Provide. 
 
 177. Such bonds shall provide that in the event the company shall 
 become insolvent, or cease to transact business in this State at any 
 time when it has outstanding policies of insurance in favor of citizens 
 of this State, or upon property in this State, the Commissioner of 
 Insurance and Banking shall have the power, after having given ten 
 days' notice to the officers of such company or any receiver in charge of 
 its property and affairs, to contract with any other insurance company 
 transacting business in this State for the assumption and reinsurance 
 by it of all the insurance risks outstanding in this State of such com- 
 pany which is insolvent or which has ceased to transact business in this 
 State, which contract shall also provide for the assumption of such re- 
 insuring company of all outstanding and unsatisfied lawful claims then 
 outstanding against such company which has become, insolvent or ceased 
 to transact business in this State, and in the event of the Commissioner 
 making any such contract, and if the same shall be approved as reason- 
 able by the Attorney General and the Governor of this State the re- 
 insuring company shall be entitled to recover from the makers of such 
 bond the amount of the premium or compensation so agreed upon for 
 such reinsurance. (E. S., Art. 4870.) 
 
 May Deposit Securities in Lieu of Bond. 
 
 178. Any company desiring to do so may at its option in lieu of 
 giving the bond required by this section deposit securities of any kind 
 in which it may lawfully invest its funds with the State Treasurer of 
 this State upon such terms and conditions as will in all respects afford 
 the same protection and indemnity as is herein provided for to be af- 
 forded by said bond. (E. S., Art. 4870.) 
 
 Note. A company having deposit instead of bond may withdraw deposit by 
 first protecting all its policyholders by reinsurance. (Attorney General's opin- 
 ion, March 14, 1911.) 
 
 Shall Pile Bond. 
 
 179. Every fire insurance company not organized under the laws of 
 this State, hereafter issuing or causing or authorizing to be issued any 
 policy of insurance other than life insurance, shall first have filed with 
 the Commissioner of Insurance and Banking during the calendar year 
 in which such policy may issue or authorize or cause to be issued a 
 bond of good and sufficient sureties to be approved by such Commis- 
 sioner in a sum not less than ten thousand dollars, conditioned for 
 the payment of all lawful obligations to citizens of this State arising 
 out of any policies or contracts issued by such fire insurance company; 
 which such bond shall be subject to successive suits by citizens of this 
 
INSURANCE LAWS OF TEXAS. 65 
 
 State so long as any part of the same shall not be adjusted and so long 
 as there remains outstanding any such obligations or contracts of such 
 fire insurance company. This article shall not apply to any person, firm 
 or corporation or association doing an inter-insurance, co-operative or 
 reciprocal business. (R. S., Art. 4871.) 
 
 Annual Statement Required of Fire, Marine and Inland Companies. 
 
 180. It shall be the duty of the president or of the vice-president 
 and secretary, of each fire, marine or inland insurance company doing 
 business in this State, annually, on the first day of January of each 
 year, or within sixty days thereafter, to prepare under oath and deposit 
 with the Commissioner of Insurance and Banking of this State, a full, 
 true and complete statement of the condition of such company on the 
 last day of the month of December preceding. (R. S., Art. 4872.) 
 
 What the Statement Shall Show. 
 
 181. The annual statement required by the preceding article shall 
 exhibit the following items and facts : 
 
 (1) The name of the company and where located. 
 
 (2) The names and residences of the officers. 
 
 (3) The amount of capital stock of the company. 
 
 (4) The amount of capital stock paid up. 
 
 (5) The property or assets held by the company, viz.: The real 
 estate owned by such company, its location, description and value as 
 near as may be; and if said company be one organized under the laws 
 of this State, shall accompany such statement with an abstract of title 
 to the same; the amount of cash on hand and deposited in banks to the 
 credit of the company and in what bank or banks the same is deposited ; 
 the amount of cash in the hands of agents, naming such agents; the 
 amount of cash in course of transmission; the amount of loans secured 
 by first mortgages on real estate, with the rate of interest thereon, 
 specifying the location of such real estate, its value and the name of the 
 mortgagor; the amount of all bonds and other loans, with the rate of 
 interest thereon and how secured; the amount due the company in 
 which judgments have been obtained; describing such judgments; the 
 amount of stocks in this State, of the United States, or any incorporated 
 city of this State, and of any other stock owned by the company, de- 
 scribing the same and specifying the amount and number of shares, and 
 the par and market value of each kind of stock; the amount of stock 
 held by 'such company as collateral security for loans, with amount 
 loaned on each kind of stock, its par and market value; the amount of 
 interest actually due to the company and unpaid; all other securities, 
 their description and value. 
 
 (6) The liabilities of such company, specifying the losses adjusted 
 and due; losses adjusted and not due; losses unadjusted; losses in sus- 
 pense, and the causes thereof ; losses resisted and in litigation ; dividend, 
 either in scrip or cash, specifying the amount of each declared, but not 
 due; dividends declared and due; the amount required to reinsure all 
 outstanding risks on the basis of 40 per cent of the premium on all 
 unexpired fire risks, and 100 per cent of the premiums on all unexpired 
 marine and inland transportation risks; the amount due banks or other 
 
66 . INSURANCE LAWS OF TEXAS. 
 
 creditors, naming such banks or other creditors, and the amount due 
 to each, the amount of money borrowed by the company, of whom bor- 
 rowed, the rate of interest thereon, and how secured; all other claims 
 against the company, describing the same. 
 
 (7) The income of the company during the preceding year, stating 
 the amount received for premiums, specifying separately fire, marine 
 and inland transportation premiums, deducting reinsurance ; the amount 
 received for interest, and from all other sources. 
 
 (8) The expenditures during the preceding year, specifying the 
 amount of losses paid during said term, stating how much of same 
 accrued prior and how much subsequent to the date of the preceding 
 statement, and the amount at which losses were estimated in such pre- 
 ceding statement; the amount paid for dividends; the amount paid for 
 return premiums, commissions, salaries, expenses and other charges of 
 officers, agents, clerks and other employes; the amount paid for local, 
 State, national, internal revenue and other taxes and duties ; the amount 
 paid for all other expenses, such as fees, printing, stationery, rents, 
 furniture, etc. 
 
 (9) The largest amount insured in any one risk, naming the risk. 
 
 (10) The amount of risks written during the year then ending. 
 
 (11) The amount of risks in force having less than one year to run. 
 
 (12) The amount of risks in force having more than one and not 
 over three years to run. 
 
 (13) The amount of risks having more than three years to run. 
 
 (14) It shall be stated whether or not dividends are declared on 
 premiums received for risks not terminated. (E. S., Art. 4873.) 
 
 Limit to Extent of Insurance. 
 
 182. (1) No fire, fire and marine, marine or inland insurance 
 company doing business in this State shall expose itself to any one 
 risk, except when insuring cotton in bales and grain, to an amount 
 exceeding 10 per cent of its paid up capital stock, unless the excess 
 shall be insured by such company in some other solvent insurance com- 
 pany legally authorized to do business in this State. 
 
 Note. (1) The term "one risk" means one building, irrespective of its mode 
 of construction; one building cannot be divided into a number of risks upon the 
 theory that each room is a separate risk because it is fireproof. (Opinion of 
 Attorney General, August 17, 1910.) 
 
 (2) Casualty, surety, fidelity and guaranty companies cannot issue a policy 
 or bond in excess of 10 per cent of their capital without reinsuring the excess. 
 (Opinion of Attorney General, May 7, 1915.) 
 
 (3) Limiting the amount of insurance which an insurance company may 
 write in any one risk, and requiring surplus lines to be insured in authorized 
 companies, has no application to surety companies. (Opinion of Attorney Gen- 
 eral, January 7, 1918.) 
 
 Reinsurance Must Be Placed in Licensed Companies. 
 
 (2) Every fire, fire and marine, marine or inland insurance com- 
 pany doing business in this State may reinsure the whole or any part 
 of any policy obligation in any other insurance company legally au- 
 thorized to do business in this State. The Commissioner of Insurance 
 and Banking shall require every year, from every insurance company 
 
INSURANCE LAWS OF TEXAS. 67 
 
 doing business in this State, a certificate, sworn to before an officer 
 legally qualified to administer oaths in the State of Texas, to the effect 
 that no part of the business written by such company in this State 
 has been reinsured in whole or in part by any company, corporation, 
 association or society not authorized to do business in this State. 
 Every insurance company doing business shall also furnish the Com- 
 missioner of Insurance and Banking with a list of all reinsurances 
 during the year in authorized companies, showing the name, amount 
 and premium effected in each company. 
 
 Note. (1) Reinsurance, including cotton and grain risks, must be placed in 
 companies licensed by Texas Insurance Department, and the fact that licensed 
 companies will not accept reinsurance at terms and rates obtainable elsewhere 
 will not authorize reinsuring with unlicensed companies or associations. (Opin- 
 ion of Attorney General, October 4, 1911.) 
 
 (2) A general complaint, made under oath, charging that certain insurance 
 companies licensed to do business in Texas, have violated the law requiring all 
 reinsurance of Texas business to be placed with companies authorized to do 
 business in Texas, although not specifying the times, places and circumstances 
 of such violation of law is sufficient to require the Commissioner to make an 
 investigation of such charges. (Opinion of Attorney General, March 9, 1914.) 
 
 Violation of Law Bevocation of License. 
 
 (3) Any insurance company authorized to transact the business of 
 fire, fire and marine, marine and inland insurance in this State failing 
 to comply with the provisions of this article shall forfeit its authority to 
 do such business for a period of one year, and it is hereby made the 
 duty of the Commissioner of Insurance and Banking to investigate 
 any complaint as to violation of said act, and upon satisfactory proof 
 that any company authorized to transact the business of fire, fire and 
 marine, marine or inland insurance in this State has violated the pro- 
 visions of this act, the said Commissioner shall revoke the certificate of 
 authority of the offending company. 
 
 Note. (1) Reinsuring in unauthorized company forfeits certificate of au- 
 thority for one year, and the penalty cannot be avoided by afterwards rein- 
 suring in authorized companies. (Opinion of Attorney General, June 29, 1910.) 
 
 (2) A licensed company may accept reinsurance of Texas risks from un- 
 authorized company. (Opinion of Attorney General, September 21, 1911.) 
 
 Pee for Agent's License $25 Affidavit to Be Piled. 
 
 (4) That the Commissioner of Insurance and Banking, upon the 
 payment of license fee of twenty-five dollars, issue to an agent who is 
 regularly commissioned to represent one or more fire, fire and marine 
 insurance companies authorized to do business in this State, a cer- 
 tificate of authority to place excess lines of insurance in companies not au- 
 thorized to do business in this State; provided, that the party desiring 
 such excess insurance shall first file with the Commissioner of In- 
 surance and Banking an affidavit that he has exhausted all the insur- 
 ance obtainable from companies duly authorized to do business in the 
 State. 
 
 Must Pile a Bond. 
 
 (5) Before receiving license provided for in * Section 4 of this 
 
 *Paragraph 4. 
 
68 INSURANCE LAWS OF TEXAS. 
 
 article, party applying for same shall file with the Commissioner of 
 Insurance and Banking a bond in the sum of one thousand dollars, 
 payable to the Governor of the State for the faithful observance of the 
 provisions of this article. Said bond to be approved by the Commis- 
 sioner, and to be for the benefit of the State of Texas. 
 
 Agent to Report on Oath and Keep a Separate Record of All Transac- 
 tions. 
 
 (6) Every agent so licensed shall report, under oath, to the Com- 
 missioner of Insurance and Banking within thirty days from the first 
 day of January and July of each year the amount of gross premiums 
 received by him for such excess insurance, and shall pay the said Com- 
 missioner a tax of 5 per cent thereon. The agent procuring a license 
 as provided in this article shall keep a separate record of all transactions 
 herein provided open at all times to the inspection of the Commissioner 
 or his legally appointed representative. In default of the payment of 
 any sums which may be due the State under this article, the said Com- 
 missioner may sue for the same in any court of record in this State. 
 (E. S., Art. 4875.) 
 
 Valued Policy Shall Be Considered a Liquidated Demand. 
 
 183. A fire insurance policy, in case of a total loss by fire of prop- 
 erty insured, shall be held and considered to be a liquidated demand 
 against the company for the full amount of such policy; provided, that 
 the provisions of this article shall not apply to personal property. (E. S., 
 Art. 4874.) 
 
 Breach of Warranty or Other Provision, Unless Contributing to the Loss 
 Will Not Render Contract Void. 
 
 184. No breach or violation by the insured of any of the warranties, 
 conditions or provisions of any fire insurance policy, contract of insur- 
 ance, or application therefor, upon personal property, shall render void 
 
 the policy or contract, or constitute a defense to a suit for loss thereon, 
 unless such breach or violation contributed to bring about the destruc- 
 tion of the property. (Acts 33d Leg., Chap. 105, Sec. 1.) 
 
 Article 4874, Revised Statutes, Not Repealed. 
 
 185. That* the provisions hereof (Section 184 above) shall in no 
 way affect or repeal the provisions of Article 4874 of the Ee vised Civil 
 Statutes of 1911 in so far as the same relates to fire insurance policies 
 upon real or mixed property. (Acts 33d Leg., Chap. 105, Sec. 2.) 
 
 Co-insurance Clause in Policies Forbidden. 
 
 186. No company subject to the provisions of this chapter shall issue 
 any policy or contract of insurance covering property, real or personal, 
 situated in this State which shall contain any clause or provision re- 
 quiring the assured to take out and maintain a larger amount of insur- 
 ance than that expressed in such policy, nor in any way providing that 
 the assured will be liable as a co-insurer with the company issuing the 
 policy for any part of the loss or damage which may be caused by fire 
 to the property described in the policy, and any such clause or provi- 
 
INSURANCE LAWS OF TEXAS. 69 
 
 sion shall be null and void and of no effect, whether written with or 
 without the consent of the assured; and any company issuing a policy 
 with such provision or provisions therein shall nevertheless be liable to 
 the assured for the full amount of the damage and loss sustained by the 
 property holder, not exceeding the face of the policy, notwithstanding 
 such provision or provisions. (Acts 33d Leg., Chap. 104, Sec. 1.) 
 
 Exceptions as to Co-insurance Clause. 
 
 187. Provided, that oil in tanks, wool, mohair, grain, rice, cotton, 
 cotton seed oil mills and products attached thereto, are hereby exempted 
 from the provisions of this act. (Acts 33d Leg., Chap. 104, Sec. 2.) 
 
 Stipulation in Fire Insurance Policy Attempting- to Invalidate Policy 
 Account of Condition or Neglect Beyond Control of Owner or Mort- 
 gagor, Void. 
 
 188. The interest of a mortgagee or trustee under any fire insurance 
 contract hereafter issued covering any property situated in this State 
 shall not be invalidated by any act or neglect of the mortgagor or owner 
 of said described property or the happening of any condition beyond 
 his control, and any stipulation in any contract in conflict herewith 
 shall be null and void. (Sec. 1, Chap. 15, Acts 36th Leg.) 
 
 State Insurance Board Law Repealed. 
 
 189. The act approved September 6, 1910, known and published as 
 Chapter 8 of the General Laws of the Fourth Called Session of the 
 Thirty-first Legislature of the State of Texas, entitled "An Act pro- 
 viding conditions upon which insurance companies writing contracts or 
 policies of insurance against the hazard of fire may transact business in 
 the State of Texas, and providing for the making, promulgation, regu- 
 lation and control of general basis schedules, insurance rates and pre- 
 miums and forms of insurance policies ; providing certain conditions and 
 limitations on insurance contracts or policies; providing for maximum 
 insurance rates and how companies may write contracts of insurance at 
 rates lower than the maximum rates and the filing of statements of re- 
 duced rates with the State Insurance Board and certified copies thereof 
 with city secretaries and county clerks and fixing fees of said last two 
 officers for such service; to prevent discrimination in insurance rates or 
 premiums; except as provided in this act to create a State Insurance 
 Board, and prescribing the duties and authority of said board and each 
 member thereof, and fixing the salaries of the members thereof; and 
 providing for their appointment and removal; providing certain duties 
 for and to give certain authority to the Commissioner of Insurance and 
 Banking; appropriating money necessary to carry out the provisions of 
 this act; providing penalties for the violation of certain provisions of 
 this act; fixing the time when this act shall go into effect and repealing 
 Chapter 18 of the General Laws of the State of Texas, passed by the 
 First Called Session of the Thirty-first Legislature and all other laws 
 and parts of laws in conflict herewith, and declaring an emergency," is 
 hereby repealed. (Acts 33d Leg., Chap. 106, Sec. 1.) 
 
70 INSURANCE LAWS OF TEXAS. 
 
 Maximum Premium Rates Shall Be Fixed by the Commission. 
 
 190. After this act shall take effect, a maximum rate of premiums 
 to be charged or collected by all companies transacting in this State the 
 business of fire insurance, as herein defined, shall be exclusively fixed 
 and determined and promulgated by the State Fire Insurance Commis- 
 sion created by this act, and no such fire insurance company shall, after 
 this act takes effect, charge or collect any premium or other compen- 
 sation for or on account of any policy or contract of fire insurance as 
 herein defined in excess of the maximum rate as herein provided for, 
 but may write insurance at a less rate than the maximum rate as herein 
 provided for; provided, that when insurance is written for less than the 
 maximum rate, such lesser rate shall be applicable to all risks of the 
 same character situated in the same community. (Acts 33d Leg., Chap. 
 106, Sec. 2.) 
 
 Every Company Writing Fire Insurance in This State Is Subject to Pro- 
 visions of State Insurance Commission Act. 
 
 191. Every fire insurance company, every marine insurance com- 
 pany, every fire and marine insurance company, every fire and tornado 
 insurance company, and each and every insurance company of every 
 kind and name issuing a contract or policy of insurance, or contracts or 
 policies of insurance against loss by fire on property within this State, 
 whether such property be fixed or movable, stationary or in transit, or 
 whether such property is consigned or billed for shipment within or be- 
 yond the boundary of this State, or to some foreign country, whether 
 such company is organized under the laws of this State, or under the 
 laws of any other State, Territory or possession of the United States or 
 foreign country, or by authority of the Federal government, now hold- 
 ing a certificate of authority to transact business in this State, shall be 
 deemed to have accepted such certificate and to transact business there- 
 under, upon condition that it consents to the terms and provisions of 
 this act and that it agrees to transact business in this State, subject 
 thereto; it being intended that every contract or policy of insurance 
 against the hazard of fire shall be issued in accordance with the terms 
 and provisions of this act, and the company issuing the same governed 
 thereby, regardless of the kind and character of such property and 
 whether the same is fixed or movable, stationary or in transit, including 
 the shore end of all marine risks insured against loss by fire. (Acts 
 33d Leg., Chap. 106, Sec. 3.) 
 
 Commission Created Who Compose How and When Appointed. 
 
 192. That there may be reasonable and just insurance rates in Texas, 
 there is hereby created a Commission to be known as the "State In- 
 surance Commission," which shall be composed of the Commissioner of 
 Insurance and Banking, who shall be chairman thereof, and two com- 
 missioners who shall be appointed by the Governor, by and with the con- 
 sent of the Senate, subject to removal as provided for removal of State 
 officers by Article 3528 of the Eevised Statutes of Texas; the members 
 of said Commission, other than the Commissioner of Insurance and 
 Banking, shall be appointed as herein provided within ten days after 
 this act takes effect; one of said members tp be so appointed shall be 
 
INSURANCE LAWS OP TEXAS. 71 
 
 appointed for a term ending February 1, 1914, and biennially there- 
 after; the other of said members of said Commission shall be appointed 
 for a term ending February 1, 1915, and biennially thereafter, and the 
 Governor in making his first appointments to fill these respective offices 
 shall designate which of said officers shall fill the term expiring Febru- 
 ary 1, 1914, and which of said officers shall fill the term expiring Feb- 
 ruary 1, 1915. The Commissioner of Insurance and Banking, for the 
 purpose of this act, may be referred to as the Commissioner of Insur- 
 ance. (Acts 33d Leg., Chap. 106, Sec. 4.) 
 
 Compensation of Members of Commission Expenses of Commission. 
 
 193. The members of the Commission other than the Commissioner 
 of Insurance and Banking, shall each receive as compensation for their 
 services the sum of thirty-six hundred dollars ($3600) per annum; 
 and the Commissioner of Insurance and Banking shall receive as com- 
 pensation or salary for his services, under this act, the sum of five 
 hundred dollars ($500) per annum, in addition to his compensation as 
 now fixed by law. Such salary of the two appointed members of said 
 Commission and the said five hundred dollars ($500) salary of the 
 Commissioner of Insurance and Banking, together with the necessary 
 compensation of experts, clerical force, and other persons employed by 
 said Commission, and all necessary traveling expenses, and such other 
 expenses as may be necessary, incurred in carrying out the provisions 
 of this act, shall be paid by warrants drawn by the Comptroller upon 
 the State Treasurer upon the order of said Commission; provided, that 
 the total amount of salaries and said other expenses shall not exceed the 
 sum produced by the assessment of one and one-fourth (1J) per cent 
 of the gross premium of all fire insurance companies doing business in 
 this State as provided in Section 29 of said act. (Acts 35th Leg., 
 Chap. 73, Sec. 1.) 
 
 Commission Shall Fix, Alter or Amend Rates Shall Employ Necessary 
 Experts and Assistants. 
 
 194. The State Fire Insurance Commission shall have the sole and 
 exclusive power and authority and it shall be its duty to prescribe, fix, 
 determine and promulgate the rates of premiums to be charged and 
 collected by fire insurance companies transacting business in this State. 
 As soon as practicable after this act shall take effect, the State Fire 
 Insurance Commission shall begin the work of fixing and determining 
 and promulgating the rates of premiums to be charged and collected 
 by fire insurance companies throughout the State, and the making and 
 adoption of its schedules of such rates, and then until such time as 
 this work shall have been fully completed said Commission shall have 
 full power and authority to adopt and continue in force the rates of 
 premiums which may be lawfully charged and collected when this act 
 shall take effect, or any portion thereof, for such time as it may pre- 
 scribe, or until the work of making such schedules for the entire State 
 shall be completed. Said Commission shall also have authority to alter 
 or amend any and all such rates of premiums so fixed and determined 
 and adopted by it, and to raise or lower the same, or any part thereof, 
 as herein provided. Said Commission shall have authority to employ 
 
7# INSURANCE LAWS OF TEXAS. 
 
 clerical help, inspectors, experts and other assistants, and to incur such 
 other expenses as may be necessary in carrying out the provisions of this 
 act; provided, that such expenses, including the salaries of the members 
 of the Commission, shall not exceed in the aggregate, for any fiscal 
 year, the sum of one hundred and thirty thousand dollars ($130,000). 
 (Acts 35th Leg., Chap. 73, Sec. 2.) 
 
 Shall Classify Fire Losses and Amount of Premium Collected Therefor. 
 
 195. It shall be the duty of said Commission to ascertain, as soon 
 as practicable, the annual fire loss in this State; to obtain, to make and 
 maintain a record thereof and collect such data, and information with 
 respect thereto as will enable said Commission to classify the fire losses 
 of this State, the causes thereof, and the amount of premiums collected 
 therefor for each class of risks and the amount paid thereon, in such 
 manner as will be of assistance in determining equitable insurance rates, 
 methods of reducing such fire losses and reducing the insurance rates of 
 the State, or subdivision of the State. (Acts 35th Leg., Chap. 73, 
 Sec. 2.) 
 
 Selection of Secretary and Fire Marshal of the Commission. 
 
 196. For the purpose of facilitating the work of said Commission, 
 one of the appointed members thereof shall be selected by the Commis- 
 sion as its secretary, who shall perform the duties which shall appertain 
 to that position, and whose official title shall be "Secretary of the State 
 Insurance Commission"; the other of said appointed members thereof 
 shall be selected by said Commission as Fire Marshal of the State In- 
 surance Commission, and his official title shall be "Fire Marshal of the 
 State Insurance Commission" ; but the said members so selected as Sec- 
 tary and Fire Marshal as aforesaid, shall receive no compensation for 
 filling their respective positions other than their salaries as members of 
 the State Insurance Commission, and shall perform the duties of those 
 respective positions at the will of the Commission, but their expenses 
 incurred in performing the duties of these positions shall be paid as 
 provided in this act. (Acts 33d Leg., Chap. 106, Sec. 7.) 
 
 Duties of Fire Marshal. 
 
 197. It shall be the duty of the Fire Marshal of the State Fire In- 
 surance Commission, who, for the purpose of this act, shall be referred 
 to as the State Fire Marshal, at the discretion of the board and upon 
 the request of the mayor of any city or village, or the chief of a fire 
 department of any city or village, or any fire marshal where a fire 
 occurs within such city or village, or of a county or a district judge 
 or of a sheriff or county attorney of any county where a fire occurs 
 within the district or county of the officers making such request, or of 
 any fire insurance company, or its general, State or special agent, in- 
 terested in a loss, or of a policyholder sustaining a loss, or upon the 
 direction of the State Fire Insurance Commission to forthwith investi- 
 gate at the place of such fire before loss can be paid, the origin, cause 
 and circumstances of any fire occurring within this State, whereby 
 property has been destroyed or damaged, and shall ascertain if possible 
 whether the same was the result of any accident, carelessness or de- 
 
INSURANCE LAWS OF TEXAS. 73 
 
 sign, and shall make a written report thereof to the State Insurance 
 Commission. The State Fire Marshal shall have the power to admin- 
 ister oaths, take testimony, compel the attendance of witnesses and the 
 production of documents. When, in his opinion, further investigation 
 is necessary, he shall take or cause to be taken the testimony on oath 
 of all persons supposed to be cognizant of any facts, or to have knowl- 
 edge in relation to the matter under investigation, and shall cause the 
 same to be reduced to writing, and if he shall be of the opinion that 
 there is evidence sufficient to charge any person with the crime of 
 arson, or with the attempt to commit arson, or of conspiracy to defraud 
 OT criminal conduct in connection with such, he shall arrest or cause 
 to be arrested such person, and shall furnish to the proper prosecuting 
 attorney all evidence secured, together with the names of witnesses and 
 all information obtained by him, including a copy of all pertinent and 
 material testimony taken in the case, and it shall be the duty of the 
 State Fire Marshal to assist in the prosecution of all such complaints 
 filed by him. Provided, that all investigations held by or under the 
 direction of the State Fire Marshal may, in his discretion, be private, 
 and persons other than those required to be present may be excluded 
 from the place where such investigation is held, and the witnesses may 
 be kept separate and apart from each other and not allowed to com- 
 municate with such others until they have been examined; and all tes- 
 timony taken in an investigation under the provisions of this act may 
 at the election of the State Fire Marshal be withheld from the public. 
 (Acts 35th Leg., Chap. 73, Sec. 3.) 
 
 Authority and Powers of Fire Marshal. 
 
 198. The State Fire Marshal is hereby authorized to enter at any 
 time any buildings or premises where fire occurred or is in progress, 
 or any place contiguous thereto, for the purpose of investigating the 
 cause, origin and circumstances of such fire. The State Fire Marshal, 
 upon complaint of any person, shall, at all reasonable hours, for the 
 purpose of examination, enter into and upon all buildings and premises 
 within this State, and it shall be his duty to enter upon and make 
 or cause to be entered upon or made, at any time, a thorough exam- 
 ination of mercantile, manufacturing and public buildings, and all 
 places of public amusement, or where public gatherings are held, to- 
 gether with the premises belonging thereto. Whenever he shall find 
 any building or other structure which, for want of repair or by reason 
 of age or dilapidated condition, or which for any cause is liable to 
 fire, and which is so situated as to endanger other buildings or prop- 
 erty, or is so occupied that fire would endanger persons or property 
 therein, and whenever he shall find an improper or dangerous arrange- 
 ment of stoves, ranges, furnaces or other heating appliances of any 
 kind whatsdever, including chimneys, flues and pipes with which the 
 same may be connected, or dangerous arrangement of lighting systems 
 or devices, or a dangerous storage of explosives, compounds, petroleum, 
 gasoline, kerosene, dangerous chemicals, vegetable products, ashes, com- 
 bustible, inflammable and refuse materials, or other conditions which 
 may be dangerous in character, or liable to cause or promote fire, or 
 create conditions dangerous to firemen or occupants, he shall order the 
 
74 INSURANCE LAWS OF TEXAS. 
 
 same to be removed or remedied, and such order shall be forthwith 
 complied with by the occupant or owner of such building or premises, 
 and the State Fire Marshal is hereby authorized, when necessary, to 
 apply to a court of competent jurisdiction for the necessary writs or 
 orders to enforce the provisions of this section, and in such case he shall 
 not be required to give bond. (Acts 35th Leg., Chap. 73, Sec. 4.) 
 
 Pire Marshal May Designate a Local Fire Marshal or Other Person to 
 Act for Him Expenses of Investigation, by Whom Paid. 
 
 199. If for any reason the State Fire Marshal is unable to make 
 any required investigation in person, he may designate the fire marshal 
 of such city or town or some other suitable person to act for him; and 
 such person so designated shall have the same authority as is herein 
 given the State Fire Marshal with reference to the particular matter 
 to be investigated by him, and shall receive such compensation for his 
 services as may be allowed by the State Insurance Commission. If the 
 investigation of a fire is made at the request of an insurance company, 
 or at the request of a policyholder sustaining loss, or at the request of 
 the mayor, town clerk or chief of the fire department of any city, vil- 
 lage or town in which the fire occurred, then the expenses of the Fire 
 Marshal, clerical expenses, witnesses and officers' fees incident and neces- 
 sary to such investigation shall be paid by such insurance company, or 
 such policyholder of such city or town, as the case may be, otherwise 
 the expenses of such investigation are to be paid as part of the expenses 
 of the State Insurance Commission. Provided, the party or parties, 
 company or companies, requesting such investigation shall before such 
 investigation is commenced deposit with the State Insurance Commis- 
 sion an amount of money in the judgment of said Commission suffi- 
 cient to defray the expenses of said Fire Marshal in conducting such 
 investigation. (Acts 33d Leg., Chap. 106, Sec. 10.) 
 
 No Action or Investigation by Pire Marshal Shall in Any Way Affect 
 Bights of Policyholders. 
 
 200. No action taken by the State Fire Marshal shall affect the rights 
 of any policyholder or any company in respect to a loss by reason of 
 any fire so investigated; nor shall the result of any such investigation 
 be given in evidence upon the trial of any civil action upon such pol- 
 icy, nor shall any statement made by any insurance company, its 
 officers, agents or adjusters, nor by any policyholder, or any one repre- 
 senting him, made with reference to the origin, cause or supposed origin 
 or cause of a fire to the Fire Marshal or to any one acting for him or 
 under his direction, be admitted in evidence or made the basis for any 
 civil action for damages. (Acts 33d Leg., Chap. 106, Sec. 11.) 
 
 Authority and Powers of Commission and Its Agents or Representatives. 
 201. That said Commission is authorized and empowered to require 
 sworn statements from any insurance company affected by this act, and 
 from any of its directors, officers, representatives, general agents, State 
 agents, special agents and local agents of the rates and premiums col- 
 lected for fire insurance on each class of risks, on all property in this 
 State during any or all years for the five years next preceding the first 
 day of January, 1913, and of the causes of fire, if such be known, if they 
 
INSURANCE LAWS OF TEXAS. 75 
 
 are in possession of such data, and information, or can obtain it at a 
 reasonable expense; and said Commission is empowered to require such 
 statements for any period of time after the first day of January, 1913, 
 and said Commission is empowered to require such statements showing 
 all necessary facts and information to enable said Commission to make, 
 amend and maintain the general basis schedules provided for in this act, 
 and the rules and regulations for applying same and to determine rea- 
 sonable and proper maximum specific rates and to determine and assist 
 in the enforcement of the provisions of this act. The said Commission 
 shall also have the right, at its discretion, either personally, or by some 
 one duly authorized by it to visit the office whether general, local or 
 otherwise, of any insurance company doing business in this State, and 
 the home office of said company outside of this State, if there be such, 
 and the office of any officers, directors, general agents, State agents, local 
 agents or representatives of such company, and there require such com- 
 pany, its officers, agents or representatives to produce for inspection by 
 said Commission or any of its duly authorized representatives all books, 
 records and papers of such company or such agents and representatives; 
 and the said Commission or its duly authorized agents or representa- 
 tives shall have the right to examine such books and papers and make 
 or cause to be made copies thereof ; and shall have the right to take tes- 
 timony under oath with reference thereto, and to compel the attend- 
 ance of witnesses for such purpose ; and any company, its officers, agents 
 or representatives failing to make such statements and reports herein 
 referred to and failing or refusing to permit the examination of books, 
 papers and records as herein required, when so called upon or declin- 
 ing or failing to comply with any provisions of this section shall be 
 subject to the penalties provided for in Section 26 of this act. Said! 
 Commission shall be further authorized and empowered to require the 
 fire insurance companies, transacting business in this State or any of 
 them, to furnish said Commission with any and all data which may be 
 in their possession, either jointly or severally, including maps, tariffs, 
 inspection reports and any and all data affecting fire insurance risks 
 in this State, or in any portion thereof, and said Commission shall be 
 authorized and empowered to require any two or more of said com- 
 panies, or any joint agent or representative of them, to turn over any 
 and all such data in their possession, or any part thereof, to said Com- 
 mission for its use in carrying out the provisions of this act. (Acts, 
 33d Leg., Chap. 106, Sec. 12.) 
 
 Bates Fixed, Promulgated and Published by Commission Under Certaini 
 Limitations and Conditions. 
 
 202. The rates of premium fixed by said Commission under and 
 in pursuance of the provisions of this act shall be at all times reason- 
 able and the schedules thereof made and promulgated by -said Commis- 
 sion as herein provided, shall be in such form as will in the judgment: 
 of the Commission, most clearly and definitely and in detail disclose- 
 the rate so fixed and determined by said Commission to be charged and 
 collected for policies of fire insurance. Said Commission may employ 
 and use any facts and information now in the possession of the present 
 State Insurance Board, as well as all facts obtainable from and con- 
 cerning fire insurance companies transacting business in this State,. 
 
76 INSURANCE LAWS OF TEXAS. 
 
 showing their expense and charges for fire insurance premiums, for 
 any period or periods, said Commission may deem advisable, which in 
 their opinion will enable them to devise and fix and determine reason- 
 able rates of premium for fire insurance. The said Commission in 
 making and publishing schedules of the rates fixed and determined by 
 it shall show all charges, credits, terms, privileges and conditions which 
 in anywise affect such rates, and copies of all such schedules shall be 
 furnished by said Commission to any and all companies affected by this 
 act applying therefor, and the same shall be furnished to any citizens 
 of this State applying therefor, upon the payment of the actual cost 
 thereof. No rate or rates fixed or determined by the Commission shall 
 take effect until it shall have entered an order or orders fixing and de- 
 termining same, and shall give notice thereof to all fire insurance com- 
 panies affected by this act, authorized to transact business in the State. 
 It shall be the duty of the State Fire Insurance Commission, and of 
 any inspector or other agent or employe thereof, who shall inspect any 
 risk for the purpose of enabling the Commission to fix and determine 
 the reasonable rate to be charged thereon, to furnish to the owner of 
 such risk at the date of such inspection, a copy of the inspection re- 
 port, showing all defects that may operate as charges to increase the 
 insurance rate. (Acts 33d Leg., Chap. 106, Sec. 13.) 
 
 Commission May Amend or Change Bate, and Prescribe Rules and Regu- 
 lations for Certain Risks. 
 
 203. Said Commission shall have full power and authority to alter, 
 amend, modify, or change any rate fixed and determined by it on 
 thirty days' notice, or to prescribe that any such rate or rates shall be 
 in effect for a limited time, and said Commission shall also have full 
 power and authority to prescribe reasonable rules whereby in cases 
 where no rate of premium shall have been fixed and determined by the 
 Commission, for certain risks or classes of risks, policies may be writ- 
 ten thereon at rates to be determined by the company; provided, how- 
 ever, that such company or companies shall immediately report to said 
 Commission such risk so written, and the rates collected therefor, and 
 such rates shall always be subject to review by the Commission. (Acts 
 33d Leg., Chap. 106, Sec. 13.) 
 
 Commission Has Power to Fix and Regulate Rates According to Hazard. 
 
 204. Any fire insurance company or companies affected by this act 
 shall have the right at any time to petition the Commission for an 
 order changing or modifying any rate or rates fixed and determined 
 by the Commission, and the Commission shall consider such petition in 
 the manner provided in this act, and enter such order thereon as it 
 may deem just and equitable. The Commission shall have full au- 
 thority and power to give each city, town, village or locality credit for 
 each and every hazard they may reduce or entirely remove, and also 
 for all added fire fighting equipment, increased police protection, or 
 any other equipment or improvement that has a tendency to reduce the 
 fire hazard of any such city, town, village or locality, and also to give 
 credit for a good fire record made by any city, town, village or locality. 
 Said Commission shall also have the power and authority to compel 
 
INSURANCE LAWS OF TEXAS. 77 
 
 any company to give any or all policyholders credit for any and all 
 hazards that said policyholder or holders may reduce or remove. Said 
 credit shall be in proportion to such reduction or removal of such 
 hazard and said company or companies shall return to such policy- 
 holder or holders such proportional part of the unearned premium 
 charged for such hazard that may be reduced or removed. (Acts 33d 
 Leg., Chap. 106, Sec. 14.) 
 
 Company Shall Furnish Analysis of Bate Commission Schedules Shall 
 Be Open to Public. 
 
 205. When a policy of fire insurance shall be issued by any company 
 transacting the business of fire insurance in this State, such company 
 shall furnish the policy holder with a written or printed analysis of 
 the rate or premium charged for such policy, showing the items of 
 charge and credit which determine the rate, unless such policyholder 
 has theretofore been furnished with such analysis of such rate. All 
 schedules of rates promulgated by said Commission shall be open to 
 the public at all times, and every local agent of a fire insurance com- 
 pany transacting business in this State shall have and exhibit to the 
 public copies of such schedules covering all risks upon which he is au- 
 thorized to write insurance. (Acts 33d Leg., Chap. 106, Sec. 15.) 
 
 Commission, After Giving Notice, May Change Bates to Be Collected by 
 All Companies. 
 
 206. The Commission shall have full power and authority after 
 having given reasonable notice, not exceeding thirty days, of its inten- 
 tion to do so, to alter, amend or revise any rates of premium fixed and 
 determined by it in any schedules of such rates promulgated by it as 
 herein provided, and to give reasonable notice of such alteration, amend- 
 ment or revision to the public, or to any company or companies affected 
 thereby. Such altered, amended or revised rates shall be the rates 
 thereafter to be charged and collected by all fire insurance companies 
 affected by this act; provided, that no policy in force prior to the tak- 
 ing effect of such changes, or amendments shall be affected thereby, 
 unless there shall be a change in the hazard of the risk, necessitating a 
 change in the rate, applicable to such risk, in which event such policy 
 shall be subject to the new rates. (Acts 33d Leg., Chap. 106, Sec. 16.) 
 
 Commission Shall Establish and Furnish Uniform Policy Forms, Includ- 
 ing Endorsements and Clauses Placed Thereon. 
 
 207. It shall be the duty of the State Insurance Commission to 
 make, promulgate and establish uniform policies of insurance appli- 
 cable to the various risks of this State, copies of which uniform policies 
 shall be furnished each company doing business in this State or which 
 may hereafter do business in this State. That after such uniform pol- 
 icies shall have been established and promulgated and furnished the re- 
 spective companies doing business in this State, such companies shall, 
 within sixty days after the receipt of such forms of policies, adopt and 
 use said form or forms and no other; also all companies which may 
 commence business in this State after the adoption and promulgation 
 of such forms of policies, shall adopt and use the same and no other 
 forms of policies. 
 
78 INSURANCE LAWS OF TEXAS. 
 
 The said State Fire Insurance Commission shall also prescribe all 
 standard forms, clauses and endorsements used on or in connection with 
 insurance policies. All other forms, clauses and endorsements placed 
 upon insurance policies shall be placed thereon subject to the approval 
 of the Commission. The Commission shall also have authority in its 
 discretion to change, alter or amend such form or forms of policy or 
 policies, and such clauses and endorsements used in connection there- 
 with, upon giving notice and proceedings in accordance with Section 21 
 of this act. (Acts 33d Leg., Chap. 106, Sec. 17.) 
 
 Any Provision in a Policy Declaring It Void Because of a Lien on the 
 Insured Property Shall Be Void. 
 
 208. Any provision in any policy of insurance issued by any com- 
 pany subject to the provisions of this act to the effect that if said prop- 
 erty is encumbered by a lien of any character, or shall after the issu- 
 ance of such policy become encumbered by a lien of any character, that 
 such encumbrance shall render such policy void, shall be of no force 
 and effect, and any such provision within or placed upon any such 
 policy shall be absolutely null and void. (Acts 33d Leg., Chap. 106, 
 Sec. 18.) 
 
 Co-insurance Clause Prohibited. 
 
 209. No company subject to the provisions of this act may issue any 
 policy or contract of insurance covering property in this State, which 
 shall contain any clause or provision requiring the assured to take out 
 or maintain a larger amount of insurance than that expressed in such 
 policy, nor in any way providing that the assured shall be liable as co- 
 insurer with the company issuing the policy for any part of the loss or 
 damage which may be caused by fire to the property described in such 
 policy, and any such clause, or provision shall be null and void, and of 
 no effect; provided, that the co-insurance clauses and provisions may 
 be inserted in policies written upon cotton, grain or other products in 
 process of marketing, shipping, storing or manufacture. (Acts 33d 
 Leg., Chap. 106, Sec. 19.) 
 
 Complaints as to Bates Fixed by the Commission Shall Be Heard and 
 Adjusted by the Commission. 
 
 210. Any citizen or number of citizens of this State or any policy- 
 holder OT policyholders, or any insurance company affected by this act, 
 or any Board of Trade, Chamber of Commerce, or other civic organiza- 
 tion, or the civil authorities of any town, city or village, shall have the 
 right to file a petition with the State Fire Insurance Commission, set- 
 ting forth any cause of complaint that they may have as to any order 
 made by this Commission, or any rate fixed and determined by the 
 Commission, and they shall have the right to offer evidence in support 
 of the allegations of such petition by witnesses, or by depositions, or by 
 affidavits; upon the filing of such petition, the party complained of, if 
 other than the Commission shall be notified by the Commission of the 
 filing of such petition and a copy thereof furnished the party or par- 
 ties, company or companies, of whom complaint is made, and the said 
 petition shall be set down for a hearing at a time not exceeding thirty 
 
INSURANCE LAWS OF TEXAS. 79 
 
 days after the filing of such petition and the Commission shall hear 
 and determine said petition; but it shall not be necessary for the peti- 
 tioners or any one of them to be present to present the cause to the 
 Commission, but they shall consider the testimony of all witnesses, 
 whether such witnesses testify in person or by depositions, or by affi- 
 davits, and if it be found that the complaint made in such petition is a 
 just one, then the matter complained of shall be corrected or required 
 to be corrected by said Commission. (Acts 33d Leg., Chap. 106, Sec. 20.) 
 
 Commission Shall Give Notice to All Parties Affected by Its Orders 
 Shall Hear Protests Any Dissatisfied Party' May Bring Suit Pro- 
 ceedings in Case of Suit. 
 
 211. The State Fire Insurance Commission shall give the public 
 and all insurance companies to be affected by its orders or decisions, 
 reasonable notice thereof, not exceeding thirty days, and an opportunity 
 to appear and be heard with respect to the same; which notice to the 
 public shall be published in one or more daily papers of the State, and 
 such notice to the insurance company or companies to be affected thereby 
 shall be by letter deposited in the postoffice, addressed to the State or 
 general agent of such company or companies, if the address of such State 
 or general agent be known to the Commission, or if not known, then 
 such letter shall be addressed to some local agent of such company or 
 companies, or if the address of a local agent be unknown to the Com- 
 mission, then by publication in one or more of the daily papers of the 
 State, and the Commission shall hear all protests or complaints from 
 any insurance company or any citizen or any city, or town, or village 
 or any commercial or civic organization as to the inadequacy or unrea- 
 sonableness of any rates fixed by it or approved by it, or as to the in- 
 adequacy or unreasonableness of any general basis schedules promul- 
 gated by it or the injustice of any order or decision by it, and if any 
 insurance company, or other person, or commercial or civic organiza- 
 tion, or any city, town or village, which shall be interested in any such 
 order or decision, shall be dissatisfied with any regulations, schedule or 
 rate adopted by such Commission, such company or person, commer- 
 cial or civic organization, city, town or village shall have the right, 
 within thirty days after the making of such regulation or order, or 
 rate, or schedule or within thirty days after the hearing above provided 
 for, to bring an action against said Commission in the district court 
 of Travis county to have such regulation or order or schedule or rate 
 vacated or modified; and shall set forth in a petition therefor the prin- 
 cipal ground or grounds of objection to any or all of such regulations, 
 schedules, rates or orders; in any such suit the issue shall be formed 
 and the controversy tried and determined as in other civil cases, and 
 the court may set aside and vacate or annul any one or more or any 
 part of any of the regulations, schedules, orders or rates promulgated 
 or adopted by said Commission, which shall be found by the court to 
 be unreasonable, unjust, excessive or inadequate without disturbing 
 others. No injunction, interlocutory order or decree suspending or 
 restraing (restraining) directly or indirectly the enforcement of any 
 schedule, rate, order or regulation of said Commission shall be granted; 
 provided, that in such suit the court, by interlocutory order, may au- 
 thorize the writing and acceptance of fire insurance policies at any rate 
 
80 INSURANCE LAWS OF TEXAS. 
 
 which in the judgment of the court is fair and reasonable, during the 
 pending of such suit, upon condition that the party to such suit in 
 whose favor the said interlocutory order of said court may be shall ex- 
 ecute and file with the Commissioner of Insurance and Banking a good 
 and sufficient bond to be first approved by said court, conditioned that 
 the party giving said bond will abide the final judgment of said court 
 and will pay to the Commissioner of Insurance and Banking whatever 
 difference in the rate of insurance it may be finally determined to exist 
 between the rates as fixed by said State Fire Insurance Commission 
 complained of in such. suit, and the rate finally determined to be fair 
 and reasonable by the court in said suit, and the said Commissioner of 
 Insurance and Banking, when he receives such difference in money,, 
 shall transmit the same to the parties entitled thereto. 
 
 Whenever any action shall be brought by any company under the 
 provisions of this section within said period of thirty days, no penalties 
 nor forfeitures shall attach or accrue on account of the failure of the 
 plaintiff to comply with the orders, schedules, rates or regulations sought 
 to be vacated in such action until the final determination of the same. 
 
 Either party to any such action, if dissatisfied with the judgment or 
 decree of said court, may appeal therefrom as in other civil cases. No- 
 action shall be brought in any court of the United States to set aside 
 any orders, rates, schedules or regulations made by said Commission 
 under the provisions of this act until all of the remedies provided 
 herein shall have been exhausted by the party complaining. (Acts 33d 
 Leg., Chap. 106, Sec. 21.) 
 
 Company's Certificate of Authority May Be Canceled for Violating Any 
 Provision of This Act. 
 
 212. If any insurance company affected by the provisions of this 
 act shall violate any of the provisions of this act, the Commissioner of 
 Insurance shall, by and with the consent of the Attorney General, can- 
 cel its certificate of authority to transact business in this State. (Acts. 
 33d Leg., Chap. 106, Sec. 21.) 
 
 Rebatings and Discrimination Prohibited. 
 
 213. No company shall engage or participate in the insuring or 
 reinsuring of any property in this State against loss or damage by fire 
 except in compliance with the terms and provisions of this act; nor 
 shall any such company knowingly write insurance at any lesser rate 
 than the rates herein provided for, and it shall be unlawful for any 
 company so to do, unless it shall thereafter file an analysis of same 
 with the Commission, and it shall be unlawful for any company, or its- 
 
 , officers, directors, general agents, State agents, special agents, local 
 agents, or its representatives, to grant or contract for any special favor 
 or advantages in the dividends or other profits to come thereon, or in 
 commissions in the dividends or other profits to accrue thereon, or in 
 commissions or division of commission, or any position or any valuable- 
 consideration, or any inducement not specified in the policy contract 
 of insurance; nor shall such company give, sell or purchase, offer ta 
 give, sell or purchase, directly or indirectly, as an inducement to insure 
 or in connection therewith, any stocks, bonds or other securities of any 
 insurance company or other corporation, partnership or individual, or 
 
INSURANCE LAWS OF TEXAS. 81 
 
 any dividends or profits accrued or to accrue thereon, or anything of 
 value whatsoever not specified in the policy; but nothing in this sec- 
 tion or in this act shall be construed to prohibit a company from shar- 
 ing its profits with its policyholders, provided that such agreement as 
 to profit-sharing shall be placed on or in the face of the policy, and 
 such profit-sharing shall be uniform and shall not discriminate between 
 individuals or between classes; provided, however, that no part of the 
 profit shall be paid until the expiration of the policy. Any company, 
 or any of its officers, directors, general agents, State agents, special 
 agents, local agents or its representatives, doing any of the acts in this 
 section prohibited, shall be deemed guilty of unjust discrimination; 
 provided, however, that if any agent of (or) company shall issue a 
 policy without authority, and any policyholder holding such policy shall 
 sustain a loss or damage thereunder, said company or companies shall 
 be liable to the policyholder thereunder, in the same manner and to 
 the same extent as if said company had been authorized to issue said 
 policies, although the company issued said policy in violation of the 
 provisions of this act. But this shall not be construed to give any 
 company the right to issue any contract or policy of insurance other 
 than as provided in this act. (-Acts 33d Leg., Chap. 106, Sec. 22.) 
 
 Rebating and Discrimination Prohibited. 
 
 214. No person shall knowingly receive or accept from any insur- 
 ance company or from any of its agents, sub-agents, brokers, solicitors, 
 employes, intermediaries or representatives, or any other person, any 
 rebate or premium payable on the policy, or any special favor or ad- 
 vantage in the dividends or other financial profits accrued or to ac- 
 crue thereon, or any valuable consideration, position or inducement not 
 specified in the policy of insurance, and any person so doing shall be 
 guilty of a violation of the provisions of this section, and shall be pun- 
 ished by a fine of not exceeding one hundred dollars ($100.00) or by 
 imprisonment in the county jail for not exceeding ninety days, or by 
 both such fine and imprisonment. (Acts 33d Leg., Chap. 106, Sec. 23.) 
 
 Extension of Credit for Payment of Premiums Not Forbidden, and Is 
 Not Discrimination. 
 
 215. The provisions of this law shall not deal with the collection 
 of premiums, but each company shall be permitted to make such rules 
 and regulations as it may deem just between the company, its agents, 
 and its policyholders, and no bona fide extension of credit shall be con- 
 strued as a discrimination or in violation of the provisions of this act. 
 
 All policies heretofore issued or which shall hereafter be issued by 
 any insurance company prior to the taking effect of this act, which 
 provide that said policies shall be void for non-payment of premiums 
 at a certain specified time, shall be and the same are in full force and 
 effect; provided, that the company or any of its agents, have accepted 
 the premium on said policies after the expiration of the dates named 
 in said provision fixing the date of payment. (Acts 33d Leg., Chap. 
 106, Sec. 24.) 
 
82 INSURANCE LAWS OF TEXAS. 
 
 Certificate of Authority of Company May Be Revoked, Subject to Review 
 by Courts. 
 
 216. The Commissioner of Insurance and Banking, upon ascertain- 
 ing that any insurance company or officer, agent or representative 
 thereof, has violated any of the provisions of this act, may, at his dis- 
 cretion, and with the consent and approval of the Attorney General, 
 revoke the certificate of authority of such company, officer, agent or 
 representative; but such revocation of any certificate shall in no man- 
 ner affect the liability of such company, officer, agent or representative 
 to the infliction of any other penalty provided by this act, and pro- 
 vided, that any action, decision or determination of the Commissioner 
 of Insurance and Banking and the Attorney General in such cases shall 
 be subject to the review of the courts of this State as herein provided. 
 (Acts 33d Leg., Chap. 106, Sec. 25.) 
 
 Penalty for Violation of Any Provision of State Fire Commission Act. 
 
 217. Any insurance company affected by this act, or any officer or 
 director thereof, or any agent or person acting for or employed by any 
 insurance company, who, alone or in conjunction with any corporation, 
 company or person, who shall wilfully do or cause to be done, or shall 
 wilfully suffer or permit to be done any act, matter or thing prohibited 
 or declared to be unlawful by this act, or who shall wilfully omit or fail 
 to do any act, matter or thing required to be done by this act or shall 
 cause or wilfully suffer or permit any act, matter or thing directed not 
 to be done, or who shall be guilty of any wilful infraction of this act, 
 shall be deemed guilty of a misdemeanor, and upon conviction thereof 
 shall be punished by a fine of not less than three hundred dollars 
 ($300.00) nor more than one thousand dollars ($1000.00) for each 
 offense. (Acts 33d Leg., Chap. 106, Sec. 26.) 
 
 No Person Excused Prom Testifying; nor Subject to Penalty on Account 
 of Giving Testimony Under Fire Commission Act. 
 
 218. No person shall be excused from giving testimony or produc- 
 ing evidence when legally called upon to do so at the trial of any other 
 person or company charged with violating any of the provisions . of 
 this act on the ground that it may incriminate him under the laws 
 of this State; but no person shall be prosecuted or subjected to any 
 penalty or forfeiture for or on account of any transaction, matter, or 
 thing, concerning which he may testify or produce evidence under this 
 act except for perjury in so testifying. (Acts 33d Leg., Chap. 106, 
 Sec. 27.) 
 
 Eire Commission Act Does Not Apply to Mutual Companies nor Recip- 
 rocal Associations. 
 
 219. This act shall not apply to purely mutual or to purely profit- 
 sharing fire insurance companies incorporated or unincorporated under 
 the laws of this State, and carried on by the members thereof solely 
 for the protection of their property and not for profit; nor to purely 
 co-operative inter-insurance and reciprocal exchange carried on by the 
 members thereof solely for the protection of their property and not for 
 profit. (Acts 33d Leg., Chap. 106, Sec. 28.) 
 
INSURANCE LAWS OF TEXAS. 83 
 
 Additional Tax Assessed and Collected for Meeting Expenses of State 
 Fire Insurance Commission. 
 
 220. There shall be assessed and collected by the State of Texas 
 an additional one and one-fourth (1J) per cent of the gross fire in- 
 surance premiums of all fire insurance companies doing business in 
 this State, according to the reports made to the Commissioner of In- 
 surance and Banking as required by law; and said taxes when col- 
 lected shall be placed in a separate fund with the State Treasurer to 
 be expended during the current year in carrying out the provisions of 
 this act; provided, that such expenditures, including the salaries of the 
 members of the Commission, shall not exceed in the aggregate the sum 
 of one hundred and thirty thousand dollars ($130,000.00) per annum; 
 and should there be an unexpended balance at the end of any year, 
 the State Fire Insurance Commission shall reduce the assessment for 
 the succeeding year so that the amount produced and paid into the 
 State Treasury, together with said unexpended balance in the Treas- 
 ury, will not exceed the amount appropriated for the current year, to 
 pay all necessary expenses of maintaining the Commission, which funds 
 shall be paid out upon requisition made out and filed by a majority 
 of the Commission, when the Comptroller shall issue warrants therefor. 
 (Acts 35th Leg., Chap. 73, Sec. 5.) 
 
 Note. ( 1 ) The tax on gross premiums of fire insurance companies required 
 to be collected for the support of the State Fire Insurance Commission must 
 be levied and collected on the premiums on fire insurance only and cannot be 
 levied on any other class of insurance. (Opinion of Attorney General, Feb- 
 ruary 25, 1914.) 
 
 (2) Insurance companies insuring automobiles against fire must pay the tax 
 for the support of the State Fire Insurance Commission. (Opinion of Attorney 
 General, March 14, 1915.) 
 
 If Any Part of State Fire Commission Act, Declared Unconstitutional, 
 This Does not Affect Any Other Part. 
 
 221. If any part of this act be for any reason held unconstitutional, 
 it shall not affect any other portion or part of this act. (Acts 33d Leg., 
 Chap. 106, Sec. 30.) 
 
 CHAPTEE X. 
 
 LIVE STOCK INSURANCE. 
 
 Must Have Capital Stock not Less Than $10,000 Paid in and Comply 
 With Laws Governing Insurance. 
 
 222. The purposes for which private corporations may be formed 
 are: * * * rjphg or g an i za tion of fire, marine, life and live stock 
 insurance companies; provided, that such live stock insurance com- 
 panies may be organized with an authorized and paid-up capital stock 
 of not less than ten thousand dollars ($10,000.00) ; and provided fur- 
 ther, that all insurance companies mentioned in this subdivision shall 
 be in all other respects subject to and shall comply with all the provi- 
 sions of Title 71 of the Eevised Statutes of Texas. (E. S., Art. 1121.) 
 
 Note. ( 1 ) Live stock insurance companies must be chartered as other in- 
 surance companies, by filing charter in Department of Insurance and Banking 
 
84 INSURANCE LAWS OF TEXAS. 
 
 and not with Secretary of State. (Opinion of Attorney General, June 13, 
 1906.) 
 
 (2) A foreign live stock insurance company must have a paid-up capital 
 stock of at least $100,000, in order to obtain authority to do business in Texas. 
 (Opinion of Attorney General, October 8, 1909.) 
 
 CHAPTEE XL 
 
 CASUALTY INSURANCE COMPANIES. 
 
 Who May Incorporate a Casualty Insurance Company Kinds of Insur- 
 ance It May Do. 
 
 223. Any three (3) or more persons, a majority of whom shall be 
 residents of the State of Texas, may associate in accordance with the 
 provisions of this act, and form an incorporated company for any one 
 or more of the following purposes : 
 
 A. To insure any person against bodily injury, disablement or death 
 resulting from accident and against disablement resulting from disease. 
 
 B. To insure against loss or damage resulting from accident to, 
 or injury sustained by, an employe or other person for which accident 
 or injury the assured is liable. 
 
 C. To insure* against loss or damage by burglary, theft or house 
 breaking. 
 
 D. To insure glass against breakage. 
 
 E. To insure against loss from injury to person or property which 
 results accidentally from steam boilers, elevators, electrical devices, en- 
 gines and all machinery and appliances used in connection therewith 
 or operated thereby; and to boilers, elevators, electrical devices, engines, 
 machinery and appliances. 
 
 F. To insure against loss or damage by water to any goods or 
 premises arising from the breakage or leakage of sprinkler and water 
 pipes. 
 
 G. To insure against loss resulting from accidental damage to auto- 
 mobiles, or caused accidentally by automobiles. 
 
 H. To insure against loss or damage resulting from accident to, 
 or injury suffered by any person, for which loss and damage the in- 
 sured is liable; excepting employer's liability insurance as authorized 
 under subdivision "B" of this section. 
 
 I. To insure persons, associations or corporations against loss or 
 damage by reason of giving or extending of credit. 
 
 J. To insure against loss or damage on account of circumstances 
 (incumbrances) upon or defects in the title to real estate and against 
 loss by reason of the non-payment of the principal or interest of bonds, 
 mortgages or other evidences of indebtedness. 
 
 K. To insure against any other casualty or insurance risk specified 
 in the articles of incorporation which may be lawfully made the subject 
 of insurance; and the formation of a corporation for issuing (insur- 
 ing) against which is not otherwise provided for by this act, excepting 
 fire, marine and life insurance. (Acts 32d Leg., Chap. 117, Sec. 1.) 
 
 Note. (1) A mutual casualty insurance company cannot lawfully be organ- 
 ized in Texas, and a foreign mutual casualty company cannot be permitted or 
 
INSURANCE LAWS OF TEXAS. 85 
 
 licensed to do business in Texas, because the laws of this State have made no 
 provision for such license. (Opinion of Attorney General, March 12, 1914.) 
 
 (2) A title insurance company, in its policies insuring titles, must specify 
 the time during which such policies are to run, and cannot issue such a policy 
 without fixing a date therein when the risk assumed shall cease. (Opinion of 
 Attorney General, February 18, 1915.) 
 
 (3) A title insurance company which owns an abstract plant for facilitat- 
 ing its business may likewise sell abstracts to the public. (Opinion of At- 
 torney General, February 18, 1915.) 
 
 Requisites of Charter. 
 
 224. Such persons shall associate themselves together by articles of 
 incorporation in writing, for the purpose of forming an accident or 
 casualty insurance company, which articles shall specify the name by 
 which the company shall be known, the place in which its principal 
 office will be established or located, the amount of its capital stock, the 
 general object of the company and the proposed duration of the same. 
 Any name not previously in use by any existing company may be 
 adopted. The Commissioner of Insurance and Banking shall reject any 
 name or title, when in his judgment it too closely resembles that of 
 any existing company or is likely to mislead the public. (Acts 33d 
 Leg., Chap. 117, Sec. 2.) 
 
 Manner of Filing Charter, Calling First Meeting of Stockholders and 
 Electing Board of Directors. 
 
 2.25. When such articles of incorporation are filed with the Com- 
 missioner of Insurance and Banking, together with an affidavit made 
 by two or more of its incorporators that all the stock has been sub- 
 scribed in good faith and fully paid for, together with a charter fee of 
 $20.00, it shall be the duty of the Commissioner to submit such articles 
 of incorporation to the Attorney General for examination, and if he 
 approves the same as conforming with the law, he shall (so) certify 
 and deliver such articles of incorporation, together with his certificate 
 of approval attached thereto, to the Commissioner of Insurance and 
 Banking, who shall, upon receipt thereof, record the same in a book 
 kept for that purpose, and upon receipt of a fee of $1.00 he shall fur- 
 nish a certified copy of the same to the corporators, upon which they 
 shall be a body politic and corporate, and may proceed to complete the 
 organization of the company, for which purpose they shall forthwith 
 call a meeting of the stockholders, who shall adopt by-laws for the 
 government of the company, and elect a board of directors not less than 
 three composed of stockholders, which board shall haVe full control 
 and management of the affairs of the corporation, subject to the by- 
 laws thereof as adopted or amended from time to time by the stock- 
 holders or directors, and to the laws of this State. (Acts 32d Leg., 
 Chap. 117, Sec. 3.) 
 
 Corporators Shall Elect Officers and Directors, and Open Books of Sub- 
 scription for Stock. 
 
 226. The subscribers to said articles of incorporation shall choose 
 from their number a president, a secretary, a treasurer, and such num- 
 ber of directors, not less than three (3) who shall continue in office 
 for the period of one year from the date of filing articles of incorpora- 
 
86 INSURANCE LAWS or TEXAS. 
 
 tion and until their successors shall be duly chosen and qualified, as 
 hereinafter provided. They shall open books for the subscription of 
 stock in the company at such times and places as they shall deem con- 
 venient and proper, and shall keep them open until the full amount 
 specified in the certificate (charter) is subscribed. (Acts 32d Leg., 
 Chap. 117, Sec. 4.) 
 
 Capital Stock Amount Required Must Be Fully Paid Up Before Obtain- 
 ing Certificate of Authority to Do Business Cannot Be Loaned to 
 Company's Officer Company Must Also Deposit With State Treasurer 
 $50,000 in Securities, and More if Required, in Order to Do Business 
 in Another State How Deposit May Be Withdrawn. 
 
 227. Any company organized under the provisions of this act shall 
 have not less than one hundred thousand dollars ($100,000.00) of cap- 
 ital stock subscribed, (and fully) paid in, in cash, with an additional 
 fifty thousand dollars ($50,000.00) of capital stock subscribed and fully 
 paid in, in cash, for every kind of insurance, more than one of which 
 it is authorized to transact as specified in any of the subdivisions; pro- 
 vided, that such companies with two hundred thousand dollars ($200,- 
 000.00) of capital stock subscribed and fully paid in, in cash, shall be 
 authorized to transact all and every kind of insurance specified in any 
 and all of the subdivisions of Section 1 of this act; all of which said 
 capital stock shall be paid up or invested in bonds of the United States 
 or of this State or of any county or of any municipality of this State 
 or in bonds or first liens upon unencumbered real estate in this State 
 or in any other State in which such company may previously have been 
 duly licensed to conduct an insurance business; and provided in either 
 instance such real estate shall be worth at least twice the amount loaned 
 thereon. The value of such real estate shall be determined by a val- 
 uation made under oath by two freeholders of the county where the 
 real estate is located, and if buildings are considered as a part of the 
 value of such real estate they must be insured for the benefit of the 
 mortgagee. Upon such company furnishing evidence satisfactory to 
 the Commissioner of Insurance and Banking that the capital stock 
 as herein prescribed has been all subscribed and paid up in cash in 
 good faith and that such capital stock has been invested as herein 
 prescribed, and upon the deposit of the sum of fifty thousand dollars 
 ($50,000.00) of such securities or in cash with the State Treasurer, 
 then the Commissioner of Insurance and Banking shall issue to said 
 company a certificate authorizing it to do business. No part of the 
 capital paid in dhall be loaned to any officer of said company. In the 
 event any such company shall be required by law of any other State, 
 country or province as requirement prior to doing an insurance busi- 
 ness therein, to deposit with the duly appointed officer of such other 
 State, county or province, or with the State Treasurer of this State, 
 any securities or cash in excess of the said deposit of fifty thousand 
 dollars ($50,000.00) hereinbefore mentioned, such company at its dis- 
 cretion may deposit with the State Treasurer securities of the character 
 authorized by this act, or cash, sufficient to enable it to meet such re- 
 quirements. The State Treasurer is hereby authorized and directed to 
 receive such deposit and to hold it exclusively for the protection of 
 all policyholders of the company. Any deposit so made to meet the 
 
INSURANCE LAWS OF TEXAS. 87 
 
 requirements of any such other State, county or province shall not 
 be withdrawn by the company, except upon filing with the Commis- 
 sioner of Insurance and Banking evidence satisfactory to him that the 
 company has withdrawn from business, and has no unsecured liabilities 
 outstanding in any such other State, county or province by which such 
 additional deposit was required, and upon the filing of such evidence 
 the company may withdraw such additional deposit at any time. (Acts 
 32d Leg., Chap. 117, Sec. 5.) 
 
 Note. A corporation chartered for the purpose of doing a title insurance 
 business cannot have its capital stock paid in by conveying an abstract plant 
 or company to the corporation. Such capital stock can only be paid in in cash 
 or be invested in bonds of the United States or this State or of any county or 
 municipality of the State, or in bonds or first liens upon unencumbered real 
 estate. "Cash" means ready money, either in current coin or legal tender, in 
 bank bills or checks, payable and receivable as money. (Opinion of Attorney 
 General, February 10, 1916.) 
 
 Corporate Powers of the Company. 
 
 228. A corporation organized or doing business under the provi- 
 sions of this act shall, by the name adopted by such corporation, in 
 law, be capable of suing or being sued, and may have the power to 
 make or enforce contracts in relation to the business of such corpora- 
 tion; may have and use a common seal, and may change and alter the 
 same at pleasure, and in the name of the corporation or by a trustee 
 chosen by the Board of Directors, shall, in law, be capable of taking, 
 purchasing, holding and disposing of real and personal property for 
 carrying into effect the purposes of their organization; and may by 
 their Board of Directors, trustees or managers, make by-laws and 
 amendments thereto, not inconsistent with the laws or the Constitu- 
 tion of the State, or of the United States, which by-laws shall define 
 the manner of electing directors, trustees or managers and officers of 
 such corporations, together with the qualifications and duties of the 
 same and fixing the term of office. (Acts 32d Leg., Chap. 117, Sec. 6.) 
 
 Annual Statement Bequired to Be Filed. 
 
 229. The president, vice-president, and secretary, or a majority of 
 directors or trustees of such company, organized under the provisions 
 of this act, shall annually, on the first day of January, or within sixty 
 days thereafter, prepare and deposit in the office of the Commissioner 
 of Insurance and Banking a verified statement of the condition of such 
 company on the 31st day of December of the preceding year, showing: 
 
 First. Name and where located, (a) Names of officers, (b) The 
 amount of capital stock, (c) The amount of capital stock paid in. 
 
 Second. Assets, (a) The value of real estate owned by said com- 
 pany, (b) The amount of cash on hand, (c) The amount of cash 
 deposited in bank or trust company, (d) The amount of bonds of 
 the United States, and all other bonds, giving names and amounts, 
 with par and market values of each kind, (e) The amount of loans 
 secured by first mortgage on real estate, (f ) The amount of all other 
 bonds, loans and how secured, with rate of interest, (g) The amount 
 of notes given for unpaid stock and how secured, (h) The amount 
 of interest due and unpaid, (i) All other credits or assets. 
 
88 INSURANCE LAWS OF TEXAS. 
 
 Third. Liabilities, (a) The amount of losses due and unpaid, 
 (b) The amount of claims for losses unadjusted, (c) The amount 
 of claims for losses resisted. 
 
 Fourth. Income during the year, (a) The amount of fees re- 
 ceived during the year, (b) The amount of interest received from 
 all sources, (c) The amount of receipts from all other sources. 
 
 Fifth. Expenditures during the year, (a) The amount paid for 
 losses, (b) The amount of dividends paid to stockholders, (c) The 
 amount of commissions and salaries paid to agents, (d) The amount 
 paid to officers for salaries, (e) The amount paid for taxes, (f) The 
 amount of all other payments or expenditures. 
 
 Sixth. Miscellaneous, (a) The amount paid in fees during the 
 year, (b) The amount paid for losses during the year, (c) The 
 whole amount of insurance issued and in force on the 31st day of De- 
 cember of the previous year. (Acts 32d Leg., Chap. 117, Sec. 7.) 
 
 Commissioner May Amend Annual Statement Form. 
 
 230. The Commissioner of Insurance and Banking is authorized to 
 amend the form of statement and to exact such additional informa- 
 tion as he may think necessary in order that a full exhibit of the stand- 
 ing of the companies organized and doing business under this act may 
 be shown. (Acts 32d Leg., Chap. 117, Sec. 8.) 
 
 Company Cannot Issue Policy Until Deposit Is Made and Annual State- 
 ment Filed. 
 
 231. Upon the failure of any company organized or doing business 
 under this act to make the deposit or to file the statement in time as 
 stated in the preceding section, the Commissioner of Insurance and 
 Banking shall notify such company to issue no new insurance until 
 there should have been a compliance with said requirements, and it 
 shall be unlawful for any such company to thereafter issue any policy 
 of insurance until such requirements shall be complied with. (Acts 
 32d Leg., Chap. 117, Sec. 9.) 
 
 Commissioner May Examine Company. 
 
 232. The Commissioner of Insurance and Banking may at any 
 time make a personal examination of the books, papers and securities 
 of any company organized and doing business under the provisions of 
 this act, or may authorize or empower any other suitable person to 
 make such examinations, and for the purpose of securing a full and 
 true exhibit of its affairs, he or the person selected by him shall have 
 power to examine under oath any officer of said company relative to 
 its business management. (Acts 32d Leg., Chap. 117, Sec. 10.) 
 
 Commissioner Must Revoke Certificate of Authority for Failure to Com- 
 ply With the Law, and Refer Facts to Attorney General. 
 
 233. If the Commissioner of Insurance and Banking shall at any 
 time (find) from the report or examination that the company has not 
 complied with the provisions of this act, he shall revoke its certificate 
 of authority to do business in this State and shall refer the facts to 
 the Attorney General, who shall proceed to ask the proper court to 
 appoint a receiver for said company, who shall under the direction of 
 
INSURANCE LAWS OF TEXAS. 89 
 
 the court wind up the affairs of said company. But in no other way 
 can the Commissioner of Insurance and Banking, or any other person, 
 restrain or interfere with the prosecution of business of any company 
 doing business under the provisions of this act, except in actions by 
 judgment creditor or in proceedings supplementary to execution. (Acts 
 32d Leg., Chap. 117, Sec. 11.) 
 
 Note. The insolvency of an insurance company is a breach of its contract 
 to each existing policyholder, upon the occurrence of which the policyholder is 
 entitled to recover a portion of the premium paid which is unearned at the 
 time of the insolvency. Upon such a company going into the hands of a receiver 
 the proper course for the claimant of a premium is to file his claim in the 
 receivership proceedings, and have the same allowed in due course and ordered 
 paid by the court. (Opinion of Attorney General, March 22, 1916.) 
 
 Securities on Deposit May Be Withdrawn by Substituting Others. 
 
 234. Companies organized under the provisions of this act shall have 
 the right at any time to change their securities on deposit with the 
 State Treasurer, by substituting for those withdrawn a like amount in 
 other securities of the character provided for in this act. (Acts 32d 
 Leg., Chap. 117, Sec. 12.) 
 
 How Capital Stock May Be Increased. 
 
 235. Any company organized under the provisions of this act may 
 increase the capital stock of the same at any time after the intention 
 to so increase the capital stock shall have been ratified by a two-thirds 
 vote of the stockholders and after notice of the purpose to so increase 
 the capital stock has been given by publication in some newspaper of 
 general circulation for the period of four consecutive weeks; but no 
 increase of capital stock in less amount than fifty thousand dollars 
 ($50,000.00) is hereby authorized. (Acts 32d Leg., Chap. 117, Sec. 13.) 
 
 Dividends May Be Declared From Surplus Profits Only, and at End of 
 Year. 
 
 236. The directors of any company organized under this act shall 
 not make any dividends except from the surplus profit arising from 
 their business. No dividends shall be declared except at the -close of 
 the year an<J at the time when, by law, the company is required to file 
 its annual statement with the Commissioner of Insurance and Bank- 
 ing. (Acts 32d Leg., Chap. 117, Sec. 14.) 
 
 State Treasurer May Permit Collections of Interest on Deposited Securi- 
 . ties. 
 
 237. The State Treasurer shall permit companies having securities 
 on deposit with him under the provisions of this act to collect the in- 
 terest as the same may become due and shall deliver to such companies, 
 respectively, the coupons or other evidences of interest pertaining to 
 such deposits; provided, however, that upon failure of any company to 
 deposit additional security as called for by the Commissioner of Insur- 
 ance and Banking, or pending any proceeding to close up or enjoin 
 it, the State Treasurer shall collect the interest as it becomes due, and 
 hold the same as additional security in his hands belonging to such 
 company. (Acts 32d Leg., Chap. 117, Sec. 15.) 
 
90 INSURANCE LAWS OF TEXAS. 
 
 Forfeit for Writing New Business Without Certificate. 
 
 238. Any company organized or doing business under this act with- 
 out a certificate, as provided for in this act, shall forfeit one hundred 
 dollars ($100.00) for every day it continues to write new business in 
 this State without such certificate. (Acts 32d Leg., Chap. 117, Sec. 16.) 
 
 Venue for Penalty Suits. 
 
 239. Suit brought to recover any of the penalties provided for in 
 this act shall be instituted in the name of the State of Texas, by the 
 Attorney General or by a district or county attorney under his direc- 
 tion, either in the county where the principal office is situated or in 
 the county of Travis. Such penalties, when recovered, shall be paid 
 into the State Treasury for the use of the school fund. (Acts 32d 
 Leg., Chap. 117, Sec. 17.) 
 
 Securities in Which Company's Surplus Funds Must Be Invested. 
 
 240. No company organized under the provisions of this act shall 
 invest its funds over and above its paid-up capital stock in any other 
 manner than as follows: 
 
 (a) In bonds of the United States, or of any of the States of the 
 United States which are at or above par. 
 
 (b) In bonds or first liens on unencumbered real estate in this 
 State or in any other State, county or province, in which such com- 
 pany may be duly licensed to conduct an insurance business, and pro- 
 viding in each instance such real estate shall be worth at least twice 
 the amount loaned thereon. The value of such real estate shall be de- 
 termined by a valuation made under oath by two freeholders of the 
 county where the real estate is located, and if buildings are considered 
 as a part of the value of such real estate they must be insured for the 
 benefit of the mortgagee. 
 
 (c) In bonds or other interest-bearing evidences of indebtedness 
 of any county, incorporated city, town or school or sanitary district 
 within this State, or in any other State, county or province in which 
 said company may be duly licensed to conduct an insurance business, 
 and provided that such bonds or other evidences of indebtedness are 
 issued by authority of law and that interest upon them hs never been 
 defaulted. 
 
 (d) In the stocks or bonds or other evidences of indebtedness of 
 any solvent dividend-paying corporation incorporated under the laws 
 of this State, or of the United States or of any State, county or prov- 
 ince in which such company may be duly licensed to conduct an in- 
 surance business. 
 
 (e) In loans upon the pledge of any mortgage, stock or bonds, or 
 .other evidence of indebtedness, acceptable as investments under the 
 
 terms of this act, if the current value of such mortgage, stock, bond or 
 other evidence of indebtedness is at least twenty-five per cent (25%) 
 more than the amount loaned thereon. (Acts 32d Leg., Chap. 117, 
 Sec. 18.) 
 
 Purposes for Which Company May Purchase, Hold or Convey Real Estate. 
 
 241. No company organized under this act shall be permitted to 
 
INSURANCE LAWS OF TEXAS. 91 
 
 purchase, hold or convey real estate, except for the purpose and in the 
 manner herein set forth: 
 
 First. For the erection and maintenance of buildings at least ample 
 and adequate for the transaction of its own business. 
 
 Second. Such as shall have been mortgaged to it in good faith for 
 money due. 
 
 Third. Such as shall have been conveyed to it in the satisfaction of 
 debts previously contracted in the course of its dealings, and which 
 must be taken in by the company on account of the debts secured by 
 such mortgage. 
 
 Fourth. Such as shall have been purchased at sales upon judgments, 
 decrees or mortgages obtained or made for such debts. And no com- 
 pany incorporated as aforesaid shall purchase, hold or convey real estate 
 in any other cases or for any other purpose. (Acts 32d Leg., Chap. 
 117, Sec. 19.) 
 
 Heal Estate Must Be Disposed of in Ten Years, Unless for Special Reason 
 Time Is Extended by Commissioner. 
 
 24:2. All real estate acquired as aforesaid, except such as is occupied 
 by buildings used in whole or in part for the accommodation of such 
 companies in the transaction of its business, shall, except as herein- 
 after provided, be sold and disposed of within ten years after such 
 company shall have acquired title to the same. No such company shall 
 have such real estate for a longer period than that above mentioned 
 unless the said company shall procure a certificate from the Commis- 
 sioner of Insurance and Banking that the interests of the company 
 will suffer materially by a forced sale of such real estate, in which 
 event the time for the sale may be extended to such time as the Com- 
 missioner of Insurance and Banking shall direct in said certificate. 
 (Acts 32d Leg., Chap. 117, Sec. 20.) 
 
 Commissioner Shall Issue Certificate of Authority to Do Business. 
 
 243. The Commissioner of Insurance and Banking, upon due proof 
 by a company organized under the provisions of this act, of its pos- 
 sessing the qualifications required, shall issue a certificate setting forth 
 that it has qualified and is authorized for the ensuing year to do busi- 
 ness under these statutes, which certificate, or a copy thereof, shall be 
 evidence of such qualification and of the company's authority to trans- 
 act business authorized by this act, mentioned in the preceding sec- 
 tions, and of its solvency and credit. (Acts 32d Leg., Chap. 117, 
 Sec. 21.) 
 
 This Act Applies Only to Companies Organized Under It. 
 
 244. Only companies organized and doing business under the pro- 
 visions of this act shall be subject to its provisions. (Acts 32d Leg., 
 Chap. 117, Sec. 22.) 
 
 Fees Charged Under This Act. 
 
 245. The Commissioner of Insurance and Banking shall charge for 
 filing the preliminary statement or for filing the annual statement re- 
 quired by the provisions of this act, a fee of ten dollars; and for each 
 
92 INSURANCE LAWS OF TEXAS. 
 
 certificate and seal he shall charge a fee of one dollar. (Acts 32d 
 Leg., Chap. 117, Sec. 23.) 
 
 Legal Process How Served. 
 
 246. Proceed (process) in any civil suit against any casualty com- 
 pany organized under the laws of this State may be served only on the 
 president, or any active vice-president, or secretary, or general counsel, 
 residing at the city of the home office of the company, or by leaving a 
 copy of same at the home office of such company during business hours. 
 (Acts 32d Leg., Chap. 117, Sec. 24.) 
 
 Company May Decrease Capital Stock. 
 
 247. Any company organized under the provisions of this act may 
 decrease the capital stock of same at any time after the intention to so 
 decrease the capital stock shall have been ratified by a majority vote 
 of the stockholders and after notice of the purpose to so decrease the 
 capital stock has been given by publication in some newspaper of gen- 
 eral circulation for a period of four consecutive weeks. (Acts 32d Leg., 
 Chap. 117, Sec. 25.) 
 
 This Act Cumulative and Repeals No Other Law. 
 
 248. This act is cumulative as to insurance legislation in this State, 
 and as to the mode and manner of organizing and doing insurance 
 business in this State, and shall not be construed to repeal any law 
 now in force in this State. (Acts 32d Leg., Chap. 117, Sec. 26.) 
 
 CHAPTER XII. 
 
 FIDELITY, GUAEANTY AND SURETY COMPANIES. 
 
 Home Companies May Be Incorporated. 
 
 249. Private corporations may be created by the voluntary associa- 
 tion of three or more persons for the purposes and in the manner herein- 
 after mentioned. (R. S., Art. 1120.) 
 
 To Act as Surety or Guarantor, Trustee, Assignee, Executor, Adminis- 
 trator, Etc. 
 
 250. Private corporations may be created to act as trustee, assignee, 
 executor, administrator, guardian, and receiver, when designated by any 
 person, corporation or court to do so, and to do a general fiduciary and 
 depository business; to act as surety and guarantor of the fidelity of 
 employes, trustees, executors, administrators, guardians or others ap- 
 pointed to, or assuming the performance of any trust, public or private, 
 under appointment of any court or tribunal, or under contract between 
 private individuals or corporations; also upon any bond or bonds that 
 may be required to be filed in any judiciary proceeding; also to guar- 
 antee any contract or undertaking between individuals, or beiween pri- 
 vate corporations, or between individuals or private corporations, and 
 the State and municipal corporations or counties, or between corpo- 
 rations and individuals; to act as executor and testamentary guardian 
 when designated by such decedents; or to act as administrator or guar- 
 
INSURANCE LAWS OF TEXAS. 93 
 
 dian when appointed by any court having jurisdiction; also, on any 
 bond or bonds that may be required of any State official, district official, 
 county official or official of any school district or of any municipality; 
 provided, that the commissioners court of each county shall have the 
 right to reject any or all official bonds made by surety companies and 
 in their discretion may require any or all officials to make their official 
 bonds by personal sureties; provided, also, that any such bond may be 
 accepted and approved by the officer charged by law with the duty of 
 accepting and approving the same without being signed by other securi- 
 ties than such corporation, and provided further, that when any such 
 bond shall exceed fifty thousand dollars in penal sum, the officer or offi- 
 cers charged by law with the duty of approving and accepting such 
 bond may require that such bond be signed by two or more surety com- 
 panies, or by one surety company and two or more good and sufficient 
 personal sureties, in the discretion of the principal or official of whom 
 the bond is required, and any statute or law to the contrary, or requir- 
 ing any such bonds to be signed by two or more good and sufficient sure- 
 ties, shall be governed and controlled by the provisions of this article 
 provided, also, that each corporation, making or offering to make any 
 bond under this article, shall publish in some newspaper of general cir- 
 culation in the county where such company is organized or has its prin- 
 cipal office on the first day of February of each year, a statement of its 
 condition on the previous thirty-first day of December, showing under 
 oath its assets and liabilities that a copy of said statement be filed with 
 the Commissioner of Insurance and Banking before the first of March 
 of the year following, and a fee of $25 be paid to that officer for filing 
 the same, and that an examination of its affairs may be made at any 
 time by the Commissioner of Insurance and Banking; such examina- 
 tion to be at the expense of the company; provided, that said corpora- 
 tion organized under the provisions of this article shall have a paid-up 
 capital stock of not less than $100,000, and shall keep on deposit with 
 the State Treasurer money, bonds or other securities in an amount not 
 less than $50,000; and said securities be approved by the Commissioner 
 of Insurance and Banking, and that this amount be kept intact at all 
 times. And further providing that all foreign corporations transacting 
 the business of a guaranty and fidelity company in this State file with 
 the Commissioner of Insurance and Banking an affidavit showing that 
 such foreign company has on deposit with the State Treasurer of its 
 home State $100,000 or more, in money, bonds or other securities for 
 the protection of its policyholders. (E. S., Art. 4928, as amended by 
 Sec. 1, Chap. 66, Gen. Laws, 33d Leg.)' 
 
 Note. ( 1 ) A corporation organized for the purpose of erection or repair of 
 any building or improvement, accumulation and loaning of money for said pur- 
 poses, for the purchase, sale and subdivision of real property; to act as a 
 trustee, assignee, executor, administrator, guardian or receiver, to do a general 
 fiduciary and depository business, to act as surety and guarantor of the fidelity 
 of employes, go on bonds required in any judicial proceedings, to act as ex- 
 ecutor and testamentary guardian, to act as administrator or guardian when 
 appointed by court. Held, that a deposit of $50,000 must be made. (Attorney 
 General's opinion, June 9, 1898.) 
 
 (2) The deposit by a company under above law may be made by depositing 
 its own bonds secured by mortgage on its own property. (Attorney General's 
 opinion, October 24, 1901.) 
 
94 INSURANCE LAWS OF TEXAS. 
 
 (3) A company for the purpose of acting "as trustee, assignee, executor, 
 administrator, guardian or receiver, when designated by any person, corpora- 
 tion or court so to do and to do a general fiduciary and depository business," 
 must make and publish annual statement as prescribed in above section and 
 pay the fee for filing same; but such a company is not a guaranty and fidelity 
 company, and is not required to make the deposit mentioned. Any company, 
 however, before doing a guaranty, fidelity or surety business must make such 
 deposit in order to obtain a certificate of authority to do such business. (At- 
 torney General's opinion, November 11, 1905.) 
 
 (4) A company organized for the purpose of doing business as prescribed in 
 above section, may lawfully be licensed if it has a paid-up capital of $100,000, 
 notwithstanding its charter authorizes it to have a capital in excess of that 
 amount. (Opinion of Attorney General, August 29, 1910.) 
 
 (5) A company organized under the laws of another State, whose charter 
 authorizes it to do the kinds of business mentioned in above section as well as 
 other kinds of insurance, may be licensed to do the business mentioned in said 
 section if it has a paid-up capital of $100,000, although it has a larger author- 
 ized capital; but if it does any other class of business, its entire authorized 
 capital must be first paid up. (Opinion of Attorney General, August 29, 1910.) 
 
 (6) A company organized under the above section, before doing a fidelity 
 or surety business, must deposit the securities as therein mentioned; but it 
 may do the other kinds of insurance business as provided in its charter, except 
 fidelity and surety, without being required to make the deposit. (Opinion of 
 Attorney General, December 30, 1910.) 
 
 (7) A corporation organized under the laws of the State of Texas in Sec- 
 tion 37, Chapter 130, General Laws Twenty-fifth Legislature, as amended by 
 Section 1, Chapter 127, General Laws of Twenty -eighth Legislature, K. S., Art. 
 4928, and whose charter authorizes it to do a general surety business and make 
 fidelity bonds, should obtain a license from the Commissioner of Insurance and 
 Banking, and comply with all the laws governing fidelity, surety and guaranty 
 companies doing business in Texas. (Opinion of Attorney General, December 
 2, 1912.) 
 
 (8) A certificate of deposit is "Securities" within the meaning of the law, 
 and may be deposited by a bonding and surety company in the State Treasury. 
 (Opinion of Attorney General, April 19, 1913.) 
 
 (9) Corporate surety companies may become sureties on bonds of all State 
 and county officers, including tax collectors. (Opinion of Attorney General, 
 June 12, 1914.) 
 
 Bonds, Undertakings, Obligations, Recognizances or Guaranties May Be 
 Executed by Surety Companies. 
 
 251. Whenever any bond, undertaking, recognizance or other obli- 
 gation is, by law or charter, ordinances, rules and regulations of a 
 municipality, board, body, organization, court, judge or public officer, 
 required or permitted to be made, given, tendered or filed, and when- 
 ever the performance of any act, duty or obligation, or the refraining 
 from any act, is required or permitted to be guaranteed, such bond, un- 
 dertaking, obligation, recognizance or guarantee may be executed by a 
 surety company, qualified as hereinbefore provided; and such execution 
 by such company of such bond, undertaking, obligation, recognizance 
 or guaranty shall be in all respects a full and complete compliance with 
 every law, charter, rule or regulation that such bond, undertaking, obli- 
 gation, recognizance or guaranty shall be executed by one surety or by 
 one or more sureties, or that such sureties shall be residents, or house- 
 holders, or freeholders, or either, or both, or possess any other qualifica- 
 tion and all courts, judges, heads of departments, boards, bodies, munici- 
 palities, and public officers of every character, shall accept and treat 
 such bond, undertaking, obligation, recognizance or guaranty, when so 
 
INSURANCE LAWS OF TEXAS. 95 
 
 executed by such company, as conforming to, and fully and completely 
 complying with, every requirement of every such law, charter, ordinance, 
 rule and regulation; and provided any suit on any bond issued under 
 Articles 4928 and 4929, shall be brought at the place provided by 
 Article 4934, Eevised Statutes, 1911, and if the corporation issuing the 
 bond sued on has no agent in the county where said bond was issued 
 then the Commissioner of Insurance and Banking of this State is made, 
 by consent of said company, its agent on whom service of process may 
 be held. (E. S., Art. 4929, as amended by Section 1, Chap. 66, 33d Leg.) 
 
 A General Deposit for Benefit of All Creditors. 
 
 252. Requirements to Be Complied With. Such company, to be 
 qualified to so act as surety or guarantor, must comply with the re- 
 quirements of every law of this State applicable to such company doing 
 business therein, must be authorized under the laws of the State where 
 incorporated, and under its charter, to become surety upon such bond, 
 undertaking, obligation, recognizance or guaranty, must have a fully 
 paid up and safely invested and unimpaired capital of at least one hun- 
 dred thousand dollars; must have good available assets exceeding its 
 liabilities, which liabilities for the purpose of this chapter shall be taken 
 to be its capital stock, its outstanding debts and a premium reserve at 
 the rate of 50 per centum of the current annual premiums on each out- 
 standing bond, undertaking, recognizance and obligations of like char- 
 acter in force; must file with the Commissioner of Insurance, Statistics, 
 History and Agriculture (Commissioner of Insurance and Banking) a 
 certified copy of its certificate of incorporation, a written application 
 to be authorized to do business under this chapter, and, also, with such 
 application, and in each year thereafter a statement, verified under oath, 
 made up to December 31, preceding, stating the amount of its paid-up 
 cash capital, particularizing each item of investment, the amount of 
 premiums upon existing bonds, undertakings, recognizances and obliga- 
 tions of like character in force upon which it is surety; the amount of 
 liability for unearned portion thereof estimated at the rate of 50 per 
 centum of the current annual premiums on each such bond, undertaking, 
 recognizance and obligation in force, stating also the amount of its out- 
 standing debts of all kinds, and such further facts as may be by the 
 laws of this State required of such company in transacting business 
 therein ; and, if such company be organized under the laws of any other 
 State than this State, it must also have on deposit with a State officer 
 of one of the States of the United States, not less than one hundred thou- 
 sand dollars in good securities, deposited with and held by such officer 
 for the benefit of the holders of all its obligations wheresoever incurred ; 
 must also appoint an attorney in this State upon whom process of law 
 can be served, which appointment shall continue until revoked or another 
 attorney substituted, and must file with the Commissioner of Insurance, 
 Statistics and History and Agriculture (Commissioner of Insurance and 
 Banking) written evidence of such appointment, which shall state the 
 residence and office of such attorney; and such service of process may 
 also be made upon the Commissioner of Insurance of this State by 
 virtue of his office, and shall be as effective as if made upon said at- 
 torney; and must, also, have on deposit with the Treasurer of this State 
 
96 INSURANCE LAWS or TEXAS. 
 
 at least fifty thousand dollars in good securities worth at par and market 
 value at least that sum of the value of which securities the Commis- 
 sioner of Insurance shall judge, held for the benefit of the holders of 
 all the obligations of such company wheresoever incurred; said securi- 
 ties so deposited with said Treasurer to remain with him in trust to 
 answer any default of said company as surety upon any such bond, under- 
 taking, recognizance or other obligations established by final judgment 
 in whatsoever court and wheresoever rendered upon which execution may 
 lawfully be issued against said company; said Treasurer and his suc- 
 cessors in office being hereby directed to so receive and hereafter retain 
 such deposit under this act in trust for the purposes hereof; such com- 
 pany, however, at all times to have the right to collect the interest, divi- 
 dends and profits upon such securities, and, from time to time, to with- 
 draw such securities, or portions thereof, substituting therefor others 
 of equally good character and value, to the satisfaction of said Treas- 
 urer; and such securities and substitutes therefor shall be, at all times, 
 exempt from and not subject to levy under writ or process of attach- 
 ment; and further, shall not be sold under any process against such 
 company until after thirty days' notice to said company, specifying the 
 time, place, and manner of such sale, and the process under which and 
 purposes for which it is to be made accompanied by a copy of such 
 process; provided, however, that whenever any such company, domestic 
 or foreign, has been engaged in this State in the business contemplated 
 by this act, has made deposit in this State, in trust or otherwise, of 
 securities, to answer any default of such company upon any such bond, 
 undertaking, recognizance, guaranty or stipulation, such securities so 
 deposited shall be by the trustee or custodian thereof transferred and 
 delivered to said Treasurer of this State in trust for the same purposes 
 under and subject to all the rights and equities of all parties interested, 
 and to the terms and provisions of this act; and, thereupon, such deposit 
 shall remain in trust under and subject to the terms and provisions of 
 .this act;, and, whenever such deposit has been made with a trustee by 
 order of any court or other authority, it shall be the duty of the court 
 or other authority, by order or otherwise, to direct such transfer to said 
 Treasurer; and in case such deposit is less than the sum of fifty thou- 
 sand dollars, then said company must deposit with said Treasurer securi- 
 ties sufficient to increase said deposit to said sum of fifty thousand dol- 
 lars as required by this chapter; provided, domestic corporations char- 
 tered for the purpose of doing business under this chapter within this 
 State alone shall be required to deposit securities as hereinbefore pro- 
 vided for to the amount of twenty-five thousand dollars. (R. S., Art. 
 4930, as amended by House Bill No. 34, First Called Session, 37th Leg.) 
 
 Commissioner Sliall Issue Certificate, When. 
 
 253. That the Commissioner of Insurance and Banking, upon due 
 proof by any such company of its possessing the qualifications in this 
 chapter specified, shall issue to such company a certificate setting forth 
 that such company has qualified, and is authorized for the ensuing year 
 to do business under this chapter, which said certificate shall be evidence 
 of such qualification of such company, and of its authorization to be- 
 come and to be accepted as sole surety on all bonds, undertakings, recog- 
 
INSURANCE LAWS OF TEXAS. 97 
 
 nizances and obligations required or permitted by law or the charter, 
 ordinances, rules or regulations of any municipality, board, body, organi- 
 zation or public officer, and the solvency or credit of such company for 
 all purposes, and its sufficiency as such surety. (R. S., Art. 4931.) 
 
 May Surrender Certificate of Qualification, But Must File With State 
 Treasurer Bond to Cover Liabilities, Before Withdrawing Securities. 
 
 254. That any such company, domestic or foreign, may at any time 
 surrender to the Commissioner of Insurance and Banking its said cer- 
 tificate of qualification, and shall thereupon cease to engage in said 
 business of suretyship; and such company shall thereupon be entitled 
 to the release and return of its said deposit as aforesaid, in manner 
 following: Said company shall file with said Commissioner of Insur- 
 ance and Banking a statement in writing, under oath, giving the date, 
 name and amount of all its then existing obligations of suretyship in 
 this State, briefly stating the facts of each case to said Commissioner 
 of Insurance and Banking, who, after examination of the facts, shall 
 require said company to file with the Treasurer of this State a bond, 
 payable to the State, in a sum equal to the whole amount of its liability 
 in this State, under its contracts, conditioned for the faithful perform- 
 ance and fulfillment of all its outstanding obligations, or it may, at 
 its option, reinsure its risks in some surety company authorized to do 
 business in this State, or cancel all bonds on which it is liable, and 
 return a pro rata of the premium received thereon, whenever such can- 
 cellation and return can be done without impairing its obligations to 
 third parties. (R. S., Art. 4932.) 
 
 Note. ( 1 ) Securities may be withdrawn when the company makes proper 
 statement under oath showing compliance with requirements of the law. Such 
 showing is incomplete unless full amount of each outstanding obligation be 
 given; where obligations or bonds are or have been in litigation, full and final 
 discharge by the court must be shown to obtain release or liability; certified copy 
 of resolution by board of directors authorizing surrender of qualification cer- 
 tificate and withdrawal of securities, together with authenticated showing as 
 to number of directors, number present, and votes for and against the resolu- 
 tion,, should also be furnished; and the list of outstanding obligations should 
 show the date, character, full amount, and name of principal signing each. 
 (Opinion of Attorney General, February 25, 1911.) 
 
 (2) The bond required to be filed before securities are withdrawn cannot 
 be made to cover judgments already rendered and appealed, but a sufficient 
 amount of securities to pay off such judgments, should they become final, must 
 be retained in the State Treasury. An examination of the company's affairs 
 should be made to ascertain its outstanding liabilities and fix amount of bond 
 required. (Opinion of Attorney General, November 16, 1911.) 
 
 (3) A surety company desiring to withdraw from the State and be per- 
 mitted to withdraw its deposit in the State Treasury, as a ground for such 
 withdrawal files with the Commissioner of Insurance and Banking a reinsur- 
 ance contract by which its business is reinsured in a company authorized to do 
 business in Texas, a provision in such reinsurance contract that the reinsuring 
 company shall not admit or deny a liability on any bond of the reinsured com- 
 pany unless by consent of the latter, vitiates the contract to the extent that 
 withdrawal of the securities should not be permitted, the reinsurance not being 
 absolute but merely tentative. (Opinion of Attorney General, December 26, 
 1912.) 
 
 (4) In order for a security company to withdraw securities deposited by 
 it with the State Treasurer it must first file with the Commissioner of In- 
 surance and Banking a statement in .writing under oath, giving the date, 
 
98 INSURANCE LAWS OF TEXAS. 
 
 name and amount of all its present existing obligations of suretyship, stating 
 briefly the facts of each case. After examination of the facts thus disclosed the 
 Commissioner must require the company to file with the State Treasurer a 
 bond payable to the State in a sum equal to the whole amount of its liability 
 under its contracts, conditioned for the faithful performance of all its out- 
 standing obligations. Included within its obligations is the company's reinsur- 
 ance reserve. In lieu of the bond, however, the company may at its option re- 
 insure its risks in some surety company authorized to do business in this State, 
 or it may cancel all bonds on which it is liable and return the pro rata of the 
 premiums received thereon, when such acts can be done without impairing its 
 obligations to third parties. The statement under oath referred to, taken in 
 connection with the reinsurance contract, should show that all obligations in 
 the company arising out of surety bond contracts have been taken care of either 
 by expiration, cancellation or reinsurance. The reinsurance contract should 
 clearly show that it is made for the benefit of those holding the bond con- 
 tracts of the reinsured company and that the holders of such contracts could 
 recover against the reinsuring company. The officers of the company must be 
 authorized by the directors, and the directors in turn by the shareholders be- 
 fore this character of reinsurance contract can be effectuated and before the 
 securities can be withdrawn from the Treasury. In a case where the officers 
 have already made the sworn statement and executed the reinsurance contract, 
 these acts should be approved by the shareholders and then the directors and 
 officers should be authorized to withdraw the securities from the State Treas- 
 ury. (Opinion of Attorney General, February 18, 1916.) 
 
 Company May Withdraw From Bond. 
 
 255. Any surety company may withdraw from the bond of any trus- 
 tee, guardian, assignee, receiver, executor, administrator or other fidu- 
 ciary, in like manner and by like proceedings as is now provided by 
 law in the case of individual sureties. (E. S., Art. 4933.) 
 
 Note. Where a bonding company is placed in the hands of a receiver it is 
 necessary for parties secured under its bond contracts to give new bonds or 
 obtain other sureties on such contracts. (Opinion of Attorney General, October 
 14, 1915.) 
 
 May Be Sued in County Where Bond Is Filed. 
 
 256. If any suit be instituted upon any bond or obligation of any 
 surety company, the proper court of the county wherein said bond is 
 filed shall have jurisdiction of said cause, and service therein shall be 
 made, either upon the attorney for said company, by this act required 
 to be appointed, or upon the Commissioner of Insurance and Banking 
 and such service shall be to all intents valid and effectual as service 
 upon said company. And such guaranty, fidelity and surety companies 
 shall be deemed resident of the counties wherever they may do business, 
 and the doing or performing of any business in any county shall be 
 deemed an acceptance of the provisions of this chapter. (E. S., Art. 
 4934.) 
 
 Note. The above statute (Sec. 256) authorizes service of process on the 
 Commissioner of Insurance and Banking as the statutory representative of for- 
 eign insurance companies and the revocation of a company's power of attorney 
 appointing said Commissioner its attorney for service, does not affect this stat- 
 utory provision. (Opinion of Attorney General, June 7, 1917.) 
 
 State Treasurer to Pay Claims When Company Has Defaulted. 
 
 257. Defaulting Company; Claims Paid, How. Should any com- 
 pany of the character named or enumerated in this chapter fail or re- 
 
INSURANCE LAWS OF TEXAS. 99 
 
 fuse to pay any loss by it wheresoever incurred within sixty days after 
 its liability thereupon shall have been finally determined by the judg- 
 ment of any court of competent jurisdiction wheresoever rendered, upon 
 satisfactory proof, to the Treasurer of this State, of such liability and 
 of its non-payment, said Treasurer shall, out of the deposits so made 
 with him, as by this chapter provided, pay said loss, and when he shall 
 have done so, he shall at once certify to the Commissioner of Insurance 
 and Banking the fact of such default on the part of said company; 
 whereupon said Commissioner shall forthwith cancel and annul the 
 certificate of authority of such company to do business in this State; 
 provided, that such payment shall not operate to release the company 
 from payment of any balance which it still may owe after such pay- 
 ment by the Treasurer of this State has been made. (R. S., Art. 4935, 
 as amended by House Bill No. 34, First Called Session, 37th Leg.) 
 
 Note. ( 1 ) The word "loss" as used in above statute means a loss under a 
 policy or contract of the company and not a judgment obtained against the 
 company as garnishee. (Opinion of Attorney General, December 11, 1915.) 
 
 (2) The above statute is not sufficient to authorize the Treasurer to sell the 
 securities on deposit with him and obtain money with which to pay the obliga- 
 tions of the defaulting surety company. In such case, however, the holders of 
 the obligations of the company can apply to a court of equity for a receiver, 
 which court may proceed to carry into effect the original purposes of the trust. 
 (Opinion of Attorney General, June 7, 1917.) 
 
 Shall Be Held to Be the Agent. 
 
 258. Any person who solicits business for or on behalf of such 
 corporation, or makes or transmits for any person other than himself, 
 any application for guaranty or security, or who advertises or other- 
 wise gives notice that he will receive or transmit same, or who shall 
 receive or transmit same, or who shall receive or deliver a contract of 
 guaranty or security, or who shall examine or investigate the character 
 of any applicant for guaranty or security than himself, or who shall 
 refer any applicant for guaranty or security to such corporation, whether 
 any of said acts shall be done at the instance and request, or by the 
 employment of such corporation, or other corporation or person, or any 
 person who shall issue indemnifying bonds or contracts, whose solvency 
 and compliance with his said bonds or obligations is guaranteed directly 
 or indirectly by any corporation, shall be held to be the agent of such 
 corporation, so far as relates to all the liabilities and penalties pre- 
 scribed by this chapter. (E. S., Art. 4936.) 
 
 Five Hundred Dollar Penalty for Accepting Corporation Which Has Not 
 Complied With the Law. 
 
 259. Any person, association of persons or corporations, who shall 
 accept any corporation created for the purposes, or either of them, mem- 
 tioned in Article 4928 (Sec. 250) without such corporation having pre- 
 viously complied with the provisions and requirements of this chapter, 
 and having received from the Commissioner of Insurance and Banking 
 the certificate of authority provided for in this chapter, shall forfeit 
 as a penalty the sum of five hundred dollars, to be recovered by suit in 
 the name of the State in any court of competent jurisdiction. (R. S., 
 Art. 4937.) 
 
100 INSURANCE LAWS OF TEXAS. 
 
 When Bond Has Been Canceled, Statement for Cause Must Be Made in 
 Writing. 
 
 260. When any corporation shall cancel a bond of guaranty or 
 indemnity, or shall notify the employer of the person whose fidelity is 
 guaranteed, that said corporation will no longer guarantee or be secur- 
 ity for the fidelity of said person, or when said corporation has once 
 guaranteed the fidelity of any person, or acted as security therefor, and 
 on application refuses to do so again, it shall furnish to such person a 
 full statement in writing of the facts on which the action of the cor- 
 poration is based, and if such action be based in whole or in part on in- 
 formation, all such information; and any such corporation failing or 
 refusing to furnish any such written statement within thirty days after 
 a request therefor shall be liable to such person injured in the sum of 
 five hundred dollars in addition to all other damages caused thereby, 
 which may be sued for and recovered in any court of competent juris- 
 diction. (E. S., Art. 4938.) 
 
 Commissioner Shall Revoke Certificate of Authority, When. 
 
 261. If any such corporation shall fail or refuse to comply with the 
 provisions of this chapter, the Commissioner of Insurance and Bank- 
 ing shall revoke the certificate of authority issued said corporation. 
 (R. S., Art. 4939.) 
 
 Charged With Public Use. 
 
 262. Corporations created for the purposes mentioned in Article 
 4928 (Sec. 250) are hereby declared to be charged with a public use. 
 (R. S., Art. 4940.) 
 
 CHAPTER XIII. 
 
 GENERAL PROVISIONS APPLIES TO VARIOUS COMPANIES. 
 
 Must Publish Certificate of Commissioner. 
 
 263. It shall be the duty of every insurance company doing busi- 
 ness in this State, whether life, health, fire, marine or inland, to pub- 
 lish annually, within thirty days after the issuance thereof, a certifi- 
 cate from the Commissioner of Insurance and Banking that such com- 
 pany has in all respects complied with the laws in relation to insurance. 
 (R. S., Art. 4939.) 
 
 Companies Organized in This State Unlawful Dividends. 
 
 264. It shall not be lawful for any life, health, marine or inland 
 insurance company organized under the laws of this State to make 
 any dividend except from the surplus profits arising from its business; 
 and in estimating such profits there shall be reserved therefrom a sum 
 equal to 40 per cent of the amount received as premiums on unex- 
 pired fire risks and policies, and 100 per cent of the premiums received 
 on unexpired life, health, marine or inland transportation risks and 
 policies; which amount so reserved is hereby declared to be unearned 
 premiums; and there shall also be reserved the amount of all unpaid 
 losses, whether adjusted or unadjusted; all sums due the company on 
 
INSURANCE LAWS OF TEXAS. 101 
 
 bonds, mortgages, stock and book accounts, of which no part of the 
 principal or interest thereon has been paid during the year preceding 
 such estimate of profit, and upon which suit for foreclosures or collec- 
 tions has not been commenced, or which, after judgment has been ob- 
 tained thereon, shall have remained more than two years unsatisfied, 
 and upon which interest shall not have been paid; and in case of any 
 such judgment, the interest due or accrued thereon and remaining un- 
 paid shall also be reserved. (R. S., Arts. 4867 and 4944.) 
 
 Penalty for Making Unlawful Dividends. 
 
 265. Any dividend made contrary to the provisions of the preced- 
 ing article shall subject the company making it to a forfeiture of its 
 charter, and the Commissioner of Insurance and Banking shall forth- 
 with revoke its certificate of authority. (R. S., Art. 4868.) 
 
 Association of Companies Not Permitted to Do Business Until. 
 
 266. In the event that any number of insurance companies, whether 
 life, health, fire, marine or inland, should associate themselves together 
 for the purpose of issuing or vending policies or joint policies of insur- 
 ance, such association shall not be permitted to do business in this 
 State until the taxes and fees due from each of said companies shall 
 have been paid and all the conditions of the law fully complied with 
 by each company; and any company failing or refusing to pay such 
 taxes and fees, and to fully comply with the requirements of law, shall 
 be refused permission by the Commissioner of Insurance and Banking 
 to do business in this State. (R. S., Art. 4945.) 
 
 Non-Competing Insurance Companies May Consolidate. 
 
 267. Any two or more insurance companies doing a similar line of 
 business which are and have been substantially owned by same con- 
 trolling stockholders and which have never been actually competing 
 companies with each other, and where all of them have been previously 
 organized under the laws of this State, may unite or consolidate upon 
 a compliance with the terms of this act; provided, that such consolida- 
 tion shall not be effectuated in violation of the Anti-Trust and Anti- 
 Monopoly Laws of this State. (Acts 36th Leg., Chap. 57, Sec. 1.) 
 
 Before Consolidating Stockholders' Meetings Must Be Called. 
 
 268. Before any such consolidation shall take place the parties hold- 
 ing at least two-thirds of the capital stock of each of the companies 
 shall vote in favor thereof at a separate meeting of the stockholders of 
 each company called for such purpose. Such meeting may be called 
 in the manner provided in the by-laws of the respective companies or 
 the laws under which such companies are organized, for calling special 
 meetings of stockholders, except that each stockholder shall be notified 
 by mail of the time and place and object of such meeting. (Acts 36th 
 Leg., Chap. 57, Sec. 2.) 
 
 May Unite Assets Under New Name or Name of One of the Consolidating 
 Companies Proportionate Value of Stock in Consolidated Companies. 
 
 269. Such companies proposing to consolidate may unite their assets 
 or any part thereof and become incorporated in one body under the name 
 
102 INSURANCE LAWS OF TEXAS. 
 
 of any one or more of such companies or under any other name that 
 may be agreed upon, and issue stock in such corporation to the stock- 
 holders of each of the companies consolidated, the actual value of which 
 stock in the new company shall bear the same proportion to the actual 
 value of the stock surrendered by such stockholder as the entire assets 
 of the company surrendering such stock bears to the entire assets of the 
 new company which value shall be agreed upon by the Board of Direc- 
 tors of each company; provided, that said stockholders (holding two- 
 thirds of the stock) may at the meeting provided for in Section 2 of 
 this act, delegate the valuation of assets to a committee of stockholders 
 appointed by their respective Boards of Directors. (Acts 36th Leg., 
 Chap. 57, Sec. 3.) 
 
 One Company May Take Over Assets of the Others and Increase Its 
 Capital Stock. 
 
 270. Instead of the method provided in Section 3 of this act, one 
 company may take over all the assets of the other companies proposing 
 to consolidate and issue stock to their stockholders in proportion that 
 the value of their stock bears to the entire value of the assets of the 
 company in which they are stockholders, and for this purpose the cap- 
 ital stock of such purchasing company may be increased, as now or 
 may be hereafter provided by law. (Acts 36th Leg., Chap. 57, Sec. 4.) 
 
 Commissioner, When the Companies Have Been Consolidated, to Issue 
 Charter. 
 
 271. In case of consolidation under Section 3 of this act the Insur- 
 ance Commissioner shall upon proof furnished of a compliance with the 
 terms hereof and being satisfied that the proposed consolidation is for 
 the best interests of the policyholders of the respective companies and 
 made in accordance with law, and upon the filing of articles of incor- 
 poration and other due proceedings had as required by the laws of this 
 State, issue and deliver a charter to such new company. (Acts 36th 
 Leg., Chap. 57, Sec. 5.) 
 
 Consolidation Shall Work Dissolution of Absorbed Companies, Without 
 Prejudice, Ho"wever, to Bights of Interested Parties. 
 
 272. Such consolidation shall work a dissolution of the companies 
 absorbed who shall in nowise prejudice the right of any creditors of 
 any such corporation to have payment of his debt out of the assets and 
 property thereof, nor shall any creditor be thereby ^deprived of, nor 
 prejudiced in any right of action then pending or existing or which may 
 thereafter arise against said company, and service or summons of the 
 proper officers or agents of such new or reorganized corporation shall 
 be deemed sufficient as to all or any of such companies. (Acts 36th 
 Leg., Chap. 57, Sec. 6.) 
 
 All Outstanding- Policies of the Consolidating Companies Shall Be As- 
 sumed by the Reorganized Company. 
 
 273. All policies of insurance outstanding against all such com- 
 panies shall by reason of such consolidation be assumed by the reor- 
 ganized company, and they shall carry out the terms of such policy on 
 the part of the insurer and be entitled to all the rights and privileges 
 
INSURANCE LAWS OF TEXAS. 103 
 
 thereof and the reserves accumulating on such policy prior to such con- 
 solidation. (Acts 36th Leg., Chap. 57, Sec. 7.) 
 
 Notices Shall Be Published Three Successive Weeks in Two Papers. 
 
 274. Whenever by any provision of this title any notice or other 
 matter is required to be published, it shall, unless otherwise provided, 
 be published for three successive weeks in two newspapers printed in 
 the State and which have a general circulation in the State. (R. S., 
 Art. 4946.) 
 
 Annual Tax, and Denning Gross Premiums. 
 
 275. Every insurance company transacting the business of fire, 
 marine, marine inland, accident, credit, title, live stock, fidelity, guar- 
 anty, surety, casualty or any other kind or character of insurance busi- 
 ness other than the business of life insurance, within this State, and 
 other than Fraternal Benefit Associations, at the time of filing its an- 
 nual statement, shall report to the Commissioner of Insurance and 
 Banking the gross amount of premiums received in the State upon 
 property, and from persons residing in this State during the preceding 
 year, and each of such companies shall pay an annual tax upon such 
 gross premium receipts as follows: Shall pay a tax of two and six- 
 tenths per cent; provided, that any company doing two or more kinds 
 of insurance business herein referred to, shall pay the tax herein levied 
 upon its gross premiums received from each of said kinds of business; 
 and the gross premium receipts where referred to in this act are under- 
 stood to be the premium receipts reported to the Commissioner of In- 
 surance and Banking by the insurance companies upon the sworn state- 
 ment of two principal officers of such company, less return premiums 
 paid policyholders, and to the premiums paid for reinsurance in com- 
 panies authorized to do business in this State. (Acts 32d Leg., Chap. 
 108, Sec. 1.) 
 
 Note. Casualty companies, home companies organized in Texas, are not ex- 
 empt from payment of the taxes on their gross premium receipts. (Opinion 
 of Attorney General, January 18, 1915.) 
 
 Manner of Collecting Taxes. 
 
 276. Upon receipts by him of sworn statements, showing the gross 
 premium receipts by such companies, the Commissioner shall certify 
 to the State Treasurer the amount of taxes due (by) each company, 
 which tax shall be paid to the State Treasurer for the use of the State 
 on or before the first of March following, and the receipt of the Treas- 
 urer shall be evidence of the payment of such taxes. No such insur- 
 ance company shall receive a permit to do business in this State until 
 such taxes are paid. (Acts 32d Leg., Chap. 108, Sec. 1.) 
 
 Note. Where an insurance company, through an error, reports to the Com- 
 missioner of Insurance and Banking gross amount of premiums and pays to the 
 Treasurer taxes due thereon, which gross receipts, and consequently the taxes 
 paid thereon, were in excess of the actual amount of gross receipts upon which 
 taxes were due, the Commissioner would have no authority to permit the 
 deduction of such excess amount from the subsequent year's report and permit 
 the payment of a gross receipt tax for such subsequent year less the exces- 
 
104 INSURANCE LAWS OF TEXAS. 
 
 sive amount paid for the previous year. (Opinion of Attorney General, June 
 17, 1919.) 
 
 Certain Investments Will Reduce Taxes Municipal and County Occupa- 
 tion Taxes Prohibited Fraternal Beneficiary Associations Exempt. 
 
 277. If any such, insurance company shall have as much as one- 
 fourth of its entire assets, as shown by said sworn statement, invested 
 in any or all of the following securities: Eeal estate in the State of 
 Texas, bonds of this State or of any county, incorporated city or town 
 of this State, or other property in this State in which by law such 
 companies may invest their funds, then the annual tax of any such 
 companies shall be one per cent of its said gross premium receipts, 
 and if any such company shall invest as aforesaid as much as one- 
 half of its assets, then the annual tax of such company shall be one- 
 half of one per cent of its gross premium receipts, as above denned; 
 and provided further, that no occupation tax shall be 'levied on in- 
 surance companies herein subjected to a gross premium receipt tax 
 by any county, city or town; provided, also, that all mutual fraternal 
 benevolent associations, now or hereafter doing business in this State 
 under the lodge system and on the assessment plan, whether organized 
 under the laws of this State or a foreign state or country, are exempt 
 from the provisions of this section. (Acts 32d Leg., Chap. 108, Sec. 1.) 
 
 No Other Taxes Can Be Levied or Collected, But Fire Insurance Companies 
 Must Pay Expenses of State Insurance Board Purely Co-operative or 
 Mutual Fire Insurance Companies Are Exempt From Provisions of 
 This Act. 
 
 278. The taxes aforesaid shall constitute all taxes and license fees 
 collectible under the laws of this State against any such insurance 
 companies, and no other occupation or other taxes shall be levied on or 
 collected from any insurance company by any county, city or town, 
 but this act shall not be construed to prohibit the levy and collection 
 of State, county and municipal taxes upon the real and personal prop- 
 erty of such companies ; provided, that purely co-operative or mutual fire 
 insurance companies carried on by the members thereof solely for the 
 protection of their own property, and not for profits, shall be exempt 
 from the provisions of this bill; provided, that in addition to the tax 
 above prescribed, each company doing the business herein referred to 
 and affected by the provisions of the act of the Fourth Called Session 
 of the Thirty-first Legislature, approved September 6, 1910, and pub- 
 lished as Chapter 8, General Laws of said session, shall pay its pro rata 
 share of the charge or cost of maintaining the State Insurance Board as 
 provided by Section 28 of said act, approved September 6, 1910, and 
 published as Chapter 8 of the General Laws of the Fourth Called Ses- 
 sion of the Thirty-first Legislature; and provided further, that portion 
 of Section 28 of the State Insurance Board Law which reads as fol- 
 lows: "Provided, that the collections from insurance companies pro- 
 vided for in this section shall not be made for any year during which 
 any such company shall be liable under the laws of this State to the 
 payment of an occupation tax at a rate of two and one-half per cent or 
 more of the gross premiums received, less deductions for reinsurance 
 
INSURANCE LAWS OF TEXAS. 105 
 
 and return premiums on canceled policies," be and the same is hereby 
 repealed. (Acts 32d Leg., Chap. 108, Sec. 1.) 
 
 Note. (1) A surety company, making bonds required by the United States 
 government under a license granted under an Act of Congress, does not thereby 
 become a Federal agency, and the premiums collected on such bonds are not 
 exempt from taxation. (Opinion of Attorney General, March 1, 1910.) 
 
 (2) A company, licensed to do a life insurance business and an accident 
 insurance business, and which withdraws from the State as to its life business, 
 is not required to pay taxes on premiums on renewals on its life business in 
 order to obtain a license to continue its accident business. (Opinion of Attor- 
 ney General, September 29, 1910.) 
 
 Repealing Clause. 
 
 279. All laws and parts of laws in conflict herewith are hereby re- 
 pealed. (Acts 32d Leg., Chap. 108, Sec. 2.) 
 
 Misrepresentation Must Be Material to Avoid Contract on That Ground. 
 
 280. Any provision in any contract or policy of insurance issued 
 or contracted for in this State, which provides that the answers or 
 statements made in the application of such contract, or in the con- 
 tract of insurance, if untrue or false, shall render the contract or policy 
 void or voidable, shall be of no effect and shall not constitute any 
 defense to any suit brought upon such contract, unless it be shown 
 upon the trial thereof that the matter or thing misrepresented was 
 material to the risk or actually contributed to the contingency or event 
 on which said policy became due and payable, and whether it was ma- 
 terial or so contributed in any case, shall be a question of fact to be 
 determined by the court or jury trying such case. (E. S., Art. 4947.) 
 
 No Defense Based Upon Misrepresentation Valid Unless Defendant Shall 
 Within Reasonable Time After Discovering the Falsity Give Notice. 
 
 281. That in all suits brought upon insurance contracts or policies 
 hereafter issued or contracted for in this State, no defense based upon 
 misrepresentations made in the application for or in obtaining or secur- 
 ing the said contract shall be valid, unless the defendant shall show 
 on the trial that within a reasonable time after discovering the falsity 
 of the misrepresentations so made it gave notice to the assured, if liv- 
 ing, or, if dead, to the owners or beneficiaries of said contract, that it 
 refused to be bound by the contract or policy; provided, that ninety 
 days shall be a reasonable time ; provided also, that this article shall not 
 be construed as to render available as a defense any immaterial misrep- 
 resentation, nor to in anywise modify or affect Article 3096aa (4947). 
 (R. S., Art. 4948.) 
 
 Shall Not Constitute Defense Unless Shown That False Statement Made 
 Was Fraudulently Made and Material. 
 
 282. That any provision in any contract or policy of insurance is- 
 sued or contracted for in this State, which provides that the same 
 shall be void, or voidable, if any misrepresentations or false statements 
 be made in proofs of loss or of death, as the case may be, shall be of 
 no effect, and shall not constitute any defense to any suit brought upon 
 such contract or policy, unless it be shown upon the trial of such suit 
 that the false statement made in such proofs of loss or death was fraud- 
 
106 INSURANCE LAWS or TEXAS. 
 
 ulently made, and misrepresented a fact material to the question of the 
 liability of the insurance company upon the contract of insurance sued 
 on, and that the insurance company was thereby misled, and caused to 
 waive or lose some valid defense to the policy. (E. S., Art. 4949.) 
 
 The Insurance Contract Governed by Laws of Texas Notwithstanding 
 Stipulations to the Contrary. 
 
 283. That any contract of insurance payable to any citizen or in- 
 habitant of this State by any insurance company or corporation doing 
 business within this State shall be held to be a contract made and en- 
 tered into under and by virtue of the laws of this State relating to 
 insurance and governed thereby, notwithstanding such policy or con- 
 tract of insurance may provide that the contract was executed and the 
 premiums and policy (in case it becomes a demand) shall be payable 
 without this State, or at the home office of the company or corporation 
 
 issuing the same. (E. S., Art. 4950.) 
 
 * 
 
 No Agreement Shortening Period of Limitation Valid. 
 
 284. It shall be unlawful for any person, firm, corporation, associa- 
 tion, or combination of whatsoever kind to enter into any stipulation, 
 contract or agreement, by reason whereof the time in which to sue 
 thereon is limited to a shorter period than two years. And no stipula- 
 tion, contract or agreement for any such shorter limitation in which to 
 sue shall ever be valid in 'this State. (E. S., Art. 5713.) 
 
 Notice of Claims for Damages; Rule as to. 
 
 285. No stipulation in any contract requiring notice to be given of 
 any claim for damages as a condition precedent to the right to sue 
 thereon shall ever be valid, unless such stipulation is reasonable ; and 
 any such stipulation fixing the time within which such notice shall be 
 given at a less period than ninety days shall be void, and, when any 
 such notice is required, the same may be given to the nearest or to any 
 other convenient local agent of the company requiring the same; pro- 
 vided, that no stipulation in any contract between a person, corporation 
 or receiver operating railroad, or street railway, or interurban railroad, 
 and an employe or servant requiring notice of a claim by an employe or 
 servant for damages for injury received to the person, or by a husband, 
 wife, father, mother, child or children of a deceased employe for his or 
 her death, caused by negligence as a condition precedent to liability, 
 shall ever be valid. In any suit brought under this and the preceding 
 article it shall be presumed that notice has been given, unless the want 
 of notice is especially pleaded under oath. (E. S., Art. 5714.) 
 
 Note. An accident and health insurance policy containing the provision that: 
 "Written notice of injury or sickness on which claim may be based, shall be 
 given to the association within twenty days after the date of the accident caus- 
 ing such injury or within ten days after the commencement of disability from 
 such sickness," should not be approved by the Commissioner of Insurance and 
 Banking, because said provision in the policy is in conflict with the provisions 
 of Article 5714 of the Revised Statutes of Texas, which requires that no stipu- 
 lation in a contract fixing the time within which notice of any claim for dam- 
 ages shall be given, as a condition precedent to t the right to sue thereon, at a 
 less period than ninety days, shall be valid. (Opinion of Attorney General. 
 July 22, 1921.) 
 
INSURANCE LAWS OF TEXAS. 107 
 
 Photographic Copy of Contracts Act Does Not Apply in Which There Is 
 a Clause in Policy Making It Indisputable After Two Years or Less, 
 Provided, Etc. 
 
 286. Every contract or policy of insurance issued or contracted for 
 in this State shall be accompanied by a written, photographic or printed 
 copy of the application for such insurance policy or contract, as well 
 as a copy of all questions asked and answers given thereto. The pro- 
 visions of the foregoing articles shall not apply to policies of life in- 
 surance in which there is a clause making such policy indisputable 
 after two years or less, provided premiums are duly paid ; provided fur- 
 ther, that no defense based upon misrepresentation made in the ap- 
 plication for or in obtaining or securing any contract of insurance upon 
 the life of any person being or residing in this State shall be valid 
 or enforcible in any suit brought upon such contract two years or more 
 after the date of its issuance when premiums due on such contract 
 for the said term of two years have been paid to and received by the 
 company issuing such contract without notice to the assured by the 
 company so issuing such contract of its intention to rescind the same 
 on account of misrepresentations so made, unless it shall be shown on 
 the trial that such misrepresentation was material to the risk and in- 
 tentionally made. (E. S., Art. 4951.) 
 
 Level Premium Policy Shall Not Be Issued Providing for More Than 
 One Year Preliminary Term. 
 
 287. No level premium policy of life insurance shall be issued or 
 sold by any company in this State after December 31, 1909, which pro- 
 vides for more than one year preliminary term insurance. (E. S., 
 Art. 4952.) 
 
 Policies Shall Contain Entire Contract. 
 
 288. Every policy of insurance issued or delivered within this State 
 on or after the first day of January, 1910, by any life insurance com- 
 pany doing business within this State, shall contain the entire con- 
 tract between the parties, and the application therefor may be made 
 a part thereof. (E. S., Art. 4953.) 
 
 Note. This section repeals Section 286 of this Digest. (Department ruling.) 
 
 Companies Shall Not Permit Distinctions. 
 
 289. No insurance company doing business in this State shall make 
 or permit any distinction or discrimination in favor of individuals be- 
 tween insurants (the insured) of the same class and of equal expecta- 
 tion of life in the amount of or payment of premiums or rates charged 
 for policies of life endowment insurance or in the dividends or other 
 benefits payable thereon; nor shall any such company or agent thereof 
 make any contract of insurance or agreement as to such contract other 
 than as expressed in the policy .issued thereon, nor shall any such 
 company or any officer, agent, solicitor or representative thereof pay, 
 allow or give, or offer to pay, allow or give, directly or indirectly, as an 
 inducement to insurance any rebate of premium payable on the policy, 
 or any special favor or advantage in the dividends or other benefits 
 to accrue thereon or any paid employment or contract for service of 
 
108 INSURANCE LAWS or TEXAS. 
 
 any kind, or any valuable consideration or inducement whatever not 
 specified in the policy contract of insurance; or give, sell or purchase, 
 or offer to give, sell or purchase, as an inducement to insurance, or in 
 connection therewith, any stocks, bonds or other securities of any in- 
 surance company or other corporation, association or partnership or 
 any dividends or profits to accrue thereon or anything of value what- 
 soever not specified in the policy, or issue any policy containing any 
 special or board contract or similar provision, by the terms of which 
 said policy will share or participate in any special fund derived from 
 a tax or a charge against any portion of the premium on any other 
 policy. Any company or agent violating the provisions of this article 
 shall be deemed 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, and the said company shall as an additional 
 penalty forfeit its certificate of authority to do business in this State, 
 and the said agent shall as an additional penalty forfeit his license to 
 do business in this State for one year; provided, the company shall not 
 be held liable under this article for any act of its agent unless such 
 act was authorized by its president, one of its vice-presidents, its secre- 
 tary or assistant secretary, or by its board of directors. (P. C., 643, 
 and E. S., Art. 4954.) 
 
 Note. ( 1 ) Policies of accident insurance, which promise to pay to the holder, 
 if he renews the policy for a second year, a benefit greater by 10 per cent than 
 the benefit given the first year, and if renewed the third year, a benefit of 20 
 per cent greater, and so on, increasing the benefit 10 per cent on each annual 
 renewal for five years, at. the same annual premium rate, should not be per- 
 mitted to issue in this State because forbidden by the law prohibiting rebates 
 and discrimination. Contracts already in existence, however, under which such 
 accumulations have accrued or will accrue may be carried out according to 
 their terms; but no new contract promising such accumulations can be law- 
 fully made. (Opinions of Attorney General, July 21 and September 21, 1911.) 
 
 (2) Accumulations on accident policies mentioned in opinions of Attorney 
 General above noted are forbidden and prohibited on and after October 1, 1911. 
 (Department ruling.) 
 
 (3) It is no violation of the law for a company to collect a policy fee in 
 excess of the usual premium when for the first time it issues a policy on the 
 industrial or weekly or monthly premium plan. (Opinion of Attorney General, 
 November 21, 1911.) 
 
 (4) Survivorship fund contracts are prohibited by the provision of this 
 act. (Opinion of Attorney General, May 23, 1913.) 
 
 (5) Survivorship fund contracts and all similar contracts written by life 
 insurance companies are illegal and should be forbidden. Such contracts, how- 
 ever, as have already .been issued are valid and binding. (Opinion of Attorney 
 General, July 10, 1913.) 
 
 (6) Acceptance of note without interest in payment of premiums is dis- 
 crimination and a rebate. When a note is taken by a company or any of its 
 agents, the interest rate on every such note must 'be the same. (Department 
 ruling, December 9, 1913. Opinion of Attorney General, December 20, 1913.) 
 
 Shall Apply to All Companies. 
 
 290. All the provisions of the laws of this State applicable to the 
 life, fire, marine, inland, lightning or tornado insurance companies 
 shall, so far as the same are applicable, govern and apply to , all com- 
 panies transacting any other kind of insurance business in this State 
 
INSURANCE LAWS OF TEXAS. 109 
 
 so far as they are not in conflict with the provisions of law made specially 
 applicable thereto. (R. S., Art. 4955.) 
 
 Note. Article 4955, R. S., has been held by the courts of this State not ap- 
 plicable to surety companies. (Opinion of Attorney General, January 7, 1918.) 
 
 Corporations May Be Incorporated to Transact One or More Kinds of 
 Insurance Business. 
 
 291. Corporations may be incorporated under the laws of this State 
 to transact any one or more kinds of insurance business other than 
 life, fire, marine, inland, lightning or tornado insurance business in 
 the same manner and by complying with the same requirements as pre- 
 scribed by law for the incorporation of life insurance companies; pro- 
 vided, that no such company shall be incorporated having the power 
 to do a fidelity and surety business or a liability insurance business 
 with a paid-up capital stock of less than $200,000.00. (R. S., Art. 
 4956.) 
 
 Shall Not Apply to Fraternal Beneficiary Associations. 
 
 292. None of the terms or provisions of this chapter shall apply to 
 nor in anywise affect fraternal beneficiary associations as defined by 
 the laws of this State, nor apply to companies carrying on the business 
 of life or casualty insurance, on the assessment or annual premium 
 plan, under the provisions of this title. (R. S., Art. 4957.) 
 
 Shall Not Misrepresent Policies. 
 
 293. No life insurance company doing business in this State, and 
 no officer, director or agent thereof shall issue or circulate or cause or 
 permit to be issued or circulated, any estimate, illustration, circular or 
 statement of any sort misrepresenting the terms of any policy issued 
 by it or benefits or advantages to be promised thereby or the dividends 
 or share of surplus to be received thereon. (R. S., Art. 4958.) 
 
 Policy Shall Not Be Defeated. 
 
 294. No recovery upon any life, accident or health insurance policy 
 shall ever be defeated because of any misrepresentation in the applica- 
 tion which is of an immaterial fact and which does not affect the risks 
 assumed. (R. S., Art. 4959.) 
 
 As Conditions Precedent, Foreign Corporation Shall Be Held to Have 
 Assented to These Provisions. 
 
 295. The provisions of this title are conditions upon which foreign 
 insurance companies shall be permitted to do business within this State, 
 and any such foreign corporations engaged in issuing insurance con- 
 tracts or policies within this State shall be held to have assented thereto 
 as a condition precedent to its rights to engage in such business within 
 this State. (R. S., Art. 4972.) 
 
110 INSURANCE LAWS OF TEXAS. 
 
 CHAPTER XIV. 
 
 WORKMEN'S COMPENSATION AND EMPLOYERS' LIABILITY. 
 
 Chapter 179, Acts Thirty- third Legislature, Repealed and Amended. 
 
 296. That Chapter 179, entitled "An Act relating to employers' 
 liability and providing for the compensation of certain employes, and 
 their representatives and beneficiaries- for personal injuries sustained 
 in the course of employment, and for deaths resulting from such in- 
 juries, and to provide and determine in what cases compensation shall 
 be paid, and to make the payment thereof the more certain and prompt 
 by the creation of an insurance association to insure and guarantee such 
 payments and of an industrial accident board for the investigation of 
 claims and for the adjudication thereof for consenting parties, fixing 
 the membership and powers of said board and its compensation and 
 duties, and the method of its appointment, and the term of office of its 
 members, and fixing also the powers, duties and liabilities of said in- 
 surance association and the extent of control over the same to be exer- 
 cised by the Commissioner of Banking and Insurance and providing 
 also for the insurance of payments of compensation to employes by 
 certain other insurance companies and organizations, and declaring an 
 emergency/' be and the same is hereby amended so as to hereafter read 
 as follows (Acts 35th Leg., Chap. 103, Sec. 1) : 
 
 PART I. 
 
 MODIFICATION OF REMEDIES. 
 
 What Shall Not Be a Defense. 
 
 297. In an action to recover damages for personal injuries sustained 
 by an employe in the course of his employment, or for death resulting 
 from personal injury so sustained, it shall not be a defense : 
 
 1. That the employe was guilty of contributory negligence. 
 
 2. That the injury was caused by the negligence of a fellow employe. 
 
 3. That the employe had assumed the risk of the injury incident 
 to his employment; but such employer may defend in such action on 
 the ground that the injury was caused by the wilful intention of the 
 employe to bring about the injury, or was so caused while the employe 
 was in a state of intoxication. 
 
 4. Provided, however, that in all such actions against an employer 
 who is not a subscriber, as defined hereafter in this act, it shall be 
 necessary to a recovery for the plaintiff to prove negligence of such 
 employer or some agent or servant of such employer acting within the 
 general scope of his employment. (Acts 35th Leg., Chap. 103, Sec. 1, 
 Part I.) 
 
 Exemption of Certain Laborers Employers With Three or More Em- 
 ployes Subject to the Provisions of This Act. 
 
 298. The provisions of this act shall not apply to actions to recover 
 damages for the personal injuries nor for death resulting from per- 
 sonal injuries sustained by domestic servants, farm laborers, ranch labor- 
 ers, nor to employes of any firm, person, or corporation having in his 
 
INSURANCE LAWS OF TEXAS. Ill 
 
 or their employ less than three (3) employes, nor to the employes of 
 any person, firm or corporation operating any steam, electric, street or 
 interurban railway as a common carrier; provided, that any employer 
 of three or more employes at the time of becoming a subscriber shall 
 remain a subscriber subject to all the rights, liabilities, duties and ex- 
 emptions of such, notwithstanding after having become a subscriber the 
 number of employes may at times be less than three. (Acts 37th Leg., 
 Chap. 115, Sec. 2, Part I.) 
 
 Note. (1) A waitress at a fashionable club ib not a domestic servant. 
 (Opinion of Attorney General, October 20, 1915.) 
 
 (2) A domestic servant is one in actual employ of the master, engaged 
 principally in the master's household duties, and is actually or substantially 
 a member of the household. (Opinion of Attorney General, October 20, 1915.) 
 
 (3) Corporations chartered under Subdivision 53, Article 1121 of the Re- 
 vised Civil Statutes, as terminal railway companies, are railway companies 
 operating as common carriers and are exempt from the provisions of the Work- 
 men's Compensation Act. (Opinion of Attorney General, August 4, 1916.) 
 
 No Subscribing Employer Shall Be Subject to Any Other Liability What- 
 soever, Save the Compensation Allowed by This Act. 
 
 299. The employes of a subscriber shall have no right of action 
 against their employer for damages for personal injuries, and the rep- 
 resentatives and beneficiaries of deceased employes shall have no right 
 of action against such subscribing employer for damages for injuries 
 resulting in death, but such employes and their representatives and 
 beneficiaries shall look for compensation solely to the association, as 
 the same is hereinafter provided for; provided that all compensation 
 allowed under the succeeding sections herein shall be exempt from gar- 
 nishment,, attachment, judgment and all other suits or claims, and no 
 such right of action and no such compensation and no part thereof or 
 of either shall be assignable, except as otherwise herein provided, and 
 any attempt to assign the same shall be void. (Acts 35th Leg., Chap. 
 103, Sec. 3, Part I.) 
 
 Note. This section is applicable to stock companies. If a subscriber enters 
 into a contract with an independent contractor to do any particular work of 
 a character that the employes, if injured, would be entitled to compensation 
 under employment by the subscriber, then they are entitled to compensation. 
 This is also true of employes of a sub-contractor. The independent contractor, 
 however, is not liable for compensation to employes of his sub-contractor. (Opin- 
 ion of Attorney General, September 23, 1913.) 
 
 Employe May Waive Bights Under This Law by Giving Proper Notice. 
 
 300. An employe of a subscriber shall be held to have waived his 
 right of action at common law or under any statute of this State to 
 recover damages for injuries sustained in the course of his employment 
 if he shall not have given his employer, at the time of his contract of 
 hire, notice in writing that he claimed said right or if the contract of 
 hire was made before the employer became a subscriber,, if the employe 
 shall not have given the said notice within five (5) days of notice of 
 such subscription. An employe who has given notice to his employer 
 that he claimed his right of action at common law or under any statute 
 may thereafter waive such claim by notice in writing, which shall take 
 effect five (5) days after its delivery to his employer or his agent; pro- 
 
INSURANCE LAWS OF TEXAS. 
 
 vided further, that any employe of a subscriber who has not waived his 
 right of action at common law or under any statute to recover dam- 
 ages for injury sustained in the course of his employment, as above 
 provided in this section, shall, as well as his legal beneficiaries and rep- 
 resentatives, have his or their cause of action for such injuries as now 
 exist by the common law and statutes of this State, which action shall 
 be subject to all defenses under the common law and statutes of this 
 State. (Acts 35th Leg., Chap. 103, Sec. 3a, Part I.) 
 
 Employe Who Has Not Given the Notice of Waiver Is Entitled to Com- 
 pensation Herein Provided. 
 
 301. If an employe who has not given notice of his claim of com- 
 mon law or statutory rights of action, as provided in Section 3a, Part 
 I, of this act (Sec. 300), or who has given such notice and waived the 
 same, sustains an injury in the course of his employment, he shall be 
 paid compensation by the association as hereinafter provided, if his 
 employer is a subscriber at the time of the injury. (Acts 35th Leg., 
 Chap. 103, Sec. 3b, Part I.) 
 
 Employes of Non-Subscribing Employers Cannot Participate in the Ben- 
 efits of Compensation, But They Shall Be Entitled to Bring Suits. 
 
 302. Employes whose employers are not at the time of the injury 
 subscribers to said association, and the representatives and beneficiaries 
 of deceased employes who at the time of the injury were working for 
 non-subscribing employers cannot participate in the benefits of said in- 
 surance association, but they shall be entitled to bring suit and may 
 recover judgment against such employers, or any of them, for all dam- 
 ages sustained by reason of any personal injury received in the course of 
 employment or by reason of death resulting from such injury, and the 
 provisions of Section 1 of this act (Sec. 296) shall be applied in all 
 such actions. (Acts 35th Leg., Chap. 103, Sec. 4, Part I.) 
 
 Bight to Recover for Exemplary Damages Not Prohibited by .This Act. 
 
 303. Nothing in this act shall be taken or held to prohibit the re- 
 covery of exemplary damages by the surviving husband, wife, heirs of 
 his or her body,' or such of them as there may be of any deceased em- 
 ploye whose death is occasioned by homicide from the wilful act or 
 omission or gross negligence of any person, firm or corporation from 
 the employer of such employe at the time of the injury causing the 
 death of the latter. Provided, that in any suit so brought for exem- 
 plary damages the trial shall be de novo, and no presumption shall exist 
 that any -award, ruling or finding of the Industrial Accident Board 
 was correct; and in such suit brought by the employe or his legal heirs 
 or representatives against such association or employer, such award, 
 ruling or finding shall neither be pleaded nor introduced in evidence. 
 (Acts 35th Leg., Chap. 103, Sec. 5, Part I.) 
 
 No Compensation Paid for Less Than One Week's Disability, Beginning 
 on Eighth Day Medical Aid, Hospital Services and Medicines Fur- 
 nished as Needed. 
 
 304. No compensation shall be paid under this act for an injury 
 which does not incapacitate the employe for a period of at least one 
 
INSURANCE LAWS OF TEXAS. 113 
 
 week from earning full wages, but if incapacity extends beyond one 
 week, compensation shall begin to accrue on the eighth day after the 
 injury. Provided, however, the medical aid, hospital services, and medi- 
 cines, as provided for in Section 7 hereof (Sec. 305) shall be supplied 
 as and when needed and according to the terms and provisions of said 
 Section 7 (Sec. 305). And provided further, that if incapacity does 
 not follow at once after the infliction of the injury or within eight (8) 
 days thereof, but does result subsequently that compensation shall begin 
 to accrue with the eighth day after the date incapacity commenced. 
 In any event the employe shall be entitled to the medical aid, hospital 
 services and medicines as provided elsewhere in this act. (Acts 35th 
 Leg., Chap. 103, Sec. 6, Part I.) 
 
 Note. Compensation does not begin until the eighth day after the injury. 
 The compensation provided in the law shall be full and complete compensation. 
 (Opinion of Attorney General, October 3, 1913.) 
 
 Medical Aid, Hospital Services and Medicines Are to Be Furnished. 
 
 305. During the first two weeks of the injury, dating from the date 
 of its infliction, the association shall furnish reasonable medical aid, 
 hospital services and medicines. If the association fails to so furnish 
 same as and when needed during the time specified, after notice of the 
 injury to the association or subscriber, the injured employe may pro- 
 vide said medical aid, hospital services and medicines at the cost and 
 expense of the association. The employe shall not be entitled to re- 
 cover any amount expended or incurred by him for said medical aid, 
 hospital services or medicines nor shall any person who supplied the 
 same be entitled to recover of the association therefor, unless the asso- 
 ciation or subscriber shall have had notice of the injury and shall have 
 refused, failed or .neglected to furnish it or them within a reasonable 
 time. Provided, however, that at the time of the injury or imme- 
 diately thereafter, if necessary, the employe shall have the right to call 
 in any available physician or surgeon to administer first-aid treatment 
 as may be reasonably necessary at the expense of the association. Dur- 
 ing the second or any subsequent week of continuous total incapacity 
 requiring the confinement to a hospital, the association shall, upon 
 application of the attending physician or surgeon certifying the neces- 
 sity therefor to the Industrial Accident Board and to the association, 
 furnish such additional hospital services as may be deemed necessary, 
 not to exceed one week, unless at the end of such additional week the 
 attending physician shall certify to the necessity for another week of 
 hospital services or so much thereof as may be needed; provided, how- 
 ever, that such additional hospital services as are provided for in this 
 paragraph shall not be held to include any obligation on the part of 
 the association to pay for medical or surgical services not ordinarily 
 provided by hospitals as a part of their services. (Acts 35th Leg., 
 Chap. 103, Sec. 7, Part I.) 
 
 Board Has Authority Under Certain Conditions to Change Physician or 
 Other Requirements. 
 
 306. If it be shown that the association is furnishing medical aid, 
 hospital services and medicines provided for by Section 7 hereof (Sec. 
 
114 INSURANCE LAWS OF TEXAS. 
 
 305) in such manner that there is reasonable ground for believing that 
 the life, health or recovery of the employe is being endangered or im- 
 paired thereby, the board may order a change in the physician or other 
 requirements of said section, and if the association fails promptly to 
 comply with such order after receiving it, the board may permit the 
 employe or some one for him to provide the same at the expense of the 
 association under such reasonable regulations as may be provided by 
 said board. (Acts 35th Leg., Chap. 103, Sec. 7a, Part I.) 
 
 Charges for Medical Aid, Hospital Services and Medicine Must Be Rea- 
 sonable. 
 
 307. All fees and charges under Sections 7 and 7a (Sees. 305 and 
 
 306) hereof shall be fair and reasonable, shall be subject to regulation 
 of the board and shall be limited to such charges as are reasonable for 
 similar treatment of injured persons of a like standard of living where 
 such treatment is paid for by the injured person himself or some one 
 acting for him. In determining what fees are reasonable, the board 
 may also consider the increased security of payment afforded by this 
 act. Where such medical aid, hospital service or medicines are fur- 
 nished by a public hospital or other institution, payment thereof shall 
 be made to the proper authorities conducting the same, and the amount 
 so paid shall be promptly reported to the board. (Acts 35th Leg., 
 Chap. 103, Sec. 7b, Part I.) 
 
 Fees for Legal Services Subject to Approval of Board. 
 
 308. All fees of attorneys for representing claimants before the 
 board under the provisions of this act shall be subject to the approval 
 of the board. No attorney's fees for representing claimants before the 
 board shall be allowed or approved against any party or parties not rep- 
 resented by such attorney, nor exceeding an amount equal to 15 per 
 cent of the amount of the first one thousand dollars or fraction thereof 
 recovered, nor 10 per cent of the excess of such recovery, if any, over 
 one thousand dollars. And in addition to the reasonable expense in- 
 curred by the attorney in the preparation and presentation of the said 
 claim before the board, such expenses to be allowed by the board; fur- 
 ther provided, that where an attorney represents only a part of those 
 interested in the allowance of a claim before the board and his services 
 in prosecuting such claim and obtaining an award therein inures to 
 the benefit of others jointly interested therein, then the board may take 
 these facts into consideration and allow the attorney a reasonable charge, 
 to be assessed against the interest of those receiving benefits of the serv- 
 ice of such attorney. The attorney's fees herein provided for may be 
 redeemed by the association by the payment of a lump sum or may be 
 commuted by agreement of the parties subject to the approval of the 
 board, but not until the claim represented by said attorney has been 
 finally determined by the board and recognized and accepted by the 
 association. After the approval, as first above provided for, if the as- 
 sociation be notified in writing of such claim or agreement for legal 
 services, the same shall be a lien against any amount thereafter to be 
 paid as compensation ; provided, however, that where the employe's com- 
 pensation is payable by the association in periodical installments, the 
 board shall fix at the time of approval the proportion of each install- 
 
INSURANCE LAWS OF TEXAS. 115 
 
 ment to be paid on account of said legal services. (Acts 35th Leg., 
 Chapter 103, Sec. 7c, Part I.) 
 
 Attorney's Fee for Representing Claimant's Interest Carried From the 
 Board to the Courts Cannot Exceed One-third of Amount Recovered. 
 
 309. For representing the interest of any claimant in any manner 
 carried from the board into the courts, it shall be lawful for the attor- 
 neys representing such interest to contract with any of the beneficiaries 
 under this act for an attorney's fee for such representation, not to ex- 
 ceed one-third () of the amount recovered, such fees for services so 
 rendered to be fixed and allowed by the trial court, in which such mat- 
 ter may be heard and determined. (Acts 35th Leg., Chap. 103, Sec. 
 7d, Part I.) 
 
 Compensation Payable to Legal Beneficiary When Death Results From 
 the Injury. 
 
 310. If death should result from the injury, the association herein- 
 after created shall pay the legal beneficiaries of the deceased employe 
 a weekly payment equal to 60 per cent of his average weekly wages, 
 but not more than $15 nor less than $5 a week, for a period of three 
 hundred and sixty weeks from the date of the injury. (Acts 35th Leg., 
 Chap. 103, Sec. 8, Part I.) 
 
 Beneficiaries of Compensation Where Death Results. 
 
 311. The compensation provided for in the foregoing section of this 
 act shall be for the sole and exclusive benefit of the surviving husband 
 who has not, for good cause, and for a period of three years prior 
 thereto, abandoned his wife at the time of the injury, the wife who 
 has not, at the time of the injury, without good cause, and for a period 
 of three years prior thereto, abandoned her husband and the minor chil- 
 dren, without regard to the question of dependency, dependent parents, 
 and dependent grandparents and dependent stepmothers and dependent 
 children or dependent brothers and sisters of the deceased employe, and 
 the amount recovered thereunder shall not be liable for the debts of the 
 deceased nor for the debts of the beneficiary or beneficiaries, and shall 
 be distributed among such beneficiaries as may be entitled to same as 
 hereinbefore provided according to the laws of descent and distribution 
 of this State; and provided, such compensation shall not pass to the 
 estate of the deceased to be administered upon, but shall be paid directly 
 to said beneficiaries when the same are capable of taking, under the 
 laws of the State, or to their guardian or next friend, in -case of lunacy, 
 infancy or other disqualifying cause of any beneficiary. And the com- 
 pensation provided for in this act shall be paid weekly to the bene- 
 ficiaries herein named and specified, subject to the other provisions of 
 this act. (Acts 35th Leg., Chap. 103, Sec. 8a, Part I.) 
 
 Compensation, Hx*w Divided Where Death Results After a Period of In- 
 capacity. 
 
 312. In case death occurs as a result of the injury after a period of 
 total or partial incapacity, for which compensation has been paid, the 
 period of incapacity shall be deducted from the total period of com- 
 pensation and the benefits paid thereunder from the maximum allowed 
 
116 INSURANCE LAWS OF TEXAS. 
 
 for the death, respectively, stated in this act. (Acts 35th Leg.. Chap. 
 103, Sec. 8b, Part I.) 
 
 Compensation Where No Legal Beneficiaries Are Left Burial Expenses. 
 
 313. If the deceased employe leaves no legal beneficiary, the asso- 
 ciation shall pay all expenses incident to his last sickness as a result of 
 the injury and in addition a funeral benefit not to exceed $100; pro- 
 vided, however, that where any deceased employe leaves legal bene- 
 ficiaries, but who is buried at the expense of his employer or any other 
 person, the expense of such burial, not to exceed $100, shall be payable 
 out of the compensation due the beneficiary or beneficiaries of such de- 
 ceased employe, subject to the approval of the board. ' (Acts 35th Leg., 
 Chap. 103, Sec. 9, Part I.) 
 
 Compensation and Length of Time in the Event of Total Disability. 
 
 314. While the incapacity for work resulting from injury is total, 
 the association shall pay the injured employe a weekly compensation 
 equal to 60 per cent of his average weekly wages, but not more than 
 $15 nor less than $5, and in no case shall the period covered by such 
 compensation be greater than four hundred and one (401) weeks from 
 the date of the injury. (Acts 35th Leg., Chap. 103, Sec. 10, Part I.) 
 
 Compensation and Length of Time in the Event of Partial Disability. 
 
 315. While the incapacity for work resulting from the injury is 
 partial, the association shall pay the injured employe a weekly com- 
 pensation equal to 60 per cent of the difference between his average 
 weekly wages before the injury and his average weekly wage-earning 
 capacity during the existence of such partial incapacity, but in no 
 case more than $15 per week, and the period covered by such compen- 
 sation to be in no case greater than three hundred weeks; provided, 
 that in no case shall the period of compensation for total and partial 
 incapacity exceed four hundred and one (401) weeks from the date of 
 the injury. (Acts 35th Leg., Chap. 103, Sec. 11, Part I.) 
 
 Total and Permanent Incapacity Defined. 
 
 316. In cases of the following injuries, the incapacity shall conclu- 
 sively be held to be total and permanent, towit : 
 
 (1) The total and permanent loss of the sight in both eyes. 
 
 (2) The loss of both feet at or above the ankle. 
 
 (3) The loss of both hands at or above the wrist. 
 
 (4) A similar loss of one hand and one foot. 
 
 (5) An injury to the spine resulting in permanent and complete 
 paralysis of both arms or both legs or of one arm and one leg. 
 
 (6) An injury to the skull resulting in incurable insanity or im- 
 becility. 
 
 In any of the above enumerated cases it shall be considered that the 
 total loss of the use of a member shall be equivalent to and draw the 
 same compensation during the time of such total loss of the use thereof 
 as for the total and permanent loss of such member. 
 
 The above enumeration is not to be taken as exclusive, but in all 
 other cases the burden of proof shall be on the claimant to prove that 
 
INSURANCE LAWS or TEXAS. 117 
 
 his injuries have resulted in permanent, total incapacity. (Acts 35th 
 Leg., Chap. 103, Sec. lla, Part I.) 
 
 Compensation for Specified Injuries. 
 
 317. For the injuries enumerated in the following schedule the em- 
 ploye shall receive in lieu of all other compensation except medical aid, 
 hospital services and medicines, as elsewhere herein provided, a weekly 
 compensation equal to 60 per cent of the average weekly wages of 
 such employe, but not less than $5 per week nor exceeding $15 per 
 week for the respective periods stated herein, towit: 
 
 For the loss of a thumb, 60 per cent of the average weekly wages 
 during sixty weeks. 
 
 For the loss of a first finger, commonly called the index finger, 60 
 per cent of the average weekly wages during forty-five weeks. 
 
 For the loss of a second finger, 60 per cent of the average weekly 
 wages during thirty weeks. 
 
 For the loss of a third finger, 60 per cent of the average weekly 
 wages during twenty-one weeks. 
 
 For the loss of a fourth finger, commonly known as the little finger, 
 60 per cent of the average weekly wages during fifteen weeks. 
 
 The loss of the second or distal phalange of the thumb shall be con- 
 sidered to be equal to the loss of one-half of such thumb; the loss of 
 more than one-half of such thumb shall be considered to be equal to 
 the loss of the whole thumb. 
 
 The loss of the third or distal phalange of any finger shall be con- 
 sidered to be equal to the loss of one-third of such finger. 
 
 The loss of the middle or second phalange of any finger shall be con- 
 sidered to be equal to the loss of two-thirds of such finger. 
 
 The loss of more than the middle or distal phalange of any finger 
 shall be considered to be equal to the loss of the whole finger; pro- 
 vided, however, that in no case shall the amount received for the loss 
 of a thumb and more than one finger on the same hand exceed the 
 amount provided in this schedule for the loss of a hand. 
 
 For the loss of the metacarpal bone (bone of palm), for the corre- 
 sponding thumb, finger, or fingers above, add ten weeks to the number 
 of weeks as above, subject to the limitation that in no case shall the 
 amount received for the loss or injury to any one hand be more than 
 for the loss of the hand. 
 
 For ankylosis (total stiffness of) or contracture (due to sears or in- 
 juries), which make the fingers useless, the same number of weeks shall 
 apply to such finger or fingers or parts of fingers (not thumb) as given 
 above. 
 
 For the loss of a hand, 60 per cent of the average weekly wages 
 during one hundred and fifty weeks. 
 
 For the loss of an arm, at or above the elbow, 60 per cent of the 
 average weekly wages during two hundred weeks. 
 
 For the loss of one of the toes, other than the great toe, 60 per 
 cent of the average weekly wages during ten weeks. 
 
 For the loss of the great toe, 60 per cent of the average weekly 
 wages during thirty weeks. 
 
 The loss of more than two-thirds of any toe shall be considered to 
 be equal to the loss of the whole toe. 
 
118 INSURANCE LAWS OF TEXAS. 
 
 The loss of less than two-thirds of any toe shall be considered to be 
 equal to the loss of one-half of the toe. 
 
 For the loss of a foot, 60 per cent of the average weekly wages 
 during one hundred and twenty-five weeks. 
 
 For the loss of a leg at or above the knee, 60 per cent of the aver- 
 age weekly wages during two hundred weeks. 
 
 For the total and permanent loss of the sight of one eye, 60 per 
 cent of the average weekly wages during one hundred weeks. 
 
 In the foregoing enumerated cases of permanent, partial incapacity, 
 it shall be considered that the permanent loss of the use of a member 
 shall be equivalent to and draw the same compensation as the loss of 
 that member. 
 
 For the complete and permanent loss of the hearing in both ears, 
 60 per cent of the weekly wages during one hundred and fifty weeks. 
 
 For the loss of an eye and leg above the knee, 60 per cent of the 
 average weekly wages during a period of three hundred and fifty weeks. 
 
 For the loss of an eye and an arm above the elbow, 60 per cent of 
 the average weekly wages during a period of three hundred and fifty 
 weeks. 
 
 For the loss of an eye and a hand, 60 per cent of the average 
 weekly wages during a period of three hundred and twenty-five weeks. 
 
 For the loss of an eye and a foot, 60 per cent of the average weekly 
 wages during a period of three hundred weeks. 
 
 Where the employe sustains concurrent injuries resulting in concur- 
 rent incapacities, he shall receive compensation only for the injury 
 which produces the longest period of incapacity; but this section shall 
 not affect liability for the concurrent loss or the loss or the use thereof 
 of more than one member, for which members compensation is pro- 
 vided in this schedule; compensation for specific injuries under this act 
 shall be cumulative as to time and not concurrent. 
 
 In all cases of permanent, partial incapacity, it shall be considered 
 that the permanent loss of the use of the member be equivalent to and 
 draw the same compensation as the loss of that member; but the com- 
 pensation in and by said schedule provided shall be in lieu of all other 
 compensation in such cases. 
 
 In all other cases, partial incapacity, including any disfigurement 
 which will impair the future usefulness or occupational opportunities 
 of the injured employe, compensation shall be determined according to 
 the percentage of incapacity, taking into account, among other things, 
 any previous incapacity, the nature of the physical injury or disfigure- 
 ment, the occupation of the injured employe, and the age at the time 
 of the injury; the compensation paid therefor shall be 60 per cent 
 of the average weekly wages of the employe, but not to exceed $15 per 
 week, multiplied by the percentage of incapacity caused by the injury 
 for such period as the board may determine not exceeding three hun- 
 dred weeks. Whenever the weekly payments under this paragraph would 
 be less than $3 per week, the period may be shortened, and the pay- 
 ments correspondingly increased by the board. (Acts 35th Leg., Chap. 
 103, Sec. 12, Part I.) 
 
INSURANCE LAWS OF TEXAS. 119 
 
 Where Injured Employe Refuses Employment Suitable to His Physical 
 Condition. 
 
 318. If the injured employe refuses employment reasonably suited to 
 his incapacity and physical condition, procured for him in the locality 
 where injured or at a place agreeable to him, he shall not be entitled 
 to compensation during the period of such refusal, unless in the opin- 
 ion of the board such refusal is justifiable. This section shall not apply 
 in cases of specific injuries for which a schedule is fixed by this act. 
 (Acts 35th Leg., Chap. 103, Sec. 12a, Part I.) 
 
 Requirements in Claims for Hernia. 
 
 319. In all claims for hernia resulting from injury sustained in the 
 course of employment, it must be definitely proven to the satisfaction 
 of the board: 
 
 First. That there was an injury resulting in hernia. 
 
 Second. That the hernia appeared" suddenly and immediately fol- 
 lowing the injury. 
 
 Third. That the hernia did not exist in any degree prior to the in- 
 jury for which compensation is claimed. . 
 
 Fourth. That the injury was accompanied by pain. 
 
 In all such cases where liability for compensation exists, the associa- 
 tion shall provide competent surgical treatment by radical operation. 
 
 In case the injured employe refuses to submit to the operation, the 
 board shall immediately order a medical examination of such employe 
 by a physician or physicians of its own selection at a time and place to 
 be by them named, at which examination the employe and the associa- 
 tion, or either of them, shall have the right to have his or their physi- 
 cian present. The physician or physicians so selected shall make to 
 the board a report in writing, signed and sworn to, setting forth the 
 facts developed at such examination and giving his or their opinion as 
 to the advisability or non-advisability of an operation. If it be shown 
 to the board by such examination and the written report thereof and 
 the expert opinions thereon that the employe has any chronic disease or 
 is otherwise in such physical condition as to render it more than or- 
 dinarily unsafe to submit to such operation, he shall, if unwilling to 
 submit to the operation, be entitled to compensation for incapacity 
 under the general provisions of this act. If the examination and the 
 written report thereof and the expert opinions thereon then on file be- 
 fore the board do not show to the board the existence of disease or 
 other physical condition rendering the operation more than ordinarily 
 unsafe, and the board shall unanimously so find and so reduce its find- 
 ings to writing and file the same in the case and furnish the employe 
 and the association with a copy of its findings, then if the employe 
 with the knowledge of the result of such examination, such report, such 
 opinions and such findings, thereafter refuses to submit within a rea- 
 sonable time, which time shall be fixed in the findings of the board, to 
 such operation, he shall be entitled to the compensation for incapacity 
 under the general provisions of this act, for a period not exceeding one 
 year. 
 
 If the employe submits to the operation and the same is successful, 
 which shall be determined by the board, he shall in addition to the sur- 
 gical benefits herein provided for be entitled to compensation for twenty- 
 
120 INSURANCE LAWS OF TEXAS. 
 
 six weeks from the date of the operation. If such operation is not suc- 
 cessful and does not result in death, he shall be paid compensation 
 under the general provisions of this act the same as if such operation 
 had not been had; other than in determining the quantum of compen- 
 sation to be paid to the employe, the board may take into consideration 
 any minor benefits that accrued to the employe by reason thereof or 
 any aggravation or increased injury which accrued to him by reason 
 thereof. 
 
 If the hernia results in death within one year after it is sustained, 
 or the operation results in death, such death shall be held a result of 
 the injury causing such hernia and compensated accordingly under the 
 provisions of this act. This paragraph shall not apply where the em- 
 ploye has wilfully refused to submit to an operation which has been 
 found by the examination herein provided for not to be more than 
 ordinarily unsafe. (Acts 35th Leg., Chap. 103, Sec. 12b, Part I.) 
 
 In Case of Subsequent Injury to Employe Where Both Injuries Contribute 
 to Incapacity. 
 
 320/ If an employe who has suffered a previous injury shall suffer a 
 subsequent injury which results in a condition of incapacity to which 
 both injuries or their effects have contributed, the association shall be 
 liable because of such injury only for the compensation to which the 
 subsequent injury would have entitled the injured employe had there 
 been no previous injury. (Acts 35th Leg., Chap. 103, Sec. 12c, Part I.) 
 
 Board May Review Any Award or Order Previously Made. 
 
 321. Upon its own motion or upon the application of any person 
 interested showing a change of conditions, mistake or fraud, the board 
 at any time within the compensation period may review any award 'or 
 order, ending, diminishing or increasing compensation previously 
 awarded, within the maximum and minimum provided in this act, or 
 change or revoke its previous order sending immediately to the parties 
 a copy of its subsequent order or award. Eeview under this section 
 shall be only upon notice to the parties interested. (Acts 35th Leg., 
 Chap. 103, Sec. 12d, Part I.) 
 
 An Operation May Be Demanded Proceedings in Such Case. 
 
 322. In all cases where liability for compensation exists for an in- 
 jury sustained by an employe in the course of his employment and a 
 surgical operation for such injury will effect a cure of the employe or 
 will materially and beneficially improve his condition, the association 
 or the employe may demand that a surgical operation be had upon the 
 employe as herein provided, and the association shall provide and pay 
 for all necessary surgical treatment, medicines and hospital services in- 
 cident to the performance of said operation; provided the same is had. 
 In case either of said parties demands in writing to the board such 
 operation, the board shall immediately order a medical examination of 
 the employe in the same manner as is provided for in the section of 
 this act relating to hernia. If it be shown by the examination, report 
 of facts and opinions of experts, all reduced to writing and filed with 
 the board, that such operation is advisable and will relieve the condi- 
 
INSURANCE LAWS OF TEXAS. 121 
 
 tion of the injured employe or will materially benefit him, the board 
 shall so state in writing, and upon unanimous order of said board, in 
 writing, a copy of which shall be delivered to the employe and the as- 
 sociation, shall direct the employe at a time and place therein stated to 
 submit himself to an operation for said injury. If the board should find 
 that said operation is not advisable, then the employe shall continue to 
 be compensated for his incapacity under the general provisions of this 
 act. If the board shall unanimously find and so state in writing that 
 said operation is advisable, it shall make its order to that effect, stat- 
 ing the time and place when and where such operation is to be per- 
 formed, naming the physicians therein who shall perform said opera- 
 tion, and if the employe refuses to submit to such operation, the board 
 may order or direct the association to suspend the whole or any part 
 of his compensation during the time of said period of refusal. The 
 results of such operation, the question as to whether the injured em- 
 ploye shall be required to submit thereto and the benefits and liabili- 
 ties arising therefrom, shall attach, be treated, handled and determined 
 by the board in the same way as is provided in the case of hernia in 
 this act. (Acts 35th Leg., Chap. 103, Sec. 12e, Part I.) 
 
 Requirements Where a Subscriber or the Association Has a Regularly 
 Employed Physician. 
 
 323. In all cases where a subscriber or the association has in his or 
 its employ a physician or physicians regularly paid in any manner 
 whatsoever by such subscriber or association to administer to or treat 
 injured employes, the name or names of such physicians at the date of 
 employment of the same shall be filed with the board, together with 
 a copy of the contract of such employment. If the contract of such 
 physician or physicians is not in writing, then the same shall be re- 
 duced to writing and a copy thereof filed with the board. Such con- 
 tract shall state fully the extent and scope of the employment and the 
 compensation to be paid such physician or physicians. If the associa- 
 tion or subscriber wilfully fails or refuses to comply with this provi- 
 sion of this act, then an injured employe or any person acting for him 
 shall have the right to provide hospital services, medical aid and medi- 
 cine for said injured employe, at the expense of and the same shall be 
 charged to the association, and the subscriber or association shall notify 
 the employe at or before the time of injury what physician or physi- 
 cians are contracted with to treat his or its employes. (Acts 35th Leg., 
 Chap. 103, Sec. 12f, Part I.) 
 
 Subscribers or Employers Are Prohibited From Collecting Any Part of a 
 Premium From Their Employes. 
 
 324. It shall be unlawful for any subscriber or any employer who 
 seeks to comply with the provisions of this act to either directly or in- 
 directly collect of or from his employes by any means- or pretense what- 
 ever any premium under this act or part thereof paid or to be paid 
 upon any policy of such insurance under this act which covers such 
 employes, or any intended policy of such insurance designed to cover 
 such employes, and if any such subscriber or any employer of labor in 
 this State violates this -provision of this act, then any employe or the 
 legal beneficiary of any employe of such employer or subscriber shall 
 
122 INSURANCE LAWS OF TEXAS. 
 
 be entitled to all the benefits of this act and in addition thereto shall 
 have a separate right of action to recover damages against such em- 
 ployer without regard to the compensation paid or to be paid to such 
 employe or beneficiary under this act, and the association shall in no- 
 wise be responsible because of such separate action by such employe 
 or beneficiary against such employer on such separate cause of action. 
 (Acts '35th Leg., Chap. 103, Sec. 12g, Part I.) 
 
 All Contracts of Employers Which Attempt to Indemnify Them Account 
 of Injury to Employe Must Cover Liability for Compensation Pro- 
 vided in This Act. 
 
 325. Every contract or agreement of an employer, the purpose of 
 which is to indemnify him from loss or damage on account of the in- 
 jury of an employe by accidental means or on account of the negligence 
 of such employer or his officer, agent or servant, shall be absolutely 
 void unless it also covers liability for the payment of the compensation 
 provided for by this act. Provided, that this section of this act shall 
 not apply to employers of labor who are not eligible under the terms 
 of this act to become subscribers thereto, nor to employers whose em- 
 ployes have elected to reject the provisions of this act, nor to employers 
 eligible to come under the terms of this act who do not elect to do so, 
 but who choose to carry insurance upon their employes independently 
 of this law and without attempting in such insurance to provide com- 
 pensation under the terms of this act; but further provided, that any 
 evasion of this section whereby an insurance company shall undertake, 
 under the guise of writing insurance against the risk of the employers 
 who do not see proper to come under this act, to write insurance sub- 
 stantially or in any material respect similar to the insurance provided 
 for by this act, that such insurance shall be void as provided for by 
 the foregoing provisions of this section. (Acts 35th Leg., Chap. 103, 
 Sec. 12h, Part I.) 
 
 Compensation of Injured Minor Employe Whose Wages Would Be Ex- 
 pected to Increase. 
 
 326. If it be established that the injured employe was a minor when 
 injured and that under normal conditions his wages would be expected 
 to increase, that fact may be considered in arriving at his average 
 weekly wages, and compensation may be fixed accordingly. This sec- 
 tion shall not be considered as authorizing the employment of a minor 
 in any hazardous employment which is prohibited by any statute of this 
 State. (Acts 35th Leg., Chap. 103, Sec. 12i, Part I.) 
 
 Minors or Mentally Incompetent Injured Workmen. 
 
 327. If an injured employe is mentally incompetent or is a minor 
 or is under any other disqualifying cause at the time when any rights 
 or privileges accrue to him or exist under this act, his guardian or next 
 friend may in his behalf claim and exercise such rights and privileges 
 except as otherwise herein provided. 
 
 In case of partial incapacity or temporary total incapacity, payment 
 of compensation may be made direct to the minor and his receipts 
 taken therefor, if the authority to so pay and receipt for said compen- 
 
INSURANCE LAWS OF TEXAS. 123 
 
 sation is first obtained from the board. (Acts 35th Leg., Chap. 103, 
 Sec. 13, Part I.) 
 
 Employe Cannot Waive Bight to Compensation. 
 
 328. No agreement by any employe to waive his rights to compen- 
 sation under this act shall be valid. (Acts 35th Leg., Chap. 103, Sec. 
 14, Part I.) 
 
 Note. Employers of labor operating under the Workmen's Compensation law 
 cannot cover part of their employes and leave part of them uncovered where 
 such employes are engaged in the same general business or enterprise. (Opinion 
 of Attorney General, March 23, 1918.) 
 
 Xiump Sum Payment. 
 
 329. In cases where death or total permanent incapacity results 
 from an injury, the liability of the association may be redeemed by 
 payment of a lump sum by agreement of the parties thereto, subject to 
 the approval of the Industrial Accident Board hereinafter created. This 
 section shall be construed as excluding any other character of lump sum 
 settlement save and except as herein specified; provided, however, that 
 in special cases wherein the judgment of the board manifest hardship 
 and injustice would otherwise result, the board may compel the associa- 
 tion in the cases provided for in this section to redeem their liability 
 by payment of a lump sum as may be determined, by the board. (Acts 
 35th Leg., Chap. 103, Sec. 15, Part I.) 
 
 Board May Increase Amount of Compensation by Correspondingly De- 
 creasing the Number of Weeks. 
 
 330. In any case where compensation is payable weekly at a defi- 
 nite sum and for a definite period,, and it appears to the board that the 
 amount of compensation being paid is inadequate to meet the necessi- 
 ties of the beneficiary, the board shall have the power to increase the 
 amount of compensation by correspondingly decreasing the number of 
 weeks far which the same is to be paid, allowing such discount to the 
 company increasing such payments as is applicable in cases of lump 
 sum settlement. (Acts 35th Leg., Chap. 103, Sec. 15a, Part I.) 
 
 Cause of Action in All Death Cases Shall Survive. 
 
 331. In all cases of injury resulting in death, where such injury 
 was sustained in the course of employment, cause of action shall sur- 
 vive. (Acts 35th Leg., Chap. 103, Sec. 16, Part I.) 
 
 Alien Beneficiaries Entitled to Compensation. 
 
 332. Non-resident alien beneficiaries and resident alien beneficiaries 
 shall be entitled to compensation under this act. Non-resident alien 
 beneficiaries may be officially represented by the consular officers of the 
 nation of which such alien or aliens may be citizens or subject, and in 
 such cases the consular officers shall have the right to receive for dis- 
 tribution for such non-resident alien beneficiaries all compensation 
 awarded hereunder, and the receipt of such consular officers shall be a 
 full discharge of all sums paid to and received by them. The associa- 
 tion may at any time subject to the approval of the board commute 
 
124 INSURANCE LAWS OF TEXAS. 
 
 all future installments of compensation payable to alien beneficiaries, 
 not residents of the United States, by paying to such alien beneficiaries 
 the sum agreed upon and filing receipts therefor with the board. (Acts 
 35th Leg., Chap. 103, Sec. 17, Part I.) 
 
 Certificate of Authority of Association to Do Business May Be Revoked 
 for Failure to Promptly and Regularly Pay Compensation. 
 
 333. It is the purpose of this act that the compensation herein pro- 
 vided for shall be paid from week to week and as it accrues and directly 
 to the person entitled thereto, unless the liability is redeemed as in such 
 cases provided elsewhere herein, and, if the association wilfully fails or 
 refuses to pay compensation as and when the same matures and ac- 
 crues, the board shall notify said association that such is the course it 
 is pursuing, and if after such notice the association continues to wil- 
 fully refuse and fail to meet these payments of compensation as pro- 
 vided for in this act, the board shall have the power to hold that such 
 association is not complying with the provisions of this act. And shall 
 certify such fact to the Commissioner of Insurance and Banking, and 
 said certificate shall be sufficient cause to justify said Commissioner of 
 Insurance and Banking to revoke or forfeit the license or permit of 
 such association to do business in Texas ; provided, said power of the 
 board shall not be held to deny the association the right to bring suit 
 or suits to set aside any ruling, order or decision of the board. (Acts 
 35th Leg., Chap. 103, Sec. 18, Part I.) 
 
 An Employe, Hired in This State, But Receiving an Injury Outside the 
 State, Is Entitled to Compensation. 
 
 334. If an employe who has been hired in this State sustained in- 
 jury in the course of his employment, he shall be entitled to compen- 
 sation according to the law of this State, even though such injury was 
 received outside of the State. (Acts 35th Leg., Chap. 103, Sec. 19, 
 Part I.) 
 
 PAET II. 
 
 Industrial Accident Board How Created Term of Office. 
 
 335. There shall be an Industrial Accident Board consisting of three 
 members, and the same is hereby created to be appointed by the Gov- 
 ernor, one of whom shall be chairman, and said board shall have the 
 powers, duties and functions hereinafter conferred. Beginning with 
 September 1, 1917, one member thereof shall be appointed for a term 
 of two years, one for four years, and one for six years; thereafter the 
 term of office for members of the board shall be six years. Appoint- 
 ments to fill vacancies on the board shall be for the unexpired term. 
 (Acts 35th Leg., Chap. 103, Sec. 1, Part II.) 
 
 Composition of Board. 
 
 336. One member of the Industrial Accident Board shall be at the 
 time of his appointment an employer of labor in some industry or busi- 
 ness covered by this act; one shall be at the time of his appointment 
 employed in some business industry as a wage-earner, and the third 
 member shall be at the time of his appointment a practicing attorney 
 
INSURANCE LAWS OF TEXAS. 125 
 
 of recognized ability, said member to act in the capacity of legal ad- 
 viser to the board, in addition to his other duties as a member thereof, 
 and to be chairman of said board. (Acts 35th Leg., Chap. 103, Sec. 
 2, Part II.) 
 
 Salaries of Board Members and Appointed Secretary, Clerical Help and 
 Other Expenses. 
 
 337. The salaries and expenses of the Industrial Accident Board 
 shall be paid by the State. The salaries of the said members of the 
 board shall be as follows: For the chairman of said board, $3000 per 
 year, and for each of the other members thereof $2500, payable in equal 
 monthly installments. The board may appoint a secretary at a salary 
 not to exceed $2000 a year. 
 
 And may appoint such other clerical and other assistants as may be 
 necessary to properly administer this act. It shall also be allowed an 
 annual sum, the amount to be determined by the Legislature, for cler- 
 ical and other services, office equipment, traveling and all other neces- 
 sary expenses. The board shall be provided suitable offices in the Cap- 
 itol or some convenient building in the city of Austin where its records 
 shall be kept. 
 
 The members of said board, or any employe thereof, shall have the 
 right to travel upon free railroad transportation in the prosecution of 
 the duties of their respective offices in the State of Texas without vio- 
 lating any provision of the anti-pass laws of this State, and any rail- 
 road company issuing such transportation shall not be deemed nor held 
 to have violated any law of this State by reason thereof. (Acts 35th 
 Leg., Chap. 103, Sec. 3, Part II.) 
 
 Board May Make Rules, Regulations and Decisions. 
 
 338. The board may make rules not inconsistent with this act for 
 carrying "out and enforcing its provisions, and may require any em- 
 ploye claiming to have sustained injury to submit himself for examina- 
 tion before such board or someone acting under its authority at some 
 reasonable time and place within the State, and as often as may be rea- 
 sonably ordered by the board to a physician or physicians authorized 
 to practice under the laws of this State. If the employe or the asso- 
 ciation requests, he or it shall be entitled to have a physician or physi- 
 cians of his or its own selection present to participate in such examina- 
 tion. Refusal of the employe to submit to such examination shall de- 
 prive him of his right to compensation during the continuance of such 
 refusal. When a right to compensation is thus suspended no compen- 
 sation shall be payable in respect to the period of suspension. If any 
 employe shall persist in unsanitary or injurious practices which tend 
 to either imperil or retard his recovery, or shall refuse to submit to 
 such medical or surgical treatment as is reasonably essential to promote 
 his recovery, the board may in its discretion order or direct the asso- 
 ciation to reduce or suspend the compensation of any such injured em- 
 ploye. No compensation shall be reduced or suspended under the terms 
 of this section without reasonable notice to the. employe and an oppor- 
 tunity to be heard. 
 
 The association shall Jiave the privilege of having any injured em- 
 ploye examined by a physician or physicians of its own selection, at 
 
126 INSURANCE LAWS OF TEXAS. 
 
 reasonable times, at a place or places suitable to the condition of the 
 injured employe and convenient and accessible to him; provided, how- 
 ever, that the association shall pay for such examination and the rea- 
 sonable expense incident to the injured employe in submitting thereto; 
 and provided further, that the injured employe shall have the privi- 
 lege to have a physician or physicians of his own selection, at the ex- 
 pense of such injured employe, present to participate in such examina- 
 tion. 
 
 Process and procedure shall be as summary as may be under this act. 
 The board or any member thereof shall have power to subpoena wit- 
 nesses, administer oaths, inquire into matters of fact, and to examine 
 parts of the books and records of the parties to a proceeding as relate to 
 questions in dispute. All rulings and decisions of the board relating 
 to disputed claims shall be upon questions of fact and in accord with 
 the provisions of this act. (Acts 35th Leg., Chap. 103, Sec. 4 7 Part II.) 
 
 Notice to Association and Subscriber Concerning Claim Required. 
 
 339. Unless the association or subscriber have notice of the injury, 
 no proceeding for compensation for injury under this act shall be main- 
 tained unless a notice of the injury shall have been given to the asso- 
 ciation or subscriber within thirty (30) days after the happening thereof, 
 and unless a claim for compensation with respect to such injury shall 
 have been made within six (6) months after the occurrence of same; 
 or, in case of death of the employe or in the event of his physical or 
 mental incapacity within six (6) months after the death or the re- 
 moval of such physical or mental incapacity. Provided, that for good 
 cause the board may in meritorious cases waive the strict compliance 
 with the foregoing limitations as to notice and the filing of the claim 
 before the board. (Acts 35th Leg., Chap. 103, Sec. 4a, Part II.) 
 
 Appeal to the Court Against Decision of the Board Affecting the Interest 
 of Parties. 
 
 340. All questions arising under this act, if not settled by agree- 
 ment of the parties interested therein and within the terms and provi- 
 sions of this act, shall, except as otherwise provided, be determined by 
 the board. Any interested party who is not willing and does not con- 
 sent to abide by the final ruling and decision of said board shall within 
 twenty days after the rendition of said final ruling and decision by said 
 board give notice to the adverse party and to the board that he will 
 not abide by said final ruling and decision. And he shall within twenty 
 days after giving such notice bring suit in some court of competent 
 jurisdiction in the county where the injury occurred to set aside said 
 final ruling and decision, and said board shall proceed no further toward 
 the adjustment of such claim, other than as hereinafter provided; 
 provided, however, that whenever such suit is brought, the rights and 
 liability of the parties thereto shall be determined by the provisions 
 of this act, and the suit of the injured employe or person suing on 
 account of the death of such employe shall be against the association 
 if the employer of such injured or deceased employe at the time of 
 such injury or death was a subscriber as defined in this act. If the 
 final order of the board is against the association, then the association 
 and not the employer shall bring suit to set aside said final ruling and 
 
INSURANCE LAWS OF TEXAS. 127 
 
 decision of the board, if it so desires, and the court shall in either event 
 determine the issues in such cause instead of the board upon trial de 
 novo, and the burden of proof shall be upon the party claiming com- 
 pensation. In case of recovery the same shall not exceed the maxi- 
 mum compensation allowed under the provisions of this act. If any 
 party to any such final ruling and decision of the board, after having 
 given the notice as above provided, fails within said twenty days to 
 institute and prosecute a suit to set the same aside, then said final rul- 
 ing and decision shall be binding upon all parties thereto, and, if the 
 same is against the association, it shall at once comply with such final 
 ruling and decision, and failing to do so the board shall certify that 
 fact to the Commissioner of Insurance and Banking, and such certifi- 
 cate shall be sufficient cause to justify said Commissioner of Insurance 
 and Banking to revoke or forfeit the license or permit of such asso- 
 ciation to do business in Texas. (Acts 35th Leg., Chap. 103, Sec. 5, 
 Part II.) 
 
 Claimant Entitled to Damages and Attorney's Fee Where the Association 
 Refuses to Obey Order of Board. 
 
 341. In all cases where the board shall make a final order, ruling 
 or decision, as provided in the foregoing Section 5 (Sec. 340) hereof, 
 and against the association, and the association shall fail or refuse to 
 obey or comply with the same and shall fail or refuse to bring suit to 
 set the same aside as in said Section 5 (Sec. 340) is provided, then in 
 that event the claimant in addition to the rights and remedies given 
 him and the board in said Section 5 (Sec. 340) may bring suit in some 
 court of competent jurisdiction where the injury occurred, upon said 
 order, ruling or decision, and if he secures a judgment in said court 
 sustaining such order, ruling or decision in whole or in part, he shall 
 also be entitled to recover the further sum of 12 per cent as dam- 
 ages upon the amount of compensation so recovered in said judgment, 
 together with a reasonable attorney's fee for the prosecution and col- 
 lection of such claim. 
 
 It is further provided that where the board has made an award 
 against an association requiring the payment to an injured employe or 
 his beneficiaries of any weekly or monthly payments, under the terms 
 of this act, and such association should thereafter fail or refuse, with- 
 out justifiable cause, to continue to make said payments promptly as 
 they mature, then the said injured employe or his beneficiaries, in case 
 of his death, shall have the right to mature the entire claim and to 
 institute suit thereon in any court of competent jurisdiction where the 
 injury occurred to collect the full amount thereof, together with 12 
 per cent penalties and attorney's fees, as provided for in the foregoing 
 paragraph of this section. Suit may be brought under the provisions 
 of this section of the act, either in the county where the accident oc- 
 curred, or in any county where the claimants reside, or where one or 
 more of such claimants may have his place of residence at the time 
 of the institution of the suit. (Acts 35th Leg., Chap. 103, Sec. 5a, 
 Part II.) 
 
128 INSURANCE LAWS OP TEXAS. 
 
 Employe of Sub-Contractor May Have Independent Bight of Action 
 Against Such Sub-Contractor. 
 
 342. If any subscriber to this act with the purpose and intention 
 of avoiding any liability imposed by the terms of the act sublets the 
 whole or any part of the work to be performed or done by said sub- 
 scriber to any subcontractor, then in the event any employe of such 
 subcontractor sustains an injury in the course of his employment he 
 shall be deemed to be and taken for all purposes of this act to be the 
 employe of the subscriber, and in addition thereto such employe shall 
 have an independent right of action against such subcontractor, which 
 shall in no way be affected by any compensation to be received by him 
 under the terms and provisions of this act. (Acts 35th Leg., Chap. 
 103, Sec. 6, Part II.) 
 
 Proceedings Authorized Where Injury Was Caused by Which Some Person 
 Other Than the Subscriber Is Liable. 
 
 343. Where the injury for which compensation is payable under this 
 act was caused under circumstances creating a legal liability in some 
 person other than the subscriber to pay damages in respect thereof, the 
 employe may at his option proceed either at law against that person to 
 recover damages or against the association for compensation under this 
 act, but not against both, and if he elects to proceed at law against 
 the person other than the subscriber, then he shall not be entitled to 
 compensation under the provisions of this act; if compensation be 
 claimed under this act by the injured employe or his legal benefi- 
 ciaries, then the association shall be subrogated to the rights of the 
 injured employe in so far as may be necessary and may enforce in the 
 name of the injured employe or of his legal beneficiaries or in its own 
 name and for the joint use and benefit of said employe or beneficiaries 
 and the association and the liability of said other person, and in case 
 the association recovers a sum greater than that paid or assumed by 
 the association to the employe or his legal beneficiaries, together with 
 a reasonable cost of enforcing such liability, which shall be determined 
 by the court trying the case, then out of the sum so recovered the asso- 
 ciation shall reimburse itself and pay said cost, and the excess so re- 
 covered shall be paid to the injured employe or his beneficiaries. The as- 
 sociation shall not have the right to adjust or compromise such lia- 
 bility against such third person without notice to the injured employe 
 or his beneficiaries. The association shall not have the right to adjust 
 or compromise such liability against such third person without notice 
 to the injured employe or his beneficiaries and the approval of the 
 board, upon a hearing thereof. (Acts 35th Leg., Chap. 103, Sec. 6a, 
 Part II.) 
 
 Keeping Records of Injuries to Workmen by Employers Their Duty to 
 Report Accident to the Board Within Eight Days on Official Blanks- 
 What Report Shall State Supplemental Report Upon the Termina- 
 tion of Disability or Disability Extends Beyond Sixty Days Penalty 
 for Failing or Refusing Any Such Report. 
 
 344. Every subscriber shall hereafter keep a record of all injuries, 
 fatal or otherwise, sustained by his employes in the course of their em- 
 ployment. Within eight days after the occurrence of an accident re- 
 
INSURANCE LAWS OF TEXAS. 129 
 
 suiting in an injury to an employe, causing his absence from work for 
 more than one day, a report thereof shall be made in writing to the 
 board on blanks to be procured from the board for that purpose. Upon 
 the termination of the incapacity of the injured employe, or if such in- 
 capacity extends beyond a period of sixty days, the subscriber shall make 
 a supplemental report upon blanks to be procured for that purpose. 
 The said report shall contain the name and nature of the business of 
 the employer, the location of the establishment, the name, age, sex, and 
 occupation of the injured employe and the character of work in which 
 he was engaged at the time of the injury, and shall state the date and 
 hour of receiving such injury and the nature and cause of the injury, 
 and such other information as the board may require. Any employer 
 wilfully failing or refusing to make any such report within the time 
 herein provided, or wilfully failing or refusing to give said board any 
 information demanded by said board relating to any injury to any em- 
 ploye, which information is in the possession of or can be ascertained 
 by the employer by the use of reasonable diligence, shall be liable for 
 and shall pay to the State of Texas a penalty of not more than one 
 thousand dollars for each and every offense, the same to be recovered 
 in a suit to be instituted and prosecuted in Travis county by the At- 
 torney General or by the district or county attorney under his direc- 
 tion in a district court thereof. (Acts 35th Leg., Chap. 103, Sec. 7, 
 Part II.) 
 
 Note. Section 7 of part II of the Liability and Workmen's Compensation 
 Act of 1913 requiring employers to report accidents, applies only to such em- 
 ployers as accept the provisions and benefits of the said act and does not apply 
 to employers not insured thereunder. (Opinion of Attorney General, Septem- 
 ber 6, 1913.) 
 
 Quorum of Board Seal of Board. 
 
 345. A majority of the board shall constitute a quorum to transact 
 business, and the act or decision of any two members of the board shall 
 be held the act or decision of the board, except as otherwise herein 
 specifically provided. No vacancy shall impair the right of the re- 
 maining member or members of the board to exercise all the powers of 
 the board. The board shall provide itself with a seal for the authen- 
 tication of its orders, awards or proceedings on which shall be inscribed 
 the words "Industrial Accident Board, State of Texas, Official Seal." 
 And any order, award or proceeding of said board when duly attested 
 and sealed by the board or its secretary shall be admissible as evidence 
 of the act of said board in any court in this State. (Acts 35th Leg., 
 Chap. 103, Sec. 8, Part II.) 
 
 Board Shall Furnish Certified Copies of Records Fees. 
 
 346. Upon the written request and payment of the fees therefor, 
 which fees shall be the same as those charged for similar services in the 
 Secretary of State's office, the board shall furnish to any person entitled 
 thereto a certified copy of any order, award, decision or paper on file in 
 the office of said board, and the fees so received for such copies shall 
 be covered into the Treasury of the State of Texas into the fund for 
 assistant clerical hire in the department of the Industrial Accident 
 Board, and so much thereof as may be necessary may be used by said 
 
130 INSURANCE LAWS OF TEXAS. 
 
 department upon proper voucher therefor to pay the necessary clerks 
 to make such copies, and any excess that may exist at the end of any 
 fiscal year in such fund shall lapse into the general revenue fund of 
 this State, and no fee or salary shall be paid to any clerk or other per- 
 son in said department for making such copies in excess of the fees 
 charged for such copies. (Acts 35th Leg., Chap. 103, Sec. 9, Part II.) 
 
 Board May Make Investigations Anywhere in the State. 
 
 347. Said board or any member thereof may hold hearings or take 
 testimony or make investigations at any point within the State of Texas, 
 reporting the result thereof, if the same is made by one member to the 
 board, or it can employ or use the assistance of an inspector or adjuster 
 for the purpose of adjusting and settling claims for compensation or 
 developing the facts relating to any claim for compensation. (Acts 
 35th Leg., Chap. 103, Sec. 10, Part II.) 
 
 Association Shall Notify Board Whenever It Stops or Suspends Payment 
 of Compensation. 
 
 348. When the association suspends or stops payment of compen- 
 sation, it shall immediately notify the board of that fact, giving to said 
 board the name, number and style of the claim, the amount paid thereon, 
 the date of the suspension or stopping of payment thereon and the 
 reason for such suspension or stopping of payment of compensation. 
 (Acts 35th Leg., Chap. 103, Sec. 11, Part II.) 
 
 Board May Authorize Monthly or Quarterly Payments of Compensation 
 or Compromise Settlements. 
 
 349. The board upon application of either party may in its discre- 
 tion, having regard to the welfare of the employe and the convenience 
 of the association, authorize compensation to be paid monthly or 
 quarterly. 
 
 In any case where the liability of the association or. the extent of 
 the injury of the employe is uncertain, indefinite or incapable of being 
 satisfactorily established the board may approve any compromise ad- 
 justment, settlement or commutation thereof made between the parties. 
 (Acts 35th Leg., Chap. 103, Sec. 12, Part II.) 
 
 PART III. 
 
 Creation of Employers' Insurance Association. 
 
 350. The "Texas Employers' Insurance Association" is hereby cre- 
 ated, a body corporate with the powers provided in this act and with 
 all the general corporate powers incident thereto. (Acts 35th Leg., 
 Chap. 103, Sec. 1, Part III.) 
 
 Appointment of Constitutive Board of Directors and Its Term Election 
 of Their Successors According to the Provisions of the By-Laws. 
 
 351. The Governor shall appoint a board of directors of the asso- 
 ciation consisting of twelve members, who shall serve for a term of one 
 year or until their successors are elected by ballot by the subscribers 
 at such time and for such term as the by-laws shall provide; provided, 
 that at any annual meeting of subscribers the number of directors may 
 
INSURANCE LAWS OF TEXAS. 131 
 
 be increased or decreased by resolution duly recorded in the minutes 
 of such meeting. (Acts 35th Leg., Chap. 103, Sec. 2, Part III.) 
 
 Powers and Duties of the Board of Directors. 
 
 352. Until the first meeting of the subscribers the board of directors 
 shall have and exercise all the powers of the subscribers and may adopt 
 by-laws, not inconsistent with the provisions of this act, which shall be 
 in effect until amended or repealed by the subscribers. (Acts 35th Leg., 
 Chap. 103, Sec. 3, Part III.) 
 
 Organization of the Board of Directors. 
 
 353. The board of directors shall immediately choose by ballot a 
 president, who shall be a member of the board, a secretary, a treasurer, 
 and such other officials as the by-laws may provide. (Acts 35th Leg., 
 Chap. 103, Sec. 4, Part III.) 
 
 What Shall Constitute a Quorum Vacancies, How Filled. 
 
 354. Seven or more of the directors shall constitute a quorum for 
 the transaction of business. Vacancies in any office may be filled in 
 such manner as the by-laws shall provide. (Acts 35th Leg., Chap. 103, 
 Sec. 5, Part III.) 
 
 Board of Directors May Appoint an Executive Committee. 
 
 355. The board of directors may appoint an executive committee, 
 which may have and exercise all of the powers of the board of directors 
 except when the board is in session. (Acts 35th Leg., Chap. 103, Sec. 
 5a, Part III.) 
 
 Who May Become a Subscriber. 
 
 356. Any employer of labor in this State may become a subscriber, 
 except as provided in Section 2, Part I (Sec. 298) of this act. (Acts 
 35th Leg., Chap. 103, Sec. 6, Part III.) 
 
 Note. A municipal corporation cannot become a subscriber. The word "cor- 
 poration" is a technical word which, however, has a common meaning which 
 is "private corporation," and as there is nothing in this Act to indicate the 
 contrary the common meaning of the word is given to it. (Opinion of At- 
 torney General, September 23, 1913.) 
 
 The First Meeting of the Board of Directors, When Called. 
 
 357. The board of directors shall, within thirty days of the sub- 
 scription of twenty-five employers, call the first meeting of the sub- 
 scribers by a notice in writing mailed to each subscriber at his resi- 
 dence or place of business, not less than ten days before the date fixed 
 for the meeting. (Acts 35th Leg., Chap. 103, Sec. 7, Part III.) 
 
 The Voting Power of the Subscribers. 
 
 358. In any meeting of the subscribers each subscriber shall have 
 one vote, and if a subscriber has 500 employes to whom the association 
 is bound to pay compensation he shall be entitled to two votes, and he 
 shall be entitled to one additional vote for each additional 500 em- 
 ployes to whom the association is bound to pay compensation, but no 
 
132 INSURANCE LAWS or TEXAS. 
 
 subscriber shall cast, by his own right or by right of proxy, more than 
 20 votes. (Acts 35th Leg., Chap. 163, Sec. 8, Part III.) 
 
 No Policies Shall Be Issued by Association Unless It Has Fifty Mem- 
 bers with 2000 Employes. 
 
 359. No policies shall be issued by the association until not less than 
 50 members have subscribed, who have not less than 2000 employes 
 to whom the association may be bound to pay compensation. (Acts 35th 
 Leg., Chap. 103, Sec. 9, Part III.) 
 
 No Policy Shall Be Issued Before Thirty Days After Granting a License 
 to the Association by the Commissioner of Insurance and Banking. 
 
 360. No policies shall be issued by the association until a list of 
 the subscribers with the number of employes of each, together with 
 such information as the Commissioner of Insurance and Banking may 
 require, shall have been filed with the Department of Insurance and 
 Banking, nor until the president and secretary of the association shall 
 have certified under oath that every subscription on the list so filed is 
 genuine and made with an agreement with each subscriber that he will 
 take the policy so subscribed for by him within thirty days of the 
 granting of a license to the association by the Commissioner of Insur- 
 ance and Banking to issue policies. (Acts 35th Leg., Chap. 103, Sec. 
 10, Part III.) 
 
 Note. Above section and Section 17 of part III, requiring the filing with the 
 Commissioner of Insurance and Banking of lists of subscribers, with number of 
 employes of each, and any proposed premium, assessment, dividend or distribu- 
 tion of subscribers, do not apply to capital stock insurance companies, but do 
 apply to mutual companies and reciprocal associations. (Opinion of Attorney 
 General, September 12, 1913.) 
 
 No Further Policies Shall Be Issued Until Shortage of Number of Sub- 
 scribers or Employes Is Covered. 
 
 361. If the number of subscribers falls below 50, or the number of 
 employes to whom the association may- be bound to pay compensation 
 falls below 2000, no further policies shall be issued until other em- 
 ployers have subscribed who, together with existing subscribers, amount 
 to not less than 50, who have not less than 2000 employes to whom the 
 association may be bound to pay compensation, said subscriptions to 
 be subject to the provisions of the preceding section. (Acts 35th Leg., 
 Chap. 103, Sec. 11, Part III.) 
 
 Commissioner of Insurance and Banking Shall Grant a License, When. 
 
 362. Upon the filing of the certificates provided for in the two pre- 
 ceding sections, the Commissioner of Insurance and Banking shall make 
 such investigations as he may deem proper and, if his findings war- 
 rant it, grant a license to the association to issue policies. (Acts 35th 
 Leg., Chap. 103, Sec. 12, Part III.) 
 
 Classification of Subscribers Into Groups by the Board of Directors. 
 
 363. . The board of directors may distribute the subscribers into 
 groups for the purpose of segregating the experience of each such group 
 as to premiums and losses, and for the purpose of determining divi- 
 
INSURANCE LAWS OF TEXAS. 133 
 
 dends payable to and assessments payable by the subscribers within 
 each group, but for the purpose of determining the solvency of the 
 association the funds of the association shajl be deemed one and indi- 
 visible. The board of directors shall have power to rearrange any of 
 the groups by withdrawing any subscriber and transferring him wholly 
 or in part to any group and to set up new groups at its discretion. (Acts 
 35th Leg., Chap. 103, Sec. 13, Part III.) 
 
 Mutual Contingent Liability of a Subscriber Fixed in Assocation's By- 
 Laws and Policies, 
 
 364. The association may, in its by-laws and policies, fix the limit 
 of liability of the subscribers for the payment of assessments herein- 
 after provided for, but such limit of liability of the subscribers shall 
 not, except by special agreement in writing between the association and 
 subscriber, be fixed at an amount greater than an amount equal to and 
 in addition to an annual premium. (Acts 35th Leg., Chap. 103 Sec. 
 14, Part III.) 
 
 Association May Collect Additional Assessments How Levied and Col- 
 lected. 
 
 365. If the association, at the end of any calendar year, is not pos- 
 sessed of admitted assets in excess of unearned premiums sufficient for 
 the payment of its incurred losses and expenses, it shall make an as- 
 sessment for the amount needed to pay such losses and expenses, first 
 upon the subscribers within each group whose earned premiums com- 
 pared with its incurred losses and expenses shows a deficiency for the 
 group, and, second, only upon the subscribers within each group whose 
 earned premiums compared with its incurred losses and expenses shows 
 a surplus, and in no event shall it make an assessment for any aggre- 
 gate amount more than is needed to pay losses and expenses. Every 
 subscriber shall, in accordance with the law and his contract, pay his 
 proportionate part of any assessment which may be levied by the asso- 
 ciation on account of losses and expenses incurred during any calendar 
 vear while he is a subscriber. (Acts 35th Leg., Chap. 103, Sec. 15, 
 Part III.) 
 
 Payments of Dividends Upon the Policies Expiring During Each Year 
 Classification by Groups, But Whole Fund Shall Be Used for Pay- 
 ment of Approved Compensation. 
 
 366. The board of directors may by vote from time to time fix the 
 amount to be paid as dividends on the policies in force during each 
 calendar year after retaining sums sufficient to pay all compensation 
 which may be payable on account of injuries sustained and expenses in- 
 curred during the calendar year. Dividends and assessments shall be 
 fixed by and for groups, but the entire assets of the association, includ- 
 ing the liability of the subscriber to assessment within the limits fixed 
 by the by-laws or by special agreement in writing as authorized, shall 
 be subject to the payment of any approved claim for compensation 
 against the association. (Acts 35th Leg., Chap. 103, Sec. 16, Part III.) 
 
 Note. So long as the association or company maintains a surplus of $200,000, 
 the law does not prohibit the payment of dividends monthly, if the earned 
 fund exists from which they may be paid. If the rates are higher than the 
 lowest possible rate consistent with the maintenance of solvency and the 
 
134 INSURANCE LAWS OF TEXAS. 
 
 creation of adequate reserves and a reasonable surplus, and are in fact so 
 Mgh as to require a monthly payment of dividends, the remedy is reduction of 
 the rates. If too high, they may be enjoined by any interested party. (Opin- 
 ion of Attorney General, December 22, 1917.) 
 
 Liability of Members to Assessment Suspended, When. 
 
 367. Whenever the association shall have accumulated at the end 
 of any calendar year an admitted surplus in excess of incurred losses, 
 expenses and unearned premiums amounting to the sum of two hun- 
 dred thousand dollars, the liability of its members to assessment shall 
 be suspended during the ensuing calendar year, or for such further 
 period as the association shall maintain unimpaired such surplus of 
 two hundred thousand dollars or more, and the certificate of the Com- 
 missioner of Insurance and Banking, after an examination and report, 
 shall be conclusive evidence as to the facts in any proceeding in which 
 the fact may be an issue. (Acts 35th Leg., Chap. 103, Sec. 16a, 
 Part III.) 
 
 Association May Issue Policies Whose Holders Will Not Participate in 
 Surplus, When. 
 
 368. Whenever by reason of having qualified under Section 16a, 
 Part III (Sec. 367), to issue policies which are not subject to assess- 
 ment, the association may issue policies which will not entitle the holder 
 to participate in any distribution of surplus. (Acts 35th Leg., Chap. 
 103, Sec. 16b, Part III.) 
 
 Board of Directors Shall Determine Hazards by Classes and Fix Bates. 
 
 369. The board of directors shall determine hazards by classes, and 
 iix the rates of premium which shall be applicable to the payroll in each 
 of such classes at the lowest possible rate consistent with the mainte- 
 nance of solvency and the creation of adequate reserves and a reason- 
 able surplus, and for such purpose may adopt a system of schedule and 
 experience rating in such a manner as to take account of the peculiar 
 hazard of each individual risk. (Acts 35th Leg., Chap. 103, Sec. 16c, 
 Part ill.) 
 
 Approval by the Commissioner of Insurance and Banking Necessary for 
 Fixing Premiums, Assessments, Etc. 
 
 370. Any proposed rate of premium, assessment or dividend or any 
 distribution of subscribers shall not take effect until approved by the 
 Commissioner of Insurance and Banking after such investigation as he 
 may deem necessary. (Acts 35th Leg., Chap. 103, Sec. 17, Part III.) 
 
 Note. See Section 10, part III. (Opinion of Attorney General, September 
 12, 1913.) 
 
 Regulation and Rules for the Conditions in Plants and Places of Works 
 With Respect to the Safety of Its Employes Appeal to the Indus- 
 trial Accident Board. 
 
 371. The association shall make and enforce reasonable rules for 
 the prevention of injuries on the premises of subscribers, and for this 
 purpose the inspector of the association or of the board shall have free 
 access to all such premises during regular working hours. Any sub- 
 scriber aggrieved by such rule or regulation may petition the board 
 
INSURANCE LAWS OF TEXAS. 135 
 
 for a review, and it may affirm, amend or annul the rule or regulation. 
 (Acts 35th Leg., Chap. 103, Sec. 18, Part III.) 
 
 Any Employer Upon Becoming a Subscriber Must Report to Industrial 
 Accident Board. 
 
 372. Whenever any employer of labor in this State becomes a sub- 
 scriber to this act, he shall immediately notify the board of such fact, 
 stating in such notice his name, place of business, character of the 
 business, approximate number of employes, estimated amount of his 
 payroll and the name of the insurance company carrying his insurance, 
 the date of issuing the policy and the date when the same will expire, 
 and whenever any policy is renewed that fact shall be made known to 
 the board, and the notice thereof shall contain the above facts. The 
 association shall also report the same to the board, giving the name of 
 the employer, place of business, character of the business, .approximate 
 number of employes, estimated amount of payroll, date of issuance and 
 date of expiration of said policy. Any employer or association wilfully 
 failing or refusing to make any such report shall be liable for and shall 
 pay to the State of Texas a penalty of not more than one thousand dol- 
 lars ($1000) for each and every offense, the same to be recovered in a 
 suit to be instituted and prosecuted in Travis county by the Attorney 
 General or by the district or county attorney under his direction in 
 the district court thereof. (Acts 35th Leg., Chap. 103, Sec. 18a, Part 
 III.) 
 
 Subscriber Must Notify His Employes When He Provides for Paying 
 Compensation. 
 
 373. Every subscriber shall as soon as he secures a policy give notice 
 in writing or print, or in such manner or way as may be directed or 
 approved by the board of all persons under contract of hire with him 
 that he has provided for payment of compensation for injuries with the 
 association. (Acts 35th Leg., Chap. 103, Sec. 19, Part III.) 
 
 Notice as Directed by Industrial Accident Board Must Be Given by Sub- 
 scriber When He Provides for Compensation and When He Ceases to 
 Be a Subscriber. 
 
 374. Every subscriber shall, after receiving a policy, give notice in 
 writing or print, or in such manner or way as may be directed or ap- 
 proved by the board, to all persons with whom he is about to enter into 
 a contract of hire that he has provided for payment of compensation 
 for injuries by the association. If any employer ceases to be a sub- 
 scriber, he shall, on or before the date on which his policy expires, give 
 notice to that effect in writing or print, or in such other manner or 
 way as the board may direct or approve to all persons under contract 
 of hire with him. In case of the renewal of his policy no notice shall 
 be required under this act. He shall file a copy of said notice with 
 the board. (Acts 35th Leg., Chap. 103, Sec. 20, Part III.) 
 
 Association Is Responsible for Liability Judgment. 
 
 375. If a subscriber who has complied with all the rules, regula- 
 tions and demands of the association is required by any judgment of 
 a court at law to pay any employe any damages, actual or exemplary, 
 
136 INSURANCE LAWS OF TEXAS. 
 
 on account of any personal injury sustained by such employe in the 
 course of his employment during the period of subscription, the asso- 
 ciation shall pay to the subscriber the full amount of the judgment 
 and the cost assessed therewith, if the subscriber shall have given the 
 association notice of the bringing of the action upon which the judg- 
 ment was recovered and an opportunity to appear and defend same in 
 his or its name. (Acts 35th Leg., Chap. 103, Sec. 21, Part III.) 
 
 Note. (1) Above section of this act, relating to the payment Of judgments 
 and costs, applies to stock companies as well as to mutual companies and recip- 
 rocal associations. (Opinion of Attorney General, September 12, 1913.) 
 
 (2) The Texas Workmen's Compensation Law has no application over in- 
 juries in such manner and in such places as would give the courts of admiralty 
 jurisdiction. However, the Texas Employers' Insurance Association has power 
 to insure the United States Shipping Board, the employer not the employe, 
 against claims arising from judgments for damages against the employer ren- 
 dered either in the admiralty or common law courts. (Opinion of Attorney 
 General, January 12, 1921.) 
 
 Existing Corporate Powers of Association. 
 
 376. The corporate powers of the association shall not expire be- 
 cause of failure to issue policies or to make insurance. (Acts 35th 
 Leg., Chap. 103, Sec. 22, Part III.) 
 
 Association Shall Maintain Adequate Reserves. 
 
 377. The association shall set up and maintain reserves adequate to 
 meet anticipated losses and carry all claims to maturity and policies 
 to termination, which reserves shall be computed in accordance with 
 such rules as shall be approved by the Commissioner of Insurance and 
 Banking. (Acts 35th Leg., Chap. 103, Sec. 23, Part III.) 
 
 PAET IV. 
 Definitions. 
 
 378. The following words and phrases as used in this act shall, 
 unless a different meaning is plainly required by the context, have the 
 following meanings, respectively : 
 
 "Employer" shall mean any person, firm, partnership, association of 
 persons or corporations or their legal representatives that makes con- 
 tracts of hire. 
 
 "Employe" shall mean every person in the service of another under 
 any contract of hire, expressed or implied, oral or written, except mas- 
 ters of or seamen on vessels engaged in interstate or foreign commerce, 
 and except one whose employment is not in the usual course of the 
 trade, business, profession or occupation of his employer. 
 
 Note. (1) A partner in a firm of employers to whom a workmen's compen- 
 sation policy is issued covering the employes of such firm is not an employe of 
 such firm within the meaning of the Texas compensation law and is not pro- 
 tected under such a workmen's compensation policy. 
 
 (2) A trustee operating as a real trust is not an employe of such trust 
 within the meaning of the said Act. The remuneration received by such partner 
 or trustee should not be included in the payroll in estimating the premium to 
 be paid for a workmen's compensation policy. 
 
 (3) No special contract could be made whereby partners, trustees, operating 
 real trust and officers of corporations while acting solely as such, could be 
 
INSURANCE LAWS OF TEXAS. 137 
 
 treated as employes and covered by such policies. (Opinion of Attorney Gen- 
 eral, March 5, 1920.) 
 
 The words "legal beneficiaries," as used in this act, shall mean the 
 relatives named in Section 8a, Part I (Sec. 311), of this act. "Asso- 
 ciation" shall mean the "Texas Employers' Insurance Association" or 
 any other insurance company authorized under this act to insure the 
 payment of compensation to injured employes or to the beneficiaries of 
 deceased employes. 
 
 "Subscriber" shall mean any employe who has become a member of 
 the association by paying the required premium; provided, that the as- 
 sociation holds a license issued by the Commissioner of Insurance and 
 Banking, as provided for in Section 12, Part III (Sec. 362), of this act. 
 
 "Average weekly wages" shall mean : 
 
 1. If the injured employe shall have worked in the employment in 
 which he was working at the time of the injury, whether for the same 
 employer or not, substantially the whole of the year immediately pre- 
 ceding the injury, his average annual wages shall consist of three hun- 
 dred times the average daily wage or salary which he shall have earned 
 in such employment during the days when so employed. 
 
 2. If the injured employe shall not have worked in such employ- 
 ment during substantially the whole of the year, his average annual 
 wages shall consist of three hundred times the average daily wage or 
 salary which an employe of the same class working substantially the 
 whole of such immediately preceding year in the same or in a similar 
 employment in the same or a neighboring place, shall have earned in 
 such employment during the days when so employed. 
 
 3. When by reason of the shortness of the time of the employment 
 of the employe, or other employe engaged in the same class of work in 
 the manner and for the length of time specified in the above Subsec- 
 tions 1 and 2, or other good and sufficient reasons, it is impracticable- 
 to compute the average weekly wages as -above defined, it shall be com- 
 puted by the board in any manner which may seem just and fair to- 
 both parties. 
 
 4. Said wages shall include the market value of board, lodging,, 
 laundry, fuel and other advantages which can be estimated in money,, 
 which the employe receives from the employer as part of his remuner- 
 ation. Any sums, however, which the employer has paid to the em- 
 ploye to cover any special expenses entailed on him by. the act of his 
 employment shall not be included. 
 
 5. The average weekly wages of an employe shall be one-fifty-second 
 (1-52) part of the average annual wage. 
 
 The terms "injury" or "personal injury," as used in this act, shall be 
 construed to mean damage or harm to the physical structure of the body 
 and such diseases or infection as naturally result therefrom. 
 
 The term "injury sustained in the course of employment/' as used 
 in this act, shall not include: 
 
 1. An injury caused by the act of God, unless the employe is at the 
 time engaged in the performance of duties that subject him to a greater 
 hazard from the act of God responsible for the injury than ordinarily 
 applies to the general public. 
 
 2. An injury caused by an act of a third person intended to injure 
 
138 INSURANCE LAWS OF TEXAS. 
 
 the employe because of reasons personal to him and not directed against 
 him as an employe, or because of his employment. 
 
 3. An injury received while in a state of intoxication. 
 
 4. An injury caused by the employe's wilful intention and attempt 
 ,to injure himself, or to unlawfully injure some other person, but shall 
 include all other injuries of every kind and character having to do with 
 and originating in the work, business, trade or profession of the em- 
 ployer received by an employe while engaged in or about the further- 
 ance of the affairs or business of his employer whether upon the em- 
 ployer's premises or elsewhere. (Acts 35th Leg., Chap. 103, Sec. 1, 
 Part IV.) 
 
 , Note. ( 1 ) The word "employe," defined in this section, embraces every per- 
 son whether a laborer or an officer in the service of another under any contract 
 of hire, and includes the officers of a corporation. (Opinion of Attorney Gen- 
 eral, February 3, 1916.) 
 
 (2) Where employes are under the direction and control of their employers 
 as to the work to be done and the manner of its doing, then they should be 
 included in the payroll of the company employing them and are in all things 
 [entitled to the benefits of the Workmen's Compensation Act, regardless of the 
 fact that they may be paid by commission. The term "employe," as used in 
 our compensation act, by reason of its definition as being "a person in the 
 service of another under contract of hire, etc.," must be construed to mean 
 the servant of another in the sense that the term servant is used in describing 
 the legal relationship known as master and servant. In determining who an 
 employe is within the meaning of the act the controlling question is whether 
 or not the employe is subject to the direction and control of the person em- 
 ploying him, to the extent of prescribing what work shall be done and how it 
 shall be done. (Opinion of Attorney General, February 11, 1916.) 
 
 Certain Officers of a Corporation Subscriber Not Considered to Be Em- 
 ployes. 
 
 379. The president, vice-president or vice-presidents, secretary or 
 other officers thereof provided in its charter or by-laws and the directors 
 of any corporation which is a subscriber to this act shall not be deemed 
 Or held to be an employe within the meaning of that term so defined 
 in the preceding section hereof. (Acts 35th Leg., Chap. 103, Sec. la, 
 Part IV.) 
 
 Note. Officers and directors of a corporation, acting as such, are not employes 
 within the meaning of said Act, but when employed by the corporation in other 
 capacities, then they are not excluded from the benefits of the Act provided 
 their services bring them within the definition of employe. (Opinion of At- 
 torney General, March 5, 1920.) 
 
 Any Insurance Company Transacting Liability or Accident Business 
 Within This State, Including Mutual and Reciprocal Insurance Com- 
 panies, Shall Have the Same Bight to Insure the Liability. 
 
 380. Any insurance company, which term shall include mutual and 
 reciprocal companies, lawfully transacting a liability or accident busi- 
 ness in this State, shall have the same right to insure the liability and 
 pay the compensation provided for in Part I of this act, and when 
 such company issues a policy conditioned to pay such compensation, the 
 holder of such said policy shall be regarded as a subscriber so far as 
 applicable under this act, and when such company insures such pay- 
 ment of compensation it shall be subject to the provisions of Parts I, 
 
INSURANCE LAWS OF TEXAS. 139 
 
 II and IV and of Sections 10, 17, 18a and 21 of Part III (Sees. 360, 
 370, 372 and 375) of this act, and shall file with the Commissioner of 
 Insurance and Banking its classification of hazards with the rates of 
 premium respectively applicable to each, none of which shall take effect 
 until the Commissioner of Insurance and Banking has approved same 
 as adequate to the risks to which they respectively apply and not less 
 than charged by the association, and such company may have and exer- 
 cise all of the rights and powers conferred by this act on the association 
 created hereby, but such rights and powers shall not be exercised by a 
 mutual or reciprocal organization unless such organization has at least 
 50 subscribers who have not less than 2000 employes. (Acts 35th Leg., 
 Chap. 103, Sec. 2, Part IV.) 
 
 Note. (1) Under the Workmen's Compensation law, insurance companies 
 doing business are required to file their classification of premiums with the 
 Commissioner of Insurance and Banking, and he is required to approve same 
 before any policies are issued, regardless of whether the Industrial Accident 
 Board has been organized or not. (Opinion of Attorney General, August 30, 
 1913.) 
 
 (2) An employer in order to receive benefits of this Act must either become 
 a member of the Texas Employers' Insurance Association or take a policy in 
 some licensed company, and has right to elect either to be a member of such 
 association or take a policy in a licensed company. (Opinion of Attorney Gen- 
 eral, September 6, 1913.) 
 
 (3) Sections 10 and 17 of part III, requiring the filing with the Commis- 
 sioner of Insurance and Banking of lists of subscribers of each, and any pro- 
 posed premium, assessment, dividend, or distribution of subscribers, do not apply 
 to capital stock insurance companies, but do apply to mutual companies and 
 reciprocal associations. Section 21 of part III of said Act relating to the pay- 
 ment of judgments and costs, apples to stock companies as well as to mutual 
 companies and reciprocal associations. (Opinion of Attorney General, Septem- 
 ber 12, 1913.) 
 
 (4) Capital stock companies have the right to write workmen's compensa- 
 tion insurance and may have and exercise all the rights and powers conferred 
 on the Texas Employers' Insurance Association, but they must exercise them 
 under the same restrictions, and are held subject to the provisions of Sections 
 13, 14, 15, and 16 of part III of the Workmen's Compensation law. (Opinion 
 of Attorney General, May 29, 1914.) 
 
 Subscriber Entitled to Refund of Unearned Portion of Premium. 
 
 381. Any subscriber who has paid a premium as provided in Sec- 
 tion 1, Part IV (Sec. 378), of this act, may, upon application to the 
 board and to the association and after a showing satisfactory to the 
 board, that he has notified all of his employes in such manner as may 
 be required by the board, cease to be a subscriber and be entitled to a 
 refund of the unearned portion of his premium, subject, however, to 
 any rule approved by the Commissioner of Insurance and Banking as to 
 the minimum premiums or short rate cancellation. (Acts 35th Leg., 
 Chap. 103, Sec. 3, Part IV.) 
 
 Subscriber Misrepresenting Payroll Subject to Penalty. 
 
 382. Any subscriber who shall wilfully misrepresent the amount of 
 his payroll to the association writing his insurance upon which any 
 premium under this act is to be based shall be liable to the association 
 insuring the compensation of his employes in an amount not to exceed 
 
140 INSURANCE LAWS or TEXAS. 
 
 ten times the amount of the difference between the premium which he 
 paid and the amount which said subscriber should have paid had his 
 payroll been correctly computed; and the liability to said association 
 for such misrepresentation, if it was received thereby, may be enforced 
 in a civil action in any court of competent jurisdiction in this State. 
 (Acts 35th Leg., Chap. 103, Sec. 3a, Part IV.) 
 
 This Act Does Not Repeal, But Merely Amends and Continues in Force 
 the Original Workmen's Compensation Law. 
 
 383. No inchoate, vested, matured, existing or other rights, reme- 
 dies, powers, duties or authority, either of any employe or legal bene- 
 ficiary, or of the board, or of the association, or of any other person 
 shall be in any way affected by any of the amendments herein made to 
 the original law hereby amended, but all such rights, remedies, powers, 
 duties and authority shall remain and be in force as under the original 
 law just as if the amendments hereby adopted had neve.r been made, 
 and to that end it is hereby declared that said original law is not re- 
 pealed, but the same is, and shall remain in full force and effect as to 
 all such rights, remedies, powers, duties and authority; and further, 
 this act, in so far as it adopts the law of which it is an amendment, 
 is a continuation thereof, and only in other respects a new enactment. 
 (Acts 35th Leg., Chap. 103, Sec. 3b, Part IV.) 
 
 Further Definition of Terms Contained in This Act. 
 
 384. Any reference to any employe herein who has been injured 
 shall, when the employe, is dead, also include the legal beneficiaries, as 
 that term is herein used, of such employe to whom compensation may 
 fee payable. Whenever the word "board" is used in this act, it shall be 
 construed to mean Industrial Accident Board created by this act. When- 
 ever in this act the singular is used, the plural shall be included : when- 
 ever the masculine gender is used, the feminine and neuter shall be 
 included. (Acts 35th Leg., Chap. 103, Sec. 3b, Part IV.) 
 
 Unconstitutionality of Part of Law Not to Affect Whole Law. 
 
 385. Should any part of this act for any reason be held to be in- 
 valid, unconstitutional or inoperative, no other part or parts thereof 
 shall be held affected thereby, and if any exception to or any limita- 
 tion upon any general provision herein contained shall be held to be 
 unconstitutional or invalid or ineffective, the general provisions shall, 
 nevertheless, stand effective- and valid as if it has been enacted with- 
 out limitation or exceptions. (Acts 35th Leg., Chap. 103, Sec. 4, 
 Part IV.) 
 
 Association May Make Advance Payments of Compensation. 
 
 386. In cases of emergency or impending necessity the association 
 may make advanced payments of compensation to any employe during 
 the period of his incapacity or to his beneficiaries within the terms of 
 this act, and when the same is either directed or approved by the board 
 it shall be credited as against any unaccrued compensation due said 
 employe or beneficiaries. (Acts 35th Leg., Chap. 103, Sec. 5, Part IV.) 
 
INSURANCE LAWS OF TEXAS. 141 
 
 Reports of Accidents Not to Be Considered as Admissions or Evidence. 
 
 387. The reports of accidents required by this act to be made by 
 subscribers shall not be deemed and considered as admissions and evi- 
 dence against the association or the subscriber in any proceedings be- 
 fore the board or elsewhere in a contested case where the facts set out 
 therein or in any one of them is sought to be contradicted by the asso- 
 ciation or subscriber. (Acts 35th Leg., Chap. 103, Sec. 6, Part IV.) 
 
 Employers' Liability Insurance Manner of Reporting and Calculating 
 Reserve. 
 
 388. Every insurance company which has for ten years or more under- 
 taken to insure persons, firms or corporations against loss or damage 
 on account of the bodily injury or death by accident of any person for 
 which loss or damage said persons, firm or corporations are respectively 
 responsible shall, on or before the first day of October in each year 
 render to the Insurance Commissioner a statement in writing of its 
 business transacted in the United States, which shall show separately 
 for each of the five calendar years constituting the first half of the period 
 of ten years next preceding the thirty-first day of December of the year m 
 which the statement is made. 
 
 (1) The number of persons reported injured under all its forms of 
 liability policies, whether such injuries were reported to the home office 
 of the company or to any of its representatives, and whether such in- 
 jury resulted in loss to the company or not. 
 
 (2) The amount that on or before the thirty-first day of August of 
 the year in which the statement is made had been paid on account or 
 in consequence of all injuries so reported, including therein all pay- 
 ments on suits arising from such injuries. 
 
 (3) The number of suits or actions under su^h policies on account 
 of injuries reported which have been settled either by payments or 
 compromise. 
 
 (4) The amount paid in settlement of such suits or actions on 
 or before the thirty-first day of August of the year when the state- 
 ment is made, including therein all payments made on account or in 
 consequence of injuries from which the suits arose, whether prior to or 
 later than the date when the suits were brought. Every such company 
 shall, in its financial statements hereafter made in this State, use the 
 experience so ascertained for computing its outstanding losses under 
 all its forms of liability policies, irrespective of the date when the pol- 
 icies were issued. The average cost per suit of settling such cases as 
 computed by the data required in this article shall be multiplied by 
 the number of suits or actions pending on account of injuries repprted 
 prior to eighteen months previous to the date on which the condition 
 of the company is to be ascertained and shown, which suits or actions 
 are being defended for or on account of a holder of any such policy, 
 -also the average cost on account of each injured person, determined as 
 aforesaid from the company's experience, shall be multiplied by the 
 number of injuries reported within the 18 months prior to making the 
 statement of the company's condition, whether such injuries were re- 
 ported to the home office of the company, or to any of its representa- 
 tives. From the sum of these two products so ascertained there shall 
 be deducted the amount of all payments made on account or in conse- 
 
142 INSURANCE LAWS OP TEXAS. 
 
 quence of said injuries reported within eighteen months, this amount 
 so deducted to be taken as of the date at which the said statement 
 is made. The sum remaining after making this deduction shall be 
 charged as the liability of the company on account of outstanding 
 losses. Any admitted company issuing liability contracts which by 
 reason of its limited experience in liability underwriting cannot fur- 
 nish the information required by this section shall,, nevertheless, until 
 it is able to comply with said requirements, be charged with a lia- 
 bility for outstanding losses upon all kinds of its liability policies an 
 amount not less than the amount resulting from the following process. 
 (E. S., Art. 4941.) 
 
 Report Shall Contain. 
 
 389. The number of suits or actions pending on account of injuries 
 reported prior to eighteen months previous to the date of making up 
 the statement, whether such injuries were reported to the home office 
 of the company or to any of its representatives, which are being de- 
 fended on account of the holder of any policy, shall be multiplied by 
 the average cost per suit as shown by the average experience of all 
 other admitted liability companies ascertained from the data required 
 by this section, also the number of injuries reported under said policies 
 at any time within eighteen months of making up the statement, 
 whether reported to the home office of the company, or to any of its 
 representatives, and whether such injuries resulted in loss to the com- 
 pany or not, shall be multiplied by the average cost for each injured 
 person as shown by the average of said experience of all other ad- 
 mitted liability companies, ascertained from the data required by this 
 section. From the sum of these two products there shall be deducted the 
 amount of all payments made on account of or in consequence of said 
 injuries reported within eighteen months, this amount to be taken as 
 of the date at which the statement is made. A sum not less than the 
 amount remaining after this deduction shall be charged as a liability 
 for outstanding losses to liability companies covered by the provisions 
 of this paragraph. The average cost for suits and for injured persons 
 required by this paragraph shall, on or before the first day of Decem- 
 ber of each year, be furnished by the Insurance Commissioner to every 
 such company which has not had an experience of ten years in liability 
 underwriting. Besides the reserves provided for in this article, each 
 such company shall be charged as a liability with all unpaid losses of 
 which the company received notice on or before December 31st and 
 all other debts and liabilities. If the capital stock of any such com- 
 pany computing its liabilities in accordance with the provisions of this 
 article shall be at any time impaired to the extent of 20 per cent 
 thereof, it shall be the duty of the Commissioner of Insurance and 
 Banking to give notice to the company to make good its whole capital 
 stock within sixty days, and if this is not done he shall require the 
 company to cease to do business within this State, and shall thereupon, 
 in case the company is organized under the authority of the State, im- 
 mediately institute legal proceedings to wind up the affairs of such 
 company. (E. S., Art. 4941.) 
 
INSURANCE LAWS OF TEXAS. 143 
 
 Commissioner May Accept Certificate, When. 
 
 390. The Commissioner of Insurance and Banking, in calculating 
 the reserve liability of any such company, may accept the certificate 
 of the officer of any other State charged with the duty of supervising 
 such company, as to any such company organized under the laws of 
 such State; provided, such certificate shows that such liability has been 
 computed in accordance with the provisions of the preceding (article) 
 section. (E. S., Art. 4942.) 
 
 CHAPTER XV. 
 
 MUTUAL ASSESSMENT ACCIDENT INSURANCE HOME COMPANIES. 
 
 Incorporation of. 
 
 391. Any number of persons, not less than five, may organize a cor- 
 poration for the purpose of transacting business of accident insurance, 
 upon the co-operate or mutual assessment plan, without capital stock, 
 by complying with the provisions of this chapter; provided, that all 
 such persons shall be bona fide citizens and residents of the State of 
 Texas. (E. S., Art. 4794.) 
 
 Note. A mutual assessment liability accident insurance company cannot be 
 lawfully organized in Texas under the provisions of the law authorizing the 
 organization of mutual accident insurance companies. (Opinion of Attorney 
 General, April 27, 1915.) 
 
 Charter, Requirements of. 
 
 392. Such persons must sign and acknowledge before an officer duly 
 authorized to take acknowledgments of deeds a written charter setting 
 forth : 
 
 (1) The name of such corporation, which name must not so re- 
 semble the name of any other company engaged in the insurance busi- 
 ness in this State as to cause a probability of confusion. 
 
 (2) The number of its directors and the names and residences of 
 those who are to act as such for the first year. 
 
 Note. (1) A mutual assessment accident insurance company must have not 
 less than seven nor more than thirteen directors. (Opinion of Attorney General, 
 January 26, 1916.) 
 
 (2) Must have not less than seven directors specified in the charter. (Opin- 
 ion of Attorney General, August 23, 1916.) 
 
 (3) The location of its principal office, which must be within the 
 State of Texas. 
 
 (4) It 'shall state that said corporation shall have no capital stock, 
 and shall give the purpose for which same is organized and the plan 
 upon which it proposes to do business by stating that its said business 
 shall be conducted upon the assessment plan without lodges. 
 
 (5) The term for which it is to exist, which shall not be for more 
 than fifty years. (E. S., Art. 4795.) 
 
114 INSURANCE LAWS OF TEXAS. 
 
 Charter and Affidavits Presented to Attorney General Two Hundred 
 Bona Fide Applicants Representing One Hundred Thousand Dollars 
 Insurance Must Sign Application Bank Certify to Deposit. 
 
 393. Said charter shall be presented to the Attorney General of this 
 State, accompanied by affidavits of all said incorporators, showing that 
 they are bona fide citizens of this State, by bona fide applications for 
 insurance in said company from not less than two hundred applicants, 
 for not less than one hundred thousand dollars insurance by an affi- 
 davit by one of its incorporators showing that each of said applicants 
 has deposited with affiant at least eighty cents on each thousand dol- 
 lars insurance so applied for by him, and by a certificate of some sol- 
 vent bank showing that all such advance funds are deposited therein, 
 to be turned over to the treasurer of such corporation when organized. 
 Said Attorney General shall carefully examine all said instruments and 
 if he finds the same are in conformity with the requirements of this 
 chapter, he shall give his approval, and file the same with the Commis- 
 sioner of Insurance and Banking. (E. S., Art. 4796.) 
 
 Note. 'The company, before the charter may be approved, must have not less 
 than two hundred separate applicants for insurance. (Opinion of Attorney 
 General, August 23, 1916.) 
 
 Charter Filed With Commissioner With Approval of Attorney General, 
 Accompanied by a Filing Fee of $20 Certified Copy of Charter Fee 
 of $1 Association a Body Corporate. 
 
 394. When said charter has been filed with the Commissioner, with 
 the approval of- the Attorney General, accompanied by a filing fee of 
 $20, the Commissioner shall record the said charter and certificate of 
 the Attorney General in a book kept for that purpose, and shall, upon 
 the receipt of fee for certified copy of charter, of one dollar, furnish a 
 certified copy of such charter and certificate of the Attorney General 
 to the corporators, and shall return to such corporators all such appli- 
 cations for membership, also a certificate that such charter has been 
 filed and recorded in his office, and that said company is duly incor- 
 porated under the laws of the State of Texas and authorized to trans- 
 act the business set forth in its charter, stating same; upon the filing 
 and recording of which charter said association shall become a body 
 politic and corporate, with -the right to transact its said business in 
 this State and elsewhere, according to the provisions of this chapter, 
 to hold property and alienate same, to contract, sue and be sued under 
 its corporate name, and by that name shall have succession, and may 
 by its board of directors make by-laws not inconsistent with law and 
 shall carry on its business subject to the provisions of this chapter. 
 (E. S., Art. 4797.) 
 
 Shall Be Deemed to Be Engaged in the Business of Mutual . Assessment 
 Accident Insurance, When Subject Only to the Provisions of This 
 Act. 
 
 395. Any corporation which issues any certificate, policy or other 
 evidence of interest to its members whereby upon his death or total 
 disability any money is to be paid by such corporation to such member 
 or beneficiary designated by him, which money is derived from volun- 
 tary contributions or from admission fees, dues and assessments or any 
 
INSURANCE LAWS OF TEXAS. 145 
 
 of them collected or to be collected from the members thereof, and 
 interest and accretions upon, and wherein the paying of such money 
 is conditioned upon the same being realized in the manner aforesaid, 
 and wherein the money so realized is applied to the uses and purposes 
 of said corporation and the expense of the management and prosecu- 
 tion of its business, and which has no subordinate lodges or similar 
 bodies, shall be deemed to be engaged in the business of mutual assess- 
 ment accident insurance as contemplated by this chapter, and shall be 
 subject only to the provisions of this chapter. (E. S., Art. 4798.) 
 
 Note. A mutual assessment accident insurance company may provide in its 
 by-laws that the money from which its policy obligations are to be paid shall 
 oe by dues paid by the members instead of assessments, and in such case, the 
 by-laws may also provide that no extra assessments shall ever be levied upon 
 those members who join the association after the passage of such by-laws. 
 (Opinion of Attorney General, April 11, 1914.) 
 
 No Stock Certificates No Dividends Pay No Profits Annual Meetings. 
 
 396. Such corporations shall issue no certificates of stock, shall de- 
 clare no dividends, shall pay no profits, and the salaries of all officers 
 shall be designated in its by-laws; and such by-laws shall provide for 
 annual members' meetings in which each member shall be entitled to 
 vote only in person to the amount of insurance held by him. (E. S., 
 Art. 4799.) 
 
 Members and Directors to Vote on Adoption of By- Laws or Amendments 
 Thereto; Provided. 
 
 397. Every such corporation must, before the adoption of any by- 
 laws or amendments thereto, cause the same to be mailed to all the mem- 
 bers and directors of such association together with the notice of the 
 time and place when the same shall be considered, and same shall be 
 so mailed at least ten days before the time for such meeting; provided, 
 that the provisions of this article shall not apply to by-laws adopted 
 within sixty days after the incorporation of such company. (E. S., 
 Art. 4800.) 
 
 Note. Provisions in the by-laws for notice of accident within ten days are 
 void, under Revised Statutes, 5714. By-laws providing that on dissolution of 
 its residue of property should become the property of its then existing members 
 is invalid. The by-laws cannot confer authority on the board of directors to 
 repeal, amend or enact by-laws. 
 
 Books and Papers Subject to Examination. 
 
 398. All books and papers of such corporation shall at all reasonable 
 times be open for examination by members and their representatives. 
 (E. S., Art. 4801.) 
 
 Commissioner to Examine Financial Conditions Annually. 
 
 399. The Commissioner of Insurance and Banking shall annually, 
 or as often as he deems necessary, in person, or by one or more exam- 
 iners, commissioned in writing, visit each and every such corporation 
 and examine its financial condition and its ability to meet its liabilities. 
 He shall have free access to all books and papers of the corporation or 
 agents thereof, and shall have power to examine, under oath, the offi- 
 
146 INSURANCE LAWS OF TEXAS. 
 
 cers, agents and employes of such corporation. He may revoke or 
 modify any certificate of authority issued by him, when any conditions 
 prescribed by law for granting it no longer exist. The expense of every 
 such examination shall be paid by the corporation so examined. (R. S., 
 Art. 4802.) 
 
 Statement to Be Filed With the Commissioner What It Must Show 
 Filing Fees $10 Each Certificate or Certified Copy Thereof $1. 
 
 400. Every such corporation shall, on the first day of January of 
 each year, or within sixty days thereafter, make and file with the Com- 
 missioner of Insurance and Banking of this State a report of its affairs 
 and operations during the year ending on the thirty-first day of Decem- 
 ber immediately preceding. Such report shall be upon blank forms, 
 to be provided by such Commissioner, and shall be verified by the oath 
 of the secretary of such corporation and shall contain answers to the 
 following questions: 
 
 (1) Number of certificates or policies issued or members admitted 
 during the year. 
 
 (2) Amount of indemnity affected thereby. 
 
 (3) Number of death losses. 
 
 (4) Number of death losses paid. 
 
 (5) Number of other losses. 
 
 (6) Number of other losses paid. 
 
 (7) The amount received from each assessment in each class. 
 
 (8) Total amount paid for losses. 
 
 (9) Number of death claims for which assessments have been made. 
 
 (10) Number of death claims compromised or resisted, and brief 
 statement of reasons. 
 
 (11) Number of other claims for which assessment has been made. 
 
 (12) Number of other claims compromised or resisted, and brief 
 statement of the reasons. 
 
 (13) Does company charge annual dues, and, if so, how much? 
 
 (14) Total amount received and the disposition thereof. 
 
 (15) Does the company use moneys received for payment of claims 
 to pay expense of the company in whole or in part, and, if so, state 
 the amount so used? 
 
 (16) Give total amount of all salaries paid officers and name of 
 each salaried officer and the amount paid him. 
 
 (17) Does the company guarantee fixed amount to be paid regard- 
 less of amounts realized from assessments, dues, admission fees, etc.? 
 
 (18) If so, state amount guaranteed and the security therefor. 
 
 (19) Has the company a reserve fund? 
 
 (20) If so, how is it created and for what purpose; the amount 
 thereof, and in what form, and how invested. 
 
 (21) Has the company more than one class of members? 
 
 (22) If so, how many and what, and give the amount of indemnity 
 in each. 
 
 (23) Give number of members in each class. 
 
 (24) State when the company was organized. 
 
 (25) Number of policies or memberships lapsed during the year. 
 
 (26) Number of policies of each class at beginning and at end of 
 year. 
 
INSURANCE LAWS OF TEXAS. 147 
 
 (27) All assets applicable to payment of insurance, other than re- 
 serve fund, and how invested. 
 
 (28) Amount received from all sources for payment of losses and 
 the disposition thereof. 
 
 And in case such corporation fails or refuses to make such report in 
 full within said time, its charter and franchise shall be forfeited as 
 provided in Section 406 of this Digest. The following fees shall be 
 paid annually: Filing annual statement, $10; certificate of authority 
 to corporation, $1; each certified copy thereof, $1. (R. S., Art. 4803.) 
 
 What Each Certificate of Membership Must Show Company May Create 
 a Reserve Fund, May Charge a Membership Fee Which May Be Used 
 for Expenses 60 Per Cent of Amounts Realized From All Sources 
 Must Be Used in Payment of Losses. 
 
 401. Each certificate of membership, policy or other contract of 
 insurance issued by such company shall bear on its face in red letters 
 the following words: "The payment of the benefit herein provided 
 for is conditioned upon its being collected by this company from assess- 
 ments and other sources as provided in its by-laws" ; provided, that 
 nothing in this chapter shall be construed to prevent the creation of 
 a reserve fund by any such organization, which fund, or its accretions, 
 or both, are to be used only for the payment of losses or benefits, as 
 provided in the by-laws of such corporation; provided, further, that 
 such corporation may charge a membership or admission fee of not 
 exceeding three dollars upon each policy issued, the proceeds of which 
 may be placed in the expense fund, and that at least sixty per cent 
 of all amounts realized from any other sources shall be used only for 
 the payment of losses or benefits as they occur, or the balance thereof 
 remaining after paying such losses or benefits transferred to such re- 
 serve fund; provided, further, that such membership fee may also apply 
 as a payment or credit upon the initial assessment or premium, if the 
 by-laws of the corporation so provide. (R. S., Art. 4804, as amended by 
 Sec. 1, Chap. 149, Acts 34th Leg.) 
 
 May Insure Against Disability Arising From Sickness or Disease, and 
 May Pay Funeral Benefit Not Exceeding $100. 
 
 402. Any corporation now existing or hereafter organized under the 
 provisions of this chapter for the purpose of transacting the business 
 of a mutual assessment accident insurance company shall have and is 
 hereby vested with the authority under its corporate powers to engage 
 in the business, on the assessment plan, as defined in this chapter, of 
 insuring against disability resulting from sickness or disease, and to 
 pay to the beneficiaries of its deceased members a funeral benefit which 
 shall not exceed the sum of one hundred ($100) dollars in event of 
 death of any member resulting from sickness or disease. Provided, 
 however, that in enforcing compliance with the requirements of Article 
 4796 (Sec. 393), applications for insurance against disability or death 
 
 -resulting from sickness or disease shall not be taken into consideration. 
 (R, S., 4804a, as contained in Sec. 2, Chap. 149, Acts 34th Leg.) . 
 
 Note. (1) All voluntary contributions, admission fees, dues and assessments 
 collected from a policyholder by a mutual assessment accident association con- 
 stitute the premium or assessment in consideration of which the policy is issued; 
 
148 INSURANCE LAWS OF TEXAS. 
 
 and all such collections must, under the law, be divided and used in the pro- 
 portion of 60 per cent for losses and not more than 40 per cent for expenses. 
 Such an association which collects a specified amount under the name of "ad- 
 mission fees" must divide such admission fee in the same proportion, and the 
 admission fee cannot lawfully be deducted from the dues or assessments and 
 used for expenses only, but must be divided in the same proportion as other 
 assessments, 60 per cent to be used for paying losses and only 40 per cent for 
 expenses. (Opinion of Attorney General, September 13, 1913.) 
 
 (2) A mutual assessment accident insurance company can engage only in 
 accident insurance, except it may issue policies insuring against disability re- 
 sulting from sickness or disease, and in connection therewith pay to the bene- 
 ficiaries of its deceased members a funeral benefit which shall not exceed one 
 hundred dollars. It cannot issue straight life insurance policies. (Opinion of 
 Attorney General, August 17, 1916.) 
 
 Notices of Assessment Must Show What. 
 
 403. Each notice of assessments made by such corporation upon its 
 members or any of them shall truly state the cause and purpose of 
 such assessment, amount paid on the last claim paid, the cause of dis- 
 ability or death, the name of the member for whose death or disability 
 such payment was made, the maximum face value of the certificate or 
 policy, and in case of disability the maximum amount provided for in 
 such policy or certificate for such disability, and if not paid in full the 
 reason therefor. (E. S., Art. 4805.) 
 
 The Bight, With Consent of Corporation, to Change Name of Beneficiary. 
 
 404. Any member of .such corporation shall have the right at any 
 time, with the consent of such corporation, to change the beneficiary 
 in his policy or certificate, without requiring the consent of such bene- 
 ficiary, and such corporation shall give consent under such regulations 
 as may be prescribed in its by-laws. (E. S., Art. 4806.) 
 
 Amount to Be Paid on Policy Must Be Stipulated Corporation Must Pay 
 in Full Subject to Legal Defenses; Provided. 
 
 405. Every policy or certificate issued by any such corporation shall 
 specify the sum of money which it promises to pay upon the contin- 
 gency insured against, and the number of days after the receipt of 
 satisfactory proof of the happening of such contingency at which such 
 payment shall be made; and upon the happening of such contingency 
 such corporation shall be liable for the payment of such amount in 
 full at the time so specified, subject to such legal defenses as it may 
 have. against same; provided, that if the sum realized by it from as- 
 sessments made in accordance with its by-laws to meet such payments, 
 together with such other sums as its by-laws may provide shall be 
 used for that purpose, shall be insufficient to pay such sum in full for 
 which it is so liable, then the payment of the full amount so realized 
 shall discharge such corporation from all liability by the reason of the 
 happening of such contingency, and in that event such corporation shall 
 
 be liable only for the amount so actually realized. (E. S., Art. 4807.) 
 
 
 
 Must Comply With Requirements of This Chapter or Forfeit Charter. 
 
 406. If any corporation not incorporated under this chapter shall 
 engage in any branch of mutual assessment accident insurance as 
 herein defined, or if any corporation organized under the provisions 
 
INSURANCE LAWS OF TEXAS. 149 
 
 of this chapter shall transact business in any manner except as herein 
 authorized, such corporation shall in either event be subject to the for- 
 feiture of its charter and franchise and the Attorney General of this 
 State shall immediately institute suit to forfeit its charter and dis- 
 solve it. (R. S., Art. 4808.) 
 
 Officers and Employes Failing to Comply With the Provisions of This 
 Law Subject to Imprisonment. 
 
 407. Any officer and other employe of a mutual insurance company 
 who shall use or appropriate, or knowingly permit to be used or ap- 
 propriated by another, any money belonging to such mutual insurance 
 company in any manner other than is herein provided, shall be deemed 
 guilty of a felony, and upon conviction shall be punished by imprison- 
 ment in the State penitentiary for any length of time not less than 
 two nor more than ten years. (Art. 680, Penal Code.) 
 
 CHAPTER XVI. 
 
 MUTUAL FIRE, LIGHTNING, HAIL AND STORM INSURANCE COMPANIES 
 THEIR REGULATION, GOVERNMENT AND CONTROL. 
 
 Incorporation of "Mutual" Must Be in Title. 
 
 408. Any number of persons, not less than seven, who shall be resi- 
 dent citizens of the State of Texas, may form and incorporate a com- 
 pany for the purpose of mutual insurance against loss or damage by 
 fire, lightning, hail and storms and for all or either of such purposes; 
 provided, that every company incorporated under the provisions of this 
 act shall embody the word "mutual" in its title, which shall appear 
 upon the first page of every policy and renewal receipt. (Sec. 1, Chap. 
 29, 33d Leg.) 
 
 Note. Mutual fire insurance companies are subject to the General Corpora- 
 tion Laws of the State. (Opinion of Attorney General, September 9, 1916.) 
 
 Application for Permit to Solicit Insurance Filing Fee. 
 
 409. When any number of persons, not less than seven, desire to 
 organize a mutual insurance company, as herein provided, they shall 
 make application to the Commissioner of Insurance and Banking of the 
 State of Texas for permission to solicit insurance on the mutual plan. 
 Such application shall contain: 
 
 (1) The name of the company, and the name selected shall not be 
 so similar to that of any other insurance company as to be likely to 
 mislead the public. 
 
 (2) The locality of the principal business office of such company. 
 
 (3) The kind of insurance business the company proposes to en- 
 gage in. 
 
 (4) The name and place of residence of not less than seven per- 
 sons making such application for such permit. 
 
 (5) An affidavit of at least one of said applicants, stating the places 
 of residence and names of such applicants correctly. 
 
 Upon receipt of such application, together with a fee of one dollar, 
 
150 INSURANCE LAWS or TEXAS. 
 
 in payment for filing such application, the Commissioner of Insurance 
 and Banking shall at once file said application, and issue to said ap- 
 plicant a permit authorizing said applicant to solicit insurance on the 
 mutual plan, in accordance with the terms of the application, but not 
 to issue policies of insurance. (Sec. 2, Chap. 29, 33d Leg.) 
 
 Conditions, Etc., for Obtaining Charter, Fees and Taxes. 
 
 410. No such company shall be granted a charter, or be authorized 
 to issue policies of insurance, until insurance, upon not less than one 
 hundred separate risks, the total amount of which insurance shall be not 
 less than one hundred thousand dollars, has been applied for and en- 
 tered on the books of said company, and until an amount equal to not 
 less than fifty per cent of the first premiums for such insurance has 
 been paid in cash to such company, a premium note being taken for the 
 balance, if any, and such mutual annual premiums must aggregate not 
 less than twice the maximum liability to be incurred on any one risk, 
 and no policy of insurance shall be written or liability, as an insurer 
 be incurred, by said company until a statement subscribed and sworn 
 to by the president and secretary of said company, stating that the 
 above provisions have been complied with, has been filed with the Com- 
 missioner of Insurance and Banking of the State of Texas, together 
 with certified copies of the company's proposed charter and by-laws. 
 
 The charter or articles of association of said company shall be signed 
 and acknowledged by at least four of the original applicants for said 
 permits, and shall contain : 
 
 (1) The name of the company. 
 
 (2) The purpose for which it is formed. 
 
 (3) The place or places where its business is to be transacted, and 
 the location of its principal business office. 
 
 (4) The term for which it is to exist. 
 
 (5) The number of its directors, or trustees, and the names and 
 residences of those who are elected for the first year. 
 
 When said applicants have complied with all the above requirements, 
 and have filed the necessary copies of their charter and by-laws with 
 the Commissioner of Insurance and Banking of the State of Texas, and 
 have paid the fees and taxes required by the laws of the State of Texas 
 to be paid the Commissioner of Insurance and Banking shall record 
 said charter, and furnish said company with a certified copy thereof, 
 and shall issue to said company a certificate of authority showing it 
 has complied with the laws of the State of Texas, and authorizing it to 
 do business until the last day of the following February. (33d Leg., 
 Chap. 29, Sec. 3.) 
 
 Note. (1) The charter of a mutual fire insurance company must be in 
 accord with the statute prescribing its requisites; must show the number of 
 directors, and its by-laws on the same subject must be in accord with the num- 
 ber of directors specified in its charter. (Opinion of Attorney General, April 
 2, 1914.) 
 
 (2) A mutual fire insurance company, organized under this statute, cannot 
 amend its charter so as to authorize it to do any other kinds of insurance than 
 fire, lightning, hail and storm mentioned in said statute, and therefore cannot 
 avail itself of the provisions of Chapter 108, Acts of the Thirty -third Legisla- 
 ture (Section 170, this Digest) which refers only to capital stock companies 
 and not to mutual companies. (Opinion of Attorney General, August 8, 1914.) 
 
INSURANCE LAWS OF TEXAS. 151 
 
 (3) A mutual fire insurance company must have not less than seven nor 
 more than thirteen directors; its charter should contain some formal words 
 showing the purpose and intention of the incorporators to enter into a con- 
 tract. (Opinion of Attorney General, May 4, 1915.) 
 
 Biennial Examination of Mutual Companies Charter Forfeited, When. 
 
 411. Every mutual fire, lightning and storm insurance company 
 incorporated in this State shall be under the supervision of the Com- 
 missioner of Insurance and Banking, who shall make or cause to be 
 made, an examination of the affairs of each mutual insurance company, 
 at the company's expense at least once in every two years and at such 
 other times as he deems proper, and he shall thoroughly and carefully 
 inspect books, accounts and records of the company, and if upon such 
 inspection the affairs of such company are found to be in a sound con- 
 dition, and the company thus solvent and able to fulfill its obligations, 
 he shall issue to the company a certificate showing the result of such 
 examination. If upon examination he is of opinion that the mutual 
 insurance company is insolvent or has exceeded its powers or has failed 
 to comply with the provisions of law governing it, he may suspend the 
 company's permit and shall give such company written notice of that 
 objected to, and failing such being remied (remedied) within thirty 
 days, he shall report the same to the Attorney General, who shall at 
 once bring suit to forfeit the charter of such company. (33d Leg., 
 Chap. 29, Sec. 4.) 
 
 Annual Statement of Company. 
 
 412. Every mutual insurance company transacting business in the 
 State shall, before the month of March in each year, file in the office 
 of the Commissioner of Insurance a statement showing the exact condi- 
 tion of affairs of the company upon the 31st day of December preceding; 
 such statement being in conformity with such forms as the Insurance 
 Commissioner may furnish. (Id., Sec. 5.) 
 
 Who Are Members; Their Bight to Vote. 
 
 413. Every person to whom a policy of insurance has been issued 
 by a mutual company incorporated in this State shall be a member of 
 such company so long as his policy remains in force and shall be en- 
 titled to one vote at the meetings of the members of such companies, 
 and shall further be entitled to his equitable share of all benefits de- 
 rived from being a member of such company. (Id., Sec. 6.) 
 
 Payment of Annual Premium Other Liabilities Assessable at the Dis- 
 cretion of Whom. 
 
 414. The by-laws of every company organized under this act shall 
 provide that every member, in addition to his annual premium paid in 
 cash, or in cash and premium notes shall be liable for a sum equal to 
 another annual premium ; or it may provide a sum equal to three or five 
 annual premiums. Such additional liability being assessable at the dis- 
 cretufn of the Insurance Commissioner or the company's board of di- 
 rectors, for the member's proportionate share of losses and expenses 
 should the company's funds become impaired. (Id., Sec. 7.) 
 
153 INSURANCE LAWS OF TEXAS. 
 
 Note. ( 1 ) The members or policyholders of a mutual fire insurance com- 
 pany are not responsible for the debts of the corporation except to the extent 
 specified in this chapter. In addition to one annual premium the statute makes 
 each policyholder liable for another annual premium. This liability is absolute 
 and can neither be waived or avoided, when needed. There is also an optional 
 liability which must be stated in the company's by-laws; that is the additional 
 liability may be either three or five annual premiums if it is so stated in the 
 by-laws. This additional liability can only be used to pay losses and expenses, 
 and is assessable at the direction of the Insurance Commissioner or by the 
 company's board of directors, when needed. The insolvency of the company 
 does not terminate the obligation of the policyholders to contribute by assess- 
 ments to pay losses incurred prior to the insolvency. If an unearned premium 
 was due for policy cancelled prior to insolvency then it may be paid out of 
 assessment funds, but if the unearned premium is simply the amount unearned 
 at the time of the insolvency ; then it may not be paid out of funds collected 
 by assessment. The appointment of a receiver of a company on the ground of 
 insolvency cancels outstanding policies and subsequent losses are not liabilities 
 which may be enforced. (Opinion of Attorney General, September 9, 1916.) 
 
 (2) Under above section it is not necessary to levy the assessment for an 
 entire annual premium, but only for so much thereof as may be necessary. The 
 fact that one assessment has been made during the year will not preclude sub- 
 sequent assessments so long as the total amount does not exceed the limitation 
 provided by the by-laws of the company. (Opinion of Attorney General, July 
 20, 1917.) 
 
 By-Laws of Company Shall Contain, What By-Laws Form Part of Con- 
 tract With the Company. 
 
 415. The by-laws of such companies shall specifically provide for 
 the rules and regulations of the government, providing for the collec- 
 tion of adequate premiums or assessments, either all in cash or part 
 cash and part by note, such premiums being based upon the greater or 
 less risk attached to the property insured, and they shall state clearly 
 and plainly the extent of each member's liability to other members, 
 shall provide for the accumulation of a surplus fund to which shall be 
 added not less than ten per cent of the annual saving, being made by 
 the company, shall require (provide) for the bonding of the company's 
 officers and shall name such other provisions and safeguards as may be 
 deemed proper and not contrary to the laws of the State, and a notice 
 in heavy type shall be printed on all policies calling to the attention 
 of the insured that the by-laws are a part of his contract with the com- 
 pany. (Id., Sec. 8.) 
 
 Note. ( 1 ) The by-laws of a mutual fire insurance company, authorizing an 
 additional assessment upon the policyholders, cannot limit such assessment to the 
 payment of losses, but must permit it to be used for expenses as well. Under 
 such by-laws an executive committee must be composed of members of the board 
 of directors, but such committee cannot be substituted for or take the place of 
 the board, and the duties of the committee must be limited and prescribed by the 
 by-law. The board of directors cannot amend the by-laws after their adoption 
 by the policyholders, but all such amendments must be made under authority 
 of the policyholders or members of the corporation. Such by-laws filed with the 
 charter of the company should be certified to. (Opinion of Attorney General, 
 June 27, 1913.) 
 
 (2) The executive committee of a mutual fire insurance company, provMed for 
 in the by-laws of the company, must be members of the company and of the board 
 of directors. The duties of such committee should be defined, but they cannot 
 be made to embrace the general management of the company. Such general man- 
 agement must be by and through the board of directors. (Opinion of Attorney 
 General, July 9, 1913.) 
 
INSURANCE LAWS OF TEXAS. 15<'i 
 
 (3) The board of directors of a mutual fire insurance company cannot law- 
 fully transfer all their powers to an executive committee, and the by-laws of the 
 company should not attempt to do so. The powers and duties of the executive 
 committee should be limited and clearly denned in the by-laws, and in such a 
 way as to leave the actual management of the company in the hands of the 
 directors and not with the committee. The by-laws can be amended only by 
 members of the company and cannot be lawfully amended by the directors only. 
 (Opinion of Attorney General, September 19, 1913.) 
 
 (4) The by-laws of a mutual fire insurance company having reference to 
 the number of its directors must be in accord with its charter. A by-law, 
 providing for the levying of assessments, should follow the requirements of the 
 statute, and should not conflict with it nor contain provisions not authorized 
 by it. It is contrary to the statute and unlawful for such by-laws to provide 
 for a creation of a reserve fund as capital of a mutual company which shall 
 belong to the company and not be subject to distribution or division among the 
 policyholders, and prohibiting persons who have ceased to be policyholders from 
 having an interest in such reserve fund. It is also unlawful for them to provide 
 that at the dissolution of the company such reserve fund shall be divided among 
 those who may be policyholders at the time of the dissolution. Such by-laws 
 must clearly provide for the collection of adequate premiums and assessments 
 based upon the greater or less risk of the property insured. By-laws cannot be 
 amended by the directors or officers, but by the stockholders who in a mutual 
 company are its policyholders. (Opinion of Attorney General, April 2, 1914.) 
 
 (5) By-laws of a mutual fire insurance company attempting to provide that 
 officers of the company shall hold office for five years should not be approved, 
 because contrary to the law which requires that the directors of a corporation 
 shall be elected annually and shall then elect the officers from their own mem- 
 bership. Nor should by-laws of such a company be approved if they provide 
 that the secretary shall receive for his services and all other expenses of the 
 company 35 per cent of the premiums; nor if the attempt to exempt the officers 
 and directors from liability for the obligations of the company; nor if they at- 
 tempt to limit the place where suits may be brought against the company to a 
 single county; nor if they provide that the policyholders shall participate in the 
 profits and losses of the company; nor if they attempt to give the officers of the 
 company power to make rates on risks. A by-law of such a company which 
 provides that no dividend shall be declared until its surplus amounts to $100,000 
 and that 10 per cent of the annual savings shall be added to the surplus, should 
 be in such language as to make the meaning clear. (Opinion of Attorney Gen- 
 eral, May 27, 1914.) 
 
 (6) The by-laws of a mutual fire insurance company must be in harmony 
 with its charter. An article stating the name of the company, vesting the man- 
 agement in the board of directors and locating the principal office, are not 
 necessary in the by-laws; their presence there is merely superfluous, not illegal. 
 The term of office of the officers should be fixed by the by-laws. The by-laws 
 as an original proposition are to be adopted by the board of directors, but after 
 their adoption they cannot be changed except by vote* of the policyholders or 
 members, and a provision to the effect that the directors shall have authority 
 to amend the by-laws is contrary to the statutes of this State. An article of the 
 by-laws of such a company limiting the purpose for which an additional pre- 
 mium or assessment may be collected for payment of loss is contrary to the 
 statute. When assessed by legal authority such additional collection must be 
 made not only for payment of loss but for expense as well. By-laws limiting 
 the maximum liability to be assumed on any one fire to $1000 should not be 
 approved. By-laws of such a company should state the date of the annual 
 meeting of the members, provide for the collection of premiums either in cash 
 or part cash, such premiums to be based upon the greater or less risk attached 
 to the property insured; should state clearly the extent of each member's lia- 
 bility to other members, provide for the accumulation of a surplus fund to which 
 must be added not less than 10 per cent of the annual savings of the company, 
 and for the bonding the officers charged with handling the company's funds. 
 (Opinion of Attorney General, May 4, 1915.) 
 
154 INSURANCE LAWS OF TEXAS. 
 
 (7) By-laws of a mutual fire insurance company cannot provide that a mem- 
 ber of the company will have a vote for each policy which he has on a separate 
 risk, but a member can only have one vote. By-laws of such company which 
 limit the collection of an additional premium on demand of board of directors 
 are too restrictive. The surplus of a mutual company cannot be limited by 
 the by-laws. Mutual fire insurance companies organized under the laws of this 
 State are subject to all the laws governing stock fire insurance companies where 
 not in conflict with the mutual fire insurance laws. Mutual companies are sub- 
 ject to the valued policy law and the anti-technicality law, and a provision in 
 the by-laws providing that a loss under a policy is payable contingent on the 
 holder having paid the premium thereon, is void. The by-laws of a mutual com- 
 pany are, under the statute, a part of its policy contract. (Opinion of Attorney 
 General, August 7, 1916.) 
 
 Investment of Funds. 
 
 416. Funds of mutual companies may be invested in United States 
 bonds, Texas State bonds, county or city bonds of the State of Texas, 
 provided that such bonds are issued by authority of law, and that in- 
 terest upon them has never been defaulted, or in first mortgages on im- 
 proved real estate within the State where the first mortgage does not 
 exceed fifty per cent of the value of the land and improvements thereon. 
 (Id., Sec. 9.) 
 
 Expenses of Company Limited to 35 Per Cent of Annual Premiums 
 Statement. 
 
 417. The expenses of all companies incorporated under this act must 
 not exceed an amount equal to thirty-five per cent of the annual pre- 
 miums, and a statement must be made annually to the Commissioner 
 of Insurance and Banking by the president or secretary of the company 
 that they are being so limited. (Id., Sec. 10.) 
 
 Note. (1) The annual premiums mentioned in above section refer to gross 
 annual premiums and not to net premiums. (Opinion of Attorney General, 
 May 4, 1915.) 
 
 (2) Back taxes due by a mutual insurance company which became due prior 
 to the enactment of the present law, and taxes on real estate are not necessarily 
 payable out of the 35 per cent expense fund referred to in this Act, but may be 
 paid out of the income of the company from sources other than premium receipts. 
 (Opinion of Attorney General, July 23, 1917.) 
 
 Reserve Dividend. 
 
 418. In determining the solvency of any mutual company, organ- 
 ized for any purpose mentioned in this act, and in determining the 
 profit or saving to be distributed among members forty per cent of the 
 actual cash premiums paid on policies in force for one year, and a pro 
 rata of all premiums received on risks that have more than one year to 
 run shall be deemed to be a sufficient reserve under the said policies, 
 and no dividends to members shall be paid out of this reserve. (Id., 
 Sec. 11.) 
 
 Note. In determining the solvency of a mutual fire insurance company, its 
 liabilities will consist of all its debts, including policy obligations which have 
 been adjusted or fixed by judgments or which are of such a nature that the 
 amount has been determined and in addition thereto the pro rata of unearned 
 specified in above Section 418. The assets of such company are not limited to 
 those designated as "admitted assets," but the value of the entire property of 
 the company of every kind and character should be considered, including the 
 
INSURANCE LAWS OF TEXAS. 155 
 
 value of that which may be realized from assessment prescribed in its own by- 
 laws and by statute. So long as the assets of the company, determined as just 
 suggested, exceed its liabilities, as just defined, the company would not be in- 
 solvent. (Opinion of Attorney General, March 29, 1918.) 
 
 Special Examination of Company, When Necessary. 
 
 419. If any time the admitted assets of any mutual company, oper- 
 ating under this act, shall come to be less than the largest single risk 
 for which the company is liable, then the president and the secretary 
 of the company shall at once notify the Commissioner of Insurance and 
 Banking, and he may make an examination into the company's affairs 
 if he deems it best. (Id., Sec. 12.) 
 
 When to Suspend or Revoke License Forfeit of Charter. 
 
 420. If upon the examination of the company's affairs, as required 
 in Section 12 (Sec. 419), it appear that the largest single risk for 
 which the company is liable exceeds the admitted assets of the com- 
 pany, the Commissioner of Insurance and Banking shall immediately 
 suspend or revoke the license of the company until the assets of the 
 company are increased by assessment or otherwise, sufficiently to meet 
 the requirements. 
 
 The company shall have thirty days within which to meet this Ac- 
 quirement, and if within that time it fails to do so the Commissioner 
 of Insurance and Banking shall refer the matter to the Attorney Gen- 
 eral of the State of Texas, with instructions to institute proper legal 
 proceedings to forfeit the charter of said company. (Id., Sec. 13.) 
 
 Note. The words "admitted assets," as used in Sections 419 and 420 above, 
 with reference to the largest single risk exceeding the admitted assets of the 
 company, mean all those securities of the company which are defined in Section 
 416 above, and, in addition, include cash and policy notes authorized and per- 
 mitted by the statutes, and generally any valid obligation due the company, pro- 
 vided always that such assets have real value. However, that which might be 
 realized by assessment under the statute and under the by-laws of the company 
 would not be considered an admitted asset for the purpose of determining 
 whether or not any single risk exceeded the admitted assets of the company. 
 The fact that the company may have written a policy in excess of its admitted 
 assets has no bearing on the general solvency of the company. Sections 419 and 
 420 above are extra conditions imposed upon mutual companies and may not be 
 violated without incurring the possibility of forfeiture, even though the com- 
 pany should be, under the general corporation laws, comparatively solvent. 
 (Opinion of Attorney General, March 29, 1918.) 
 
 Penalty for Failure to Keport or Make False Statement. 
 
 421. Failure to report the company's condition as required in Sec- 
 tion 12 of this act shall be considered a misdemeanor, punishable by 
 a fine of not less than one hundred dollars, nor more than five hundred 
 dollars for such offense. 
 
 The intentional submitting of a false statement, or the intentional 
 misappropriation of the funds of mutual companies, shall be considered 
 a felony, punishable by confinement in the penitentiary for a term of 
 years not less than five, nor more then ten years for such offense. (Id., 
 Sec. 14.) 
 
156 INSURANCE LAWS OF TEXAS. 
 
 Law Governing Stock Fire Insurance Companies Applicable to Mutual 
 Companies. 
 
 422. Every mutual company organized for any purpose mentioned 
 in this act shall be amenable to, and subject to the provisions of all 
 laws of this State governing stock fire insurance companies, in so far 
 as they are applicable to mutual companies,, and not in conflict with the 
 provisions of this act. (Id., Sec. 15.) 
 
 Lfcense or Permit Suspended, When Penalty for Violation or Failure to 
 Comply With Provisions of This Act. 
 
 423. Any mutual company that shall wilfully violate, or fail to 
 comply with the provisions of this act, shall be subject to, and liable 
 to pay a penalty of not less than five dollars, nor more than one hun- 
 dred dollars for each violation thereof, and such penalty may be col- 
 lected and recovered in an action brought in the name of the State of 
 Texas in any court having jurisdiction thereof; and for any violation 
 or failure to comply with any of the provisions of this act the Commis- 
 sioner of Insurance and Banking may suspend a company's permit, or 
 license, and while suspended such company shall be prohibited from 
 writing or renewing any insurance policies. (Id., Sec. 16.) 
 
 Foreign Mutual Companies Must Have. 
 
 424. Mutual companies incorporated under the laws of any other 
 State, or 'foreign government, for any, or all of the purposes, specified 
 in the first section of this act, and duly licensed to transact business in 
 such other States or government, and that have not less than one hun- 
 dred thousand dollars assets in excess of liabilities, shall when they have 
 complied with the requirements and restrictions of this act, as far as 
 applicable to them, be admitted to do business in this State, and the 
 Commissioner of Insurance and Banking shall issue to any such com- 
 pany so complying a permit authorizing such company to do business 
 in this State until the last day of the following February. (Id., Sec. 17.) 
 
 Filing Fees and Taxes. 
 
 425. Every mutual company operating under this act shall pay to 
 the Commissioner of Insurance and Banking of the State of Texas, for 
 obtaining a charter, a fee of twenty dollars, and for each license granted 
 or renewal thereof, a fee of one dollar, and for filing each annual state- 
 ment, a fee of ten dollars annually on the 31st day of each December, 
 and when the Insurance Commissioner has certified to the Treasurer 
 of the State of Texas, the correct amount to be paid, every mutual com- 
 pany operating under this act shall pay to the Treasurer of the State 
 of Texas one-half of one per cent of all the net premiums, or assess- 
 ments, received by it during the year, and no other tax shall be required 
 of such mutual company or companies, their officers and agents, except 
 such fees as shall be paid to the Commissioner of Insurance as required 
 by law. (Id., Sec. 18.) 
 
 Withdrawal of Securities on Depositing With State Treasurer in Accord- 
 ance With Repealed Law, B. S., Art. 4909, When, 
 
 426. Any mutual fire, lightning and storm insurance company 
 which has deposited securities with the State Treasurer of the State of 
 
INSURANCE LAWS OF TEXAS. 157 
 
 Texas, in accordance with Chapter 10, Title 71, of the Revised Statutes 
 of Texas of 1911, repealed in Section 20 of this act, may withdraw 
 from such depository any securities so deposited upon filing with the 
 Commissioner of Insurance and Banking of the State of Texas a decla- 
 ration of its intentions to comply with the provisions of this act, and 
 upon the execution and delivery to the State Treasury of the State of 
 Texas of a proper receipt for such securities, which receipt shall release 
 the State Treasurer from all further liabilities on account of such de- 
 posit, or the withdrawal thereof. (Id., Sec. 19.) 
 
 Repeal of Chapter X, Title 71, B. S., 1011. 
 
 427. Chapter 10, Title 71, of the Revised Statutes of the State of 
 Texas of 1911, and all other acts or laws, or parts of laws in conflict 
 with this act, or in conflict with any portion of this act are hereby re- 
 pealed, but nothing in this act shall be deemed to apply in any way to 
 the present law governing county mutual insurance, or farmers mutuals, 
 now operating under lodge systems, or printers mutuals, and such com- 
 panies and associations shall not be subject to the provisions of this act, 
 except that they will make annual reports to the Commissioner of In- 
 surance and Banking of the State of Texas. (Id., Sec. 20.) 
 
 CHAPTER XVIL 
 
 MUTUAL HAIL INSURANCE COMPANIES. 
 
 Seven or More Resident Citizens May Form Private Corporation for 
 Mutual Hail Insurance "Mutual" Must Be in Title. 
 
 428. Private corporations may be created without a capital stock 
 within this State by the voluntary association of seven or more persons, 
 resident citizens of this State, who collectively own not less than one 
 thousand acres of growing crops of all kinds for the purpose of mutual 
 insurance against loss or damage by hail ; provided, that every company 
 incorporated under the provisions of this act shall embody the word 
 "mutual" in its title. (Acts 33d Leg., Chap. 22, Sec. 1.) 
 
 Must Obtain Permit to Solicit, Stating Name and Place of Company, 
 Purpose of Organization Amount of First Assessment to Be Levied 
 on Risk. 
 
 429. When any number of persons not less than seven desire to or- 
 ganize a mutual hail insurance company, as herein provided, they shall 
 make application to the Commissioner of Insurance and Banking for 
 permission to solicit business under the mutual plan, stating the prin- 
 cipal place of business, and name of the company; that said company 
 is to be organized for the insurance of growing crops against loss or 
 damage by hail. Upon receipt of said application the Commissioner" 
 of Insurance and Banking shall issue said applicants a permit to solicit 
 insurance against loss or damage by hail on the mutual plan in accord- 
 ance with the terms of the application, but not to issue policies of in- 
 surance. Said mutual company shall take from each applicant an ob- 
 ligation specifying the property to be insured and the amount to be 
 paid, as the first assessment evidenced by a promissory note for such 
 
158 INSURANCE LAWS OF TEXAS. 
 
 sum and payable on or before the 31st day of the succeeding December 
 and upon the State of Texas granting to said mutual insurance com- 
 pany a charter authorizing it to do business in this State. (Id., Sec. 2.) 
 
 Conditions, Etc., for Obtaining- Charter; Fees. 
 
 430. When applications have been secured for insurance with such 
 company from at least two hundred applicants, residing in not less than 
 twenty-five different counties in this State, the first assessment or pre- 
 mium on which applications shall amount to at least ten thousand dol- 
 lars for which notes of solvent parties founded on actual bona fide ap- 
 plications for insurance payable upon the granting a charter by the 
 State to said mutual hail insurance company, which premium notes 
 shall be a lien on the crop insured or otherwise secured and which notes 
 and applications shall be submitted to the Commissioner of Insurance 
 and Banking, and when he finds the applications and notes to be gen- 
 uine and secured by liens on growing crops or otherwise secured, he shall 
 upon the payment of a fee of twenty-five dollars certify the fact that he 
 has examined and approved said applications and notes to the Secretary 
 of State, who shall upon an application of said persons to which appli- 
 cation shall be attached the said certificate of the Commissioner of 
 Insurance and Banking permit said company to incorporate and issue 
 to it a charter. A certified copy of the charter shall thereupon be filed 
 with the Commissioner of Insurance and Banking who upon the pay- 
 ment of the fees required by law shall issue to said mutual hail insur- 
 ance company a license to solicit and transact business and issue poli- 
 cies against loss or damage by hail. Every person making application 
 for insurance in such company prior to the granting of a charter to 
 such company and signing a non-negotiable promissory note shall be 
 liable upon the note upon the granting of a charter by the State, and, 
 if payment is refused, suit may be brought on same in any court in 
 this State having jurisdiction of the amount at the principal office of 
 said insurance company. (Id., Sec. 3.) 
 
 Note. A mutual hail insurance company that has ceased to transact business, 
 has ceased to have any members, and has ceased to exist, except in so far as its 
 charter has not been forfeited, must comply with above section of the law before 
 being licensed to again transact business. (Opinion of Attorney General, May 
 4, 1917.) 
 
 Application for Charter What It Shall 
 
 431. The application for a charter shall state the name of the cor- 
 poration, the purpose for which it is formed, the place of its principal 
 office, the term for which it is to exist, the number, name and residence 
 of its directors for the first year and shall be subscribed and acknowl- 
 edged by seven or more of the applicants. (Id., Sec. 4.) 
 
 Organization and Qualifications of Oflacers and Directors. 
 
 432. Upon the issuance of a charter by the Secretary of State to 
 such mutual hail insurance company the persons making applications 
 for such charter shall constitute a board of directors for the first year, 
 which board of directors shall consist of not less than seven persons, all 
 of whom shall be residents of this State. The officers of such company 
 shall be such as may be provided by the by-laws, and the treasurer or 
 
INSURANCE LAWS OF TEXAS. 159 
 
 the secretary and treasurer, if such offices should be combined in one, 
 shall execute a bond in the sum of ten thousand dollars payable to the 
 Commissioner of Insurance and Banking and his successors in office, 
 conditioned for the faithful performance of his duties, and that he will 
 account for all moneys, notes or other assets that may come into his 
 hands, said bond shall be signed by two or more good and solvent sure- 
 ties or be executed by a guaranty company authorized to do business in 
 this State, and shall be approved by the Commissioner of Insurance and 
 Banking. (Id., Sec. 5.) 
 
 What Policy Shall Contain Bigger Losses Than the Sum of All Pre- 
 miums -Shall Be Paid by Proportionate Shares. 
 
 433. Mutual hail insurance companies organized under the provi- 
 sions of this act may issue policies on growing crops of all kinds 
 against loss or damage by hail only. Any person desiring insurance in 
 such company shall make application on blanks furnished by the com- 
 pany and shall pay the full amount of the premium in cash or secured 
 notes. Provided, that no contract shall be made providing for payment 
 of any obligation by the insured or for suit on any such obligation of 
 the insured, except those given by the charter members referred to in 
 Section 3 of this act, in any county other than the county in which the 
 insured has his domicile. In case the whole amount of the premium 
 collected by such company for any one year shall be insufficient to pay 
 all losses occurring during said year, after paying the necessary ex- 
 penses for said year, the persons insured by such company shall receive 
 their proportionate share of the sums realized from said premiums after 
 deducting the expenses therefrom, in full satisfaction of their losses, 
 and no member shall be liable to the company or to any other person 
 for more than the premium which shall be paid by him or secured to 
 be paid by him in making hi& application for insurance. (Id., Sec. 6.) 
 
 Fund Set Apart for Payment of Losses Investment of Such Fund How 
 Disposed of. 
 
 434. All companies incorporated under this act shall set aside sixty 
 per cent of all premiums collected as a policyholders' fund for the 
 payment of losses, which fund shall be used for no other purpose, and 
 the remainder of the gross premiums collected shall be used, if needed, 
 for paying the expenses of said company, and if not needed for such 
 purpose, such remainder not so used shall be added to -the policyholders' 
 fund at the end of the current year, and if, at the end of such current 
 year, the total of said policyholders' fund has not been appropriated or 
 necessary in the payment of losses to policyholders, then such amount 
 of said fund so remaining may be invested in first mortgage notes on 
 lands in this State, said investment not exceeding fifty per cent of the 
 value of said lands, or in bonds of this State, or in county, city, town 
 or school district bonds of this State; provided, said bonds have been 
 approved by the Attorney General, which funds or securities shall be 
 deposited in trust for said policyholders with any bank approved by the 
 Commissioner of Insurance and Banking as a reserve fund, which fund 
 may be used for the payment of policyholders, if necessary, in case of 
 excessive and unprecedented losses, and such company may collect and 
 
160 INSURANCE LAWS or TEXAS. 
 
 receive the interest and dividends thereon to be used in defraying the 
 expenses and paying the losses of said company. (Id., Sec. 7.) 
 
 Note. The company has the right to sell real estate paper in which its sur- 
 plus is invested to pay policyholders when necessary account of unprecedented 
 losses. Commissioner may require losses to be paid out of this fund to be sub- 
 mitted to him for approval before payment. Commissioner is authorized to 
 designate depository for the funds and securities of the company. (Opinion of 
 Attorney General, October 18, 1915.) 
 
 Bates to Be Determined and Fixed. 
 
 435. The board of directors of such company shall have the au- 
 thority to fix the rates to be charged for such insurance, and 'may fix at 
 their discretion different rates for different sections of the State based 
 upon the frequency of hail storms in such sections. (Id., Sec. 8.) 
 
 Annual Statement of Companies. 
 
 436. Every such corporation shall, on or before January 1st, or 
 within thirty days thereafter, each year make and file with the Com- 
 missioner of Insurance and Banking a report upon blank forms to be 
 furnished by such Commissioner, which report shall be verified by the 
 oath of the secretary of such corporation, and shall show the number of 
 policies issued for the preceding year, the number and amount of losses 
 paid, the gross amount received from premiums, the amount of expenses 
 paid, and the amount set aside or invested during the year as a reserve 
 fund, if any, and the books, records and documents of such corporation 
 shall be subject to the inspection and examination of the Attorney Gen- 
 eral or the Commissioner of Insurance and Banking. (Id., Sec. 9.) 
 
 Filing Fees. 
 
 437. The following fees shall be paid by companies organized under 
 this law: In addition to the application fee, charter fee, to the Secre- 
 tary of State when charter is issued $25.00, annual franchise tax of 
 $50.00, and to the Commissioner of Insurance and Banking for filing 
 annual statement $5.00, certificate of authority* to corporation $1.00 
 and no other fees shall be paid by said companies. (Id., Sec. 10.) 
 
 CHAPTEE XVIII. 
 
 RECIPROCAL OR INTER-INSURANCE INDEMNITY CONTRACTS AUTHORIZ- 
 ING AND REGULATING. 
 
 Declaring- Who May Exchange Reciprocal or Inter-Insurance Indemnity 
 Contracts Life Insurance Excepted. 
 
 438. That individuals, partnerships and corporations of this State 
 hereby designated subscribers are hereby authorized to exchange re- 
 ciprocal or inter-insurance contracts with each other, or with individ- 
 uals, partnerships and corporations of other States and countries, pro- 
 viding indemnity among themselves from any loss which may be in- 
 sured against under other provisions of the laws, excepting life insur- 
 ance. (Acts 34th Leg., Chapi 156, Sec. 1.) 
 
INSURANCE LAWS OF TEXAS. 161 
 
 Attorney in Fact May Execute for Subscribers Power of Attorney Desig- 
 nates His Place of Office. 
 
 439. That such contracts may be executed by a duly appointed at- 
 torney in fact duly authorized and acting for such subscribers. The 
 office or offices of such attorney may be maintained at such place or 
 places as may be designated by the subscribers in the power of attorney. 
 (Acts 34th Leg., Chap. 156, Sec. 2.) 
 
 Requisites of Declaration to Be Filed by Attorney. 
 
 440. That such subscribers, so contracting among themselves, shall, 
 through their attorney, file with the Insurance Commissioner of this 
 State a declaration verified by the oath of such attorney setting forth: 
 
 (a) The name or the title of the office at which such subscribers 
 propose to exchange such indemnity contracts. Said name or title shall 
 not be so similar to any other name or title previously adopted by a 
 similar organization, or by any insurance corporation or association, 
 as in the opinion of the Insurance Commissioner is calculated to result 
 in confusion or deception. The office or offices through which such in- 
 demnity contracts shall be exchanged shall be classified as reciprocal or 
 inter-insurance exchanges. 
 
 (b) The kind or kinds of insurance to be effected or exchanged. 
 
 (c) A copy of the form of policy, contract or agreement under or 
 by which such insurance is to be effected or exchanged. 
 
 Note. No duty devolves upon the Commissioner of Insurance and Banking 
 either to approve or disapprove a policy issued by a reciprocal exchange. (Opin- 
 ion of Attorney General, June 12, 1919.) 
 
 (d) A copy of the form of power of attorney or authority of such 
 attorney under which such insurance is to be effected or exchanged. 
 
 (e) The location of the office or offices from which such contracts 
 or agreements are to be issued. 
 
 (f) That applications have been made for indemnity upon at least 
 seventy-five separate risks, aggregating not less than one-half million 
 dollars as represented by executed contracts or bona fide applications 
 to become concurrently effective, or in case of liability or compensation 
 insurance, covering a total payroll of not less than two thousand em- 
 ployes. 
 
 (g) That there is on deposit with some State or national bank as 
 a depository for the payment of losses not less than the sum of ten 
 thousand dollars. (Acts 34th Leg., Chap. 156, Sec. 3.) 
 
 Shall File Instrument Designating Commissioner as Attorney for Serv- 
 ice How Service Is Made. 
 
 441. That concurrently with the filing of the declaration provided 
 for by the terms of Section 3 hereof, the attorney shall file with the 
 Insurance Commissioner an instrument in writing, executed by him 
 for said subscribers, conditioned that, upon the issuance of certificates 
 of authority provided for in Section 10 hereof, service of process may 
 be had upon the Insurance Commissioner in all suits in this State 
 arising out of such policies, contracts or agreements, which service 
 shall be valid and binding upon all subscribers exchanging at any time 
 reciprocal or inter-insurance contracts through such attorney. Three 
 copies of such process shall be served, and the Insurance Commissioner 
 
162 INSURANCE LAWS OF TEXAS. 
 
 shall file one copy, forward one copy to said attorney, and return one 
 copy with his admission of service. (Acts 34th Leg., Chap. 156, Sec. 4.) 
 
 Attorney Shall File Statement Under Oath Showing Maximum Indem- 
 nity Upon Any Single Bisk Also as to Single Bisk of Any Sub- 
 scriber Shall Not Be Greater Than 10 Per Cent of His Net Worth. 
 
 442. That there shall be filed with the Insurance Commissioner of 
 this State by such attorney a statement under the oath of such attorney 
 showing the maximum amount of indemnity upon any single risk, and 
 such attorney shall, whenever and as often as the same shall be re- 
 quired, file with the Insurance Commissioner a statement verified by 
 his oath to the effect that he has examined the commercial rating of 
 such subscribers as shown by the reference book of a commercial agency 
 having at least one hundred thousand subscribers, and that from such 
 examination or from other information in his possession it appears 
 that no subscriber has assumed on any single risk an amount greater 
 than 10 per cent of the net worth of such subscriber. (Acts 34th Leg., 
 Chap. 156, Sec. 5.) 
 
 Reserve to Be Maintained. 
 
 443. That there shall at all times be maintained as a reserve a sum 
 in cash or convertible securities equal to 50 per cent of the aggregate 
 net annual deposits collected and credited to the accounts of the sub- 
 scribers on policies having one year or less to run and pro rata on those 
 for longer periods. For the purpose of said reserve, net annual de- 
 posits shall be construed to mean the advance payments of subscribers 
 after deducting therefrom the amounts specifically provided in the 
 subscribers' agreements for expenses and reinsurance. Said sum shall 
 at no time be less than ten thousand dollars, and if at any time 50 
 per cent of the aggregate deposits so collected and credited shall not 
 equal that amount, then the subscribers, or their attorney for them, 
 shall make up any deficiency. (Acts 34th Leg., Chap. 156, Sec. 6.) 
 
 Attorney Shall Make Annual Beports and Furnish Additional Informa- 
 tion Shall Be Subject to Examination. 
 
 444. That such attorney shall make an annual report to the Insur- 
 ance Commissioner for each calendar year, which report shall be made 
 on or before March the 1st for the previous calendar year ending De- 
 cember 31, showing that the financial condition of affairs at the office 
 where such contracts are issued is in accordance with the standard of 
 solvency provided for herein, and shall furnish such additional infor- 
 mation and reports as may be required to show the total premiums or 
 deposits collected, the total losses paid, the total amounts returned to 
 subscribers, and the amounts retained for expenses; provided, however, 
 that such attorney shall not be required to furnish the names and 
 addresses of any subscribers. The business affairs and assets of said 
 reciprocal or inter-insurance exchanges, as shown at the office of the 
 attorney thereof, shall be subject to examination by the Insurance Com- 
 missioner. (Acts 34th Leg., Chap. 156, Sec. 7.) 
 
 All Corporations Authorized to Exchange Indemnity Contracts. 
 
 445. That any corporation now or hereafter organized under the 
 
INSURANCE LAWS OF TEXAS. 163 
 
 laws of this State shall, in addition to the rights, powers and fran- 
 chises specified in its articles of incorporation, have full power and 
 authority to exchange insurance contracts of the kind and character 
 herein mentioned. The right to exchange such contracts is hereby de- 
 clared to be incidental to the purposes for which such corporations are 
 organized and as much granted as the rights and powers expressly con- 
 ferred. (Acts 34th Leg., Chap. 156, Sec. 8.) 
 
 Attorney Prohibited From Exchanging Contracts, or Soliciting for or 
 Negotiating Applications for Same, Without Complying With This 
 Act, Under Penalty. 
 
 446. That any attorney who shall, except for the purpose of apply- 
 ing for certificate of authority as herein provided, exchange any con- 
 tract of indemnity of the kind and character specified in this act, or 
 directly or indirectly solicit or negotiate any application for same, 
 without first complying with the foregoing provisions, shall be deemed 
 guilty of a misdemeanor, and upon conviction thereof shall be subjected 
 to a fine of not less than one hundred dollars nor more than one thou- 
 sand dollars. (Acts 34th Leg., Chap. 156, Sec. 9.) 
 
 Attorney Must Annually Procure Certificate of Authority From Com- 
 missioner, Who May Revoke or Suspend Same. 
 
 447. That each attorney by whom or through whom are issued any 
 policies of or contracts for indemnity of the character referred to in 
 this act shall procure from the Insurance Commissioner annually a 
 certificate of authority, stating that all of the requirements of this act 
 have been complied with, and upon such compliance and the payment 
 of the fees required by this act, the Insurance Commissioner shall 
 issue such certificate of authority. The Insurance -Commissioner may 
 revoke or suspend any certificate of authority issued hereunder in case 
 of breach of any of the conditions imposed by this act after reasonable 
 notice has been given said attorney, in writing, so that he may appear 
 and show cause why action should not be taken. Any attorney who 
 may have procured a certificate of authority hereunder shall renew same 
 annually thereafter; provided, however, that any certificate of authority 
 shall continue in full force and effect until the new certificate of au- 
 thority is issued or specifically refused. (Acts 34th Leg., Chap. 156, 
 Sec. 10.) 
 
 
 
 License Fee. 
 
 448. That such attorney shall pay as a fee for the issuance of the 
 certificate of authority herein provided for the sum of twenty dollars, 
 which shall be in lieu of all license fees and taxes of whatsoever char- 
 acter in this State. (Acts 34th Leg., Chap. 156, Sec. 11.) 
 
 Insurance Laws Do Not Apply to Exchange of Indemnity Contracts. 
 
 449. That except as herein provided no insurance law of this State 
 shall apply to the exchange of such indemnity contracts unless they are 
 specifically mentioned. (Acts 34th Leg., Chap. 156, Sec. 12.) 
 
164 INSURANCE LAWS OF TEXAS. 
 
 Repealing Chapter 109, General Laws, Thirty-third Legislature. 
 
 450. That Chapter 109, General Laws of the State of Texas, passed 
 at the Eegular Session of the Thirty-third Legislature, be and the same 
 is hereby repealed, and all other laws and parts of laws in conflict with 
 this act are hereby repealed. (Acts 34th Leg., Chap. 156, Sec. 13.) 
 
 CHAPTER XIX. 
 
 PRINTERS' AND COUNTY MUTUAL FIRE AND STORM INSURANCE ASSO- 
 CIATIONS. 
 
 Printers' Mutual Fire and Storm Insurance Associations Three or More 
 Persons to Organize No Capital Stock. 
 
 451. Private corporations may be created within this State by the 
 voluntary association of three or more persons for the organization of 
 printers' mutual fire and storm insurance associations without an au- 
 thorized or subscribed capital stock; and for the purpose of insuring 
 against loss by fire or storm, only such property as may be owned and 
 operated for the purpose of publishing daily, weekly or other periodi- 
 cal newspapers, or such as may be incident thereto, or conducting job 
 printing offices. (E. S., Art. 4919.) 
 
 Must Have Certificate of Authority, Make Reports and Pay Certain Fees. 
 
 452. Before beginning operations the company provided for in this 
 chapter must obtain from the Commissioner of Insurance and Banking 
 a certificate of authority such as is issued to mutual fire and tornado in- 
 surance companies doing business in this State, first making a showing 
 to said Commissioner that the company has fully complied with all the 
 requirements of law applicable to such mutual fire and tornado insur- 
 ance companies; provided, that no officers of printers' mutual fire and 
 storm insurance associations shall be required to give bond except the 
 treasurers thereof, who shall annually file a bond with good securities 
 and in amount to be approved by said Commissioner. (E. S., Art. 
 4920.) 
 
 Shall Report Annually. 
 
 453. All printers' mutual fire and storm insurance associations which 
 transact business in only one county shall report annually on or before 
 the last day of February to said Commissioner on blanks prepared by 
 him and pay to said Commissioner as a fee for filing the same the sum 
 of $5.00, and such association shall not be required to pay the annual 
 franchise tax collected of other corporations under the laws of this State. 
 (E. S., Art. 4921.) 
 
INSURANCE LAWS OF TEXAS. 165 
 
 CHAPTER XX. 
 
 MUTUAL PLAN OF INSURANCE AGAINST LOSS OR DAMAGE RESULTING FROM 
 BURGLARY, ROBBERY, AND LOSS OF MONEY AND SECURITIES 
 
 IN TRANSPORTATION. 
 Shall Be Authorized. 
 
 454. Any insurance company organized and incorporated on the 
 mutual plan, under the laws of this State or any other State, for the 
 purpose of insuring against loss or damage resulting from burglary 
 and robbery, or any attempt thereat, and securing against the loss of 
 money and securities in course of transportation, when shipped by reg- 
 istered mail, shall be authorized, admitted and licensed to do business 
 in this State, as provided in this chapter. (R. S., Art. 4922.) 
 
 Certain Conditions Premium Contracts to Constitute Part of the Assets. 
 
 455. Before any such company shall be authorized to transact busi- 
 ness in this State, except to solicit and receive applications for insur- 
 ance and portions of premiums thereon, as hereinafter provided, it shall 
 have in force five hundred (500) or more policies on which the pre- 
 miums shall have been paid in cash, or shall be evidenced by the writ- 
 ten contracts of the policyholders, on which not less than one-fifth of 
 the amount shall have been paid in cash, and the cash and contracts 
 for premiums shall amount in the aggregate to a sum of not less than 
 one hundred thousand ($100,000) dollars. The premium contracts so 
 held shall constitute a part of the assets of the company. (R. S., Art. 
 4923.) 
 
 Must File Copy of Charter, Articles of Incorporation, Statement Which 
 Must Show Assets, Liabilities, Receipts and Disbursements, Etc. 
 Impaired Reserve. 
 
 456. And every such company, association or partnership shall also 
 file a certified copy of its charter, articles of incorporation or deed of 
 settlement, together with a statement under the oath of the president 
 or vice-president and secretary of the company for which he or they 
 may act, stating the name of the company and the place where located, 
 a detailed statement of its assets, showing the number of policyholders, 
 aggregate amount of premium contracts, the amount of cash on hand, 
 in bank, or in the hands of agents, the amount of real estate, and how 
 the same is encumbered by mortgage, the number of shares of stock 
 of every kind owned by the company, the par and market value of 
 the same, amount loaned on bond and mortgage, the amount loaned 
 on other securities, stating the kind and the amount loaned on each, 
 and the estimated value of the whole amount of such securities and 
 other assets or property of the company, also stating the indebted- 
 ness of the company, the amount of losses adjusted and unpaid, the 
 amount incurred and in process of adjustment, the amount resisted by 
 the company as illegal and fraudulent, and all other claims existing 
 against the company; and for a company organized under the laws of 
 any other State, a copy of the last annual report, if any, made under 
 any law of the State by which such company was incorporated; and 
 no agent shall be allowed to transact business for any such company 
 
166 INSURANCE LAWS OF TEXAS. 
 
 whose reinsurance reserve, as required in this act, is impaired to the 
 extent of twenty per cent thereof, while such deficiency shall continue. 
 Nor shall it be lawful for any agent or agents to act for any company 
 or companies referred to in this act, directly or indirectly, in taking 
 risks or transacting the business of burglary and robbery insurance, or 
 the insuring of the safe shipping of money and securities by registered 
 mail in this State, without procuring from the Insurance Commissioner 
 a certificate of authority, stating that such company has complied with 
 all the requirements of this chapter which apply to such companies, and 
 as to companies organized under the laws of any other State there shall 
 foe added the name of the attorney appointed to act for the company. 
 (R. S., Art. 4924.) 
 
 ILine of Business Must Be Confined Must Set Aside a Reinsurance Re- 
 serve of 50 Per Cent. 
 
 457. Any company organized, admitted and licensed to transact busi- 
 ness in this State under this chapter, shall confine its line of business 
 to that stated in the first section of this chapter, and shall confine its 
 business in this State to banks, bankers, loan companies and county 
 treasurers, and shall not issue any policy or policies to any person, firm 
 or corporation in this State other than banks, bankers, loan companies 
 and county treasurers. Every such company shall set aside a rein- 
 surance reserve of fifty per cent of its premiums, whether collected in 
 cash or represented by obligations of the policyholders, as written in 
 its policies. (E. S., Art. 4924.) 
 
 Policyholders. 
 
 458. Policyholders of any company organized and admitted to trans- 
 act business in this State under this chapter, shall be held liable to 
 pay the membership fee and premium on their insurance as paid or 
 contracted to be paid at the time the policy is taken out, and shall not 
 be held liable for any further or other assessments or claims on the 
 part of the company or its policyholders. The membership fees and 
 premiums agreed upon may be collected in cash at the time the policy 
 is issued or evidenced by a written obligation of the policyholder as 
 may be agreed upon by the company and the policyholder. Such pay- 
 ment or obligation shall be the limit of the liability of the policy- 
 holder to the company for premium on their insurance. (R. S., Art. 
 4925.) 
 
 IVtust Appoint Insurance Commissioner on Whom Process of Law Can 
 Be Served. 
 
 459. It shall not be lawful for any insurance company, association 
 or partnership incorporated by or organized under the laws of any 
 other State of the United States for any of the purposes specified in 
 this act, directly or indirectly, to take risks or transact any business 
 of insurance in this State by any agent or agents in this State, until 
 it shall first appoint an attorney in this State, who shall be the Com- 
 missioner of Insurance and Banking, on whom process of law can be 
 served, and file in the office of the Commissioner of Insurance and 
 Banking a written instrument duly signed and sealed, certifying such 
 appointment, and any process issued by any court of record in this 
 
INSURANCE LAWS OF TEXAS. 167 
 
 State, and served upon such attorney by the proper officer of the county 
 in which such attorney may reside or be found, shall be deemed a 
 sufficient service of the process upon said company, but service of process 
 upon such company may also be made in any other manner provided 
 by law. (R. S., Art. 4926.) 
 
 Statement to Be Submitted and License Issued Annually. 
 
 460. -The statement and evidence of new membership, assets and 
 investments required by Article 4924 (Sec. 456), of this chapter shall 
 be renewed from year to year in such manner and form as may be 
 required by said Insurance Commissioner, with an additional statement 
 of the amount of premiums received in this State during the pre- 
 ceding year, so long as such agency continues, and the said Insurance 
 Commissioner, on being satisfied that the membership, assets, securities- 
 and investments remain secure, as hereinbefore mentioned, shall furnish 
 a renewal of the certificate as aforesaid. (E. S., Art. 4927.) 
 
 Must Pay an Annual Occupation Tax of $50, and 2 Per Cent on Gash: 
 Collected on Premiums. 
 
 461. All companies organized, authorized, admitted and licensed 
 under this act shall pay an annual occupation tax of fifty dollars on 
 filing their annual statement, and a tax of two per cent on the cash 
 collected as premiums during the preceding year from policyholders 
 residing in Texas, which shall be in lieu of all other taxes or fees; 
 provided, this shall not exempt from the payment of charter or per- 
 mit fees or ad valorem taxes. (Sec. 8, Chap. 72, General Laws, 26th 
 Leg.) 
 
 Note. The above section (461) has probably been repealed by Section 2, Chap- 
 ter 108, Acts Thirty-second Legislature, which is Section 279 of this Digest. 
 
 CHAPTER XXI. 
 
 AGENTS DEFINITIONS OF LICENSE POWERS RESTRICTIONS 
 
 PENALTIES. 
 
 Must Have Certificate of Authority. 
 
 462. It shall not be lawful for any person to act within this State 
 as agent or otherwise in soliciting or receiving applications for insur- 
 ance of any kind whatever, or in any manner to aid in the transaction 
 of the business of any insurance company incorporated in this State 
 or out of it, without first procuring a certificate of authority from the 
 Commissioner of Insurance and Banking. (E. S., Art. 4960.) 
 
 Penalty for Agent Doing Business Without Authority. 
 
 463. If any person shall transact the business of life, fire or marine 
 insurance in this State, either as agent, solicitor or broker, without his 
 or the company or association which he represents, first obtaining a 
 certificate of authority therefor from the Commissioner of Insurance 
 and Banking, he shall be punished by fine not less than five hundred 
 nor more than one thousand dollars, and by imprisonment in the 
 
168 INSURANCE LAWS OF TEXAS. 
 
 county jail not less than three nor more than six months. (P. C., 
 Art. 642.) 
 
 Penalty for Any Violation of Insurance Laws. 
 
 464. If any person shall violate any provision of the laws of this 
 State regulating the business of life, fire or marine insurance, he shall 
 be punished by fine not less than five hundred nor more than one 
 thousand dollars. (P. C., Art. 643.) 
 
 Who Are Insurance Agents. 
 
 465. Any person who solicits insurance on behalf of any insurance 
 company, whether incorporated under the laws of this or any other 
 State or foreign government, or who takes or transmits other than 
 for himself any application for insurance, or any policy of insurance, 
 to or from such company, or who advertises or otherwise gives notice 
 that he will receive or transmit the same, or shall receive or deliver 
 a policy of insurance of any such company, or who shall examine or 
 inspect any risk, or receive or collect or transmit any premium of 
 insurance or make or forward any diagram of any building or build- 
 ings, or do or perform any other act or thing in the making or con- 
 summating of any contract of insurance for or with any such insur- 
 ance company other than for himself, or who shall examine into or 
 adjust or aid in adjusting any loss for or on behalf of any such in- 
 surance company, whether any of such acts shall be done at the in- 
 stance or request or by the employment of such insurance company, 
 or of or by any broker or other person, shall be held to be the agent 
 of the company for which the act is done or the risk is taken, as far 
 as relates to all the liabilities, duties, requirements and penalties set 
 forth in this act; provided, that the provisions of this act shall not 
 apply to citizens of this State who arbitrate in the adjustment of 
 losses between the insurers and the assured, nor to the adjustment of 
 particular or general average losses of vessels or cargoes by marine ad- 
 justers who have paid an occupation tax of two hundred dollars for 
 the year in which the adjustment is made; provided further, that the 
 provisions of this chapter shall not apply to practicing attorneys at law 
 in the State of Texas acting in the regular transaction of their busi- 
 ness as such attorneys at law, and who are not local agents nor acting 
 as adjusters for any insurance company. (P. C., Art. 644, and E. S., 
 Art. 4961.) 
 
 Note. (1) Individuals only may become agents of insurance companies, and 
 partnership firms, corporations or companies cannot be licensed as such. (Opin- 
 ion of Attorney General, May 3, 1904.) 
 
 (2) A warehouseman, who in his own name procures from insurance com- 
 panies policies "on cotton in bales owned or held by the assured in trust or on 
 commission or on joint account with others," and thereafter charging his patrons 
 their proper proportion of insurance carried by him in trust for their benefit, 
 does not thereby become an insurance company or the agent of any such com- 
 pany. (Opinion of Attorney General, April 29, 1911.) 
 
 (3) An adjuster for an insurance company may adjust losses occurring under 
 policies lawfully issued by the company while licensed in Texas, although at the 
 time of the adjustment the company has no authority to do business in Texas. 
 (Opinion of Attorney General, June 9, 1911.) 
 
INSURANCE LAWS OF TEXAS. 169 
 
 Shall Be Guilty of a Misdemeanor. 
 
 466. Any person who shall do or perform any of the acts or things 
 mentioned in the preceding article for any insurance company herein- 
 before referred to, without such company having first complied with 
 the requirements of the laws of this State, or having received the 
 certificate of authority from the Commissioner of Insurance and Bank- 
 ing of the State of Texas, as required by law, shall be guilty of a 
 misdemeanor, and on conviction by any court of competent jurisdiction, 
 for the first offense shall be fined five hundred dollars, and also a sum 
 equal to the State, county and municipal licenses required to be paid 
 by such insurance company for doing business in this State, and shall 
 be imprisoned in the county jail where the offense is committed for 
 the period of three months, unless the fine assessed against him and 
 the sum of licenses herein mentioned and the cost of the court be 
 sooner paid; and for any second or other offense such person shall be 
 fined in the sum 'of one thousand dollars, and shall be imprisoned in 
 the county jail for the period of six months, unless the fines assessed 
 against him and the costs of court be sooner paid. (P. C., Art. 645.) 
 
 Note. An agent soliciting subscriptions to the capital stock of an insurance 
 company not authorized to do business in Texas, is not an insurance agent?, 
 and may lawfully solicit such subscriptions and sell such stock without a license 
 from the Commissioner of Insurance and Banking. 
 
 Persons Performing Acts of Ag-ent Shall Pay Tax. 
 
 467. Whenever any person shall do or perform within this State 
 any of the acts mentioned in Article 4961 (Sec. 465), for or on behalf 
 of any insurance company therein referred to, such company shall be 
 held to be doing business in the State, and shall be subject to the same 
 taxes, State, county and municipal, as insurance companies that have 
 been legally qualified and admitted to do business 'in this State, by 
 agents or otherwise, are subject; the same to be assessed and collected 
 as taxes are assessed and collected against such companies, and such 
 persons so doing or performing any of the acts or things shall be per- 
 sonally liable for such taxes. (E. S., Art. 4962.) 
 
 Shall Be liable to Policyholders for Loss. 
 
 468. Any person who shall do any of the acts mentioned in Article 
 4961 (Sec. 465), for or on behalf of any insurance company, without 
 such company has first complied with the requirements of the laws of 
 this State, shall be personally liable to the holder of any policy of 
 insurance in respect of which such act was done, for any loss covered by 
 the same. (E. S., Art. 4962.) 
 
 Fraudulent Insurance. 
 
 469. If any person shall cause insurance to be made in this State- 
 upon any merchandise or other commodity represented to be already 
 shipped, or about to be shipped, at any place, whether within this 
 State or out of it, and shall, with intent to defraud the insurer, ship 
 articles of value less than one-half the represented value of those in- 
 sured, or of a different kind from those insured, he shall be punished 
 by a fine in any sum not exceeding the amount for which such mer- 
 chandise or commodity may be insured. (P. C., Art. 967.) 
 
170 INSURANCE LAWS OF TEXAS. 
 
 All Insurance Business Must Be Transacted Through Authorized and 
 Licensed Agents Penalty. 
 
 470. Any fire, fire and marine, marine, tornado, rent, accident, 
 casualty, liability, health, elevator, disability, plate glass, burglary, bond- 
 ing, title, surety or fidelity insurance company legally authorized to 
 do business in this State is hereby prohibited from authorizing or 
 allowing any person, agent, firm, or corporation that is a non-resident 
 of the State of Texas to issue or cause to be issued, to sign or counter- 
 sign, or to ^deliver or cause to be delivered, any policy or policies of 
 insurance on property, person or persons located in the State of Texas, 
 icxcept through regularly commissioned and licensed agents of such 
 companies in Texas; provided, however, that this law shall not apply 
 to property owned by the railroad companies or other common carriers; 
 and provided further, that upon oath made in writing by any person, 
 that he cannot procure insurance on property through such agents in 
 Texas, it shall be lawful for any insurance company not having an 
 agent in Texas to insure property of any person upon application of 
 .said person, upon his filing said oath with the county clerk of the 
 county in which such person resides. (R. S., Art. 4963.) 
 
 Note. ( 1 ) A licensed fire insurance company is not prohibited from paying 
 , commission to a non-resident agent on business on Texas property, provided 
 the policy be issued through a licensed resident agent in this State. (Opinion 
 of Attorney General, August 24, 1909.) 
 
 (2) An insurance company can issue a policy through a non-resident agent 
 provided the policy is issued, signed or countersigned by a local agent who is 
 duly licensed in the State. (Opinion of Attorney General, November 21, 1916.) 
 
 ^Required to File Affidavit That the Law Has Not Been Violated. 
 
 471. Before a certificate or license to any fire, fire and marine, 
 marine, tornado, rent, accident, casualty, liability, health, elevator, dis- 
 ability, plate glass, burglary, bonding, title, surety or fidelity insurance 
 -company is issued authorizing it to transact business in this State, the 
 Insurance Commissioner shall require in every case, in addition to the 
 'other requirements already made and provided J)y the law that each and 
 :all ;such insurance companies herein mentioned shall file with him an 
 affidavit that it has not violated any provision of this law. (E. S., 
 Art. 4964.) 
 
 Agent of Company Prohibited From Paying Commission or Valuable Con- 
 sideration on Account of Policy on Property or Persons in Texas to 
 ^Non-Residents or to Any Person Not a Licensed Agent. 
 
 472. Any person, agent, firm or corporation licensed by the Com- 
 missioner of Insurance to act as a fire and marine, marine, tornado, 
 rent, accident, casualty, liability, health, elevator, disability, plate glass, 
 burglary, bonding, title, surety or fidelity insurance agent in the State 
 of Texas, is hereby prohibited from paying, directly or indirectly, any 
 commission, brokerage, or other valuable consideration on account of 
 any policy or policies covering property, person, persons, in the State 
 of Texas, to any person, persons, agent, firm or corporation that is 
 a non-resident of the State of Texas, or to any person or persons, 
 .agent, firm or corporation not duly licensed by the Commissioner of 
 Insurance and Banking of the State of Texas as a fire, fire and marine, 
 
INSURANCE LAWS OF TEXAS. 171 
 
 marine, tornado, rent, accident, casualty, liability, health, elevator, dis- 
 ability, plate glass, burglary, bonding, title, surety or fidelity insurance 
 agent. (R. S., Art. 4965.) 
 
 Note. A corporation cannot be a licensed agent of an insurance company, 
 and the stockholders of a corporation, individually licensed as agents of in- 
 surance companies, are prohibited from paying to the corporation any part of 
 their commissions as insurance agents. (Attorney General's opinion, May 17, 
 19110 
 
 Commissioner Must Investigate Any Violation of the Provisions of This 
 Act Penalty Cumulative. 
 
 473. Whenever the Commissioner of Insurance and Banking shall 
 have or receive notice or information of any violation of any of 
 the provisions of this law, he shall immediately investigate or cause to 
 be investigated such violation, and if a fire, fire and marine, marine,, 
 tornado, rent, accident, casualty, liability, health, elevator, disability,, 
 plate glass, burglary, bonding, title, surety or fidelity insurance com- 
 pany has violated any of such provisions aforesaid, he shall immediately 
 revoke his license for not less than three months, nor more than six 
 months, for the first offense, and for each offense thereafter for not 
 less than one year, and if any person, agent, firm or corporation licensed 
 by the Commissioner of Insurance and Banking as a fire, fire and 
 marine, marine, tornado, rent, accident, casualty, liability, health, ele- 
 vator, disability, plate glass, burglary, bonding, title, surety or fidelity 
 insurance agent shall violate or cause to be violated any of the pro- 
 visions of this law, he snail for the first offense have his license re- 
 voked for all companies for which he has been licensed, for not less 
 than three months, and for the second offense he shall have his license' 
 revoked for all companies for which he is licensed, and shall not there- 
 after be licensed for any company for one year from date of revo.- 
 catkm. (R. S., Art 4966.) 
 
 Tor Purpose of Enforcing Provisions of This Act Commissioner to Ex- 
 amine Books, Etc., at Head Office and at Companies' Expense Other- 
 Towers. 
 
 474. For the purpose of enforcing the provisions of this law, the 
 Commissioner of Insurance and Banking is hereby authorized and it is 
 made his duty, at the expense of the company investigated, to examine 
 at the head office, located within the United States of America, all 
 books, records, and papers of such company and also any officers or 
 employes thereof under oath as to violations of this law, and he is 
 further hereby empowered to examine any person or persons, administer 
 oaths and send for papers and records, and failure or refusal upon the 
 part of any fire, fire and marine, marine, tornado, rent, accident, cas- 
 ualty, liability, health, elevator, disability, plate glass, burglary, bond- 
 ing, title, surety or fidelity insurance company, person or persons, 
 agent, firm or corporation, licensed to do business in the State of' 
 Texas to appear before the Commissioner of Insurance and Banking 
 when requested to do so or to produce records and papers, or answers 
 under oath, shall subject such fire, fire and marine, marine, tornado, 
 rent, accident, casualty, liability, health, elevator, disability, plate glass,, 
 burglary, bonding, title, surety or fidelity insurance company, person 
 
172 INSURANCE LAWS OF TEXAS. 
 
 or persons, agent, firm, corporation to the penalties of this law. (R. S., 
 Art. 4967.) 
 
 Shall Be Regarded as Agent of Company in Controversy. 
 
 475. Any person who shall solicit an application for insurance upon 
 the life of another shall in any controversy between the assured and 
 his beneficiary and the company issuing any policy upon such appli- 
 cation be regarded as the agent of the company, and not the agent 
 of the insured, but such agent shall not have the power to waive, change 
 or alter any of the terms or conditions of the application or policy. 
 (E. S., Art. 4968.) 
 
 Corporation or Stock Company Shall Not Be Licensed. 
 
 476. No corporation or stock company shall be licensed or granted 
 a certificate of authority as the agent or representative of any life in- 
 surance company in soliciting, selling or in any manner placing life 
 insurance policies or contracts in this State. No life insurance com- 
 pany shall, after June 30, 1903, be granted a certificate of authority 
 to transact business in this State which has or is bound by any valid 
 subsisting contract with any other corporation, by virtue of which such 
 other corporation is entitled to receive directly or indirectly in (any) 
 percentage or portion of the premium or other income of such life insur- 
 ance company for any period. No person shall hereafter be granted 
 a certificate of authority as the agent of any life insurance company 
 who, after June 30, 1903, enters into any contract with any corpora- 
 tion other than such life insurance company, by virtue of which such 
 other corporation is entitled to receive, directly or indirectly, any com- 
 pensation earned by him as agent for such life insurance company, or 
 any percentage or portion thereof for any period. (R. S., Art. 4969.) 
 
 Note. A life insurance company, having a contract with one of its officers 
 under which he is paid a commission on any part of the company's business, 
 cannot be licensed to do business in Texas, notwithstanding such contract was 
 made before the law in above section became effective. (Opinion of Attorney 
 General, March 14, 1911.) 
 
 Companies Shall Designate Officer or Agent to Appoint Agents. 
 
 477. Every such foreign company shall, by resolution of its board 
 of directors, designate some officer or agent who is empowered to ap- 
 point or employ its agents or solicitors in this State, and such officer 
 or agent shall promptly notify the Commissioner in writing of the 
 name, title and address of each person so appointed or employed. Upon 
 receipt of this notice, if such person is of good reputation and char- 
 acter, the Commissioner shall issue to him a certificate, which shall 
 include a copy of the certificate of authority, authorizing the company 
 requesting it to do business in this State and the name and title of 
 the person to whom the certificate is issued. Such certificate, unless 
 sooner revoked by the Commissioner for cause or canceled at the re- 
 quest of the company employing the holder thereof, shall continue in 
 force until the first day of March next after its issuance and must be 
 renewed annually. (E. S., Art. 4970.) 
 
INSURANCE LAWS OF TEXAS. 173 
 
 Note. The lists of licensed insurance agents on file in the Department of 
 Insurance are public records, but are not subject to an unqualified inspection 
 by the public. The Commissioner has the right to refuse inspection which 
 would be prejudicial to public interest. To permit persons connected with one 
 insurance company to make copies of the names of agents of another company 
 would be prejudicial to public interest. Such inspection should be permitted 
 only for the protection of a private right or the enforcement of law. (Opinion 
 of Attorney General, April 1, 1914.) 
 
 Commissioner Shall Revoke License. 
 
 478. Cause for the revocation of the certificate of authority of an 
 agent or solicitor for an insurance company may exist for violation of 
 any of the insurance laws, or if it shall appear to the Commissioner 
 upon due proof, after notice that such agent or solicitor has knowingly 
 deceived or defrauded a policyholder or a person having been solicited 
 for insurance, or that such agent or solicitor has unreasonably failed 
 and neglected to pay over to the company, or its agent entitled thereto, 
 any premium or part thereof, collected by him on any policy of insur- 
 ance or application therefor. The Commissioner shall publish such 
 revocation in such manner as he deems proper for the protection of 
 the public, and no person whose certificate of authority as agent or 
 solicitor has been revoked shall be entitled to again receive a certificate 
 of authority as such agent or solicitor for any insurance company in 
 this State for a period of one year. (E. S., Art. 4971.) 
 
 Penalty for Acting Without Certificate. 
 
 479. Any person who for direct or indirect compensation solicits 
 insurance, in behalf of any company, or transmits for a person other 
 than himself, an application for a policy of insurance to or from such 
 company, or assumes to act in negotiation of insurance without a cer- 
 tificate of authority to act as agent or solicitor for such company, or 
 after such certificate of authority shall have been canceled or revoked, 
 shall be guilty of a misdemeanor and upon conviction shall be punished 
 by a fine of not less than $100. (P. C., Art. 689.) 
 
 Penalty for Procuring by False Representations Payment of Premiums. 
 
 480. Any such agent or solicitor who knowingly procures by fraud- 
 ulent representation payment of any obligation for the payment of a 
 premium of insurance shall be deemed guilty of a misdemeanor and 
 upon conviction shall be punished by a fine of not less than one hun- 
 dred dollars, nor more than one thousand dollars. (P. C., Art. 690.) 
 
 Penalty for Bmbezzlement. 
 
 481. Any insurance agent or solicitor who collects prehiiums for 
 an insurance company lawfully doing business in this State and who 
 embezzles or fraudulently converts or appropriates to his own use, or 
 with intent to embezzle takes, secretes or otherwise disposes of or 
 fraudulently withholds, appropriates, lends, invests or otherwise uses or 
 applies any money or substitutes for money received by him as such 
 agent or broker, contrary to the instructions or without the consent of 
 the company for or on account of which the same was received by him 
 shall be deemed guilty of theft of property of the value of the amount 
 
174 INSURANCE LAWS OF TEXAS. 
 
 involved in either case, and shall be punished accordingly. (P. C., 
 Art. 691.) 
 
 Penalty for False Statements. 
 
 482. Any . solicitor, agent or examining physician who shall know- 
 ingly or wilfully make any false or fraudulent statement or repre- 
 sentation in or with reference to any application for insurance shall 
 be deemed guilty of a misdemeanor and upon conviction shall be pun- 
 ished by a fine of not less than one hundred dollars, nor more than 
 five hundred dollars. (P. C., Art. 692.) 
 
 Annual Occupation Tax. 
 
 483. There shall be levied on and collected from every person, firm, 
 company or association of persons pursuing any of the occupations 
 named in the following numbered subdivisions of this article, an an- 
 nual occupation tax, which shall be paid annually in advance, except 
 when herein otherwise provided, on every such occupation or separate 
 establishment, as follows: * * * (R. S., Art. 7355.) 
 
 Insurance Adjusters and General Agents. 
 
 484. From each and every person acting as general adjuster of 
 losses, or agents of life, fire, marine and- accident insurance companies, 
 who may transact any business as such in this State, an annual occu- 
 pation tax of fifty dollars. By "general agent/ 3 as used in this law, is 
 meant any person or firm, representative of any insurance company in 
 this State, or who may exercise a general supervision over the business 
 of such insurance company in this State, or over the local agency 
 thereof in this State, or any subdivision thereof. (Sec. 20, R. S., Art. 
 7355.) 
 
 Note. (1) The occupation tax on local agents and all life insurance agents 
 has been repealed. 
 
 (2) The statute levies an occupation tax of $50 against State or general 
 agents of fire insurance companies and permits counties and cities to levy one- 
 half that amount. (Opinion of Attorney General, August 28, 1915.) 
 
 CHAPTER XXII. 
 
 FRATERNAL BENEFIT SOCIETIES. 
 
 Fraternal Benefit Societies Defined. 
 
 485. Any corporation, society, order or voluntary association, with- 
 out 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 ritualistic 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. (33d Leg., Chap. 113, Sec. 1.) 
 
 Lodge System Defined. 
 
 486. Any society having a supreme governing or legislative body 
 and subordinate lodges or branches by whatever name known, into 
 
INSURANCE LAWS OF TEXAS. 175 
 
 which members shall be elected, initiated and admitted in accordance 
 with the 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 sys- 
 tem. (Id., Sec. 2.) 
 
 Note. A fraternal benefit society has no authority to issue membership cer- 
 tificates to persons who have not been elected and initiated into the order by 
 its ritualistic ceremonies. (Opinion of Attorney General, December 20, 1918.) 
 
 Representative Form of Government Denned. 
 
 487. Any such society shall be deemed to have a representative form 
 of government when it shall provide in its constitution and laws for 
 a supreme legislative or governing body, composed of representatives, 
 elected either by the members or by delegates elected, directly or in- 
 directly by the members, together with such other members as may be 
 prescribed by its constitution 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; 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 mem- 
 bers, officers, representatives or delegates of a fraternal benefit society 
 shall not vote by proxy. (Id., Sec. 3.) 
 
 Note. A fraternal beneficiary association organized under the laws of an- 
 other State, and doing business under a license in Texas prior to the date 
 when the laws of Texas, governing such associations, became effective (July 12, 
 1909), and continuously since that date, is not required, as a prerequisite to 
 renewal of its Texas license, to hold meetings of its supreme governing body 
 as often as once every four years unless the laws of its home State so pre- 
 scribe. (Opinion of Attorney General, May 23, 1913.) 
 
 Exemptions. 
 
 488. 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. (Id., Sec. 4.) 
 
 Benefits. 
 
 489. Every society transacting business under this act shall pro- 
 vide for the payment of death benefits, and may provide for the pay- 
 ment of benefits in case of temporary or permanent physical disability, 
 either as the result of disease, accident or old age; provided, the period 
 of life at which the payment of benefits for disability 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; provided, that 
 nothing in this act contained shall be so construed as to prevent the 
 
176 INSURANCE LAWS OF TEXAS. 
 
 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 oc- 
 curring within the term for which the benefit certificates 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 contri- 
 bution, 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 contribution, and to 
 contracts affected by such readjustment. 
 
 Note. A fraternal benefit society has no lawful authority to pay a funeral 
 benefit upon the death of a husband or wife of a member, such deceased person 
 not being a member of the society. Such funeral benefits may lawfully be paid 
 only to beneficiaries under certificates issued to members as provided in the 
 statute defining who may be beneficiaries under a fraternal benefit certificate. 
 (Opinion of Attorney General, April 2, 1920.) 
 
 Any society which shall show by the annual valuation hereinafter 
 provided for, that it is accumulating and maintaining the reserve not 
 lower than the usual reserve computed by the American Experience 
 Table and five 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 mem- 
 bers to whom they are made. (Id., Sec. 5.) 
 
 Beneficiaries. 
 
 490. The payment of death benefits shall be confined to wife, hus- 
 band, 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 original cer- 
 tificate the member shall become dependent upon an incorporated char- 
 itable institution, he shall have the privilege, with the consent of the 
 society, to make such institution his beneficiary. Within the above re- 
 strictions 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 and 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 bene- 
 ficiaries within the above classes. (Id., Sec. 6.). 
 
 Note. A fraternal beneficiary association, whose laws provide that the affi- 
 anced husband or wife of a member may be a beneficiary in its certificate, and 
 whose laws fail to provide for the levy of special assessments when necessary 
 to meet its obligations, cannot be licensed to do business in Texas. (Opinion 
 of Attorney General, January 1, 1913.) 
 
 Religious, Eleemosynary or Educational Societies May Be Beneficiaries. 
 
 491. That fraternal benefit societies heretofore or hereafter incor- 
 porated by the State of Texas or licensed to do business therein, shall 
 
INSURANCE LAWS OF TEXAS. 177 
 
 be authorized to provide in their constitutions, by-laws or fundamental 
 laws for the issuance of benefit certificates to their members, wherein 
 any association, society or corporation organized and operated for re- 
 ligious, eleemosynary or educational purposes may be named as bene- 
 ficiary. (Acts 35th Leg., Chap. 162, Sec. 1.) 
 
 Qualifications for Membership. 
 
 492. 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 examination therefor. Nothing herein 
 contained shall prevent such society from accepting general or social 
 members. (Acts 33d Leg., Chap. 113, Sec. 7.) 
 
 Note. A fraternal benefit society may have social or general members who 
 do not carry insurance, but in every instance, without any exception, 'social or 
 general members must be elected and initiated into the order with ritualistic 
 ceremonies, the same as are beneficial members. (Opinion of Attorny General, 
 December 20, 1918.) 
 
 May Provide by Constitution and By-Laws for Insuring Lives of Children. 
 
 493. Any fraternal benefit society authorized to do business in this 
 State and operating on the lodge plan, may provide in its constitution 
 and by-laws, in addition to other benefits provided for therein, for the 
 payment of death or annuity benefits upon the lives of children be- 
 tween the ages of two and eighteen years at next birthday, for whose 
 support and maintenance a member of such society is responsible. Any 
 such society may at its option organize and operate branches for such 
 children and membership in local lodges and initiation therein shall 
 not be required of such children, nor shall they have any voice in the 
 management of the society. The total benefits payable as above pro- 
 vided shall in no case exceed the following amounts at ages at next 
 birthday at time of death, respectively, as follows: 
 
 Between the Between the 
 
 ages of Amount. ages of Amount. 
 
 2 and 3 $ 34 8 and 9 $200 00 
 
 3 and 4 40 9 and 10 240 00 
 
 4 and 5 48 10 and 11 300 00 
 
 5 and 6 58 11 and 12 380 00 
 
 6 and 7 140 12 and 13 460 00 
 
 7 and 8 160 13 and 16 520 00 
 
 16 and 18 600 00. 
 
 (Acts 35th Leg., Chap. 192, Sec. 1.) 
 
 Note. Juvenile insurance policies cannot be issued under the fraternal bene- 
 ficiary Act to dependants of a person who has not been elected and initiated 
 into the order as a member. (Opinion of Attorney General, December 20, 1918.) 
 
178 INSURANCE LAWS OF TEXAS. 
 
 Requisites for Issuing Benefit Certificates Insuring Lives of Children. 
 
 494. No benefit certificates as to any child shall take effect until 
 after medical examination or inspection by a licensed medical practi- 
 tioner, in accordance with the laws of the society, nor shall any such 
 benefit certificate be issued unless the society shall simultaneously put 
 in force or have in force at the time of issue of said certificate at least 
 five hundred such certificates, on each of which at least one assessment 
 has been paid, nor where the number of lives represented by like cer- 
 tificates falls below five hundred. The death benefit contributions to 
 be made upon such certificate shall be based upon the "Standard In- 
 dustrial Mortality Table" or the "English Life Number Six" and a 
 rate of interest not greater than four per cent per annum, or upon a 
 higher standard; provided, that contributions may be waived or re- 
 turns may be made from any surplus held in excess of reserve and other 
 liabilities, as provided in the by-laws, and provided further that extra 
 contributions shall be made if the reserves hereafter provided for be- 
 come impaired. (Acts 35th Leg., Chap. 192, Sec. 2.) 
 
 Funds Accruing From. Contributions for Insuring Lives of Children and 
 All Accretions From Same Shall be Kept Separate Such Certificate 
 May Be Exchanged for Membership Certificate When the Child Ar- 
 rives at Age for Initiation. 
 
 495. Any society entering into such insurance agreement shall main- 
 tain on all such contracts the reserve required by the standard of mor- 
 tality and interest adopted by the society for computing contributions, 
 as provided in Section 2 (Sec. 494), and the funds representing the 
 benefit contributions and all accretions thereon shall be kept as sep- 
 arate and distinct funds, independent of the other funds of the society, 
 and shall not be liable for nor used for the payment of the debts and 
 obligations of the society other than the benefits herein authorized; 
 provided, that a society may provide that when a child reaches the 
 minimum age for initiation into membership in such society, any ben- 
 efit certificate issued hereunder may be surrendered for cancellation and 
 exchanged for any other form of certificate issued by the society; pro- 
 vided, that such surrender will not reduce the number of lives insured 
 in the branch below five hundred, and upon the issuance of such new 
 certificate any reserve upon the original certificate herein provided for 
 shall be transferred to credit of the new certificate. Neither the per- 
 son who originally made application for benefits on account of such 
 child, nor the beneficiary named in such original certificate, nor the 
 person who paid the contribution, shall have any vested right in such 
 new certificate, the free nomination of a beneficiary under the new 
 certificate being left to the child so admitted to benefit membership. 
 (Acts 35th Leg., Chap. 192, Sec. 3.) 
 
 Separate Statement on Business of Insuring Lives of Children Required 
 in Annual Report to Commissioner. 
 
 496. An entirely separate financial statement of the business trans- 
 actions and of assets and liabilities arising therefrom shall be made in 
 its annual report to the Commissioner of Insurance and Banking by 
 any society availing itself of the provisions hereof. The separation of 
 assets, funds and liabilities required hereby shall not be terminated, re- 
 
INSURANCE LAWS OF TEXAS. 179 
 
 scinded or modified, nor shall the funds be diverted for any use other 
 than as specified in Section 3 (Sec. 495), as long as any certificates 
 issued hereunder remain in force, and this requirement shall be recog- 
 nized and enforced in any liquidation, reinsurance, merger, or other 
 change in the condition of the status of the society. (Acts 35th Leg., 
 Chap. 192, Sec. 4.) 
 
 The Society's Laws and Certificate Insuring Lives of Children May Pro- 
 vide for Specified Payments on Account of General or Expense Fund. 
 
 497. Any society shall have the right to provide in its laws and the 
 certificate issued hereunder for specified payments on account of the 
 expense or general fund, which payments shall or shall not be mingled 
 with the general fund of the society as its constitution and by-laws 
 may provide. (Acts 35th Leg., Chap. 192, Sec. 5.) 
 
 Certificate on Life of Child May Be Continued for Benefit of the Child's 
 Estate, When. 
 
 498. In the event of the termination of membership in the society 
 by the person responsible for the support of any child, on whose ac- 
 count a certificate may have been issued, as provided herein the cer- 
 tificate may be continued for the benefit of the estate of the child; pro- 
 vided, the contributions are continued, or for the benefit of any other 
 person responsible for the support and maintenance of such child, who 
 shall assume the payment of the required contributions. (Acts 35th 
 Leg., Chap. 192, Sec. 6.) 
 
 Certificate. 
 
 499. Every certificate issued by any such society shall specify the 
 amount of benefit provided thereby, and shall provide that the certifi- 
 cate, the charter or articles of incorporation (or, if a voluntary asso- 
 ciation,, the articles of association), the constitution and laws of the 
 society, and the application for membership and medical examination, 
 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 corre- 
 sponding officer, shall be received in evidence of the terms and condi* 
 tions thereof, and any changes, additions or amendments to said char- 
 ter, or articles of incorporation, or articles of association, if a volun- 
 tary association, a constitution or laws duly made or enacted subse- 
 quent to the issuance of the benefit certificates 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. (Acts 33d Leg., Chap. 113, Sec. 8.) 
 
 Funds. 
 
 500. 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 individual rights therein 
 or become entitled- to any apportionment or the surrender of any part 
 
180 INSURANCE LAWS OF TEXAS. 
 
 thereof, except as provided in 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 incor- 
 porated or admitted to transact business in this State which does not 
 provide for stated periodical contributions sufficient to provide for 
 meeting the mortuary obligations contracted, 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 more than four per cent per 
 annum, nor write or accept members for temporary or permanent dis- 
 ability benefits except upon tables based upon reliable experience, with 
 an interest assumption not higher than four per cent per annum. 
 
 Deferred payments or installments of claims shall be considered as 
 fixed liabilities on the happenings 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 installments 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, re- 
 gardless of proposed future collections to meet any such liabilities. 
 (Id., Sec. 9.) 
 
 Note. A fraternal beneficiary association which provides, in its charter, or 
 constitution and by-laws, for different benefits, beneficiaries, or disbursements of 
 its funds to that provided by the laws of Texas, cannot be licensed to do busi- 
 ness in Texas. (Opinion of Attorney General, April 15, 1913.) 
 
 Investments. 
 
 501. Every society shall invest its funds only in securities permitted 
 by the laws of this State for the investment of the assets of life insur- 
 ance companies; provided, that any foreign society permitted or seek- 
 ing to do business in this State which invests 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 ; provided, that 
 in case the constitution and by-laws of the grand lodge or governing 
 body of any such association provides that all or any part of the bene- 
 ficiary or mortuary or insurance fund of such association that is paid 
 in by or collected from the members of such subordinate or local lodge 
 may be retained in the custody of and controlled and managed by such 
 subordinate or local lodge, and designate what officers of such sub- 
 ordinate or local lodge shall have the custody and control of such fund 
 and authorize such local officers to loan or invest the same, and such 
 local officer shall have executed and filed, and shall from time to time, 
 when required by the Commissioner of Insurance and Banking, file 
 with the Commissioner of Insurance and Banking such bond or other 
 written instrument to be prescribed and approved in terms and amount 
 by the Commissioner of Insurance and Banking as will indemnify such 
 fund against waste, depletion or loss through loans, investment or other- 
 wise, then such fund so secured shall be exempt from the provisions 
 of this act. (Id., Sec. 10.) 
 
 . The bond referred to in above section should be made payable to the 
 Commissioner of Insurance and Banking and all persons legally interested ia 
 
INSURANCE LAWS OF TEXAS. 181 
 
 the fund. Form recommended by Attorney General. (Opinion of Attorney Gen- 
 eral, December 14, 1911.) 
 
 Distribution of Funds. 
 
 502. 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 collected for mortuary or dis- 
 ability purposes, or the net accretions of either or any of said funds 
 shall be used for expenses. (Id., Sec. 11.) 
 
 Organization. 
 
 503. Seven or more persons, citizens of the United Staies, and a 
 majority of whom are citizens of this State, who desire to form a fra- 
 ternal benefit society, as defined by this act, may make and sign (giving 
 their addresses) and acknowledge before some officer competent to take 
 acknowledgment of deeds, articles of incorporation, 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 al- 
 ready 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 in- 
 clude more liberal powers than are granted by this act; provided, that 
 any lawful, social, intellectual, educational, charitable, benevolent, moral 
 or religious 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 
 general 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. 
 
 Fourth. Such articles of incorporation and duly certified copies of 
 the constitution and laws, rules and regulations, and copies of all pro- 
 posed 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 Commissioner of Insurance and 
 Banking, conditioned upon the return of the advance payments, as 
 provided in this section, to applicants, if the organization is not com- 
 pleted within one year, 'shall be filed with the Commissioner of Insur- 
 ance and Banking, who may require such further information as he 
 deems necessary, and if the purposes of the society conform to the re- 
 quirements of this act, and all provisions of law have been complied 
 with, the Commissioner of Insurance and Banking shall so certify and 
 retain and record (or file) the articles of incorporation, and furnish 
 the incorporators a preliminary certificate authorizing said society to 
 solicit members as hereinafter provided. 
 
 Upon receipt of said certificate from the Commissioner of Insurance 
 and Banking said society may solicit members for the purpose of com- 
 pleting its organization and shall collect from each applicant the 
 
1S2 INSURANCE LAWS OF TEXAS. 
 
 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 applicant a receipt for the amount so collected. 
 But no such society shall incur any liability other than for such ad- 
 vanced payments, nor issue any benefit certificate nor pay or allow > 
 or offer or promise to pay or allow, to any person any death or dis- 
 ability benefit until actual bona fide applications for death benefit cer- 
 tificates have been secured upon at least five hundred lives for at least 
 one thousand dollars each, and all such applications for death benefits 
 shall have been regularly examined by legally qualified practicing phy- 
 sicians and certificates of such examination 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 Commissioner of Insurance and Banking, 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 subordinate 
 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 Con- 
 gress, August 23, 1899, or any higher standard, at the option of the 
 society, and for disability benefits by tables based upon reliable experi- 
 ence 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 Commissioner of Insurance and Banking by the sworn statement of 
 the treasurer or corresponding 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 effected, which payments in the aggregate shall amount to at least 
 twenty-five hundred dollars; all of which shall be credited to the mor- 
 tuary 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 organization, be 
 held in trust, and if the organization is not completed within one year 
 as hereinafter provided, returned to said applicants. 
 
 The Commissioner of Insurance and Banking may make such exam- 
 ination and require such further information as he deems advisable, and 
 upon presentation of satisfactory evidence that the society has com- 
 piled (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 of such certificate. 
 The Commissioner of Insurance and Banking 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 preliminary certificate granted under the provisions of this sec- 
 tion shall be valid after one year from its date, or after such further 
 period, not exceeding one year, as may be authorized by the Commis- 
 
INSURANCE LAWS OF TEXAS. 183 
 
 sioner of Banking and Insurance upon cause shown; unless the five 
 hundred applicants herein required have been secured and the organi- 
 zation has been completed as herein provided; and the articles of in- 
 corporation and all proceedings thereunder shall become null and void 
 in one year from the date of said preliminary certificate, or at the 
 expiration of said extended period, unless such society shall have com- 
 pleted its organization and commenced business as herein provided. 
 When any domestic society shall have discontinued 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 management of its affairs and the 
 fixing and readjusting of the rates of contribution 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 object and 
 purposes of the society. (Id., Sec. 12.) 
 
 Note. (1) The organizers of a fraternal beneficiary association and to whom 
 a preliminary certificate authorizing them to solicit members, but not to issue 
 certificates or policies, cannot assign their rights under such preliminary certifi- 
 cate to other parties, nor can any other parties than those named in the prelim- 
 inary certificate perfect the organization and obtain a charter. (Opinion of 
 Attorney General, July 25, 1913.) 
 
 (2) The bond mentioned in above section should be signed and acknowl- 
 edged by the incorporafbrs of the association as principal and should be made 
 payable to the Commissioner of Insurance and Banking. (Opinion of Attorney 
 General, December 21, 1909.) 
 
 Powers Retained Beincorporation Amendments. 
 
 504. Any society 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 incon- 
 sistent with this act, if incorporated; or if it be a voluntary associa- 
 tion, it may incorporate 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 amend- 
 ments shall be filed with the Commissioner of Insurance and Banking 
 and shall become operative upon such filing, unless a later time be 
 provided in such amendments or in its articles of incorporation, con- 
 stitution or laws. (Id., Sec. 13.) 
 
 Mergers and Transfers. 
 
 505. 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 
 Commissioner of Insurance and Banking 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 
 
184 INSURANCE LAWS OF TEXAS. 
 
 contracting societies, that such merger or transfer has been approved by 
 a vote of two-thirds of the members of the supreme legislative or gov- 
 erning body of each of said societies. 
 
 Upon the submission of said contract, financial statements and cer- 
 tificates, the Commissioner of Insurance and Banking shall examine 
 the same, and if he shall find such financial statements 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 trans- 
 fer, issue his certificate to that effect, and thereupon the said contract 
 or 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 Commissioner of Insurance and Banking. 
 (Id., Sec. 14.) 
 
 Annual License. 
 
 506. Societies which are now authorized to transact business in this 
 State may continue such business until the first day of April 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 April; provided, however, the license 
 shall continue in full force and effect until the new license be issued 
 or specifically refused. For each such license or renewal the society 
 shall pay the Commissioner of Insurance and Banking ten dollars. A 
 duly certified copy or duplicate of such license shall be prima facie eVi- 
 dence that the license (licensee) is a fraternal benefit society within 
 the meaning of this act. (Id., Sec. 15.) 
 
 Admission of Foreign Society. 
 
 507. 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 
 license from the Commissioner of Insurance and Banking. Any such 
 society shall be entitled to a license to transact business within this 
 State upon filing with the Commissioner of Insurance and Banking 
 a duly certified copy of its charter or articles of association; a copy 
 of its constitution and laws, certified by its secretary or corresponding 
 officer; a power of attorney to the Commissioner of Insurance and 
 Banking as hereinafter provided; a statement of its business under 
 oath of its president and secretary or corresponding officers in the 
 form required by the Commissioner of Insurance and Banking, duly 
 verified by an examination made by the supervising insurance official 
 of its home State or other State satisfactory to the Commissioner of 
 Insurance and Banking 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 persons holding sim- 
 ilar contracts; and upon furnishing the Commissioner of Insurance 
 and Banking 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, 
 
INSURANCE LAWS OF TEXAS. 185 
 
 Territory, district, province or country where it is organized, he shall 
 issue a license to such society to do business in this State until the first 
 day of the succeeding April, and such license 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 April; provided, how- 
 ever, that license shall continue in full force and effect until the new 
 license 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 re- 
 quired by the laws of the State, Territory, district, country or province 
 where it is organized. For each such license or renewal the society 
 shall pay the Commissioner of Insurance and Banking ten dollars. 
 When the Commissioner of Insurance and Banking refuses to license 
 any society or revoke its 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 of the society, upon request, and the action 
 of the Commissioner of Insurance and Banking shall be reviewable by 
 proper proceedings in any court of competent jurisdiction within the 
 State; provided, however, that nothing contained in this or the pre- 
 ceding section shall be taken or construed as preventing any such so- 
 ciety from continuing in good faith all contracts made in this State 
 during the time such society was legally authorized to transact business 
 herein. (Id., Sec. 16.) 
 
 Note. ( 1 ) All the provisions of above section must be complied with before a 
 foreign association can be lawfully licensed, and if the Commissioner of Insur- 
 ance and Banking desires further information, he may also make, or have an 
 examination made, of the association before issuing a license to do business in 
 Texas. (Opinion of Attorney General, March 18, 1910.) 
 
 (2) A foreign fraternal benefit society, seeking admission into the State, 
 may be admitted, although its funds in hand do not equal its policy valuations 
 and although the rate of premium on old policies is not in compliance with the 
 statutory rate. But all business written by the company after its admission 
 must be written at a rate of premium equal to or in excess of that based on 
 the National Fraternal Congress Table of Mortality. As to its old business, 
 the terms of Section 23a, Chapter 113 of the Acts of the Thirty-third Legisla- 
 ture, must be complied with. A joint life fund provided by a fraternal benefit 
 society policy, by which one-half of the amount specified in the policy upon 
 the death of the policyholder becomes "payable to the first and oldest out- 
 standing certificate in force in the same division and class of members of cor- 
 responding age, etc.," is unauthorized by the laws of this State, is what is 
 called a wagering contract, and is contrary to the public policy of this State, 
 and a society writing such a contract cannot be admitted to transact business 
 in Texas. (Opinion of Attorney General, January 25, 1918.) 
 
 Power of Attorney and Service of Process. 
 
 508. Every society, whether domestic or foreign, now transacting 
 business in this State shall, within thirty days after the passage of this 
 act, any (and) every such society hereafter applying for admission, 
 shall, before being licensed, appoint in writing the Commissioner of 
 Insurance and Banking, and his successors in office to be its true and 
 lawful attorney upon whom all legal process in any action or proceed- 
 ing 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 
 
186 INSURANCE LAWS OF TEXAS. 
 
 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 re- 
 mains outstanding in this State. 
 
 Copies of such appointment certified by said Commissioner of Insur- 
 ance and Banking 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 at- 
 torney, must be made in duplicate upon the Commissioner of Insurance 
 and Banking, 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, ploding 
 (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 Commissioner of Insurance and 
 Banking he shall forthwith forward by registered mail one of the 
 duplicate copies prepaid and directed to its secretary or corresponding 
 officer. Legal process shall not be served upon any such society except 
 in the manner provided herein. (Id., Sec. 17.) 
 
 Place of Meeting Location of Office. 
 
 509. Any domestic society may provide that the meetings of its 
 legislative or governing body may be held in any State, district, prov- 
 ince 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. (Id., Sec. 18.) 
 
 No Personal Liability. 
 
 510. 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. (Id., Sec. 19.) 
 
 Waiver of the Provisions of the Laws. 
 
 511. 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 the 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. 
 
 All grand lodges, by whatever name known, whether incorporated or 
 not, holding charters from any supreme governing body, which were 
 conducting business in this State upon the passage of this act, as a 
 fraternal beneficiary association, upon what is known as the separate 
 jurisdiction plan, shall be treated as single State organizations, and 
 all reports required by the provisions of this act shall be made and 
 furnished by the officers of such supreme State governing body and 
 shall embrace and contain the transactions, liabilities and assets of such 
 State organization. (Id., Sec. 20.) 
 
INSURANCE LAWS OF TEXAS. 187 
 
 Benefit Not Attachable. 
 
 512. No money or other benefit, charity or relief or aid to be paid, 
 provided or rendered by any such society shall be liable to attachment, 
 garnishment or other process, or be seized, taken, or 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. (Id., 
 Sec. 21.) 
 
 Constitution and Laws Amendments. 
 
 513. Every society transacting business under this act shall file 
 with the Commissioner of Insurance and Banking a duly certified copy 
 of all amendments of, or additions to its constitution 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. (Id., Sec. 22.) 
 
 Annual Reports. 
 
 514. Every society transacting business in this State shall annu- 
 ally, on or before the 1st day of March, file with the Commissioner of 
 Insurance and Banking 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 31st day of December next preced- 
 ing, and of its transactions for the year ending on that date, and also 
 shall furnish such other information as the Commissioner of Insur- 
 ance and Banking may deem necessary to a proper exhibit of its busi- 
 ness and plan of working. The Commissioner of Insurance and Bank- 
 ing 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 Commissioner of Insurance and Banking a 
 valuation of its certificates in force on December 31st last preceding, 
 excluding those issued within the year for which the report is filed, in 
 cases where the contribution 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 31, 1913, such report of val- 
 uation 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 the subject to valuation; and, as contingent 
 assets, the present mid-year value of the future net contributions pro- 
 vided 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 val- 
 uation may show the net value of the certificates subject to valuation 
 hereinbefore provided, and said net value, when computed in case of 
 monthly contributions, may be the means of the terminal values for the 
 end of the preceding and of the current insurance years. 
 
 Such valuation shall be certified by a competent accountant or actu- 
 ary, 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 Commissioner of Insurance and Banking within 
 ninety days after the submission of the last preceding annal (annual) 
 
188 INSURANCE LAWS OF TEXAS. 
 
 report. The legal minimum standard of valuation for all certificates, 
 except for disability benefits, shall be the National Fraternal Congress 
 Table of Mortality, as adopted by the National 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 thou- 
 sand 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 disability benefits shall keep the net contri- 
 butions 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 experiences, and in 
 such cases 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 solvet (solvent) so long as the founds (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 
 explanation of the facts concerning the condition of the society thereby 
 disclosed, 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 disclosed, may be published in the society's official paper, and 
 the issue containing the same mailed to each beneficiary member of 
 the society. The laws of such society shall .provide that if the stated 
 periodical contributions of the members are insufficient to pay all 
 matured death and disability 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 deficiency; and such laws may provide that, upon 
 the written application or consent of the member, his certificate may 
 be charged with its proportion of any deficiency disclosed by valuation, 
 with interest not exceeding five per centum per annum. (Id v Sec. 23.) 
 
 Note. All business written by a foreign fraternal benefit society after its 
 admission to Texas must be written at a premium equal to or in excess of 
 that based on the National Fraternal Congress Table of Mortality. As to its 
 old business the terms of Section 23a, Chapter 113, Acts of the Thirty -third 
 Legislature (Sec. 515), must be complied with. (Opinion of Attorney Gen- 
 eral, January 25, 1918.) 
 
 Provisions to Insure Future Security. 
 
 515. If the valuation of the certificates, as hereinbefore provided, 
 on December 31, 1917, shall show that the present value of future net 
 contributions, together with the admitted assets, is less than the pres- 
 ent value of the promised benefits and accrued liability, such society 
 shall thereafter maintain said financial condition at each succeeding 
 triennial valuation in respect of the degree of deficiency as shown in 
 the valuation of December 31, 1917. If at any succeeding triennial 
 valuation such society does not show at least the same condition, the 
 
INSURANCE LAWS OF TEXAS. 189 
 
 Commissioner of Insurance and Banking shall direct that it thereafter 
 comply with the requirements herein specified. If the next succeeding 
 triennial valuation after the receipt of such notice shall show that the 
 society has failed to maintain the condition required herein, the Com- 
 missioner of Insurance and Banking may, in the absence of good cause 
 shown for such failure, institute 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, its license may be canceled in the 
 manner provided in this act. 
 
 Any such society, shown by any triennial valuation, subsequent to 
 December 31, 1917, not to have maintained the condition herein re- 
 quired, shall, within two years thereafter, make such improvement as 
 to show a percentage of deficiency not greater than as of December 31, 
 1917, or thereafter, as to all new members admitted, be subject, so far 
 as stated rates of contributions are concerned, to the provisions of Sec- 
 tion 12 of this act, applicable in the organization of new societies; 
 provided, that the net mortuary or beneficiary contributions and funds 
 of such new members shall be kept separate and apart from the other 
 funds of the society. If such required improvement is not shown by 
 the succeeding triennial valuation, then the said new members may be 
 placed in a separate class and their certificates valued as an independ- 
 ent society in respect of contributions and funds. (Id., Sec. 23a.) 
 
 Same. 
 
 516. In lieu of the requirements of Sections 23 and 23a, any society 
 accepting in its laws the provisions of this section may value its cer- 
 tificates on a basis herein designated, "accumulation basis," by credit- 
 ing each member with the net amount contributed for each year and 
 with interest at approximately the next (net) rate earned and by 
 charging him with his share of the losses for each year, herein desig- 
 nated "cost of insurance/' and carrying the balance, if any, to his 
 credit. The charge for the cost of insurance may be accordingly to the 
 actual experience of the society applied to a table of mortality recog- 
 nized by the law of this State, and shall take into consideration the 
 amount at risk during each year, which shall be the amount payable at 
 death less the credit to the member, except as specifically provided in 
 its articles of laws or contracts no- charge shall be carried forward from 
 the first valuation hereunder against any member for any past share of 
 losses exceeding the contributions and credit. If, after the first val- 
 uation, any member's share of losses for any year exceeds his credit, 
 including the contribution for the year, the contribution shall be in- 
 creased to cover his share of the losses. Any such excess share of losses 
 chargeable to any member may be paid out of a fund or contribution 
 especially created or required for such purpose. 
 
 Any member may transfer to any plan adopted by the society with 
 net rates on which tabular reserves are maintained and on such transfer 
 shall be entitled to make such application of his credit as provided in 
 the laws of the society. 
 
 Certificates issued, rerated or readjusted on a basis provided for ade- 
 quate rates with adequate reserves to mature such certificates upon 
 assumption for mortality and interest recognized by the law of this 
 State shall be valued on such basis, herein designated the "Tabular 
 
190 INSURANCE LAWS OF TEXAS. 
 
 Basis"; provided, that if on the first valuation under this section a 
 deficiency in reserve shall be shown for any such certificate, the same 
 shall be valued on the accumulation basis. 
 
 Whenever in any society having members upon the tabular basis and 
 upon the accumulation basis, the total of all costs of insurance provided 
 for any year shall be insufficient to meet the actual death and disabil- 
 ity losses for the year, the deficiency shall be met for the year from the 
 available funds after setting aside all credits in the reserve or from 
 increased contributions or by an increase in the number of assess- 
 ments applied to the society, as a whole or to classes of members as 
 may be specified in its laws, savings from a lower amount of death losses 
 may be returned in like manner as may be specified in its laws. If the 
 laws of the society so provide, the assets representing the reserves of 
 any separate class of members may be carried separately for such class 
 as if in an independent society, and the required reserve accummula- 
 tion (accumulation) of such class, so set apart shall not thereafter be 
 mingled with the assets of other classes of the society. 
 
 A table showing the credits to individual members for each age and 
 year of entry and showing opposite each credit the tabular reserve re-, 
 quired on the whole life or other plan of insurance specified in the con- 
 tract, according to assumptions for mortality and interest recognized 
 by the law of this State and adopted by the society, shall be filed by the 
 society with each annual report and also be furnished to each member 
 before July 1st of each year. 
 
 In lieu of the aforesaid statement there may be furnished fo each 
 member within the same time a statement giving the credit for such 
 member and giving the tabular reserve and level rate required for a 
 transfer carrying out the plan of insurance specified in the contract. 
 No table or statement need be made or furnished where the reserves are 
 maintained on the tabular basis. For this purpose individual book- 
 keeping accounts for each member shall not be required and all calcu- 
 lations may be made by actuarial methods. 
 
 Nothing herein contained shall prevent the maintenance of such sur- 
 plus over and above the credits on the accumulation basis, and the re- 
 serves on the tabular basis pursuant to its laws; nor be construed as 
 giving to the individual member any right or claim to any such reserve 
 or credit other than in manner as expressed in the contract and its 
 laws; nor as making any such reserve or credits a liability in deter- 
 mining the legal solvency of the society. (Id., Sec. 23b.) 
 
 Examination of Domestic Societies. 
 
 517. The Commissioner of Insurance and Banking, or any person 
 he may appoint, shall have the power of visitation 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 re- 
 late to the business of the society, and may summon and qualify as wit- 
 nesses under oath and examine its officers, agents and employes or other 
 person in relation to the affairs, transactions and conditions of the 
 society. 
 
 The expense of such examination shall be paid by the society ex- 
 amined upon statement furnished by the Commissioner of Insurance 
 
INSURANCE LAWS OF TEXAS. 191 
 
 and Banking and the examination shall be made at least once in three 
 years. 
 
 Whenever after examination the Commissioner of Insurance and 
 Banking is satisfied that any domestic society has failed to comply with 
 any provisions of this act, or is exceeding its powers, or is not carrying 
 out its contracts in good faith, or is transacting business fraudulently; 
 or whenever any domestic society, after the existence of one year or 
 more, shall have a membership of less than four hundred (or shall de- 
 termine to discontinue business) the Commissioner of Insurance and 
 Banking may present the facts relating thereto to the Attorney General, 
 who shall, if he deem the circumstance 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 if 
 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 officer of the society and a reasonable opportunity given 
 to it, on a date to be named in said notice, to show cause why such 
 proceeding should not be commenced. (Id., Sec. 24.) 
 
 Application for Receiver, Etc. 
 
 518. No application for injunction 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 the State 
 unless the same is made by the Attorney General. (Id., Sec. 25.) 
 
 Examination of Foreign Societies. 
 
 519. Commissioner of Insurance and Banking, or any person whom 
 he may appoint, may examine any foreign society transacting or ap- 
 plying for admission to transact business in this State. The said 
 Commissioner of Insurance and Banking 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 witnesses under oath and examine its 
 officers, agents and employes and other persons in relation to the affairs, 
 transactions and conditions of the society. He may, in his discretion, 
 accept, in lieu of such examination, [an examination] of the Insurance 
 Department of the State, territory, district, province or country where 
 such society is organized. The actual expense of examiners making 
 any such examination shall be paid by the society, upon statements 
 furnished by the Commissioner of Insurance and Banking. 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 business in this State shall be suspended, 
 or license refused until satisfactory evidence is furnished the Com- 
 
192 INSURANCE LAWS OF TEXAS. 
 
 missioner of Insurance and Banking relating to the condition and 
 affairs of the society, and during such suspension the society shall not 
 write any new business in this State. (Id., Sec. 26.) 
 
 Note. See note under Section 507. 
 
 "No Adverse Publications. 
 
 520. Pending, during or after an examination or investigation of 
 any such society, either domestic or foreign, the Commissioner of In- 
 surance and Banking shall make public no financial statement, report 
 or finding, nor shall he permit to become public any financial state- 
 ment, 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, re- 
 port of (or) finding, and to make such showing in connection there- 
 with as it may desire. (Id., Sec. 27.) 
 
 Revocation of License. 
 
 521. When the Commissioner of Insurance and Banking on investi- 
 gation is satisfied that any foreign society transacting business under 
 this act has exceeded its powers, or has failed to comply with any pro- 
 visions of this act, or is conducting business fraudulently, or is not car- 
 rying 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 
 said Commissioner of Insurance and Banking, or the society does not 
 present good and sufficient reason why its authority to transact busi- 
 ness 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 de- 
 cisions and findings of the Commissioner of Insurance and Banking 
 made under the provisions of this section may be reviewed by proper 
 proceedings in any court of competent jurisdiction, as provided in Sec- 
 tion 16 (Sec. 507) of this act. (Id., Sec. 28.) 
 
 Exemption of Certain Societies. 
 
 522. 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 insurance department of the supreme lodge 
 Knights of Pythias) and the Junior Order of the United American 
 Mechanics (exclusive of the beneficiary degree or insurance branch of 
 the National Council Junior Order United States American Mechanics) 
 or societies which limit their membership to any one hazardous occupa- 
 tion 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 five hundred dollars 
 to any one person or disability benefits not exceeding three hundred 
 dollars in any one year to pay one person or both, nor to any contracts 
 of reinsurance business on such plan in this State, nor to domestic so- 
 cieties which limit their membership to the employes of a particular 
 
INSURANCE LAWS OF TEXAS. 193 
 
 city or town, designated firm, business house or corporation, nor to 
 domestic lodges, orders or associations of a 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 person in one year. 
 
 The Commissioner of Insurance and Banking may require from any 
 society such information as will enable him to determine whether such 
 society is exempt from the provisions of this act. 
 
 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 the benefits in case of death or disability result- 
 ing 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 re- 
 quiring medical examinations, valuations of benefit certificates and that 
 the certificates shall specify the amount of benefits, shall not apply to 
 such society. (Id,, Sec. 29.) 
 
 Note. ( 1 ) A fraternal benefit society chartered and operating under a license 
 of the Commissioner of Insurance and Banking prior to the enactment of the 
 statute of 1913, governing such societies, cannot be exempted from complying 
 with the requirements of the last mentioned statute by merely reducing the 
 amount of its benefits below $300 for death benefits or $500 for disability bene- 
 fits in one year, but is nevertheless subject to said statute regardless of the 
 amount of its benefits. The exemption of certain associations under Section 29 
 of said Act if the benefits are not in excess of the above amounts, refers only 
 to a voluntary unincorporated association and not to a corporation already 
 operating under a charter and a license. (Opinion of Attorney General, June 
 27, 1913.) 
 
 (2) A fraternal benefit society issuing certificates, which are in effect in- 
 surance policies, is thereby doing an insurance business, and must comply with 
 the laws governing fraternal benefit societies, including the provisions requiring 
 such organizations to obtain a certificate of authority to do such business. 
 (Opinion of Attorney General, July 8, 1913.) 
 
 Taxation. 
 
 523. Every fraternal benefit society organized or licensed under this 
 act is hereby declared to be a charitable and benevolent institution, and 
 all of its funds and property shall be exempt from all and every State, 
 county, district, municipal and school tax, other than taxes on real 
 estate and office equipment, when same is used for other than lodge 
 purposes. (Id., Sec. 30.) 
 
 Local Mutual Aid or Burial Associations Exempt. 
 
 524. The provisions of this chapter shall not apply to incorporated 
 or unincorporated mutual relief or benefits, or burial associations, oper- 
 ating upon the assessment plan, whose business is confined to not more 
 than one county in the State of Texas, or to a territory in two or more 
 adjacent counties included within a radius of not more than fifty miles 
 surrounding the city or town in which its principal office is to be lo- 
 cated, which is designated in its charter and which at no time shall 
 have a membership exceeding 2000 members which are hereby denom- 
 inated local mutual aid associations; provided, that such associations 
 
194 INSURANCE LAWS OF TEXAS. 
 
 are in no manner directly or indirectly connected, federated or asso- 
 ciated with any such association and do not directly or indirectly con- 
 tribute to the expense or support of any other such association,, or to 
 the officers, promoters, or managers thereof; and, provided, that no per- 
 son or officer shall receive from said association any payment on ac- 
 count of organization or other expenses or salaries who is not a bona 
 fide resident of the county or area in which such association is domi- 
 ciled. The association above mentioned shall annually, on or before 
 March 1, file a statement with the Commissioner of Insurance and 
 Banking, which shall be signed and sworn to by the president, secre- 
 tary, and treasurer, or the officer holding positions corresponding thereto. 
 Such statement shall show whether the association has, during the pre r 
 ceding year, done any business outside of the county or area in which 
 it is domiciled, and shall state whether or not said association is asso- 
 ciated, federated or directly or indirectly connected with any other, 
 and shall show what, if anything, has been contributed during the pre- 
 ceding year by said association, or the members, to any person or offi- 
 cer, or director thereof for salaries, commissions or promotion expenses, 
 and the name and residence of the party or parties receiving the same. 
 The Commissioner of Insurance and Banking may, at his option, and 
 it shall be his duty, if not satisfied with said statement, to demand 
 other and additional statements and examine the books, papers, and 
 records of said association, either himself or by some other suitable 
 person authorized by him. Should it appear to the Commissioner of 
 Insurance and Banking that any such local mutual aid association is 
 not carrying on business as set forth in this article, and is not entitled 
 to the exemption therein set forth, such association shall be subject to 
 and comply with all provision of this chapter as a fraternal beneficiary 
 association. Every such local association claiming to be entitled to 
 the benefit of the exemption created by this article shall plainly state 
 upon its certificates, applications and all advertising matter, in a con- 
 spicuous manner, that said association is a local mutual aid association 
 or same shall be deemed subject to all provisions of this chapter con- 
 cerning fraternal beneficiary associations. (Acts 36th Leg., Chap. 50, 
 Sec. 1.) 
 
 Note. ( 1 ) Every corporation which issues policies of insurance must comply 
 with the insurance laws governing insurance corporations. If it assumes, as a 
 fraternal benefit society, to issue indemnity against death, accident or bad health, 
 for a stipulated or periodical premium or assessment, it thereby undertakes 
 to do an insurance business and is not a charitable organization. Such a con- 
 cern must comply with all the laws regulating fraternal benefit societies, in- 
 cluding the obtaining and holding a certificate of the Commissioner of Insur- 
 ance and Banking, authorizing it to engage in that business. (Opinion of At- 
 torney General, March 7, 1913.) 
 
 (2) Local mutual aid associations which confine their business to a single 
 county are not limited as to the number of members one such association may 
 have. Such an association doing business in more than one county and within 
 a territory of not more than fifty miles from its home office, must limit the 
 number of its members to not exceeding two thousand. (Opinion of Attorney 
 General, April 23, 1920.) 
 
INSURANCE LAWS OF TEXAS. 195 
 
 Penalties. 
 
 525. Any person, officer, member or examining physician of any 
 society authorized to do business under this act who shall knowingly 
 or wilfully make any false or fraudulent statement or representation in 
 or with reference to any application for membership, or for the pur- 
 pose of obtaining money from or benefit in any society transacting busi- 
 ness under this act, shall be guilty of a misdemeanor, and upon con- 
 virtion 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; any person who shall wilfully make 
 a false statement of any material fact or thing in a sworn statement 
 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 cer- 
 tificate 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 proceeded 
 against and punished as provided by the statutes of this State in rela- 
 tion to the crime of perjury. 
 
 Any person who shall solicit membership for, or in any manner as- 
 sist in procuring membership in any fraternal benefit society, not li- 
 censed to do business in this State, or who shall solicit membership for, 
 or in any manner assist in procuring membership in such society, not 
 authorized as herein provided to do business as herein defined in the 
 State, shall be guilty of a misdemeanor and upon conviction thereof 
 shall be punished by a fine of not less than fifty nor more than two 
 hundred dollars. 
 
 Any person who solicits for or organizes lodges of such association 
 as are described in the first section of this act without first obtaining 
 from the Commissioner of Insurance and Banking a certificate of au- 
 thority showing that the association has complied with' the provisions 
 of this act, and is entitled to do business in this State, shall be deemed 
 guilty of a misdemeanor and upon conviction shall be punished by a 
 fine of not less than one hundred dollars, nor more than two hundred 
 and fifty dollars, or by imprisonment in the county jail for not less 
 than three nor more than six months, or by both such fine and imprison- 
 ment; provided, the provisions of this section shall not be so construed 
 as to prohibit any member or members of a local or subordinate lodge 
 from soliciting any person or persons to become a member of any local 
 or subordinate lodge already in existence; and providing, further, the 
 provisions of this section, shall not apply to any member or members of 
 any local or subordinate lodge who participate in, supervise or directs 
 or conducts the organization or establishment of any local or subordi- 
 nate lodge within the limits of the county of his or their residence or 
 lodge district. All certificates of authority for agents or solicitors shall 
 be issued by the Commissioner upon application made therefor by any 
 of the general officers of the association, or by any agent whom the 
 properly authorized governing body of the association has, by resolution 
 filed with the Commissioner of Insurance and Banking, duly empow- 
 ered to make such application, and all such certificates shall be revoked 
 by the Commissioner upon the request of the association, and may be 
 revoked for cause upon like ground, and in like manner as the certifi- 
 
196 INSURANCE LAWS or TEXAS. 
 
 cates of authority of agents for life insurance companies under the 
 laws of this State. All such certificates shall be renewed annually and 
 shall expire on the first day of April of each year, and a fee of $1.00 
 shall be paid for the use of the State for the issuance of said such 
 certificate. 
 
 Any society or any officer, agent or employe thereof neglecting or 
 refusing to comply x with or violating 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 con- 
 viction thereof. (Acts 33d Leg., Chap. 113, Sec. 32.) 
 
 Repeal of Former Acts. 
 
 526. Chapter 36, Acts of the First Called Session of the Thirty- 
 first Legislature and Chapter 22, Acts of the Second Called Session of 
 the Thirty-first Legislature, and Chapter 92, Acts of the Regular Ses- 
 sion of the Thirty-second Legislature, and all other laws in conflict 
 with this act are hereby repealed. (Id., Sec. 33.) 
 
 CHAPTER XXIII. 
 
 What Companies Are Subject to the Provisions of This Act. 
 
 527. Every private corporation, foreign or domestic, organized for 
 profit, which is now attempting or shall hereafter attempt to increase 
 its capital stock, and every proposed corporation attempted to be or- 
 ganized which shall, directly or indirectly, through itself, its agents 
 or employes, or through any person or association of persons, holding 
 companies, sales companies or otherwise, or through any other agents, 
 sell or contract to sell any stock of such corporation or proposed cor- 
 poration, upon which sale or proposed sale or contracts of sale any part 
 of the proceeds derived or to be derived therefrom are used or to be 
 used, directly or indirectly for the payment of any commission, promo- 
 tion, organization fee or other expenses incident, directly or indirectly, 
 to the sale of its shares of stock, except attorney's fees, charter fees, 
 franchise tax, permit fees and stationery and supplies, shall be subject 
 to the provisions of this act. (Acts 33d Leg., 1st Called Session, Chap. 
 32, Sec. 1.) 
 
 Applies to Mining, Oil or Gas and Townsite Corporations. 
 
 528. This act shall also apply to any mining, oil or gas corpora- 
 tion increasing its stock or proposed mining, oil or gas corporation at- 
 tempting to sell stock in which any land or mineral or thing of value is 
 to be procured from, in or under such land that has been or is to be 
 placed as an asset with or in the corporation or proposed corporation, 
 whether any promotion fee is charged or not, and to any townsite cor- 
 poration or proposed townsite corporation. (Acts 33d Leg., 1st Called 
 Session, Chapter 32, Sec. 2.) 
 
INSURANCE LAWS OF TEXAS. i97 
 
 Filing of Statements With Secretary of State or Commissioner Before 
 Offering- for Sale Filing Fees. 
 
 529. Before offering for sale or contracting to sell, directly or indi- 
 rectly, any stock of such proposed corporation, or such increased stock 
 of any existing corporation, or before selling any stock in any townsite 
 corporation as provided in Section 2, such corporation, or those pro- 
 moting or having charge of the sale of stock of any proposed corpora- 
 tion, shall file, under oath, in the office of the Secretary of State, where, 
 under the law, a charter would be filed in his department, or in the 
 office of the Commissioner of Insurance and Banking, where, under 
 the law, a charter would be filed in 'his department, together with a 
 filing fee of twenty dollars, the following document: A statement 
 showing in full detail the plan upon which the corporation proposes to 
 increase its capital stock or upon which the promoters or those having 
 charge of the sale of stock of any proposed corporation proposes to sell 
 its stock and organize the corporation, together with a copy of all the 
 forms of contracts, stock (or deeds, if the same shall come under Sec- 
 tion 2 hereof) to be used by the corporation or promoters, or those hav- 
 ing charge of the sale of stocks of any proposed corporation in con- 
 nection with such stock sales. The statement shall further show the 
 name, location and domicile of such corporation, and the names of its 
 officers or proposed officers, if any, or promoters, and the addresses of 
 all the parties; the amount of capital stock of any corporation already 
 organized, the proposed increase, or the proposed capital stock of the 
 corporation to be organized, and the price at which the stock is pro- 
 posed to be sold; and the price at which the stock is proposed to be 
 sold shall not be changed without filing with the 'Secretary or Commis- 
 sioner, as the case may be, a statement of such change, which shall be 
 subject to his approval. Any such corporation or promoters of such 
 proposed corporation shall furnish the Secretary or Commissioner such 
 other information as may be necessary or proper concerning the sale 
 of its stock. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 3.) 
 
 Filing of Copy of Charter and Other Evidence, When Statement of Esti- 
 mated Fees and Expenses. 
 
 530. If it shall be a corporation organized under the laws of any 
 other jurisdiction, it shall file with the Secretary or Commissioner a 
 copy of its charter, and such other evidence of its authority as the Sec- 
 retary or Commissioner may require. 
 
 Said statement shall also show the commission, promotion fee and 
 other estimated incidental expenses proposed to be charged for the or- 
 ganization of such proposed corporation, or the increase in the capital 
 stock of any corporation already organized, and how the commissions 
 or fees are to be paid. (Acts 33d Leg., 1st Called Session, Chap. 32, 
 Sec. 3.) 
 
 Mining, Oil, Gas and Townsite Companies Must Give Estimate of Actual 
 Value of Property Employment of Experts. 
 
 531. If the corporation or proposed corporation comes under Sec- 
 tion 2 hereof, the officers of the corporation, or the promoters of the 
 proposed corporation, shall state the facts upon which they base their 
 estimate of the actual value of the property which is to become an asset 
 
198 INSURANCE LAWS OF TEXAS. 
 
 of the corporation, and the Secretary or Commissioner shall require 
 such proof as he may deem proper to establish the actual value of the 
 property. 
 
 The Secretary or Commissioner shall have the right to employ such 
 experts as he may deem necessary, and the experts shall be employed 
 at the expense of the corporation or promoters of a proposed corpora- 
 tion. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 3.) 
 
 Filing" of Statements Relating to Townsite Corporations Issue of Permit. 
 
 532. No corporation proposed to be organized for the purpose of 
 buying or selling townsites and town lots shall hereafter be granted 
 a charter by the Secretary of State, or if a foreign corporation shall 
 not be granted a permit to do business in the State of Texas unless the 
 incorporators of said proposed corporation or officer of such foreign 
 corporation shall file with the Secretary of State each and every docu- 
 ment, contract and all papers referred to in Section 3 of this act ? as 
 well as a general statement of the plan of its proposed townsite, and a 
 general statement of its methods of advertising same, together with a 
 sample copy of its advertising literature, and no charter shall be granted 
 any corporation unless after the compliance with the provisions of this 
 act and in the judgment of the Secretary of State, such business of any 
 proposed townsite corporation will be honestly and fairly conducted 
 both to the corporation and to the public. And each and every cor- 
 poration in this State now existing or hereafter organized desiring to 
 engage in the sale of townsite lots or sites shall, prior to such sale, file 
 with the Secretary of State a general plan of said proposed lots to be 
 sold, as well as a copy of any and all proposed contracts to be made 
 with the public in the sale thereof, and a general statement of the lit- 
 erature proposed to be issued, and all matters referred to in Section 3 
 hereof, and if in the judgment of the Secretary of State said sale will 
 be conducted both honestly and fairly to the corporation and to the pub- 
 lic, a permit to conduct said sale shall be granted. This provision shall 
 not be construed to authorize the creation of any corporation for any 
 purpose not now authorized by the laws of this State. (Acts 33d Leg., 
 1st Called Session, Chap. 32, Sec. 3.) 
 
 Secretary or Commissioner Shall Grant or Refuse the Permit. 
 
 533. The Secretary or Commissioner, upon the receipt of the infor- 
 mation as provided for in Section 3, shall grant or refuse such permit. 
 
 If the Secretary or Commissioner shall decide that the sale of stock 
 will be fairly and honestly conducted, both to the corporation and to 
 the public, such permit shall be granted, provided that the commissions, 
 promotion and other incidental expenses, exclusive of the exempted ex- 
 penses mentioned in Section 1 of this act, shall not be more than 
 fifteen (15) per cent of the price at which such stock is to be sold as 
 shown by the application or amended application. (Acts 33d Leg., 
 1st Called Session, Chap. 32, Sec. 4.) 
 
 Note. Where the application of a life insurance company for a permit to 
 sell an increased amount of its capital stock exhibited a contract between the 
 company and the agent employed to sell the increased stock, such contract 
 provided that the said agent was to receive as compensation the sum of $250 
 per month and expenses incurred in the sale of the stock, together with ex- 
 
INSURANCE LAWS OF TEXAS. 1^)9 
 
 penses in moving from a city in a distant State to a city in the State of 
 Texas. Such salary and expenses were to be paid from the stock sales account, 
 which account is money derived from a deduction of $10 from the selling price 
 of each share of stock sold, the price being $160 per share, $100 being the 
 par value, $50 surplus and $10 for expense of selling. Ten dollars per share 
 is within the 15 per cent which the law allows for selling the stock, and if the 
 stock sales account, being said $10 per share of stock sold, were sufficient to 
 pay the salary and expenses, there would be no legal objection to such con- 
 tract. But, if the contract further provided that the company would be 
 authorized "to repay itself for such sums advanced by it from time to time 
 by withdrawal of funds to the credit of the stock sales account," such lan- 
 guage indicates that the company out of its general assets would advance the 
 necessary salary and expenses if there should be nothing to the credit of the 
 stock sales account, or not enough to meet the demands on same under the 
 contract, in which event the salary and expenses actually incurred might ex- 
 ceed 15 per cent of the stock actually sold, and would be in violation of law. 
 In such a contract 'the language of same should clearly show that the salary 
 and expenses paid should never exceed the amount to the credit of the stock 
 sales account accruing on a basis of $10 per share of stock actually sold, or 
 such language as would clearly show that the company would not be required 
 to pay out of its general assets, or become indebted to the agent selling the 
 stock, in excess of $10 per share of stock actually sold. (Opinion of Attorney 
 General, March 5, 1919.) 
 
 This Act Shall Not Affect Stock Previously Sold or Subscribed; Unsold 
 or Unsubscribed Part of It Falls Under Condition of This Act. 
 
 534. Provided, that where any proposed corporation has already sold 
 its stock, or a part thereof, or any part thereof has been subscribed at 
 the time this act shall take effect, this act shall not affect* stock previ- 
 ously sold or subscribed nor any contracts made in reference to same; 
 but, if any of the stock of said proposed corporation remains unsold or 
 unsubscribed, said corporation shall, nevertheless, be entitled to a per- 
 mit upon complying with the other conditions of this act, including the 
 future sale or subscription of any of its stock. (Acts 33d Leg., 1st 
 Called Session, Chap. 32, Sec. 4.) 
 
 Commissions or Promotion Fee Paid to Agent or Promoter, When Kind 
 of Payments of Stock. 
 
 535. The commission or promotion fee shall be paid to the agent 
 or promoter as the stock is sold by him and paid for by the purchaser. 
 The stock shall be considered as paid for when paid for in cash, prop- 
 erty or labor. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 4.) 
 
 Issue of Permit Depends on Compliance With Certain Requirements, 
 Amongst Them the Filing of a Bond Approved by Secretary or Com- 
 missioner. 
 
 536. No permit shall be granted unless there shall appear upon the 
 subscription lists and contracts of such corporation or proposed cor- 
 poration, in bold type, the amount of the commissions, promotion fees 
 and other estimated expenses incident to the sale of such stock, and 
 the interest which the officer, agent, employe or promoter selling or 
 contracting to sell such stock has in such sale; nor shall such permit be 
 granted until the applicants therefor have entered into a bond for not 
 less than one thousand dollars ($1000) nor more than one hundred 
 thousand dollars ($100,000), the same to be fixed by the Secretary or 
 
200 INSURANCE LAWS OF TEXAS. 
 
 Commissioner at not more than ten per cent of the stock proposed to 
 be issued. The said bond shall be payable to the Secretary or Commis- 
 sioner as the case may be, and his successor in office, conditioned that 
 the facts set forth in the application for such permit, and the proof 
 and statement offered to such Secretary or Commissioner, upon which 
 the application is based, are true, and that they will comply with the 
 provision of this act in the sale of the stock of such corporation or 
 proposed corporation. Said bond may be made with individual sureties 
 or a surety company authorized to do business in the State of Texas, 
 and the bond shall be approved by the Secretary or Commissioner. 
 (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 4.) 
 
 Appeal to the District Court of Travis County When Permit Refused. 
 
 537. If a permit shall be refused by the Secretary or Commissioner 
 the parties applying therefor may bring suit in the district court of 
 Travis county, Texas, to require said Secretary or Commissioner to 
 issue such permit. (Acts 33d Leg., 1st Called Session, Chap. 32, 
 Sec. 5.) 
 
 Suit Upon the Bond Amount Recoverable Requisition of a New Bond 
 Cancellation of Permit. 
 
 538. Any person who shall be induced to purchase any stock of 
 any corporation or proposed corporation by the officers, agents, em- 
 ployes, promoters or trustees, by reason of any misrepresentation of any 
 material fact concerning such stock, such person or persons shall have 
 the right to bring suit upon the bond above provided for, and such 
 bond shall be subject to, and security for, such person so purchasing 
 the stock; provided, that such person shall not be entitled to recover 
 more than the money paid, or the actual value of the property given, 
 or the labor performed, in exchange for such stock, with legal interest 
 from the date of the payment or the performance of the services, or the 
 transfer of the property. 
 
 One or more recoveries upon such bond shall not vitiate the same, 
 but it shall remain in full force and effect, but no recoveries upon such 
 bond shall ever exceed the full amount of same, and upon suits being 
 filed in excess of the amount of same, the Secretary or Commissioner 
 may require a new bond, and, if the same is not given within thirty 
 days, he may cancel the permit herein provided for. (Acts 33d Leg., 
 1st Called Session, Chap. 32, Sec. 6.) 
 
 List of Authorized Officers, Agents and Employes and Its Changes Filed 
 With Secretary or Commissioner. 
 
 539. Whenever any permit has been issued, the corporation or per- 
 sons receiving the same shall file a list of the names of their or its 
 authorized officers, agents or employes, and the postoffice address of 
 each; and, in case of the change of any of its officers, agents or em- 
 ployes, it shall file a list of such changes with the Secretary or Com- 
 missioner. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 6.) 
 
 All Collected Money for the Sale of Stock Shall Be Deposited With Bank. 
 
 540. All money or other things of value collected by such corpora- 
 tion or the promoters of a proposed corporation, for the sale of its 
 
INSURANCE LAWS OF TEXAS. 201 
 
 stock, or contract for the sale of its stock, shall be deposited by said 
 corporation to its credit, or by the promoters of a proposed corporation, 
 to the credit of its proposed officers or trustees, with the exception of 
 the amount allowed for commissions, promotion fees and other inci- 
 dental expenses, with a bank, bank and trust company or trust com- 
 pany incorporated under the laws of this State, or of the United States. 
 (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 7.) 
 
 All Corporations or Proposed Corporations Must Keep a Set of Books 
 Open for Inspection by the Authorities. 
 
 541. All such corporations, and the organizers or trustees of pro- 
 posed corporations, shall keep a set of books, which shall show the 
 amount of money, or other things of value received by such corporation 
 or proposed corporation from the sale of its stock, or from contracts of 
 sale of its stock, and such books shall show the number and amounts 
 of stock sold or contracted to be sold, by whom sold, and to whom sold, 
 or contracted to be sold, and the postoffice address of each. Said books 
 shall at all times be open for inspection by the Secretary or Commis- 
 sioner, or his duly authorized agent. (Acts 33d Leg., 1st Called Ses- 
 sion, Chap. 32, Sec. 8.) 
 
 Cause for Cancellation of Permit Bight to Bring Suit in the District 
 Court of Travis County. 
 
 542. Whenever the Secretary or Commissioner shall have informa- 
 tion that any corporation, or the promoters of the proposed corporation, 
 its officers, agents or employes, are not complying with the terms of 
 this act in the sale of its stock, they shall notify such corporation, or its 
 officers, agents or employes or the promoters of the proposed corpora- 
 tion to appear, within twenty days, and show cause why such permit 
 should not be canceled, and after the hearing such Secretary or Com- 
 missioner shall have the right to cancel such permit if the proof shall 
 show that such corporation or proposed corporation, or its officers, 
 agents or employes are not complying with, the terms of this act, but 
 the parties or corporation holding such permit shall have the right to 
 bring suit, in the district court of Travis county, Texas, against the 
 Secretary or Commissioner to reinstate such permit to sell stock. (Acts 
 33d Leg., 1st Called Session, Chap. 32, Sec. 9.) 
 
 Foreign Corporations Must Show 50 Per Cent Paid-in Capital Does Not 
 Apply to Loan and Insurance Corporations. 
 
 543. No permit to sell stock shall ever be issued to any foreign cor- 
 poration which has not at the time of making application for permit at 
 least fifty per cent of its capital stock subscribed and paid in, provid- 
 ing that this shall not apply to any foreign corporation engaged exclu- 
 sively in the bus ; ness of lending money in this State, nor to any in- 
 surance company that is required by law to obtain a permit from the 
 Commissioner of Insurance and Banking. (Acts 33d Leg., 1st Called 
 Session, Chap. 32, Sec. 10.) 
 
 Foreign Corporations Shall File Po"wer of Attorney Like That Provided 
 in Article 4773, B. S. Duty of Secretary or Commissioner in Accept- 
 ing Service. 
 
 544. Each foreign corporation or the promoters of any proposed 
 foreign corporation desiring to sell or contract to sell its stock in this 
 
202 INSURANCE LAWS OF TEXAS. 
 
 State shall first file with the Secretary or Commissioner a like power 
 of attorney to that provided for life insurance corporations in Article 
 4773, Revised Civil Statutes of the State of Texas of 1911, and service 
 may be had upon the corporation and the Secretary or Commissioner, 
 as the case may be, as therein provided for, and the Secretary or Com- 
 missioner, as the case may be, upon receipt of such process as is therein 
 provided for, shall proceed as is provided for him to do in Article 4774, 
 Kevised Civil Statutes of the State of Texas of 1911, and the Secretary 
 or Commissioner's acts and conduct in regard to such power of attor- 
 ney, and such process shall be the same as is provided for in said 
 Articles 4774 and 4773, and the effect, force and result of such acts 
 shall be the same as therein provided for. (Acts 33d Leg., 1st Called 
 Session, Chap. 32, Sec. 11.) 
 
 Violation of This Law Misdemeanor Imprisonment. 
 
 545. It shall hereafter be unlawful for any officer, agent or employe 
 or trustee, or holding company, or sales agents, or person, or associa- 
 tion of persons in this State to sell, or offer to sell, or contract to sell, 
 directly or indirectly, for such concern, any stock of any corporation 
 or proposed corporation, subject to this act, which has been, proposed 
 to be, is now being, or may hereafter be organized for profit, without 
 first complying with the provisions of this act, and any person so 
 offending shall be guilty of a misdemeanor, and upon conviction shall 
 be fined not less than twenty-five dollars nor more than two thousand 
 dollars, and in addition thereto may be imprisoned in the county jail 
 for any period not more than one year, or by both such fine and im- 
 prisonment. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 12.) 
 
 Subscribers Must Be Refunded at the Expiration of Two Years Exten- 
 sion of Time May be Granted. 
 
 546. At the expiration of two years from the granting of a permit 
 under this act if the proposed corporation has failed to .organize, then 
 all subscribers must be refunded the amount paid to the promoter or 
 trustee; provided, however, that the Secretary or Commissioner may 
 grant an extension of time for the sale of securities. (Acts 33d Leg., 
 1st Called Session, Chap. 32, Sec. 12a.) 
 
 Cumulative Power of This Act. 
 
 547. This act shall be construed to be cumulative of any other law 
 or laws of this State. (Acts 33d Leg., 1st Called Session, Chap. 32, 
 Sec. 13.) 
 
 Exemptions of This Act for Certain Corporations. 
 
 548. The terms of this act shall not apply to -any national bank, 
 nor to any corporation having a charter granted under any act of the 
 Congress of the United States, nor to any State bank, bank and trust 
 company or trust company organized under the laws of this State, nor 
 to any corporation organized under the Federal Reclamation Act, ap- 
 proved June 17, 1902, or the regulations established by the Secretary of 
 the Department of the Interior in pursuance thereof. Nor shall the 
 terms of this act apply to any corporation or the promoters of any cor- 
 poration organized under the laws of Texas which does not sell or con- 
 
INSURANCE LAWS OF TEXAS. 203 
 
 tract to sell its stock to more than twenty-five bona fide purchasers; 
 provided, it does not act as the agent or trustee, holding company or 
 sales company in the promotion of any concern which is included under 
 the terms of this act. Nor shall this act apply to any railroad or rail- 
 way company or interurban railroad or railway company, or street rail- 
 road or railway company. Nor shall this act apply to the sale of stock 
 of a corporation by a bona fide owner of same, who had in good faith 
 bought the same, and who in the purchase and sale of same was and 
 is not acting directly or indirectly as promoter or agent of such cor- 
 poration. Nor shall this act apply to a bona fide stock or stock broker 
 in the sale of stock, which stock has been by such corporation sold 
 and issued to a bona fide purchaser prior to the offering of same for 
 sale by such broker; provided, that such purchaser or broker was not 
 acting, directly or indirectly, as promoter of such corporation. (Acts 
 33d Leg., 1st Called Session, Chap. 32, Sec. 14.) 
 
 Quarterly Deposit of Collected Money Examinations Made at the Ex- 
 pense of Corporations. 
 
 549. All moneys collected under the terms of this act by the Sec- 
 retary or Commissioner shall be quarterly deposited by him with the 
 State Treasurer and credited to the general fund. Whenever the Sec- 
 retary or Commissioner shall deem it necessary to examine the books 
 of any corporation or proposed corporation, subject to the provisions of 
 this act, or investigate its financial condition, he shall do so at the ex- 
 pense of the corporation or proposed corporation under investigation, 
 and the corporation or the agents of the corporation or proposed corpo- 
 ration being investigated shall pay to the Secretary or Commissioner, or 
 his agent, making the investigation his actual expenses and seven dol- 
 lars and fifty cents per day for such investigation, which said expenses 
 shall be paid at the termination of such investigation by the concern 
 investigated. (Acts 33d Leg., 1st Called Session, Chap. 32, Sec. 15.) 
 
 Definitions. 
 
 550. Whenever the word "Secretary' 5 is used in this act it shall be 
 considered to mean Secretary of the State of Texas, and whenever 
 "Commissioner" is used in this act it shall be considered to mean Com- 
 missioner of Insurance and Banking of the State of Texas. (Acts 
 33d Leg., 1st Called Session, Chap. 32, Sec. 16.) 
 
 CHAPTER XXIV. 
 
 ANTI-TRUST LAW. 
 Definition of a Trust. 
 
 551. A trust is a combination of capital, skill or acts by two or 
 more persons, firms, corporations or associations of persons, or either 
 two or more of them for either, any or all of the following purposes: 
 
 (1) To create or which may tend to create or carry out restrictions 
 in trade or commerce or aids to commerce or in the preparation of 
 any product for market or transportation, or to create or carry out 
 restrictions in the free pursuit of any business authorized or permitted 
 by the laws of this State. 
 
204 INSURANCE LAWS OF TEXAS. 
 
 (2) To fix, maintain, increase or reduce the price of merchandise, 
 produce or commodities or the cost of insurance or of the preparation 
 of any product for market or transportation. 
 
 (3) To prevent or lessen competition in the manufacture, making, 
 transportation, sale or purchase of merchandise, produce or commod- 
 ities or the business of insurance, or to prevent or lessen competition 
 in aids to commerce, or in the preparation of any product for market 
 or transportation. 
 
 (4) To fix or maintain any standard or figure whereby the price 
 of any article or commodity of merchandise, produce or commerce, or 
 the cost of transportation, or insurance, or the preparation of any 
 product for market transportation, shall be in any manner affected, 
 controlled or established. 
 
 (5) To make, enter into, maintain, execute or carry out any con- 
 tract, obligation or agreement by which the parties thereto bind, or 
 have bound themselves not to sell, dispose of, transport or to prepare 
 for market or transportation any article or commodity, or to make 
 any contract of insurance at a price below a common standard or fig- 
 ure, or by which they shall agree in any manner to keep the price 
 of such article or commodity or charge for transportation or insur- 
 ance, or the cost of the preparation of any product for market or 
 transportation at a fixed or graded figure, or by which they shall in 
 any manner affect or maintain the price of any commodity or article 
 or the cost of transportation or insurance or the cost of the prepara- 
 tion of any product for market or transportation between them, or 
 themselves and others, to preclude a free and unrestricted competi- 
 tion among themselves or others in the sale or transportation of any 
 such article or commodity or business of transportation or insurance 
 or the preparation of any product for market or transportation or by 
 which they shall agree to pool, combine or unite any interest they may 
 have in connection with the sale or purchase of any article or com- 
 modity or charge for transportation or insurance or charge for the 
 preparation of any product for market or transportation whereby its 
 price or such charge might be in any manner affected. 
 
 (6) To regulate, fix or limit the output of any article or com- 
 modity which may be manufactured, mined, produced or sold, or the 
 amount of insurance which may be undertaken, or the amount of work 
 that may be done in the preparation of any product for market or 
 transportation. 
 
 (7) To abstain from engaging in or continuing business or from 
 the purchase or sale of merchandise, produce or commodities partially 
 or entirely within the State of Texas, or any portion thereof. (R. S., 
 Art. 7796.) 
 
 Note. ( 1 ) Three insurance companies may make a contract between them- 
 selves to reinsure by one of the companies in the others of a part of the busi- 
 ness of each, respectively, provided the rates are not agreed upon and fixed 
 between the companies, each company to keep in the business in its own name 
 and with its own agents and in constant competition with the others, and each 
 to be left free to reject any reinsurance risk not satisfactory to it, and pro- 
 vided further, that the affairs of the several companies are not brought under 
 such common management or control as tends to fix or maintain cost of in- 
 surance, or lessen competition, or to fix or maintain any standard affecting, 
 controlling or managing the price of insurance, and there is no agreement to 
 
INSURANCE LAWS OF TEXAS. 205 
 
 pool, combine or unite any interest in connection with the sale of insurance, 
 nor to regulate, fix, or limit the amount of insurance to be undertaken. (Opin- 
 ion of Attorney General, June 27, 1905.) 
 
 (2) A joint contract of two or more insurance companies, being a policy 
 of insurance of the combined companies, issued under the name of certain under- 
 writers, is a violation of the anti-trust law. (Opinion of Attorney General, 
 March 17, 1905.) 
 
 (3) A corporation organized for the purpose of conducting insurance bureau 
 having as one of its purposes the right to "make estimates of the cost of carry- 
 ing fire insurance" would be in violation of the anti-trust law. (Opinion of 
 Attorney General, December 21, 1905.) 
 
 (4) An agreement between two surety companies that both shall hold them- 
 selves jointly and equally liable under each and every liquor dealer's bond 
 written by either company would be unlawful. (Opinion of Attorney General. 
 February 6, 1906.) - { 
 
 (5) The State Insurance Board law does not repeal, affect or modify the 
 anti-trust laws, and, notwithstanding the powers of the State Insurance Board 
 to regulate insurance rates, it would nevertheless be a violation of the anti- 
 trust law for two or more companies, under the name of certain underwriters, 
 to write an insurance contract or policy which would be the joint contract of 
 such companies. (Opinion of Attorney General, April 6, 1911.) 
 
 (6) The anti-trust laws of this State apply only to transactions in this 
 State, and it would not be a violation of the anti-trust laws of Texas for two 
 or more insurance companies, though chartered in Texas, to write and issue a 
 joint policy in some other State. (Attorney General's opinion, April 11, 1911.) 
 
 (7) Relative to constitution and by-laws of proposed organization of local 
 chapter or boards of local fire insurance agents in different cities and towns 
 in Texas. (Opinion of Attorney General, April 29, 1911.) 
 
 (8) The life insurance companies cannot agree upon a uniform policy at a 
 uniform rate, to be sold for the benefit of the students' loan fund or the assured, 
 because it would controvert the anti-trust law. The students' loan fund could 
 not retain the proceeds of a policy in its favor, having no insurable interest 
 in the life of the assured. (Opinion of Attorney General, December 11, 1914.) 
 
 (9) The anti-trust statutes prohibit the formation of a combination on the 
 part of two or more insurance companies for the purpose of jointly executing 
 bonds guaranteeing cotton warehouse receipts. (Opinion of Attorney General, 
 February 3, 1916.) 
 
 (10) Where two insurance companies, both of which are authorized to do 
 an automobile insurance business, issue an insurance policy executed by both 
 companies, under the terms of which the two companies do not assume any 
 joint liability, but one company assumes liability for certain things for which 
 the other company is not liable, while the other assumes liability for other 
 certain specified risks in fhe policy; this would be a violation of the anti-trust 
 law, which prohibits the preventing or lessening competition in the insurance 
 business. Such a policy jointly executed clearly shows that the companies have 
 agreed in dividing the risks, one company carrying one portion and the other 
 a separate portion. This agreement not only violates the law which prohibits 
 the preventing or lessening of competition, but is also contrary to the pro- 
 vision of the anti-trust law which prohibits an agreement, which would, in effect, 
 fix or maintain any standard or figure whereby the cost of insurance shall be 
 affected, controlled or established. The Commissioner should not approve any 
 contract in violation of the statutes of Texas. (Opinion of the Attorney Gen- 
 eral, November 22, 1920.) 
 
 Monopoly Definition. 
 
 552. A monopoly is a combination or consolidation of two or more 
 corporations when effected in either of the following methods : 
 
 (1) When the direction of the affairs of two or more corporations 
 is in any manner brought under the same management or control for 
 
206 INSURANCE LAWS OF TEXAS. 
 
 the purpose of producing, or where such common management or con- 
 trol tends to create a trust, as defined in the first article of this chapter. 
 (2) Where any corporation acquires the shares of certificates of 
 stock or bonds, franchise or other rights, or the physical properties, 
 or any part thereof, of any other corporation or corporations, for the 
 purpose of preventing or lessening, or where the effect of such acqui- 
 sition tends to affect or lessen competition, whether such acquisition 
 is accomplished directly or through the instrumentality of trustees or 
 otherwise. (R. S., Art. 7797.) 
 
 What Constitutes Conspiracy in Restraint of Trade. 
 
 553. Either or any of the following acts shall constitute a con- 
 spiracy in restraint of trade: , 
 
 (1) Where any two or more persons, firms, corporations or asso- 
 ciations of persons who are engaged in buying or selling any articles 
 of merchandise, produce or any commodity, enter into any agreement 
 or understanding to refuse to buy from or sell to any other person, 
 firm, corporation or association of persons any article of merchandise, 
 produce or commodity. 
 
 (2) Where any two or more persons, firms, corporations or asso- 
 ciations of persons shall agree to boycott or threaten to refuse to buy 
 from or sell to any person, firm, corporation or association of persons 
 for buying from or selling to any other person, firm, corporation or 
 association of persons. (R. S., Art. 7798.) 
 
 Declared to Be Illegal. 
 
 554. Any and all trusts, monopolies and conspiracies in restraint 
 of trade, as herein defined, are prohibited and declared to be illegal. 
 (R. S., Art. 7799.) 
 
 Shall Forfeit Charter. 
 
 555. Any corporation holding a charter under the laws of the State 
 of Texas, which shall violate any of the provisions of this chapter shall 
 thereby forfeit its charter and franchise, and its corporate existence 
 shall cease and determine. (R. S., Art. 7800.) 
 
 Attorney General Must Institute Suit Upon His Own Motion. 
 
 556. For a violation of any of the provisions of this chapter, or 
 any anti-trust laws of this State, by any corporation, it shall be the 
 duty of the Attorney General upon his motion and without leave or 
 order of any judge or court, to institute suit or quo warranto proceed- 
 ings in Travis county, or at the county seat of any county in the State 
 which the Attorney General may select, for the forfeiture of its charter, 
 rights' and franchises, and the dissolution of its corporate existence; 
 and for such purposes, venue is hereby given to each district court in 
 the State of Texas. (R. S., Art. 7801.) 
 
 The Corporation to Which Defaulting Corporation May Have Transferred 
 Its Properties Shall Not Be Permitted to Transact Business in Texas. 
 
 557. When a corporation organized under the laws of this State 
 shall have been convicted of a violation of any of the provisions of 
 this act, and its charter and franchise has been forfeited, as provided 
 
INSURANCE LAWS OF TEXAS. 207 
 
 in Section 5, no other corporation to which the defaulting corporation 
 may have transferred its properties and business, or which has assumed 
 the payment of its obligations, shall be permitted to incorporate or do 
 business in Texas. (R. S., Art. 7802.) 
 
 Every Foreign Corporation Violating Law Denied the Bight to Transact 
 Business To Be Enjoined. 
 
 558. Every foreign corporation violating any of the provisions of 
 this chapter is hereby denied the right, and is prohibited from doing 
 any business within this State, and it shall be the duty of the Attorney 
 General to enforce its provision by injunction or other proceedings, in 
 the district court of Travis county, in the name of the State of Texas. 
 (R. S., Art. 7803.) 
 
 To Control Proceedings Instituted to Forfeit Charter. 
 
 559. The provisions of Title 114, Revised Statutes of this State of 
 1911, to prescribe the remedy and regulate the proceedings by quo 
 warranto, etc., shall, except in so far as they conflict herewith, govern 
 and control the proceedings when instituted to forfeit any charter under 
 this title. (R. S., Art. 7804.) 
 
 The Corporation to Which Foreign Corporation May Have Transferred 
 Its Properties Shall Not Be Permitted to Do Business. 
 
 560. When any foreign corporation has been convicted of a viola- 
 tion of any of the provisions of this chapter, and its right to do busi- 
 ness in this State has been forfeited, as provided in Section 8 of this 
 act, no other corporation to which the defaulting corporation may have 
 transferred its properties and business, or which has assumed the pay- 
 ment of its obligations, shall be permitted to incorporate to do busi- 
 ness in Texas. (R. S., Art. 7805.) 
 
 Penalties Venue Fees of Attorney General. 
 
 561. Each and every firm, person, corporation or association of per- 
 sons, who shall in any manner violate the provisions of this chapter, 
 shall, for each and every day that such violation shall be committed 
 or continued, forfeit and pay a sum of not less than fifty nor more 
 than fifteen hundred dollars, which may be recovered in the name of 
 the State of Texas in the district court of any county in the State of 
 Texas, and venue is hereby given to such district court; provided, that 
 when any such suit shall have been filed in any county or jurisdiction 
 thereof acquired, it shall not be transferred to any other county, except 
 upon change of venue allowed by the court and it shall be the duty 
 of the Attorney General, or the district or county attorney under the 
 direction of the Attorney General, to prosecute for the recovery of the 
 same; and the fees of the district or county attorney for representing 
 the State in all anti-trust proceedings, or for the collection of penalties 
 for the violation of the anti-trust laws of this State, shall be ten per 
 cent of the amount collected up to and including the sum of fifty thou- 
 sand dollars, and five per cent on all sums in excess of the first fifty 
 thousand dollars, to be retained by him when collected; and all such 
 fees which he may collect shall be over and above the fees allowed under 
 the general fee bill; provided, that the provisions of this chapter as to 
 
208 INSURANCE LAWS OF TEXAS. 
 
 the fees allowed the prosecuting attorney shall not apply to any case in 
 which judgment has heretofore been rendered in any court, nor to any 
 moneys to be hereafter collected upon any such judgment heretofore 
 rendered in any court, whether such judgment or judgments are pend- 
 ing upon appeal or otherwise; and providud, further, that the district 
 or county attorney who joins in the institution of prosecution of any 
 suit for the recovery of penalties for a violation of any of the anti-trust 
 laws of this State, who shall, previous to the collection of such penal- 
 ties, cease to hold office, he shall be entitled to an equal division with 
 his successor of the fee collected in said cause; and in case of the em- 
 ployment of special counsel by any such district or county attorney, the 
 contract so made shall be binding upon such prosecuting officer making 
 such contract and thereafter retiring from office; provided further, that 
 in case any suit is compromised before any final judgment in the trial 
 court is had, then the fees herein provided for shall be reduced one- 
 half. (E. S., Art. 7806.) 
 
 Contract Void. 
 
 562. Any contract or agreement in violation of the provisions of 
 this chapter shall be absolutely void and not enforceable either in law 
 or equity. (R. S., Art. 7807.) 
 
 Additional Penalties and Forfeitures. 
 
 563. And in addition to all other penalties and forfeitures herein 
 provided for, every person violating the provisions of this chapter shall 
 be further punished by imprisonment in the penitentiary for not less 
 than one nor more than ten years. (P. C., Art. 1466.) 
 
 Act of Agent Regarded as That of Corporation, When. 
 
 564. In prosecutions for the violations of any of the provisions of 
 this chapter, evidence that any person has acted as the agent of a cor- 
 poration in the transaction of its business in this State shall be re- 
 ceived as prima facie proof that his act in the name, behalf or inter- 
 est of the corporation of which he was acting as the agent, was the 
 act of the corporation. (P. C., Art. 1467.) 
 
 Duty of Justices of the Peace to Have Summoned and to Have Examined 
 Witnesses in Relation to Violation of This Act, When. 
 
 565. Upon the application of' the Attorney General, or of any of 
 his assistants, or of any district or county attorney, acting under the 
 direction of the Attorney General, made to any county judge or any jus- 
 tice of the peace in this State, and stating that he has reason to believe 
 that a witness who is to be found in the county of which such justice of 
 the peace is an officer, knows of a violation of any of the provisions of 
 the preceding chapter, it shall be the duty of the county judge or of 
 the justice of the peace to whom such application is made to have 
 summoned and to have examined such witness in relation to violations 
 of any of the provisions of this chapter, said witness to be summoned 
 as provided for in criminal cases. The said witness shall be duly sworn 
 and the county judge or the justice of the peace, as the case may be, 
 shall cause the statement of the witness to be reduced to writing and 
 signed and sworn to before him, and such sworn statement shall be de- 
 
INSURANCE LAWS OF TEXAS. 209 
 
 livered to the Attorney General, his assistants or the district or county 
 attorney upon whose application the witness was summoned. Should 
 the witness summoned, as aforesaid, fail to appear, or to. make state- 
 ment of the facts within his knowledge under oath, or to sign the same 
 after it has been reduced to writing, he shall be guilty of contempt of 
 court and may be fined not exceeding one hundred dollars, and may be 
 attached and imprisoned in the county jail until he shall make a full 
 statement of all the facts within his knowledge with reference to the 
 matter inquired about. Any person who shall testify before any county 
 judge, or justice of the peace, as provided for in this article, or who 
 shall testify as a witness for the State in the course of any statutory 
 proceeding to secure testimony for the enforcement of the provisions 
 of the preceding chapters, or in the course of any judicial proceeding 
 to enforce the provisions of said chapter, shall not be subject to indict- 
 ment or prosecution for any transaction, matter or thing concerning 
 which he shall so give evidence, documentary or otherwise. (R. S., Art. 
 7810.) 
 
 Actions to Have Precedence. 
 
 566. All actions authorized and brought under this chapter shall 
 have precedence, on motion of the prosecuting attorney or Attorney 
 General, or all other business, civil and criminal, except criminal cases 
 where the defendants are in jail. (R. S., Art. 7808.) 
 
 Must Not Form, Aid or Become a Party to a Trust Applies to Trusts 
 Outside of the State, When Penalty. 
 
 567. If any person shall enter into an agreement or understand- 
 ing of any character to form a trust, or to form a monopoly, or to 
 form a conspiracy in restraint of trade, as these offenses are defined 
 by this chapter, or shall form a trust, monopoly or conspiracy in re- 
 straint of trade, or shall be a party to the formation of a trust or 
 monopoly or conspiracy in restraint of trade, or shall become a party 
 to a trust or monopoly or conspiracy in restraint of trade, or shall do 
 any act in furtherance of, or aid to, such trust or monopoly or con- 
 spiracy in restraint of trade, he shall be punished by imprisonment in 
 the penitentiary for a period of not less than two years nor more than 
 ten years. (P. C., Art. 1470.) 
 
 Person, Member, Agent, Employe, Etc., Operating in Violation of This 
 Law Penalty. 
 
 568. If any person shall, as a member, agent, employe, officer, di- 
 rector or stockholder of any business, firm, corporation or association 
 of persons, form, in violation of the provisions of this chapter, or shall 
 operate in violation of the provisions of this chapter any such busi- 
 ness, firm, corporation or association formed in violation of this chap- 
 ter, or shall make any sale or purchase, or any other contract, or do 
 business for such business, firm, corporation or association, or shall do 
 any other act which has the effect of violating or aiding in the viola- 
 tion of the provisions of this chapter, or shall, with the intent or pur- 
 pose of driving out competition or for the purpose of financially injur- 
 ing competitors, sell within the State at less than cost of manufacture 
 or production, or sell in such a way or give away within this State 
 
210 INSURANCE LAWS OF TEXAS. 
 
 products for the purpose of driving out competition or financially in- 
 juring competitors engaged in a similar business, or give secret rebates 
 on such purchase for the purpose aforesaid, he shall be punished by 
 confinement in the penitentiary for a period of not less than two years 
 nor more than ten years. (P. C., Art. 1471.) 
 
 Persons Outside State Liable to Punishment, When. 
 
 569. If any person shall, outside of this State, do anything which, 
 if done within this State, would constitute the formation of a trust or 
 monopoly or conspiracy in the restraint of trade, as defined in this 
 chapter, and shall cause or permit the trust or monopoly so formed by 
 him to do business within this State, or shall cause or permit such 
 trust, monopoly or conspiracy in restraint of trade to have any opera- 
 tion or effect within this State, or if such trust, monopoly or conspiracy 
 in restraint of trade having been formed outside of this State, any per- 
 son shall give effect to such trust, monopoly or conspiracy in this State, 
 or shall do anything to help or aid it doing business in -this State, or 
 otherwise violate the anti-trust laws of this State, or if any person shall 
 buy or sell, or otherwise make contracts for or aid any other business, 
 firm, corporation or association of persons formed or operated in viola- 
 tion of the provisions of this chapter, or so formed or operated as 
 would be in violation of the laws of this State, if it had been formed 
 within this State, shall be punished by confinement in the peniten- 
 tiary for a period of not less than two years nor more than ten- years. 
 (P. C., Art. 1472.) 
 
 Persons, Etc., Who Have Formed Trusts, Etc. Penalty Tor. 
 
 570. If any person, or employe or employes, or agent or agents, 
 stockholder or stockholders, officer or officers, of any person, firm, asso- 
 ciation of persons or corporation, now doing business in this State, 
 who has formed a trust as defined in this chapter, or formed a monopoly 
 as defined in this chapter, or has formed a conspiracy in restraint of 
 trade, as defined in this chapter, or shall do or perform any act of any 
 character to carry out such trust, monopoly or conspiracy in restraint 
 of trade, such person, employe or employes, agent or agents, stockholder 
 or stockholders, officer or officers, shall be punished by confinement in 
 the penitentiary for not less than two years nor more than ten years. 
 (P. C., Art. 1473.) 
 
 Criminal Prosecution in Travis County Must Not Sell for Less Than 
 Cost of Production. 
 
 571. Criminal prosecutions under this chapter may be conducted in 
 Travis county, Texas, or in any county in this State .wherein a trust, 
 monopoly or conspiracy in restraint of trade is being carried on, a re- 
 covery or prosecution against any person for any violation of this act, 
 shall not bar a prosecution of or recovery against any other person or 
 persons for the same offense. (P. C., Art. 1474.) 
 
 Prosecutions in Any County Must Notify the Attorney General. 
 
 572. Prosecutions under this chapter may be instituted and prose- 
 cuted by any county or district attorney of this State, and when any 
 such prosecutions have been instituted by any county or district attor- 
 
INSURANCE LAWS OF TKN\-. 211 
 
 ney, such officer shall forthwith notify the Attorney General of such 
 fact; and it is hereby made the duty of the Attorney General, when he 
 shall receive such notice, to join such officer in such prosecution and 
 do all in his power to secure the enforcement of this chapter. (P. C., 
 Art. 1475.) 
 
 For Every Conviction the State to Pay the District or County Attorney 
 Fees Divided, When. 
 
 573. For every conviction obtained under the provisions of this 
 chapter the State shall pay to the county or district attorney in such 
 prosecution the sum of $250, and if both the county and district attor- 
 ney shall serve together in such prosecution, such fee shall be divided 
 between them as follows: $100 to the county attorney and $150 to the 
 district attorney. (P. C., Art. 1476.) 
 
 CHAPTER XXV. 
 
 REGULATING THE BUSINESS OF INSURANCE ISSUED ON LLOYDS PLAN. 
 
 Declaring Who May Make Any Insurance Except Life Insurance on 
 Lloyds Plan. 
 
 574. That individuals, partnerships or associations ot individuals, 
 hereby designated "underwriters" are authorized to make any insurance, 
 except life insurance, on the Lloyds plan, by executing articles of agree- 
 ment expressing their purpose so to do and complying with the require- 
 ments set forth in this Act. (Acts 37th Leg., Chap. 127, Sec. 1.) 
 
 Attorney in Fact May Execute for Underwriters Articles of Agreement 
 Designates His Place of Office. 
 
 575. That policies of insurance may be executed by an attorney in 
 fact or other representatives, hereby designated "attorneys" authorized 
 by and acting for such underwriters under powers of attorney. The 
 principal office of such attorney shall be maintained at such place as 
 may be designated by the underwriters in their articles of agreement. 
 (Acts 37th Leg., Chap. 127, Sec. 2.) 
 
 Requisites of Application for License to Be Filed by Attorney. 
 
 576. The attorney shall file with the Commissioner of Insurance and 
 Banking a verified application for license setting forth and accom- 
 panied by: 
 
 (a) The name of the attorney and the title under which the busi- 
 ness is to be conducted, which title shall contain the name Lloyds and 
 shall not be so similar to any name or title in use in this State as to be 
 likely to confuse or deceive. 
 
 (b) The location of the principal office. 
 
 (c) The kind or kinds of insurance to be effected, which kinds of 
 insurance may be as follows : 
 
 1. Fire insurance, which term shall be construed to include tornado, 
 hail, crop and floater insurance. 
 
 2. Automobile insurance, which term shall be construed to include 
 
212 INSURANCE LAWS OF TEXAS. 
 
 fire, theft, transportation, property damage, collision, liability and 
 tornado. 
 
 3. Liability insurance. 
 
 4. Marine insurance. 
 
 5. Accident and health insurance. 
 
 6. Burglary and plate glass insurance. 
 
 7. Fidelity and surety bonds insurance. 
 
 8. Any other kind or kinds of insurance, not above specified, the 
 making of which is not otherwise unlawful in this State, except life 
 insurance. 
 
 (d) A copy of each form of policy or contract by which such in- 
 surance is to be effected. 
 
 (e) A copy of the form of power of attorney by virtue of which 
 the attorney is to act for and bind the several underwriters and a copy 
 of the articles of agreement entered into between the underwriters them- 
 selves and the attorney. 
 
 (f) The names and addresses of all underwriters, whose number 
 shall not be less than ten. 
 
 (g) A financial statement showing in detail the assets and liabili- 
 ties accumulated and incurred and the income and disbursements re- 
 ceived and made by the attorney for the underwriters. 
 
 (h) An instrument executed by each and all of the underwriters 
 specially empowering the attorney to accept service of process for each 
 underwriter in any action on any policy or contract of insurance, and 
 an instrument from the attorney to the Commissioner of Insurance 
 and Banking delegating the attorney's powers in this respect to the 
 Commissioner of Insurance and Banking. (Acts 37th Leg., Chap. 127, 
 Sec. 3.) 
 
 License Fee. 
 
 577. That upon compliance with the requirements of this act, and 
 upon a showing of assets as provided in Section 5 hereof the Commis- 
 sioner of Insurance and Banking shall, upon payment of a fee of ten 
 ($10.00) dollars issue a license to any attorney applying therefor speci- 
 fying the kind or kinds of insurance which he is authorized to make 
 and containing the name of the attorney, the location of his principal 
 office, and the title under which such business of insurance is to be con- 
 ducted. Such license shall continue in force until surrendered by the 
 attorney or revoked or suspended by the Commissioner of Insurance and 
 Banking as authorized by this act. (Acts 37th Leg., Chap. 127, Sec. 4.) 
 
 Net Assets, Including- the Guarantee Fund, Must Be at Least $40,000 
 If More Than Two Kinds of Insurance Are Transacted, Net Assets 
 Must Be $10,000 Additional for Each Additional Kind of Insurance; 
 if Net Assets Amount to $100,000 Any Kind May Be Written Except 
 Life Insurance. 
 
 578. That no attorney shall be licensed for the underwriters at a 
 Lloyds under this act, unless the net assets, including the guarantee 
 fund provided for in the articles of agreement, held by the attorney, 
 committee of underwriters, trustee or other officer, as provided for in 
 the articles of agreement, shall be at least forty thousand ($40,000.00) 
 dollars in cash or convertible securities; nor shall any attorney be 
 
INSURANCE LAWS OF TEXAS. 213 
 
 licensed for the underwriters at a Lloyds to transact more than two kinds 
 of insurance as defined in Section 3 hereof, unless the net assets as 
 above defined and held shall be as much as ten thousand ($10,000.00) 
 dollars additional for each additional kind of insurance designated in 
 the application for license; provided that if the underwriters have net 
 assets as above described in an amount equal to one hundred thousand 
 ($100,000.00) dollars, they may write any kind of insurance that may 
 be lawfully written in this State except life insurance. If the Com- 
 missioner of Insurance and Banking shall find upon any examination 
 of a Lloyds that the net assets as above defined are less than the amount 
 required, the impairment shall be made good within thirty days from 
 the service of a requisition for that purpose by the Commissioner of In- 
 surance and Banking upon the attorney for the underwriters. If any 
 such attorney or other person shall make any advancement to make good 
 any such impairment, the claim for the same against the assets of the 
 underwriters shall- be deferred to claims for losses under policies or con- 
 tracts of insurance. (Acts 37th Leg., Chap. 127, Sec. 5.) 
 
 Shall Be Subject to Examination. 
 
 579. That the Commissioner of Insurance and Banking may make 
 examinations of the books and affairs of any attorney for underwriters 
 at a Lloyds, the expense of any such examination to be borne by the 
 underwriters and the attorney and his deputies shall facilitate such 
 examinations and furnish all information which the Commissioner of 
 Insurance and Banking may reasonably demand. The Commissioner 
 of Insurance and Banking may revoke or suspend the license of any 
 attorney in case of breach of any of the conditions imposed by this act 
 and upon reasonable notice in writing to the attorney so that he may 
 appear and show cause why such license should not be revoked or sus- 
 pended. (Acts 37th Leg., Chap. 127, Sec. 6.) 
 
 Additional or Substituted Underwriters Bound Same as Original Sub- 
 scribers. 
 
 580. That additional or substituted underwriters shall be bound in 
 the same manner and to the same extent as though they had been orig- 
 inal subscribers to the articles of agreement and power of attorney on 
 file with the Commissioner of Insurance and Banking; and that the 
 acts of the duly appointed deputy or substitute attorney of any attorney 
 licensed under this act in accepting powers of attorney from under- 
 writers and in making and issuing policies and contracts of insurance 
 and in doing any additional acts incident thereto shall be deemed au- 
 thorized by the license issued to the original attorney. (Acts 37th Leg., 
 Chap. 127, Sec. 7.) 
 
 No Attorney Shall Assume Any One Insurance Risk Exceeding One-fifth 
 of the Amount of the Net Assets. 
 
 581. That no attorney for underwriters at a Lloyds shall assume 
 any one insurance risk exceeding one-fifth of the amount of the net 
 assets of the underwriters as above defined and the additional liability 
 assumed by the individual underwriters in the articles of agreement and 
 in the policies or contracts of insurance, unless such excess shall be 
 promptly reinsured. (Acts 37th Leg., Chap. 127, Sec. 8.) 
 
214 INSURANCE LAWS OF TEXAS. 
 
 How Action May Be Brought; Service May Be Made on the Commissioner 
 of Insurance and Banking; Fee for Such Service. 
 
 582. That action on any policy or contract of insurance made by 
 the attorney for the underwriters may be brought against the attorney 
 or against the attorney and the underwriters or any of them. In such 
 action, summons and process shall be served on the Commissioner of 
 Insurance and Banking or on the attorney in fact and when so served 
 shall have the same force and effect as if served on the attorney and on 
 each underwriter personally. A judgment in any such action against 
 the attorney or against any of the underwriters shall be binding upon 
 and be a judgment against each and all of the underwriters as their 
 several liabilities may appear in the contract of insurance on which the 
 action is brought. 
 
 Whenever any summons or other process is served on the Commissioner 
 of Insurance and Banking the same shall be served in duplicate and the 
 Commissioner of Insurance and Banking shall forthwith by registered 
 mail send one copy of the summons or other process to the attorney for 
 the underwriters at the principal office designated in the application 
 for license or latest amendment thereof. The party commencing any 
 such action against the underwriters at a Lloyds and securing service 
 of process in this manner shall at the time of such service pay to the 
 Commissioner of Insurance and Banking for the use of the Department 
 a fee of two ($2.00) dollars, which he shall be entitled to collect as 
 taxable costs in the action if he shall prevail. (Acts 37th Leg., Chap. 
 127, Sec. 9.) 
 
 Commissioner of Insurance and Banking May Revoke or Suspend Cer- 
 tificate of Authority Upon the Violation of This Act; Penalty for 
 Operating Without Complying With This Act. 
 
 583. That all such underwriters, their attorneys, agents and repre- 
 sentatives transacting the business of insurance in this State on the 
 Lloyds plan shall be governed and regulated by the provisions of this 
 act and upon violation of any of the provisions hereof the Commissioner 
 of Insurance and Banking may revoke or suspend any license or cer- 
 tificate of authority issued under the provisions of this act, and any 
 person who, as principal attorney, agent, broker or other representative, 
 shall engage in the business contemplated by this act, or any variety or 
 part thereof, without complying with the requirements hereof, or who 
 shall violate any of its provisions, shall be deemed guilty of a mis- 
 demeanor and upon conviction shall be fined in an amount not exceeding 
 five hundred ($500.00) dollars. (Acts 37th Leg., Chap. 127, Sec. 10.) 
 
 No Other Insurance Law of This State Shall Apply Unless Specifically so 
 Provided. 
 
 584. That except as herein provided no other insurance law of this 
 State shall apply to insurance on the Lloyds plan unless it is specifically 
 so provided in such, other law that the same shall be applicable. (Acts 
 37th Leg., Chap. 127, Sec. 11.) 
 
INSURANCE LAWS OF TEXAS. 215 
 
 CHAPTER XXVI. 
 
 CO-OPERATIVE SAVINGS AND CONTRACT LOAN COMPANIES. 
 
 May Be Organized Shall File Certified Copy of Charter. 
 
 585. Co-operative savings and contract loan institutions organized 
 under the general corporation laws of this State in the manner therein 
 provided, and all such institutions as may be organized hereafter, shall 
 file certified copy of the charter issued to such companies by the Secre- 
 tary of State with the Commissioner of Insurance and Banking. (Sec. 1, 
 Chap. 5, 1st Called Session, 34th Leg.) 
 
 Note. Any corporation, whether organized in this State or elsewhere, whose 
 purposes include the issuance of what are ordinarily classed as contract saving 
 certificates, whose character or plan is similar to the stock of a building and 
 loan association, whereby the subscribers pay or deposit installments at stated 
 intervals until the maturity of such contract or certificates comes within the 
 operation of Chapter 5, Acts of the First Called Session, Thirty-fourth Legis- 
 lature, it being also Chapter 25, Title 25, of Complete Texas Statutes. (Opinion 
 of Attorney General, June 21, 1921.) 
 
 Commissioner Has Supervision. 
 
 586. All such corporations shall be under the supervision and con- 
 trol of the Commissioner of Insurance and Banking, and it shall be his 
 duty, at least once every twelve months to cause the books of such cor- 
 poration to be examined, the expense of such examination to be paid by 
 such corporations in the same manner as now required by law for the 
 examination of insurance companies. (Sec. 2, Chap. 5, 1st Called Ses- 
 sion 34th Leg., as amended by Chap. 45, 4th Called Session, 35th Leg.) 
 
 Capital Stock How Paid. 
 
 587. The capital stock of all such institutions hereafter organized 
 shall not be less than twenty-five thousand dollars, and not less than 
 one-half of the capital stock must be paid in in actual currency, bank 
 notes, or certified checks; while the remainder may be paid in deferred 
 payments, payable in equal or greater installments annually; for a 
 period of time not exceeding two years ; but the deferred payments must 
 be evidenced by the subscriber's note secured by the paid-up stock cer- 
 tificates issued him equal in amount to his deferred payments and by 
 collateral equal to said amount of such character as the corporation 
 shall have the right to invest its funds in, which said notes of the sub- 
 scriber and the collateral attached thereto must be examined and ap- 
 proved by the Commissioner of Insurance and Banking and certified by 
 him to be ample and sufficient. (Sec. 3, Chap. 5, 1st Called Session, 
 34th Leg.) 
 
 Note. A corporation of this kind having been organized more than two years 
 must show its entire capital stock to have been fully paid in money. (Opinion 
 of Attorney General, June 21, 1921.) 
 
 Powers and Authority. 
 
 588. Corporations chartered hereunder shall have all the powers of 
 building and loan associations chartered under the laws of this State 
 and in addition shall have authority to engage in the business of issuing 
 
216 INSURANCE LAWS OF TEXAS. 
 
 contracts or agreements, whether in the nature of bonds, debentures, 
 certificates, or otherwise, providing for the redemption or for the ful- 
 filling of such contracts or agreements by the accumulation of a fund 
 or funds by the contributions made by a subscriber to or to the holders 
 of such contracts or agreements; or providing for the maturing or ful- 
 filling of such contracts or agreements in the order of their issue or in 
 series or in some other fixed or arbitrarily determined order or manner; 
 or providing for the payment of moneys or the granting or giving of 
 any consideration of any money or personal property, real or mixed, 
 greater in value or represented to be greater in value than the amount 
 paid in upon such contracts or agreements, together with the actual net 
 earnings accrued and accumulated thereon ; or providing for the loaning 
 of the funds contributed by the subscribers to or the holders of such 
 contracts or agreements to such subscribers or holders in any fixed or 
 arbitrarily determined order or manner; or for the making of loans or 
 advance from such funds to or for such subscribers or holders to be 
 repaid in installments; and shall have the right to place or sell bonds, 
 certificates or debentures on the partial payment or installment plan 
 (Sec. 4, Chap. 5, 1st Called Session, 34th Leg.) 
 
 Investment of Capital Shall Make Deposits With Commissioner. 
 
 589. All corporations hereafter chartered shall invest not less than 
 thirty-three and one-third per cent of its capital stock in securities of 
 the kinds in which by law it is permitted to invest or loan its funds and 
 shall deposit the same with the Commissioner of Insurance and Banking 
 for the common benefit of all the holders of all contracts issued by it. 
 All savings and contract loan companies as herein defined shall keep on 
 deposit with the Commissioner of Insurance and Banking at all times 
 an amount equal to the legal reserve required by this act on all its out- 
 standing contracts, which amount shall be either in cash or in such 
 securities as it is permitted by law to invest in ? which said deposit of 
 capital stock and reserve securities shall be held by the said Commis- 
 sioner in trust for the common benefit of all the holders of contracts 
 issued by such corporations. Any such company may deposit the law- 
 ful money of the United States in lieu of the securities above referred 
 to or any portion thereof and may also for the purpose of such deposit 
 convey to said Commissioner in trust the real estate in which any por- 
 tion of said capital or reserve may be lawfully invested, and in such case 
 said Commissioner shall hold the title thereto in trust until other securi- 
 ties in lieu thereof shall be deposited with him, whereupon he shall re- 
 convey the same to such company; said Commissioner may cause any 
 such securities or real estate to be appraised and valued prior to their 
 being deposited with or conveyed to him in trust as aforesaid ; the reason- 
 able expense of which is to be paid by the company. (Sec. 5, Chap. 5, 
 1st Called Session, 34th Leg.) 
 
 Commissioner Shall Certify Registration of All Contracts. 
 
 590. All contracts issued by any such company shall have upon their 
 face a certificate substantially in the following words: "This contract 
 is registered, and approved securities equal in value to the legal reserve 
 hereon are held in trust by the Commissioner of Insurance and Banking 
 
INSURANCE LAWS OF TEXAS. 217 
 
 of the State of Texas," which certificate shall be signed by the Com- 
 missioner and sealed with the seal of his office. (Id.) 
 
 All Contracts Shall Be Approved and Marked for Identification. 
 
 591. All contracts, whether bonds, debentures, or whatsoever form 
 or class, shall be first submitted to the Commissioner of Insurance and 
 Banking before their issuance and be approved by him as fair to the 
 purchaser thereof, to the corporation and to its stockholders, and .shall 
 have printed thereon some appropriate designating letter or figure, com- 
 bination of letters or figures or terms identifying the particular form 
 of contract, together with the year of the adoption of such form, and 
 whenever any change or modification is made in the form of contract, 
 the designating letters, figures or terms and year of adoption shall be 
 correspondingly changed. (Sec. 5, Chap. 5, 1st Called Session, 34th 
 Leg.) 
 
 Commissioner Shall Register Contracts and Make Annual Valuation of 
 Same. 
 
 592. The Commissioner of Insurance and Banking shall prepare and 
 keep such registers thereof as will enable him to commute the value of 
 such contracts at any time. Upon written proof, attested by the presi- 
 dent or vice-president and secretary -of the company which shall have 
 issued such contracts that any of them have been commuted or termi- 
 nated, the Commissioner shall commute or cancel them upon his register, 
 and until such proof is furnished, all registered contracts sjiall be con- 
 sidered in force for the purpose of this act. The net value of every 
 contract according to the standard prescribed herein for the valuation 
 of such contracts, when the first installment shall have been paid thereon, 
 less the amount of such liens as the company may have against it (not 
 exceeding such value) shall be entered opposite the records of each con- 
 tract in the register aforesaid at the time such record is made. On the 
 first day of January of each year, or within sixty days thereafter, the 
 Commissioner shall cause the contracts of each company chartered here- 
 under or operating hereunder to be carefully valued, and the actual value 
 thereof at the time fixed for such valuation, less such liens as the com- 
 pany may have against it, not exceeding such valuation, shall be entered 
 upon the register opposite the record of such policy or bond, and the 
 Commissioner shall furnish a certificate of the aggregate of such val- 
 uation. (Id.) 
 
 Additional Deposits Shall Be Made and the Amount on Deposit Shall 
 Always Be Equal to the Value of the Contracts. 
 
 593. Each company shall make additional deposits from time to 
 time, in amounts of not less than one thousand dollars, and of such 
 securities as are permitted by this act to be deposited, so that the market 
 value of the securities deposited shall always be equal to the net value 
 of the contracts issued by said company, less such items as the company 
 may have against them not exceeding such net value. So long as any 
 company shall maintain its deposit as herein prescribed at an amount 
 equal to or in excess of the net value of its contracts, it shall be the 
 duty of the Commissioner to sign and affix his seal to the certificate 
 
218 INSURANCE LAWS OF TEXAS. 
 
 before mentioned on every contract presented to him for that purpose 
 by any such company. (Id.) 
 
 Company May Increase or Withdraw Deposits. 
 
 594. Any company depositing under the provisions of this act may 
 increase its deposits at any time by making additional deposits of not 
 less than one thousand dollars of such securities as are authorized by 
 this chapter. Any such company whose deposits exceed the net value 
 of the contracts which it has in force, less its liens thereon (not exceed- 
 ing such value) may withdraw such excess and it may withdraw such 
 securities at any time by depositing others of equal value and of the 
 character authorized by this act in their stead, and it may collect in- 
 terest, coupons, rents, and other income on the securities deposited, as 
 the same accrues. (Id.) 
 
 How and Where Securities Shall Be Kept. 
 
 595. The securities deposited under this act shall be placed and kept 
 by the Commissioner of Insurance and Banking of the State in some 
 secure, safety deposit fireproof box or vault in the city or town in or 
 near the home office of the company, and the officers of the company 
 shall have access to such securities for the purpose of detaching interest 
 coupons and crediting payments and exchanging securities as above 
 provided, under such reasonable rules and regulations as the Commis- 
 sioner may establish. (Id.) 
 
 Fees for Placing Certificate of Commissioner on Contracts and Disposition 
 of Same. 
 
 596. Every company making deposit under the provisions of this 
 act shall pay to the Commissioner of Insurance and Banking for each 
 certificate placed on such contracts a fee of ten cents, and the fee so 
 received shall be disposed of by the said Commissioner as follows: 
 
 (1) The payment of the rent or hire of the safety deposit fireproof 
 box as above provided. 
 
 (2) Payment of the services of a competent and reliable represent- 
 ative of said Commissioner to be appointed by him, who shall have 
 direct charge of the securities and the safety deposit containing same, 
 and through whom and under whose supervision the company may have 
 access to the securities for the purpose above provided. The sum paid 
 such representative shall not exceed the sum of one hundred dollars 
 per annum for each such company. 
 
 (3) The balance of such fees shall be paid to or be deposited with 
 the State Treasurer to the credit of the general fund. (Sec. 7, Chap. 5, 
 1st Called Session, 34th Leg.) 
 
 Securities in Which Capital Is Invested May Be Included in Reserve De- 
 posit Deposits Shall Be Increased as Reserves Increase Company 
 Cannot Pay Commissions to Officers for Writing Contract. 
 
 " 597. Any company chartered hereunder may include as a part of its 
 reserve deposits the remaining of its capital stock, if the same has been 
 paid in and invested in such securities as such company is permitted by 
 law to invest in. Deposits of securities hereunder to the value of the 
 reserve on all outstanding contracts shall be added to and maintained 
 
INSURANCE LAWS OF TEXAS. 21'J 
 
 from time to time as the reserve values increase, by the company issuing 
 such contracts, or by any company which may assume them, and such 
 securities shall be held by the Commissioner and his successors in office 
 in trust for the benefit of such contracts as long as they shall remain 
 in force. No company chartered hereunder shall pay or contract to 
 pay, directly or indirectly, to its president, vice-president, secretary, 
 treasurer or actuary, any commission or compensation contingent upon 
 the writing of contracts or upon the continuous payment of installments 
 upon such contracts, and should any company violate the provisions of 
 this section, .it shall be the duty of the Commissioner of Insurance and 
 Banking to revoke its certificate of authority to transact business until 
 such illegal contract has been abrogated and all funds paid thereunder 
 paid into the company. (Sec. 8, Chap. 5, Acts 1st Called Session, 34th 
 Leg.) 
 
 Officers Shall Give Bond. 
 
 598. All officers of the company having charge or through whose 
 hands pass any funds or securities of any such company shall give bond 
 to the company in the form approved by the Commissioner of Insurance 
 and Banking, and in such amount as may be fixed by the board of direc- 
 tors to be not less than five per cent of the capital stock of any such 
 corporation and in no event less than one thousand dollars. (Id.) 
 
 By-Laws, Contract Forms and Advertising 1 Matter Shall Be Approved by 
 the Commissioner of Insurance and Banking. 
 
 599. The by-laws, all forms of contracts and all literature in circular 
 or permanent form, which undertake to state the benefits and advantages 
 of the contract to the investor or holder thereof, shall be first submitted 
 to the Commissioner of Insurance and Banking for his examination and 
 approval before such advertisements are promulgated and before such 
 contracts are issued. 
 
 If the Commissioner of Insurance and Banking shall approve such 
 literature or contracts, then the same may be thereafter issued and sold. 
 If he should disapprove the same, such company may institute a proceed- 
 ing in any court of competent jurisdiction and venue to review his action 
 thereon. (Sec. 9, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Impairment of Capital Forfeits Authority to Do Business Receiver May 
 Be Appointed. 
 
 600. Any such company chartered hereunder whose capital stock 
 shall become impaired to the extent of thirty-three and one-third per 
 cent thereof, computing its liabilities according to the terms of this act, 
 shall make good such impairment within sixty days by reduction of its 
 capital stock or otherwise, provided its capital stock may never be re- 
 duced below the minimum required by this act, and failure to make good 
 such impairment within said time shall forfeit its right to write new 
 business in this State until such impairment shall have been made good ; 
 and provided that the Commissioner of Insurance and Banking may 
 apply to any court of competent jurisdiction for the appointment of a 
 receiver to wind up the affairs of the company when its capital stock 
 shall become impaired to the extent of fifty per cent, provided also that 
 its affairs may be placed in the hands of a receiver by the Commissioner 
 
220 INSURANCE LAWS OF TEXAS. 
 
 and by the State, acting through the Attorney General, when its assets 
 shall not equal its liabilities, in which shall be included its outstanding 
 debts, and its contract reserves, plus fifty per cent of its capital stock. 
 
 (id.) 
 
 Company Must Have Certificate of Authority to Do Business. 
 
 601. No foreign or domestic company shall transact ' business under 
 this act unless it shall first procure from the Commissioner of Insurance 
 and Banking a certificate of authority stating that the requirements of the 
 laws of this State have been fully complied with by it and authorizing 
 it to do business in this State. Such certificate of authority shall expire 
 on the last day of February in each year and shall be renewed annually 
 so long as the company shall continue to comply with the laws of the 
 State, such renewals to be granted upon the same terms and conditions 
 as the original certificate. (Sec. 10, Chap. 5, Acts 1st Called Session, 
 34th Leg.) 
 
 Requisites for Obtaining Authority to Do Business. 
 
 602. In order to obtain a certificate of authority the corporation 
 must deposit with the Commissioner certified copy of its articles of asso- 
 ciation or incorporation, its by-laws, and the detailed statement of its 
 plans for doing business, together with copies of all contracts and agree- 
 ments proposed to be used in the conduct of its business. It shall be 
 the duty of the Commissioner to investigate and thoroughly examine 
 into all such matters and if he finds that the law has been complied with 
 and that the business proposed to be done is not in conflict with laws 
 and Constitution of this State, he shall grant a certificate authorizing 
 such corporation to do business and such contracts and plans so sub- 
 mitted and approved shall not in any manner be changed or altered until 
 the portion changed is submitted to and approved by the Commissioner. 
 (W.) 
 
 Contract May Be Surrendered and Cancelled for Cash or Paid Up Cer- 
 tificate. 
 
 603. No contract or agreement by any corporation chartered or doing 
 business hereunder shall be forfeited for non-payment but upon a failure 
 to pay upon the same according to the terms thereof for a period of 
 three months, the same may be cancelled and the holder thereof shall be 
 credited with all payments made to the reserve fund as provided in Sec- 
 tion 12 hereof and such payments and such credit shall be payable to 
 the holder in cash or paid-up certificate within sixty days thereafter at 
 the option of the holder provided he surrenders at the time of demand 
 such cancelled contract or agreement. (Sec. 11, Chap. 5, Acts 1st 
 Called Session, 34th Leg.) 
 
 Conditions Under Which Contract May Be Withdrawn Before Maturity. 
 
 604. The holder of any contract issued hereunder may withdraw the 
 same at any time upon ninety days written notice and shall be entitled 
 to receive thereafter on demand the full amount paid into the 3aid loan 
 or reserve fund, provided six consecutive monthly payments of dues 
 have been paid on the contract, in addition to the purchase price of said 
 
INSURANCE LAWS OF TEXAS. 221 
 
 contract, less 15 per cent if the same is withdrawn after six months and 
 before twelve months. If the same is withdrawn after one year and 
 before two years after date the amount paid into the loan and reserve 
 fund less ten per cent of such amount, and if withdrawn after two years 
 and before three years after the date hereof he shall receive the full 
 amount paid into said reserve fund, less five per cent, and if withdrawn 
 after three years after date hereof, he shall receive the full amount paid 
 into said reserve fund, together with three per cent interest thereon; 
 provided that the certificate holder may at his option accept a paid-up 
 certificate of contract for the amount to the credit of the contract in 
 the reserve fund, plus three per cent interest to the date of withdrawal, 
 which certificate shall bear five per cent annual interest, and be payable 
 not later than the maturity date of the original contract. (Sec. 12, 
 Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Note.^A savings and contract loan company has a provision in its contract 
 issued to its customers to the effect that when a member has paid the required 
 installments for six consecutive months, he shall be entitled to receive a loan 
 out of the loan or trust fund, provided his contract has been reached and funds 
 accumulated for a loan in its regular numerical order, and if such funds are 
 accumulated prior to 15 per cent of the face value of the contract having been 
 paid thereon, the member shall have the right, at his option, to advance the 
 difference required to make up said 15 per cent, and immediately secure the loan. 
 In connection with the provision, if a company has on hand more than $250,000, 
 this would indicate that the operation of such contracts does not enable the 
 members to procure loans as rapidly as the funds accumulate and in accordance 
 with the privileges guaranteed them, or the members are not making applica- 
 tions for loans with ordinary rapidity. Such a condition would indicate that a 
 different form of contract should be used. (Opinion of Attorney General, August 
 8, 1921.) 
 
 Liabilities of Contracts and Expense Deduction Denned. 
 
 605. The liabilities of the contracts issued by any corporation trans- 
 acting business hereunder shall at all times be the amount paid into 
 the loan or reserve fund, together with interest at the rate of three per 
 cent per annum thereon, less sixteen and two-thirds per cent paid to loan 
 or reserve fund, which may be deducted for expenses, to become the 
 actual property of the corporation, eighty-three and one-third per cent 
 of amount paid into loan or reserve fund, together with three per cent 
 thereon shall constitute the certificate or contract reserve of the company, 
 which must be invested in approved securities to be deposited with the 
 Commissioner of Insurance and Banking as herein provided. The six- 
 teen and two-thirds per cent of all sums collected and here referred to as 
 the expense deduction shall become the absolute property of the corpora- 
 tion, and shall be carried on its books as an expense and profit deduction. 
 Provided, however, that any corporation may require the payments into 
 the expense fund before any amount shall be paid into the reserve fund 
 of a loaning charge of not exceeding two and four-tenths per cent of the 
 face of the loan value of the contract as the expense of selling and book- 
 ing the contract. (Sec. 13, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Dividends Must Be Paid From Surplus Profits Only Penalty for Viola- 
 tion of This Requirement. 
 
 606. It shall not be lawful for any company organized hereunder to 
 make any dividends, except from surplus profits arising from its busi- 
 
222 INSURANCE LAWS OF TEXAS. 
 
 ness, and in estimating such profits there shall be reserved therefrom the 
 lawful reserve on all unexpired contracts, and also the amount of all 
 unpaid withdrawals or cancelled certificates and all other debts due and 
 payable or to become due and payable by the company. Any dividends 
 made contrary to the provisions of this article shall subject the company 
 making them to a forfeiture of its charter, and the Commissioner of 
 Insurance and Banking shall forthwith revoke its certificate of author- 
 ity; provided, that he shall give such company at least ten days notice 
 in writing of his intention to revoke such certificate, stating specifically 
 the reason why he intends to revoke the same. (Sec. 14, Chap. 5, Acts 
 1st Called Session, 34th Leg.) 
 
 Securities in Which Funds of Company May Be Invested. 
 
 607. Corporations chartered hereunder shall invest their funds in 
 the following and no other way : 
 
 (1) If building or loan association, in such manner and in such 
 property as building and loan associations are permitted to invest their 
 funds under the building and loan laws of this State. 
 
 (2) In the purchase of lands or building lots and erecting build- 
 ings and improvements thereon, or in the purchase of lands and improve- 
 ments, shall be or be contracted to be sold to a certificate holder of the 
 company, payable by the periodical contribution of the certificates of the 
 association or in periodical installments of such period of time as shall 
 be agreed upon and designated in the by-laws of the company; at the 
 expiration of which term all payments having been made, the lands, 
 dwelling and improvements so sold and conveyed to such certificate 
 holder shall become the property of the grantee discharged from further 
 payment. 
 
 (3) In loans to certificate holders- on bonds secured by mortgage 
 which shall be a first lien on real estate located in the State where the 
 contract holder resides at the time such contract is issued and not to 
 exceed sixty-five per cent of the cash value thereof, payable in certifi- 
 cates of the company or by periodical installments; except where any 
 company holds a mortgage on real estate which is a first lien, such com- 
 pany may increase its loan thereon and secure the same by a second or 
 subsequent mortgage; provided, the total indebtedness to the company, 
 less the amount paid on certificates pledged for such loan shall not 
 exceed sixty-five per centum of the cash value of the real estate loaned 
 on and all mortgages held by such company shall be prior to any other 
 incumbrance on said real estate. 
 
 (4) In the redemption of certificates or contracts of the company. 
 
 (5) In loans upon the pledged or collateral security of the certifi- 
 cates or contracts of the company not to exceed ninety per cent of the 
 withdrawal value of such contracts. 
 
 (6) In loans to persons not certificate holders without pledge or 
 their contracts as collateral security, on bonds secured by mortgage which 
 shall be a first lien on improved real estate in this 'State not to exceed 
 two-thirds of the cash value thereof; provided, however, a purchase 
 money mortgage or vendor's lien given to any company upon real estate 
 sold by it shall not be considered a loan within the meaning of this 
 subdivision. 
 
 (7) In the purchase, so long as the present war between the United 
 
INSURANCE LAWS OF TEXAS. 223 
 
 States of America and the Imperial Government of Germany shall con- 
 tinue, of liberty bonds issued by the United States Congress and in such 
 short time certificates of indebtedness as may have been heretofore or 
 as may hereafter be authorized by the United States Congress. (Sec. 
 15, Chap. 5, Acts 1st Called Session, 34th Leg., as amended by Chap. 
 45, Acts 4th Called Session, 35th Leg.) 
 
 May Invest in Such Securities as Life Insurance Companies May In- 
 vest in. 
 
 608. Corporations chartered hereunder may invest in or loan upon 
 any of the securities in which life insurance companies are permitted to 
 invest in or loan upon in accordance with the terms and provisions of 
 Article 4734, Revised Civil Statutes, 1911. (Sec. 16, Chap. 5, Acts 1st 
 Called Session, 34th Leg.) 
 
 Note. Where a savings and contract loan company invests its funds in notes 
 or bonds secured by a first lien on real estate and where such security consists 
 in part of improvements insured against fire, such fire insurance in amount need 
 not be in excess of an amount sufficient to cover the loan and all incidental lia- 
 bility. (Opinion of Attorney General, July 19, 1921.) 
 
 Purchases and Loans Shall Be Made Only Upon Report of Loan Com- 
 mittee. 
 
 609. No real estate shall be purchased by any such company or any 
 loan made upon bond and mortgage except upon a report in writing of 
 the loan committee of such corporation signed by them, certifying to 
 the kind and quality, and value of the real estate in question to the best 
 of their judgment; such report shall be filed and preserved among the 
 records of the company and any stockholder shall have access to such 
 reports. (Sec. 17, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 How Property of Company Shall Be Rendered for Taxation. 
 
 610. Corporations chartered hereunder shall be required to render 
 for State, county and municipal taxation all of their real estate as other 
 real estate is rendered, and all of the personal property of such company 
 shall be valued as other property is valued for assessment in this State 
 in the following manner: From the total valuation of its assets shall 
 be deducted the reserve, being the amount of the debts of such com- 
 pany by reason of its outstanding certificates or contracts, and from the 
 remainder shall be deducted the assessed valuation of all the real estate 
 owned by the company and the then remainder shall be the assessed 
 taxable valuation of its personal property. For the purpose of State, 
 county and municipal taxation, the sites of all personal property be- 
 longing to such companies shall be at the home office of. such company. 
 (Sec. 18, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Annual Report Required of Foreign Company. 
 
 611. Any corporation having authority to transact the business per- 
 mitted by this act incorporated under the laws of any other State, ter- 
 ritory or country desiring to transact such business in this State, shall 
 furnish the Commissioner of Insurance and Banking with a written or 
 printed statement under oath of the president or vice-president or treas- 
 urer and secretary of such company, which shall show: 
 
224 INSURANCE LAWS OF TEXAS. 
 
 (a) The name and locality of the company. 
 
 (b) The amount of its capital stock. 
 
 (c) The amount of its capital stock paid up. 
 
 (d) The assets of the company., including: 
 
 (1) The amount. of cash on hand and in the hands of other persons, 
 naming such persons and their residences. 
 
 (2) Real estate income, where situated and its value. 
 
 (3) The bonds owned by the company and how they are secured 
 and the rate of interest thereon. 
 
 (4) Debts due the company secured by mortgage, describing the 
 property mortgaged and the market value. 
 
 (5) Debts otherwise secured stating how secured. 
 
 (6) Debts due or to become due on certificates oT contracts. 
 
 (7) All other moneys and securities. 
 
 (e) Amount of liabilities of the company, stating the name of the 
 person or corporation to whom liable. 
 
 (f) Contracts surrendered or cancelled and unliquidated and all 
 other matters of liability in suspense. 
 
 (g) Provided, however, that the Commissioner of Insurance and 
 Banking may require other additional facts to be shown by such state- 
 ment. The same character of statement shall be made annually and 
 each company shall be required to file a similar statement not later than 
 March 1st of each year. (Sec. 19, Chap. 5, Acts 1st Called Session, 34th 
 Leg.) 
 
 Other Papers Required to Be Filed by Foreign Companies. 
 
 612. Such foreign company shall accompany such statement with a 
 certified copy of its articles of incorporation, of all amendments thereto, 
 and a copy of its by-laws, together with the name and residence of each 
 of its officers and directors, all of which must be certified to under the 
 hand of the president or secretary of such corporation; he shall also 
 furnish copies of its contracts and a detailed statement of its plans for 
 doing business in the same manner that these are required to be fur- 
 nished by domestic companies. (Sec. 20, Chap. 5, Acts 1st Called Ses- 
 sion, 34th Leg.) 
 
 Capital Stock and Deposits of Foreign Companies. 
 
 613. Such foreign company must as to its capital stock be in con- 
 formity with the provisions of this act relative to domestic companies. 
 Whenever the existing or future laws of any other State, or territory of 
 the United States, or of any other country, shall require of companies 
 chartered under this act any deposit of securities from such other State, 
 territory or country before transacting business therein, then in all such 
 cases such company shall before doing any business in this State be 
 required to make the same deposit of securities with the Treasurer of 
 this State. (Sec. 21, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Note. Such corporations, if foreign, in order to obtain a permit to operate 
 in Texas, must show compliance with the requirements of this Act as to the 
 subscription of the entire capital stock the payment of one-half thereof in money 
 at the time of organization and the payment in money of the remainder within 
 two years from the date of its organization. (Opinion of Attorney General, 
 June 21, 1921.) 
 
INSURANCE LAWS OF TKX \-. 225 
 
 Deposits of Securities Covering Part of Capital and Also Covering Re- 
 serves of Foreign Companies Are Required. 
 
 614. No company, incorporated or organized under the laws of any 
 other State, territory or country, shall transact business in this State, 
 unless it shall first deposit and keep deposited with the Commissioner of 
 Insurance and Banking of this State for the benefit of all the contract 
 holders of such company, an amount of securities, such as domestic com- 
 panies may invest in, equal to not less than thirty-three and one-third 
 per cent of its capital stock; provided, however, that if a deposit of 
 approved securities has been made under the laws of the State, territory 
 or country chartering such corporation in such manner as to secure 
 equally all the contract holders of such company, then no deposit shall 
 be required in this State as to said thirty- three and one-third per cent 
 of the capital stock, but a certificate of such deposit under the hand and 
 seal of the officer of such other State with whom the same has been 
 made shall be filed with the Commissioner of Insurance and Banking. 
 The reserves of such company, however, not organized under the laws 
 of this State shall be invested in securities or property of the same 
 classes as that in which home companies are required to invest their 
 reserves and such reserves shall be deposited with the Commissioner of 
 Insurance and Banking in the same manner as that of domestic com- 
 panies. (Sec. 22, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Foreign Companies Shall File Power of Attorney Designating Commis- 
 sioner of Insurance and Banking as Attorney for Service. 
 
 615. Each such foreign company shall file with the Commissioner of 
 Insurance and Banking of this State an irrevocable power of attorney, 
 duly executed, constituting and appointing the Commissioner of Insur- 
 ance and Banking of this State and his successors in office, or any officer 
 or board which may hereafter be clothed with the powers and duties 
 now devolved upon said Commissioner, its duly authorized agent and 
 attorney in fact for the purpose of accepting service for it, or being 
 served with citation in any suit brought against it in any court of this 
 State, by any person, or by or to or for the use of the State of Texas, 
 and consenting that the service of any civil service upon him as its 
 attorney for such purpose in any suit or proceeding shall be taken and 
 held to be valid, waiving all claim and right to object to such service 
 or to any error by reason of such service ; and said appointment, agency 
 and power of attorney shall by its terms and recitals provide that it shall 
 continue and remain in force and effect so long as such company con- 
 tinues to do business in this State or to collect amounts due on its con- 
 tracts from citizens of this State, and so long as it shall have outstand- 
 ing contracts in this State and until all claims of every character held 
 by citizens of this State or by the State of Texas against such company 
 shall have been settled. Said power of attorney shall be signed by the 
 president or vice-president and the secretary of such company, wlv>se 
 signature shall be attested by the seal of the company, and the officers 
 signing the same shall acknowledge the same before some officer author- 
 ized to take acknowledgments ; said power of attorney shall be embodied 
 in and be approved and its execution authorized by resolution of the 
 board of directors of such company, and a copy of such resolution duly 
 certified by the proper officers of such company, shall be filed with the 
 
226 INSURANCE LAWS or TEXAS. 
 
 said power of attorney in the office of the Commissioner of Insurance 
 and Banking in this State and shall be recorded by him in a book kept 
 for that purpose, there to remain a permanent record of said depart- 
 ment. The provisions of Revised Civil Statutes, Article 4773 and 
 Article 4774 shall apply to powers of attorney provided for herein, and 
 the duties of the Commissioner shall be the same as they are provided for 
 in said article of the statute with reference to foreign life insurance com- 
 panies. (Sec. 23, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Venue of Suits Against Company. 
 
 616. Suit on contracts may be instituted and prosecuted against any 
 company issuing the same in the county where the home office of such 
 company is located or where it may have an agent. (Sec. 24, Chap. 5, 
 Acts 1st Called Session, 34th Leg.) 
 
 Agents of Company Must Be Licensed and Must Give Bond. 
 
 617. All agents of any company transacting business hereunder must 
 be licensed by the Commissioner of Insurance and Banking, and in order 
 to obtain such license, it must be made to appear that such agent or 
 agents are of good moral character and of good repute in their com- 
 munities for honesty and fair dealing; and they must tender to the 
 Commissioner of Insurance and Banking a bond in form to be furnished 
 by him in any sum not less than one thousand nor more than five 
 thousand dollars, payable to the State of Texas for the use and benefit 
 of any person who may be aggrieved by the action and conduct of such 
 agent in the sale of any contract for the company of which he is licensed 
 as an agent. Such agents must be licensed annually in the same man- 
 ner that life insurance agents are licensed and such bond must be given 
 by them. Such bond may be sued upon by any person having cause of 
 action against such agent in any court of competent jurisdiction with- 
 out the necessity of making the State of Texas or the Commissioner of 
 Insurance and Banking a party to the suit; and repeated suits may be 
 brought thereon until the entire amount thereof has been exhausted. 
 (Sec. 24, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Officers and Directors Prohibited Under Penalty From Having Any In- 
 terest in Purchases or Loans of the Company. 
 
 618. No director or officer of any company transacting business in 
 this State or organized under the laws of this State shall receive any 
 money or valuable thing for negotiating, procuring, recommending or 
 aiding in any purchase or sale by any such company of any 
 property or any loan from such company, nor be pecuniarily in- 
 terested, directly or indirectly, either as principal, co-principal, agent 
 or beneficiary in any such purchase, sale or loan; provided that 
 nothing contained in this article shall prevent the company from making 
 a lo&n upon a contract by the borrower not in excess of the reserve value 
 thereof. Any person violating any provision of this section shall be 
 guilty of a misdemeanor and upon conviction thereof shall be punished 
 by fine of not less than one hundred nor more than five hundred dollars. 
 (Sec. 25, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
INSURANCE LAWS OF TEXAS. 
 
 Officer and Agents Prohibited Under Penalty From Misrepresenting Con- 
 tracts. 
 
 619. Any officer or agent of any company acting under the provi- 
 sions of this act who shall knowingly misrepresent any material fact 
 relative to the contract or certificate issued or to be issued and sold by 
 any such company to any purchaser thereof, shall be guilty of a felony 
 and upon conviction shall be punished by fine of not less than five hun- 
 dred dollars or by imprisonment in the penitentiary for a period of 
 time not more than three years or by both such imprisonment and fine. 
 (Sec. 26, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Penalties for Doing- Business Without First Complying With the Law. 
 
 620. No person, firm, corporation, or association of persons or joint 
 stock company shall hereafter engage in this State in the business pro- 
 vided for in this act, except in compliance with this act, and any cor- 
 poration which does so engage shall have its charter forfeited by suit of 
 the Attorney General and shall be liable to a penalty of not less than 
 one hundred dollars a day nor greater than five hundred dollars a day 
 for each day that it does so engage ; all such suits to be brought as other 
 penalty suits which the Attorney General is authorized to bring; any 
 person who does so engage in violation of the provisions hereof shall be 
 guilty of a misdemeanor for each and every day such person is so en- 
 gaged and shall be punished by fine not less than one hundred nor more 
 than five hundred dollars for each offense; provided each day shall be 
 a separate offense; provided, however, that existing corporations, in- 
 dividuals, associations and joint stock companies engaged in the busi- 
 ness defined in this act at the time this measure goes into effect shall 
 have twelve months thereafter to adjust their business affairs and bring 
 their business under the terms of this act; provided, however, that they 
 must within sixty days after this act goes into effect submit a statement 
 of their business to the Commissioner of Insurance and Banking, to- 
 gether with the certificate of their intention to accept the provisions of 
 this act, and comply therewith. (Sec. 27, Chap. 5, Acts 1st Called 
 Session, 34th Leg.) 
 
 Note. Co-operative savings and contract companies or associations are sub- 
 ject to the supervision of the Commissioner of Insurance and Banking whether 
 such concerns are incorporated or unincorporated and are required to comply 
 with all the provisions of the law, Chapter 5, Acts of the First Called Session 
 of the Thirty -fourth Legislature and all amendments thereto. (Opinion of At- 
 torney General, April 10, 1919.) 
 
 Certain Companies, Associations and Persons Are Governed by This Act. 
 
 621. All bond investment companies operating in this State under 
 the. terms and provisions of Chapter 25 of Title 25, Revised Civil Stat- 
 utes of this State, 1911, and all corporations engaging in the business 
 in this State defined in this act, and all individuals, associations and 
 joint stock companies unincorporated, shall be governed by this act in 
 the manner herein set forth. Individuals, joint stock associations and 
 associations unincorporated shall instead of a charter file a certificate 
 with the Commissioner of Insurance and Banking acknowledged by them 
 by their officers accepting the provisions of this act and specifying and 
 setting apart the amount of capital stock to be used in their business. 
 
228 INSURANCE LAWS OF TEXAS. 
 
 In all other respects they shall be governed by the terms and provisions 
 thereof. (Sec. 28, Chap. 5, Acts 1st Called Session, 34th Leg.) 
 
 Any Section of This Act Held Unconstitutional Shall Not Apply to Be- 
 mainder General Corporation Laws and General Laws as to Charges 
 Shall Apply to Corporations Operating Under This Act. 
 
 622. Should any section of this act be held unconstitutional or void 
 for any reason or as to any particular company, corporation, individual 
 or association, such holding shall not affect the remainder of the" act. 
 The general corporation laws of this State where not in conflict here- 
 with shall govern corporations chartered or operating under this act; 
 and the general laws specifying charges which may be made by the 
 Commissioner of Insurance and Banking shall apply to corporations 
 chartered or operating hereunder. (Sec. 29, Chap. 5, Acts 1st Called 
 Session, 34th Leg.) 
 
INDEX. 
 
 (Figures Refer to Sections.) 
 Access to Books 
 
 Commissioner shall have, 36, 37, 517. 
 Commissioner and treasurer are entitled to, 40. 
 
 Accident Insurance 
 Affidavits, 393. 
 Agents, 462 to 484. 
 Amendments to charter, 71, 122. 
 Annual meeting, 396. 
 Annual statement, 75, 121, 129, 400. 
 Assessment, 395, 401, 402, 403. 
 Beneficiary, 402, 404. 
 Business, what constitutes, 395. 
 By-laws, 122, 394, 397, 401, 404, 405. 
 Capital stock, 69, 71, 72, 114, 118, 123. 
 Certificate of authority, 74, 76, 77. 
 Certificate of membership, 401. 
 
 Charter, 49, 50, 51, 69, 70, 71, 118, 122, 271, 392, 393, 394. 
 Consolidation of companies, 267 to 273. 
 Deposits, 98, 124 to 127. 
 Defined, 68. 
 
 Directors, 70, 82, 122, 392, 394, 397. 
 Dissolution when companies consolidate, 272. 
 Dividends, 119, 396. 
 Examination,, 74, 398, 399. 
 Fees, 70, 394, 400. 
 
 Fire, Marine or Inland Insurance, 96. 
 Foreign, 121 to 131. 
 Fraternal Benefit Societies, 489, 522. 
 Incorporation, 69, 70, 122, 228, 391. 
 Industrial Accident Board, 335 to 349. 
 Industrial Insurance, 118. 
 Inquiries must answer, 42. 
 Investments and loans, 55, 56, 57, 128, 240. 
 Liabilities on policies, 94, 95, 401, 402. 
 
 Life, Health and Accident Insurance Co. (Home), 68 to 120. 
 Life, Health and Accident Insurance Co. (Foreign), 121 to 131. 
 Mutual Assessment Accident Insurance Co. (Home), 391 to 407. 
 Losses, when payable, 94, 95. 
 Non-competing companies may consolidate, 267. 
 Officers, 122. 
 Policy forms, 116. 
 Real estate holdings, 81. 
 Reinsurance, 83. 
 Reserve, 16. 
 Reserve fund, 401. 
 Service of process, 93. 
 Stock certificates, 396. 
 
 Stockholders, 59, 60, 61, 62, 65, 70, 71, 72, 73, 78, 84, 267, 268. 
 Suits on policies, 92. 
 Taxation, 91, 97, 275 to 279. 
 Terms defined, 68. 
 Workmen's Compensation, 380. 
 
23'0 INDEX. 
 
 Action 
 
 Anti-trust law, 556, 558, 561, 564, 565, 566, 572. 
 
 Attorney General, 37, 138, 144, 168, 233, 238, 420, 517, 558, 561, 565, 566, 572. 
 
 Citizens, city, town or village, 211. 
 
 Civic organization, 211. 
 
 Cause of, shall survive, 331. 
 
 Commissioner, 78. 
 
 Company, 143, 211. 
 
 County or district attorney, 565, 566. 
 
 Fraternal Benefit Societies, 517. 
 
 Policyholders, 78, 211. 
 
 State Fire Insurance Commission, 211. 
 
 Stockholders, 78. 
 
 Surety company bonds, 256. 
 
 Workmen's Compensation Law, 299 to 303, 331, 342, 343, 375, 382. 
 
 Administrator 
 
 Fidelity,, Guaranty and Surety Companies may act as, 250. 
 
 Admission Fees 
 
 Mutual Accident Companies, 394, 395. 
 
 Advertising 
 
 Mutual Aid Association, 524. 
 State Treasurer's receipt, 97, 145. 
 Sales of stock, 532. 
 
 Affidavit- 
 Agents for excessive insurance, 182 (4). 
 Corporators, 70, 225, 393. 
 False, 129. 
 
 Fraternal Benefit Societies, 503. 
 Mutual Accident Company's Corporators, 393. 
 Reinsurance, 182 (2). 
 Resident agents, as to, 471. 
 
 Agents r- 
 
 Affidavit as to resident agents, 471. 
 
 Anti-trust law, 564, 568, 570. 
 
 Application for license, 165, 440, 477, 525. 
 
 Attorneys exempt from agency laws, 465. 
 
 Blue Sky Law, under, 527, 535, .536, 538, 545. 
 
 'Cause to revoke license, how ascertained, 217, 478. 
 
 Certificate of authority, 77, 165, 446, 462, 466, 476, 477, 524, 525. 
 
 Commissioner or clerk cannot be, 8. 
 
 Commissions paid to licensed agents only, 472. 
 
 Common carriers, property exempt from Resident Agent Law, 470. 
 
 Company only, shall be agent of, 475. 
 
 Contract with company, 165. 
 
 Co-Operative Savings -and Contract Loan Companies, 617-619. 
 
 Corporation cannot be agent, 476. 
 
 Defined, 258, 465. 
 
 Designation of officer to employ, 477. 
 
 Dividing commissions with unlicensed persons, 472. 
 
 Embezzlement, 481. 
 
 Examination of, 36. 
 
 Excess insurance in unauthorized companies, 182 (457). 
 
 Fidelity, Guaranty and Surety Companies, 228, 470. 
 
INDEX. 231 
 
 Agents Continued. 
 
 Fire, Marine, Fidelity and Casualty Companies, 201, 213, 217, 463, 470 to 
 
 474. 
 
 Fraudulent insurance, 469, 480, 481, 482. 
 Fraternal Benefit Societies, 525. 
 General agents' occupation tax, 483, 484. 
 Liable to policyholder, 468. 
 
 License, 77, 165, 456, 462, 463, 467, 468, 477, 478, 479. 
 Life Companies, 77, 111, 142, 463, 464, 465, 466, 467, 468, 475, 476, 477, 478, 
 
 479, 480, 481, 482. 
 List of, 539. 
 
 Misdemeanor, 289, 466, 479, 480, 482, 525, 545. 
 Misrepresentation of policy, 293, 469. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 456. 
 Mutual Life Insurance Co., 165. 
 Non-resident, 470 to 474. 
 Officer designated to employ, 474. 
 
 Penalties, 463, 464, 466 to 470, 472, 473, 479, 480, 481, 482. 
 Policyholder, when personally liable to, 468. 
 Rebates and discriminations, 213, 214, 289. 
 Reciprocal indemnity contracts, 446, 439 to 442, 444, 447, 448. 
 Requisition for license, 477, 525. 
 
 Resident agents, all policies must be issued through, 470 to 474. 
 Revocation of license, 473, 477, 478. 
 Stock company cannot be agent, 476. 
 Taxes, subject to payment of, 467, 483, 484. 
 Unlicensed, 462, 463, 466, 472. 
 Withdrawn companies, 142. 
 
 Annual Report 
 
 To Governor by Commissioner, 25. 
 
 To Insurance Commissioners, copy of, 26. 
 
 To Legislature, 43. 
 
 Annual Statement 
 
 Arranged in tabular form for report, 43. 
 
 Assessment Companies, 149. 
 
 Casualty Companies, 229, 230, 231. 
 
 County Mutual, 453. 
 
 Commissioner's report, 43. 
 
 Co-Opera tive Savings and Contract Loan Companies, 611. 
 
 Fee for filing, 47, 75, 150, 245, 400, 425, 437. 
 
 Filed when, 180. 
 
 Fire and Marine Companies, 180, 181. 
 
 Fidelity, Guaranty and Surety Companies, 252. 
 
 Foreign Companies, 121, 507, 611. 
 
 Form, Commissioner may change, 30, 75, 230, 514. 
 
 Fraternal Benefit Societies, 496, 507, 514. 
 
 Gross premiums collected, 229, 275. 
 
 Investments in Texas Securities, 136, 137. 
 
 Life, Health and Accident Companies, 75, 121, 136, 137. 
 
 Local Mutual Aid Societies, 524. 
 
 Mutual Accident Companies, 400. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 456, 460. 
 
 Mutual Fire, Storm, Lightning and Hail Companies, 412. 
 
 Mutual Hail Companies, 436. 
 
 Mutual Life Companies, 164. 
 
 Premium receipts, 137. 
 
 Printers' Mutual Companies, ,453. 
 
 Reciprocal Indemnity, attorney of, 444. 
 
 Taxes, 137, 138, 140, 141, 275, 276, 277. 
 
232 INDEX. 
 
 Anti-Rebate Laws 
 
 Fire companies,, 213, 214. 
 
 Life, Health and Accident Companies, 289. 
 
 Anti-Trust Law, 551 to 573 
 
 Actions, have precedence, 566. 
 
 Agents' actions, 564, 568, 570. 
 
 Attorney General, 556, 558, 561, 565, 566, 572. 
 
 Boycott, 553. 
 
 Business, to abstain from engaging or continuing in, 551. 
 
 Combinations of persons, firms or corporations, 551, 552, 553. 
 
 Competition, to prevent or lessen, 551, 552, 568. 
 
 Consolidation of Insurance Companies, 267. 
 
 Consolidation of stock, bonds, franchise or properties, 552. 
 
 Conspiracy in restraint of trade, 553, 554, 567, 569. 
 
 Contract or agreement void, 562. 
 
 County or District Attorney, 561, 572. 
 
 Defaulting corporations, successor to, 557, 560. 
 
 Definitions, 551, 552, 553. 
 
 Fees of County and District Attorney, 561, 573. 
 
 Felony, 568 to 571. 
 
 Foreign Corporations, 558. 
 
 Forfeiture of charter and franchise, 555, 556, 557, 559, 560. 
 
 Injunction, 558. 
 
 Investigation of violation of law, 565. 
 
 Justice of the Peace, 565. 
 
 Management or control, two or more corporations under same, 552. 
 
 Monopoly, 552, 554, 567, 569. 
 
 Outside this State, trusts formed, 569. 
 . Penalties, 555, 557, 561, 562, 563, 564, 567 to 570. 
 
 Prices, to fix, maintain or control, 551. 
 
 Prohibited trusts, monopolies and conspiracies, 554. 
 
 Quo warranto proceedings, 556, 559. 
 
 Rebates, 567, 568. 
 
 Restrictions of trade, 551, 553. 
 
 Trusts, 551, 552, 554, 567, 569. 
 
 Venue, 556, 558, 561, 571. 
 
 Witnesses, sworn and subject to contempt, 565. 
 
 Appeal 
 
 Industrial Accident Board, 340, 341. 
 
 Texas Employers' Insurance Association, 340, 341. 
 
 Fraternal Benefit Societies, 521. 
 
 Application for Policy 
 
 Agent cannot change, 475. 
 
 Defense, account of misrepresentation, 280, 281, 282, 286, 294. 
 
 Fraternal Benefit Societies, 499, 503. 
 
 Fraudulent misrepresentation, 282. 
 
 May be made part of policy, 286, 288. 
 
 Misrepresentation, 280, 281, 286, 288. 
 
 Mutual Accident Companies, 393. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 410, 415. 
 
 Notice of misrepresentation, 280, 286. 
 
 Photographic or printed copy, 286. 
 
 Part of contract, 283, 288. 
 
 Reciprocal contracts ; 440. 
 
INDI:\. 233 
 
 Application 
 
 Charter, Mutual Hail Company, 431. 
 
 For receiver, domestic fraternal societies, 518. 
 
 Insurance on mutual plan, 393, 409, 429. 
 
 Reciprocal indemnity contracts, 447. 
 
 Shall contain, 409, 429. 
 
 Apportionment of Surplus to Policyholders 
 Mutual Life Insurance Companies, 159. 
 
 Appointment 
 Clerks, 5. 
 Commissioner, 1. 
 Commissioner as Attorney for Service, 130, 149, 252, 256, 459, 507, 508, 
 
 582, 615. 
 
 Directors Texas Employers' Insurance Association, 351. 
 Industrial Accident Board, members of, 335, 336. 
 State Fire Insurance Commission, members of, 192. 
 
 Assessment Life or Natural Premium Company, 149 to 151. 
 
 Assessment Life or Casualty Companies 
 Annual statement, 149. 
 Assets necessary, 149. 
 Certificate of compliance, 149. 
 Certificate of payment in full, 149. 
 Charter, must file certified copy, 149. 
 Commissioner appointed Attorney for Service, 149. 
 Constitution and by-laws, certified copy, 149. 
 Exempt from certain laws, 292. 
 Fees, 150. 
 
 Fraternal Benefit Societies exempt, 151. 
 Licensed, 149. 
 Prerequisites to being licensed, 149. 
 
 Assessments 
 
 Fraternal Benefit Societies, 494, 500, 503, 514> 516. 
 
 Mutual Accident Companies, 395, 401, 402, 403, 405. 
 
 Mutual Burglary, Robbery or Transportation Loss Companies, 458. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 410, 414, 415, 417. 
 
 Mutual Hail Companies, 429, 430, 433. 
 
 Natural Premium Companies, 149. 
 
 Texas Employers' Insurance Association, 363 to 370. 
 
 Assets and Liabilities 
 
 Assessment Companies, 149. 
 
 Casualty Companies, 229. 
 
 Consolidation of companies, 269, 270. 
 
 Fidelity, Guaranty and Surety Companies, 252. 
 
 Fire and Marine Insurance Companies, 181. 
 
 Life, Health and Accident Insurance Companies, 75, 121. 
 
 Mutual Fire, Lightning, 'Hail and Storm Insurance Companies, 419, 420. 
 
 Mutual Life Insurance Companies. 164. 
 
 Assignee 
 
 Fidelity, Guaranty and Surety Companies, may act as, 250. 
 
 Association 
 
 Definition of "Association," 378. 
 Corporate powers of, shall not expire, 376. 
 
23'4 INDEX. 
 
 Assumed Bisk 
 
 Workmen's Compensation Law, no defense, 297, 302. 
 
 Attachment 
 
 Compensation exempt from, 299. 
 
 Deposits, exempt from, 252. 
 
 Fraternal Benefit Society benefit, exempt, 512. 
 
 Attorney for Service 
 
 Assessment Companies, 149. 
 
 Blue Sky Law, 544. 
 
 Co-Operative Savings and Contract Loan Companies, 615. 
 
 Fidelity, Guaranty and Surety Companies, 251, 252, 256. 
 
 Fraternal Benefit Societies, 507, 508. 
 
 Life Companies, 130. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 459. 
 
 Reciprocal Exchange, 441. 
 
 Attorney General 
 
 Anti -trust laws, 556, 558, 561, 565, 566, 572. 
 
 Approving charter, 49, 70, 152, 225, 393, 394. 
 
 Approve reinsurance contract under fire insurance company's bond, 177. 
 
 Certificate of authority revoked, 212, 216. 
 
 Fraternal Benefit Societies, 517. 
 
 Mutual Life Insurance Companies, 152, 168. 
 
 Receiver, skall ask for, 233, 517. 
 
 Reports to, 21, 138, 411, 517. 
 
 Suits filed, 37, 138, 140, 144, 168, 233, 239, 382, 420, 517, 556, .558, 561, 565, 
 
 566, 572. 
 Taxes, 138, 140. 
 
 Mutual Accident Companies, 393, 394. 
 Mutual Hail Companies, inspection of records, 434, 436. 
 
 Automobile Insurance 
 Fire Companies, 170. 
 Casualty Companies, 223. 
 
 i 
 Average Weekly Wages 
 
 Definition, 378. 
 
 Paid to injured employe, 310, 314, 315, 317, 326. 
 
 Beneficiary 
 
 Definition, 68. 
 
 Fraternal Benefit Society, 490, 491, 495, 498, 500, 511, 512. 
 Life Insurance Company, 120. 
 Mutual Accident Company, 402, 403. 
 
 Workmen's Compensation Act, 299, 302, 309, 310, 311, 313, 332, 341, 343, 
 378, 383, 384, 386. 
 
 Benefits 
 
 Fraternal Benefit Society, 489, 493, 500, 512, 516. 
 
 Mutual Accident Companies, 401. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 413. 
 
 Blanks- 
 Commissioner shall furnish, 22. 
 Mutual Hail Companies, 436. 
 
INDEX. 235 
 
 Blue Sky Law, 527 to 550 
 Advertising literature, 532. 
 
 Addresses of promoters or corporation officers, 529. 
 Agents of corporation, 527, 535, 536, 538, 545. 
 Appeal from refusal to issue permit, 537. 
 Attorney for Service, 544. 
 Banks and Trust Companies exempt, 548. 
 Bonds, 536, 538. 
 Books of corporation, 541. 
 Cancellation of permit, 538, 542. 
 Capital stock, amount of, 529, 543. 
 Change of price of stock, 529. 
 Charter, copy filed, 530. 
 Commissions, 527, 530, 533, 536, 540. 
 Commissioner of Insurance and Banking, 529, 530, 531, 533, 536, 537, 538 
 
 539, 541, 542, 543, 544, 546, 549, 550. 
 Corporations subject to this act, 527. 
 Cumulative, this act is, 547. 
 Definitions of Commissioner and Secretary, 550. 
 Deposit of collections on sales, 540. 
 Deposit of fees, 549. 
 Domicile of corporation, 529. 
 Examinations, 549. 
 
 Exemption for certain corporations, 548. 
 Expenses, incident to sale of stock, 527, 530, 533, 536. 
 Expert employed, 531. 
 Extension of time for sale, 546. 
 Failure to organize, 546. . 
 Filing of documents, 529, 530, 532, 539. 
 Filing fee, 529. 
 
 Form of contracts, stocks or deeds, 529. 
 Foreign Companies, 530, 543, 544. 
 Future sale of stock, 534. 
 Inspection of books, 541. 
 
 Insurance Companies Act, does not apply to, 543. 
 Interest of salesman in sale, 536. 
 Increase of stock, 527 to 530. 
 List of names of officers, agents, etc., 539. 
 Loan Companies, 543. 
 Location of corporation, 529. 
 Mining, Oil or Gas Corporation, 528, 531. 
 Misdemeanor, 545. 
 Misrepresentation, 538. 
 
 Money for sale of stock deposited in bank, 540. 
 Name of corporation, 529. 
 New bond, 538. 
 
 Officers of corporation, 531, 539, 540, 545. 
 Organizer, 541. 
 Organization fee, 527. 
 Penalties, 545. 
 
 Permit, 532, 533, 534, 538, 542, 543, 545. 
 Power of attorney, 544. 
 Price of stock, 529, 533. 
 Promoter, 529, 531, 535, 539, 541, 546, 548. 
 Promotion fee, 527, 528, 530, 533, 535, 536, 540. 
 Railroad Companies exempt, 548. 
 Sale of stock, 527, 529, 542, 543, 544, 545. 
 Secretary of State, 529 to 533, 538, 539, 541, 546, 549, 550. 
 Service of legal process, 544. 
 Statements to be filed, 529 to 532. 
 Stock, already sold, 534. 
 
23'6 INDEX. 
 
 Blue Sky Law, 527 to 550 Continued. 
 Stock brokers exempt, 548. 
 Stock, considered paid for when ; 535. 
 Stock, unsold, 534. 
 
 Subscriber must be refunded, when, 546. 
 Subscription list and contracts, 537. 
 Suit to reinstate permit, 542. 
 Suit upon bond, 538. 
 
 Townsite Corporation, 528, 529, 531, 532. 
 Value of property must be given, 531. 
 
 Board Contracts 
 
 Dividends of Life Companies, 84, 119, 289. 
 
 Bonds 
 
 Approval of, 250. 
 Blue Sky Law, 536, 537, 538. 
 Cancellation by Surety Companies, 260. 
 Chief clerk, 6. 
 Commissioner, 4. 
 
 Co-Opera tive Savings and Contract Loan Company's officers, 598, 617. 
 Deposit in lieu of, 178. 
 Excess insurance broker, 182 (5). 
 Farmers Loan Act, issued under, 134. 
 
 Fidelity, Guaranty and Surety Companies may make, 250, 251, 253. 
 Fidelity, Guaranty and Surety Companies may withdraw, 254, 260. 
 Foreign Fire Company, 176, 177, 178, 179. 
 .Fraternal Beneficiary Associations, 501, 503. 
 Mutual Life Insurance Company's officers, 153. 
 Officers of company. 153. 415. 432. 452. 
 Printers' Mutual Company. 452. 
 Securities withdrawn, in lieu of. 254. 
 State and county officials. 250, 251, 252. 
 Suit on. 256. 
 
 Unauthorized Surety Company, made by, 259. 
 Withdrawal from, 255. 260. 
 
 Burglary, Robbery and Transportation Loss Mutual Companies, 454 to 
 461. 
 
 Burglary and Theft Insurance Companies 
 
 Agents, 462 to 484. 
 
 Application, 455. 
 
 Certificate of authority, Mutual Companies, 456. 
 
 Organization, 223, 454, 455. 
 
 Resident agents, 470 to 474. 
 
 Business of Insurance 
 
 Companies cannot transact both fire and life, 96. 
 Life Insurance Companies, 28. 
 Mutual Assessment Accident Companies, 395. 
 Mutual Burglary and Robbery Companies, 456. 
 Mutual Life Insurance Companies, 153, 160. 
 Must be transacted through agents, 470. 
 
 By-Laws 
 
 Adoptions, 70, 153, 352. 
 Assessment Companies, 149, 252. 
 Casualty Companies, 225, 228. 
 Co-Operative Life Companies, 153. 
 
INDEX. 237 
 
 By-Laws Continued. 
 
 Foreign Companies, 122. 
 
 Fraternal Benefit Societies, 486, 487, 490, 499, 501, 503, 507, 510, 511, 513, 
 
 514. 
 
 Home Companies, 64. 
 
 Mutual Accident Companies, 394, 397, 401, 404, 405. 
 Mutual Fire, Storm, Lightning and Hail Companies, 410, 414, 415. 
 Mutual Hail Companies, 432. 
 Texas Employers' Insurance Association, 352, 353, 354. 
 
 Capital Stock- 
 Annual statement, 181, 229. 
 Bona fide property of company, 52, 74. 
 
 Blue Sky Law, 527, 529, 530, 533 to 536, 538, 540, 541, 543, 544, 545. 
 Casualty Companies, 50, 51, 226, 227, 235, 247. 
 Change and reinvest, 57. 
 
 Co-Operative Savings and Contract Loan Companies, 587, 589, 600, 613. 
 Consists of what, 55. 
 Consolidated Companies, 268, 269, 270. 
 Deposits, 97, 108, 145. 
 
 Fidelity and Surety Companies, 72, 250, 252, 291. 
 Foreign Companies, 123. 
 Fractional snares may be voted, 72. 
 Home Company, all kinds, 50, 54, 55, 57, 72. 
 Impairment, 18, 114, 172, 173, 174. 
 Increased or reduced, 71, 72, 114, 235, 247. 
 Industrial Companies, 72, 118. 
 Investments of, 55, 57, 80, 227. 
 Liability Companies, 227, 291. 
 
 Life, Health and Accident Companies, 69, 72, 73, 114, 118, 123. 
 Live Stock Companies, 222. 
 
 Mutual Accident Companies have none, 391, 396. 
 New, 174. 
 
 Paid up, 33, 51, 69, 74, 123. 
 Shares, 54, 69, 72, 73. 
 
 Casualty Insurance Companies, 223 to 248 
 Affidavit of corporators, 225. 
 Agents, 462 to 474, 478 to 482. 
 Annual statement, 229, 230, 231, 236. 
 By-laws, 225, 228. 
 
 Capital stock, 50, 55, 57, 72, 224, 225, 226, 227, 229, 235, 247. 
 Certificate of authority, 51, 227, 238, 243. 
 Charter, 49, 50, 51, 224, 225, 271. 
 Consolidation of companies, 267 to 273. 
 Corporate powers, 228. 
 Corporators, number of, 223. 
 Cumulative statute, 248. 
 Deposits, 227, 231, 234, 237. 
 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66, 225, 226, 228, 236. 
 Dissolution when companies consolidate, 272. 
 Dividends, 236. 
 
 Employers' liability, experience, reports and calculation, 388 to 390. 
 Examination, 51, 52, 232, 233. 
 Fees, 244, 245. 
 
 Forfeit for doing business without license, 238. 
 Fraternal- Benefit Society, 489. 
 Inquiries, must answer, 42. 
 Investments and loans, 227, 240. 
 Laws applicable to Fire and Life Companies govern, 290, 291. 
 
238 INDEX. 
 
 Casualty Insurance Companies, 223 to 248 Continued. 
 Name, 50, 224. 
 Officers, 226, 227, 228. 
 Organization, 49, 223, 291. 
 Penalty suits, 239. 
 
 Purposes for which incorporated, 223. 
 Real estate holdings, 241, 242, 
 Service of process, 246. 
 
 Statute applies only to companies under it, 244. 
 Taxation, 275 to 279. 
 Stock subscription books, 226. 
 Venue for penalty suits, 239. 
 
 Certified Copies of Papers 
 Charter, 122, 409. 
 
 Commissioner shall furnish, 11, 24, 45, 46, 70, 77, 152. 
 Evidence, received as, 41. 
 Fees for, 46, 47, 70, 225, 394, 400. 
 
 Certificate of Authority- 
 Agents 77, 166, 447, 462, 463, 466, 476, 478, 479, 525. 
 Assessment Companies, 149. 
 Blue Sky Law, 532, 533, 536. 
 
 Burglary, Robbery and Loss in Transportation Mutual Companies, 456. 
 Casualty Companies, 20, 33, 44, 51, 227, 233, 243. 
 Certified copy for agent, 77. 
 
 Co-Operative Savings and Contract Loan Companies, 601, 602. 
 Excess insurance broker, 182 (4), (5), (6). 
 Expiration, 33, 74, 76, 117, 142, 165, 166, 506. 
 Fees, 46, 47, 76, 165, 245, 400, 506, 507. 
 
 Fidelity, Guaranty and Surety Companies, 253, 254, 257, 259. 
 Fire Companies, 20, 33, 44, 51, 409, 447. 
 Foreign Companies, conditions precedent, 117, 507. 
 Fraternal Benefit Societies, 503, 506, 507. 
 Home Companies, 51. 
 
 Issued, 33, 51, 74, 76, 117, 243, 447, 452, 470, 473, 474, 506, 507, 532, 533. 
 Life, Health and Accident Companies, 20, 33, 36, 44, 74, 76, 117, 132, 135, 
 
 140, 142, 476, 477 to 482. 
 Mutual Accident Companies, 394, 399. 
 Mutual Fire, Storm and Lightning Companies, Printers' Mutual Companies, 
 
 409, 410, 411, 420, 423, 429, 430. 
 Mutual Life Insurance Companies, 152, 153, 164. 
 Publication of, 263, 274. 
 Reciprocal indemnity contracts, 447. 
 Renewals, 76, 95, 117. 
 Revocation, 18, 20, 33, 36, 44, 111, 119, 161, 182 (3), 212, 216, 233, 257,. 
 
 261, 399, 411, 420, 423, 447, 477, 478, 515, 519, 521. 
 Surrender by Fidelity, Guaranty and Surety Companies, 254. 
 Suspension, 20, 36, 411, 423. 
 Taxes must be paid before issuance, 276. 
 Void, 95. 
 
 Certificate- 
 Compliance, 149, 507. 
 
 Fraternal Benefit Society, of, 489, 494, 495, 497, 498, 503, 507, 514, 521. 
 Preliminary, to solicit members, 152, 409, 429, 503. 
 Taxes, 138, 140, 276. 
 
 Certificate of Deposit 
 
 Fidelity, Guaranty and Surety Companies, 252. 
 
 Foreign Companies, 127, 252. 
 
 Life Companies, registration of policies, 99. 
 
INDEX. 239 
 
 Certificate of Membership 
 
 Mutual Assessment Accident Company, 401. 
 
 Certificate of Payment in Full 
 Assessment Companies, 149. 
 
 Certificate of Re-Insurance 
 Casualty Companies, 182. 
 Fire Companies, 182. 
 Marine Companies, 182. 
 
 Certificate of Stock- 
 Issue' of new after impairment, 173, 174. 
 Return of, after impairment, 173. 
 Mutual Accident Company has none, 396. 
 
 Certificate of Valuation 
 Foreign Companies, 14, 15. 
 
 Charter 
 
 Amendments, 71, 122, 499, 504. 
 
 Assessment Companies, 149, 392, 393, 394, 406. 
 
 Attorney General, submitted to, 49, 70, 225, 393, 394. 
 
 Casualty Companies, 49, 50, 51, 224, 225. 
 
 Consolidated Companies, 271. 
 
 Co-Operative Savings and Contract Loan Companies, 585. 
 
 Fee for filing, 47, 70, 225, 394, 425, 437. 
 
 Fidelity, Guaranty and Surety Companies, 249, 252. 
 
 Filing, 11, 49, 70, 225, 410, 494, 503, 504, 507. 
 
 Foreign Companies, 122, 506, 507. 
 
 Forfeiture, 119, 406, 420, 555, 556, 557, 559, 560. 
 
 Fraternal Benefit Societies, 499, 503, 504, 507. 
 
 Home Companies, 49, 50, 51. 
 
 Investment Companies, 531, 532. 
 
 Life, Health and Accident Companies, 69, 70, 71, 122. 
 
 Mutual Accident Companies, 392, 393, 394. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 456. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 410, 420. 
 
 Mutual Hail Companies, 430, 431. 
 
 Mutual Life Insurance Companies, 152. 
 
 Chief Clerk 
 
 Appointment, 5. 
 Bond, 6. 
 Duties, 6. 
 
 Claims 
 
 State Treasurer to pay, when company has defaulted, 257. 
 Filing claims, time limited, 338. 
 
 Clerks 
 
 Department, 5. 
 
 Insurance Commission, 198, 199. 
 
 Industrial Accident Board, 337. 
 
 Co-insurance Clause 
 
 Exemption, as to, 187, 209. 
 Forbidden in policies, 186, 208, 209. 
 
240 INDEX. 
 
 Collection of Interest 
 
 On securities, may be permitted by Treasurer, 237. 
 
 Commissioner 
 Appointment, 1. 
 Bond and oath, 4. 
 Clerks, 5, 6. 
 Inability to act, 6. 
 
 Insurance Commission Chairman, 192, 193. 
 Of other States, 26, 27. 
 Records of State Treasurer, access to, 40. 
 Seal, 7. 
 
 Term of office, 2. 
 Title, 7. 
 Vacancies, 3. 
 
 Commissioner's Duties, 9 to 48 
 Action, may maintain, 78. 
 
 Annual statement, for, 30, 75, 121, 165, 230, 231, 400, 611. 
 Approval, 370, 505, 591. 
 Apportionment of surplus, 160. 
 Blanks, shall furnish, 22. 
 
 Blue Sky Law, 529, 530, 533, 536 to 539, 541, 542, 549, 550. 
 Bonds, shall approve, 176, 182 (5), 501, 503, 598, 617. 
 Books, access to companies, 37. 
 Business, shall suspend, 20, 28, 600, 606. 
 Casualty Companies' policies, 231. 
 
 Capital, impairment, 18, 114, 123, 172, 173, 174, 600. 
 Certified copies of records given, 11, 24, 45, 77, 225, 394. 
 Certificate of authority, shall issue, 33, 51, 74, 76, 117, 149, 152, 227, 243, 
 
 253. 409, 410, 424, 429, 430, 447, 452, 477, 503, 533, 601, 602. 
 Certificate of registration of policies, 99, 103, 104. 
 Certificate of reinsurance, 182. 
 Certificate of valuation, 14, 15. 
 Certificate revoked, 18, 20, 33, 36, 37, 44, 111, 119, 143, 152, 168, 182, 212, 
 
 216, 233, 257, 261, 289, 399, 411, 420, 447, 477, 478, 515, 519, 521, 538, 
 
 542, 600, 606. 
 
 Certify taxes to Treasurer, 138, 276. 
 
 Charters, 28, 49, 51, 69, 70, 71, 152, 224, 225, 393, 394, 456, 585. 
 Contracts, shall approve, 591, 599, 602. 
 Deposits, must approve, 97, 98, 128, 252, 589. 
 Examinations, 19, 36, 51, 52, 74, 140, 153, 167, 168, 232, 233, 399, 411, 419, 
 
 444, 474, 517, 519, 549, 586. 
 Examiners, may appoint, 37, 232, 517, 519, 586. 
 Fees, 46, 47, 107, 165, 400, 425, 437, 503, 506. 
 Fee book, 48. 
 File papers, 11. 
 
 Fraternal Benefit Societies, 503, 505, 506, 517, 519. 
 Inquiry, may make, 42. 
 
 Insurance Commission, 189, 211, 212, 216, 220. 
 Laws, shall execute, 10. 
 License granted, 362. 
 License refused, 266. 
 Mutilated policies, shall cancel, 102. 
 Mutual Accident Companies, 394, 399. 
 Mutual Companies, shall admit, 29, 409, 410, 424, 430. 
 Net value of policies, 12, 13, 14, 34. 
 Policies, shall value, 12, 13, 14, 16, 34, 35, 101, 156. 
 Policy forms, shall approve, 116, 160. 
 Real estate, forced sale, 242. 
 Registration of policies, 99, 101, 103, 590, 592. 
 
INDEX. 241 
 
 Commissioner's Lfuties Continued. 
 
 Registration fees, how distributed, 107, 596. 
 
 Reports, 21, 25, 26, 27, 43, 136, 137, 138. 
 
 Reinsurance contracts, 83, 177. 
 
 Reserve calculation, 12, 16, 17, 34, 35, 264, 390, 592. 
 
 Resident agents' law, 473, 474. 
 
 Securities, shall keep record, 104, 106, 109, 110, 614. 
 
 Securities, transfer to Treasurer, 38, 39, 40. 
 
 Service of process, 131, 252, 256, 508, 615. 
 
 State Fire Insurance Commission, member of, 192. 
 
 Suits, shall institute, 18, 37. 
 
 Witness refusing to testify, 31. 
 
 Workmen's Compensation, 333, 360, 362, 370, 380, 381. 
 
 Complaints 
 
 Insurance Commission, 210. 
 Rates of Fire Insurance, 210. 
 
 Commission 
 
 Blue Sky Law, 527, 530, 533. 
 
 Companies shall not pay to officers, 111, 113. 
 
 Agent of company prohibited from paying, 472. 
 
 Compensation 
 
 Actions for, 309, 339, 340, 341, 342. 
 
 Amount of, 310 to 317, 330. 
 
 Begins on eighth day, 304. 
 
 Beneficiaries, 310, 311, 313, 332. 
 
 Death cases, 311, 312. 
 
 Employes of subcontractor, 342. 
 
 Funeral benefit, 313. 
 
 Medical aid, medicine and hospital service, 304, 305, 306, 307. 
 
 Minors or mentally incompetent injured workmen, 326, 327. 
 
 Payable when, 314, 315, 318, 319, 320, 329, 338, 343, 347, 348, 349, 386. 
 
 Partial incapacity, 315, 316. 
 
 Specified injuries, 317. 
 
 Total incapacity, 314, 316. 
 
 Waiver of rights to, 328. 
 
 Consolidation of Companies, 267 to 273 
 Anti-trust laws must not be violated, 267. 
 Assets, 269, 270. 
 Capital stock, 268, 269, 270. 
 Charter, 271. 
 
 Dissolution of absorbed companies, 272. 
 Name, 269. 
 
 Non-Competing Companies, 267. 
 Policies assumed by reorganized companies, 273. 
 Stockholders' meeting, 268. 
 Value of stock, 269. 
 
 Conspiracy in Restraint of Trade 
 Defined, 553. 
 
 Penalties, 555, 557, 561, 563, 567 to 571. 
 Prohibited, 554. 
 
 Constitution and By-La'ws 
 
 Amendments, 499, 503, 504, 513. 
 
 Assessment Companies, 149. 
 
 Fraternal Beneficiary Association, 486, 487, 489, 493, 497, 499, 501, 503, 504, 
 
 507, 514. 
 Mutual Accident Companies, 396, 397, 401, 405. 
 
242 INDEX. 
 
 Contributory Negligence 
 
 Workmen's Compensation Law, no defense, 297, 302. 
 
 Contracts Co-operative Savings and Contract Loan Compani 
 Approval, 591, 599, 602. 
 Cancellation, 603. 
 Registration, 590, 592, 596. 
 Withdrawal, 604. 
 Valuation, 592. 
 
 Co-operative Savings and Contract Loan Companies 
 Agents, 617, 619. 
 Annual statement, 611. 
 Attorney for Service, 615. 
 Bonds, 598, 617. 
 
 Capital stock, 587, 589, 600, 613. 
 Certificate of authority, 601, 602. 
 Charter, 585. 
 
 Contracts, approval, 591, 599, 602. 
 Contracts, cancellation and withdrawal, 603, 604. 
 Contracts, registration and valuation, 590, 592, 596. 
 Constitutionality, 622. 
 Custodian, 596. 
 
 Deposits, 589, 593, 594, 597, 605. 
 Dividends, 606. 
 Examinations, 586. 
 Fees, 596. 
 
 Foreign companies, 611 to 615. 
 Investments, 607, 608, 609. 
 . Loan or reserve fund, 605. 
 Officers, 597, 598, 618, 619. 
 Organization, 585, 602. 
 (Other companies included, 621.) 
 Penalties, 600, 606, 618, 619, 620. 
 Powers and authority, 588. 
 Receiver, 600. 
 Reserves, 592, 597, 605. 
 Securities, 589, 595, 607, 614. 
 Taxation, 610. 
 Venue, 616. 
 
 Corporation 
 
 Agent, cannot be, 476. 
 
 Blue Sky Law, 527 to 550. 
 
 Casualty Companies, 228. 
 
 Fidelity, Guaranty and Surety Companies, 250. 
 
 May be organized to do one or more kinds of insurance, 291. 
 
 Mutual Hail Companies, 428. 
 
 Printers' Mutual Associations, 451. 
 
 Reciprocal indemnity contracts, may exchange, 438, 445. 
 
 Corporation Laws 
 
 Co-Operative Savings and Contract Loan Companies, 585. 
 Govern insurance companies, 67, 79. 
 Life Companies, 148. 
 
 Corporators 
 
 Casualty Companies, 225, 226. 
 
 Certify to capital stock, 52. 
 
 Life, Health and Accident Companies, 69, 70. 
 
 Mutual Fire, Lightning and Hail Companies, 408, 409. 
 
 Mutual Life Insurance Companies, 152. 
 
 Stockholders' meetings, 70, 225. 
 
INDEX. 243 
 
 Credit Insurance Companies 
 Organization, 223. 
 
 County Occupation Tax 
 Prohibited,. 278. 
 
 Debts- 
 Fidelity, Guaranty and Surety Company, 252. 
 Mutual Life Insurance Company, 155. 
 
 Declaration 
 
 Reciprocal indemnity attorney shall be filed, 440. 
 
 Defense 
 
 Misrepresentation in policy application, 280, 281, 282, 286. 
 Technical provisions in fire policy, 184, 185. 
 Workmen's Compensation Act, 297, 302. 
 
 Definitions 
 
 Agents of insurance companies, 258, 465. 
 
 Association, 378. 
 
 Average weekly wages, 378. 
 
 Beneficiary, 68, 378. 
 
 Board, 384. 
 
 Company, 68. 
 
 Conspiracy in restraint of trade, 553. 
 
 Employe, 378. 
 
 Employer, 378. 
 
 Foreign Companies, 68. 
 
 Fraternal Benefit Societies, 485. 
 
 Gross premium receipts, 275. 
 
 Home office of company, 68. 
 
 Home or domestic companies, 68. 
 
 Insured, 68. 
 
 Life, Health and Accident Companies, 68. 
 
 Lloyds, 594. 
 
 Lodge system, 486. 
 
 Monopoly, 552. 
 
 Mutual Accident Companies, 395. 
 
 Net assets, 68. 
 
 Policyholders, 68. 
 
 Profits, 68. 
 
 Representative form of government, 487. 
 
 Subscriber, Workmen's Compensation, 378. 
 
 Texas securities, 133, 134. 
 
 Trust, 551. 
 
 Workmen's Compensation Act, 316, 378, 384. 
 
 Deposits 
 
 Approved by Commissioner, 97, 145, 252. 
 
 Blue Sky Law, under, 540, 549. 
 
 Casualty Companies, 227, 231, 234, 237. 
 
 Commissioner shall keep record, 104. 
 
 Co-Operative Savings and Contract Loan Companies, 589, 593, 594, 597, 605. 
 
 Fidelity, Guaranty and Surety Companies, 250, 252, 254. 
 
 Fire Companies, 178, 426. 
 
 Foreign Companies, 124,, 125, 126, 127, 178, 250, 252. 
 
 Home Companies, 97, 98, 145, 227, 231, 234, 237, 250, 252, 254. 
 
 Increased, may be, 105, 227. 
 
 Interest on, 237, 252. 
 
INDEX. 
 
 Deposits Continued. 
 
 Liable for judgment, 126. 
 
 Life Companies, reserve, 98, 103, 104, 105, 106, 107, 108, 109, 110, 112. 
 
 Life, Health and Accident Companies, capital stock, 97, 145. 
 
 Mutual Fire, Storm, Lightning and Hail Companies, 426, 434. 
 
 Mutual Life Insurance Companies, 154. 
 
 Not required, when, 127. 
 
 Reciprocal, 124. 
 
 Reciprocal Exchange, 440 (g). 
 
 Trustee, with, 252. 
 
 Withdrawal, 105, 234, 237, 254 ; 426. 
 
 Directors 
 
 Casualty Companies, 59, 60, 61, 62, 63, 64, 65, 66, 225, 228. 
 Choose officers, 63, 153. 
 Commissioner or clerk ineligible, 8. 
 Co-Operative Life Companies, 153, 154. 
 
 Election and term of office, 59, 60, 61, 62, 66, 70, 153, 225, 226. 
 Foreign Companies, 122, 130. 
 Fraternal Benefit Societies, 503. 
 Investments, loans and deposits, 82, 113. 
 Keep records, 65. 
 Make by-laws, 64, 153, 225. 
 Meetings, 60, 61, 62. 
 Misrepresentation of policy, 293. 
 Mutual Accident Companies, 392, 394, 397. 
 Mutual Fire, Lightning, Hail and Storm Companies, 410. 
 Mutual Hail Companies, 431, 432, 435. 
 Number and qualifications, 58, 70, 503. 
 Purchase, sale or loan, by or to companies, 82, 113. 
 Quorum, 66. 
 
 Resolution of, designating person to employ agents, 477. 
 Vacancies, 66. 
 
 Workmen's Compensation, Employers' Insurance Association, 351, 352, 353, 
 354, 355, 357, 363, 369. 
 
 Disbursements 
 
 Life Companies, 86. 
 
 Discrimination 
 
 Fire Companies, 213, 214. 
 
 Life, Health and Accident Companies, 289. 
 
 Distribution of Funds 
 
 Fraternal and Benefit Societies, 495, 502. 
 
 Dividends 
 
 Casualty Companies, 119, 236. 
 
 Co-Operative Savings and Contract Loan Companies, 606. 
 
 Fire Companies, 264, 265. 
 
 Health Companies, 119, 264, 265. 
 
 Life Companies, 84, 119, 159, 264, 265, 293. 
 
 Marine and Inland Companies, 264, 265. 
 
 Misrepresentation of, 293. 
 
 Mutual Accident Companies, 396. 
 
 Reciprocal Exchange, 444. 
 
 Surplus profits, 119, 236, 293. 
 
 Workmen's Compensation Act, 363, 366, 370. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 418. 
 
 Mutual Hail Companies, 433. 
 
 Mutual Life Insurance Companies, 159. 
 
 Unlawful, 84, 119, 236, 264, 265. 
 
INDEX. 245 
 
 Domestic Servants 
 
 Exempt from Workmen's Compensation Law, 298. 
 
 Embezzlement 
 
 Agent of company, 481. 
 
 Employers 
 
 Workmen's Compensation Act, 299, 300, 302, 303, 324, 325, 336, 342, 344, 
 356, 357, 372, 378. 
 
 Employes 
 
 Action against employer, 299, 300, 301, 302, 303. 
 
 Assumed risk, 297, 302. 
 
 Contributory negligence shall not be a defense, 297, 302. 
 
 Deceased, leaves legal beneficiaries, 310. 
 
 Deceased, loaves no legal beneficiaries, 313. 
 
 Definition, 378, 379. 
 
 Death of injured, 302, 303, 310 to 313, 319, 329, 331. 
 
 Fellow servant, 297, 302. 
 
 Injured, what compensation shall receive, 301, 304 to 323, 326, 329, 330, 
 
 334, 341, 342, 343, 349, 375. 
 Examination of, before board, 338. 
 Number necessary, 358, 359, 360, 361. 
 Non-subscriber, employes of, 302. 
 Record of injuries, 344. 
 Suits by, 302. 
 
 Employers' Liability 
 
 Reports as to experience, 388, 389, 390. 
 Reserve liability of company, 388, 389, 390. 
 Workmen's Compensation Law, 325, 375. 
 
 Evidence 
 
 Fire Marshal's acts, 200. 
 
 Instruments and certified copies of records, 41. 
 
 Insurance Commission Law, 218. 
 
 Examinations 
 Agents, 36, 201. 
 All companies, 51, 474. 
 Blue Sky Law, 549. 
 
 Casualty Companies, 51, 52, 53, 232, 233. 
 Co-Operative Savings and Contract Loan Companies, 586. 
 Expenses, by whom paid, 36, 74, 140, 152, 166, 250, 399, 411, 474, 517, 519, 
 
 549. 
 
 Fidelity, Guaranty and Surety Companies, 250. 
 Fire Companies, 51, 52, 53, 411, 419, 420. 
 Fraternal Benefit Societies, 503, 517, 519, 520. 
 Home Companies, 51, 52, 53, 411, 419, 436, 503, 507, 517, 520. 
 Life, Health and Accident Companies, 36, 37, 74, 140. 
 Lloyds Exchange, 579. 
 Medical, shall make, 161. 
 Mutual Accident Companies, 398, 399. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 411, 419, 420, 436. 
 Mutual Life Insurance Companies, 166, 167. 
 Reciprocal Exchanges, 444. 
 Reports made and filed, 53. 
 Reports published, 19. 
 Resident agent's law, 474. 
 State Fire Insurance Commission, 201. 
 When and how made, 36, 37, 51, -52, 53, 74, 140, 152, 167, 168, 232, 411, 419, 
 
 436, 517, 519, 549. 
 
246 INDEX. 
 
 Excess Insurance 
 
 Unauthorized companies, in, 182 (4, 5, 6). 
 
 Executor 
 
 Fidelity, Guaranty and Surety Companies, 250. 
 
 Exemplary Damages 
 
 Workmen's Compensation Law, 303, 375. 
 
 Exemption of Certain Societies 
 Blue Sky Law, 548.- 
 Fraternal Benefit Society Law, 147, 151, 275, 292, 488, 522, 523, 524. 
 
 Expenses 
 
 Blue Sky Law, incident to stock sales, 527, 529, 530. 
 
 Co-Operative Savings and Contract Loan Companies, 605. 
 
 Examinations, 36, 74, 140, 152, 166, 250, 399, 411, 474, 517, 519, 549. 
 
 Fire Marshal, 199. 
 
 Fraternal Benefit Societies, 500, 502, 517, 519. 
 
 Insurance Commission, 193, 194, 220, 278. 
 
 Local Mutual Aid Societies, 524. 
 
 Mutual Accident Companies, 401. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 417. 
 
 Mutual Hail Companies, 433, 434, 436. 
 
 Mutual Life Insurance Companies, 157. 
 
 Workmen's Compensation Act, 313, 337. 
 
 Fees 
 
 Assessment Companies, 150. 
 
 Attorneys in anti-trust suits, 561, 573. 
 
 Blue Sky Law, 529, 549. 
 
 Casualty Companies, 245. 
 
 Certificate, 46, 245. 
 
 Certificate of authority, 47, 76, 164, 245, 410, 425, 437, 506, 507, 525. 
 
 Certified copy of records, 46, 47, 70, 225, 394, 400. 
 
 Co-Operative Savings and Contract Loan Companies, 596. 
 
 Examinations, 47, 517, 519. 
 
 Excess insurance broker, 182 (4). 
 
 Fee book, 48. 
 
 Filing documents, 11, 47, 70, 75, 150, 164, 225, 245, 250, 394, 425, 437. 
 
 Filing statement, Fidelity, Guaranty and Surety Company, 250. 
 
 Fraternal Benefit Societies, 503, 506, 507, 525. 
 
 Industrial Accident Board, 346. 
 
 Lloyds Exchange, 577 to 582. 
 
 Mutual Accident Companies, 394, 400. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 461. 
 
 Mutual Fire, Storm, Lightning and Hail Companies, 409, 410, 425. 
 
 Mutual Hail Insurance Companies, 430, 437. 
 
 Mutual Life Insurance Companies, 164. 
 
 Must be paid, 266. 
 
 Printers' Mutual Companies, 452. 
 
 Reciprocal indemnity contracts, 448. 
 
 Registration of policies, 107. 
 
 State Treasurer, paid over to, 48, 107. 
 
 Valuing policies, 47. 
 
 Federal Court 
 
 Removal of suit, 33. 
 
 Fellow Servant's Negligence 
 
 Workmen's Compensation Law, no defense, 297, 301. 
 
INDEX. 247 
 
 Felony 
 
 Agent, 481. 
 
 Anti-trust laws, 563, 567, 569, 570. 
 
 Co-Operative Savings and Contract Loan Companies' officers and agents, 619. 
 
 False statement or report, 129. 
 
 Misappropriation of funtfs, 421. 
 
 Mutual Accident Companies, 407. 
 
 Officer's false statement, 129. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 421. 
 
 Mutual Life Insurance Companies, 154. 
 
 Fidelity, Guaranty and Surety Company 
 
 Administrator, executor or guardian, may act as, 250. 
 
 Agents, 251, 258, 462 to 484. 
 
 Annual statement, 252. 
 
 Assets, 252. 
 
 Assignee may act as, 250. 
 
 Attorney for service, 251, 252, 256. 
 
 Bond in lieu of deposits, 254. 
 
 Bonds, may be surety on, 250, 251, 252. 
 
 Bond of State or county official, 250, 251. 
 
 Capital stock, 50, 51, 55, 57, 250, 252, 291. 
 
 Cancellation of bond, 254, 260. 
 
 Certificate of authority, 51, 253, 257, 259, 261. 
 
 Charter, 49, 50, 252. 
 
 Consolidation of companies, 267 to 273. 
 
 Deposits, 250, 252, 254, 257. 
 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66. 
 
 Dissolution when companies consolidate, 272. 
 
 Examination, 51, 52, 53, 250. 
 
 Fee for filing copy of statement, 250. 
 
 Fiduciary and depository business, may do, 250. 
 
 Foreign, 250, 252. 
 
 Home Companies, in Texas only, deposit, 252. 
 
 Inquiries, must answer, 42. 
 
 Interest on deposits, 252. 
 
 Investments, 55, 56, 57. 
 
 Liabilities, 252. 
 
 Loss, failure to pay, 257. 
 
 Name, 50. 
 
 Organization, 49, 250, 291. 
 
 Penalty for accepting bond made by unlicensed company, 259. 
 
 Penalty when bond is improperly canceled, 260. 
 
 Powers, 250, 251. 
 
 Publication of statement, 251. 
 
 Public use, charged with, 262. 
 
 Purpose for which incorporated, 249, 250. 
 
 Receiver, may act as, 250. 
 
 Refusal to guarantee again, 260. 
 
 Reinsurance, 254. 
 
 Reserve, 16, 252, 254. 
 
 Resident agents, 470 to 474. 
 
 Securities deposited, 250, 252, 254. 
 
 Service of process, 252, 256. 
 
 Surrender of certificate of authority, 254. 
 
 Surety or guarantor, may act as, 250, 251, 252. 
 
 Taxation, 275 to 279. 
 
 Trustee, may act as, 250. 
 
 Unlicensed companies, accepting bonds made by, 259. 
 
 Venue, suit on bonds, 251, 256. 
 
 Withdrawal from bond, 255, 260. 
 
248 INDEX. 
 
 Fiduciary and Depository Business 
 
 Fidelity, Guaranty and Surety Companies may do, 250. 
 
 Fire Companies 
 
 Agents, 201, 213, 217, 462 to 484. 
 
 Annual statement, 180, 181. 
 
 Assets shown in annual statement, 181 (5). 
 
 Association of companies, 266. 
 
 Automobiles, may insure, 170. 
 
 Bond, 176 to 179. 
 
 Capital stock, 50, 51, 55, 57, 171, 172, 173, 174. 
 
 Certificate of authority, 51, 182, 191, 261. 
 
 Charter, 49, 50, 51, 271. 
 Co-insurance clause, 186, 187, 209. 
 
 Companies subject to commission law, 191. 
 
 Consolidation of companies, 267 to 273. 
 
 Directors, 58, 59. 60, 61, 62, 63, 64, 65, 66. 
 
 Disbursements shown in annual statement, 181 (8). 
 
 Dissolution when companies consolidate, 272. 
 
 Dividends, 264, 265. 
 
 Examination, 51, 52, 201. 
 
 Excess insurance, 182, 470. 
 
 Expenses of Insurance Board, 220, 278. 
 
 Fees and taxes must be paid, 266. 
 
 Fire loss, may insure, 170. 
 
 Foreign, 176, 177, 178, 179. 
 
 Impairment of capital stock, 172, 173, 174. 
 
 Income shown in annual statement, 181 (7). 
 
 Inquiries, must answer, 42. 
 
 Insurance Board Law repealed, 189. 
 
 Investments and loans, 55, 56, 175. 
 
 Joint policies, 266. 
 
 Laws governing other companies, 290. 
 
 Liabilities shown in annual statement, 181 (6). 
 
 Life and health business, cannot do, 28, 96. 
 
 Losses, record and classification of, 195. 
 
 Marine loss, may insure, 170. 
 
 Mortgagee, interest in policy, 188. 
 
 Mutual, 219, 278, 408 to 427, 451, 452, 453. 
 
 Name, 49. 
 
 Organization, 49, 408, 409, 410. 
 
 Penalties, 214, 216, 217, 264, 420, 421. 
 
 Policy, 183, 184, 185,' 186, 187, 188, 208, 209, 215, 266, 273. 
 
 Powers, 170, 175. 
 
 Premium collections, 215. 
 
 Premium rates, regulation of, 190, 194, 195, 202, 203, 204, 205, 206, 210, 
 211, 213, 214, 215. 
 
 Publication of certificate of authority, 263, 274. 
 
 Real estate holdings, 175. 
 
 Rebates and discriminations, 213, 214. 
 
 Reinsurance, 170, 177, 182. 
 
 Reserve, 16, 264, 418. 
 
 Resident agents, 470 to 474. 
 
 Risk, limit of one, 182. 
 
 Securities deposited in lieu of bond, 178. 
 
 Surplus profits, 264. 
 
 State Fire Insurance Commission Law, 221, 278. 
 
 Taxation, 266, 275, 276, 277, 278, 279. 
 
 Technical provisions in policies, 184, 185. 
 
 Unauthorized companies, 182, 465. 
 
 Valued policy, 183. 
 
INDEX. 249 
 
 Fire Losses 
 
 Annual, to be ascertained and make record, 195. 
 
 Fire Marshal 
 
 Authority and powers of, 198, 199, 200. 
 
 Duties of, 197. 
 
 State Fire Insurance Commission, 196, 197, 198, 199, 200. 
 
 Foreign Companies .* 
 
 Annual statement, 121, 180, 181, 207, 611. 
 
 Anti-trust laws, 558. 
 
 Bond, 176, 177, 178, 179, 617. 
 
 Blue Sky Law, 530, 543, 544. 
 
 By-laws, 122, 149, 507. 
 
 Charter, 122, 149, 507, 612. 
 
 Conditions under which they operate, 295. 
 
 Defined, 68. 
 
 Directors, 122. 
 
 Fidelity, Guaranty and Surety Companies, 252. 
 
 Fire Companies, 176, 177, 178, 179. 
 
 Fraternal Benefit Societies, 507, 519, 521. 
 
 Investments, 128, 132, 133, 134, 135, 144, 146. 
 
 Life, policy may contain, 89. 
 
 Losses, 94, 95. 
 
 Mutual Fjre, Lightning, Hail and Storm Companies, 424. 
 
 Officers, 122. 
 
 Suits on policies, 92. 
 
 Forfeiture 
 
 Casualty Companies, unlicensed, 238. 
 
 Charter and franchise, 119, 400, 406, 420, 503, 515, 555, 556, 557, 559, 560. 
 
 Fraternal Benefit Societies, 503, 515. 
 
 Mutual Accident Companies, 406. 
 
 Form Number 
 
 Policies shall have printed thereon, 100. 
 
 Fraternal Benefit Societies, 485 to 526 
 Accident, 489. 
 
 Accumulation basis of valuation, 516. 
 Advanced payment during organization, 503. 
 Affidavit relating to organization, 503. 
 Age limit of members, 592, 593, 595. 
 Agents, 525. 
 
 Amendments to charter, constitution and laws, 499, 503, 504, 513. 
 Annual license, 506, 507. 
 Annual statements, 496, 507, 514. 
 Annual valuation, 489, 514, 515, 516. 
 Application for membership, 498, 503. 
 Assessments, or premiums, 494, 500, 503, 514, 516. 
 Attorney for service, 507, 508. 
 Attorney General, Commissioner report to, 517. 
 Beneficiaries, 490, 491, 495, 498, 500, 511, 512. 
 Benefits 489, 493, 500, 512, 516. 
 Benefit not attachable, 512. 
 Bond, 501, 503. 
 Burial Association, 524. 
 
 Certificate of authority, 503, 506, 507, 515, 519, 521, 525. 
 Certificate of compliance, 507. 
 Certificate or policy, 489, 494, 495, 497, 498, 499, 503, 507. 
 
250 INDEX. 
 
 Fraternal Benefit Societies, 485 to 526- Continued. 
 Charter, 499, 503, 507, 511. 
 Children's insurance, 493 to 499. 
 Constitution, 486, 487, 493, 499, 501, 503, 504, 507. 
 Credits to individual members, 516. 
 Death and disability benefits, 489, 493, 494, 500. 
 Defined, 485. 
 Deferred payments, 500. 
 Disease, 489. 
 
 Distribution of funds, 502. 
 Dissolution, 517, 518. 
 
 Eleemosynary and educational societies may be beneficiaries, 500. 
 Enjoined from carrying on business, 517. 
 Examination, 503, 507, 517, 519, 520. 
 Exceeding its powers, 517. 
 
 Exempt from certain laws, 147, 151, 275, 292, 488. 
 Exemptions, 147, 151, 275, 292, 488, 522, 523, 524. 
 Expenses, 500, 502, 507, 517, 519. 
 Extra assessments may be levied, 514. 
 Extended protection, 489. 
 Failure to comply with law, 517, 521. 
 False statements, 525. 
 Fees, 506, 507, 525. 
 Fixed liabilities, 500. 
 Foreign, 507, 519, 521. 
 Forfeiture of charter, 479, 503. 
 
 Funds, 495, 496, 497, 500, 501, 502, 505, 510, 514, 515, 516. 
 Future security, provisions to insure, 514, 515, 516. 
 Funeral benefits, 489. 
 Governing body, 487, 503, 505, 509. 
 Installments of claims, 500. 
 Investment of funds, 147, 501, 507. 
 Laws of association, 485, 486, 487, 490, 493, 497, 499, 501, 503, 504, 507, 510, 
 
 513, 514. 
 
 Laws repealed, 526. 
 
 Limitation as to amount of benefit certificate, 522. 
 Loans of local lodges, 501. 
 Loan on policy, 489. 
 Local Mutual Aid Societies, 524. 
 Lodge system, 485, 486, 493. 
 Maintaining a certain financial condition, 515. 
 Medical examination, 492, 494, 522. 
 Meetings of governing body, 487, 509. 
 Meetings of subordinate lodge, 486. 
 
 Membership, 492, 498, 503, 505, 510, 511, 515 to 517, 522, 524. 
 Mergers and transfers, 496, 505. 
 Minimum assessment collection in organizing, 503. 
 Misdemeanor, 525. 
 Mortuary funds, 502, 503. 
 Name of association, 503. 
 Notice of actions against, 517, 521. 
 Number of members necessary, 503, 517, 522, 524. 
 Office location, 509. 
 
 Officers and directors, 487, 503, 510, 511. 
 Old age, 489. 
 
 One hazardous occupation, 522. 
 Organization, 503. 
 Paid up protection, 489. 
 Payment of benefits, 510. 
 Penalties, 519, 521, 524. 
 Periodical contributions, 500, 514. 
 
INDEX. 251 
 
 Fraternal Benefit Societies, 485 to 526 Continued. 
 Personal liability, officers and members, 510. 
 Power of attorney, appointing attorney for service, 507, 508. 
 Powers of associations, 503, 504. 
 Preliminary certificate of authority, 503. 
 Proceedings for dissolution, 521. 
 Process, service of legal, 507, 508. 
 Publication of affairs, 520. 
 Purpose of organization, 503. 
 Quo warranto action, 517. 
 Receiver appointed, 517, 518. 
 Refusal of license, 507. 
 Reincorporation, 504. 
 Reinsurance, 505. 
 
 Religious or charitable societies, 491, 522. 
 Report of valuation, 514. 
 Representative form of government, 485, 487. 
 Reserve, 489, 495, 500, 503. 
 
 Revocation or refusal of license, 507, 515, 519, 521. 
 Separate class of members or certificates, 493 to 498, 515. 
 Separate jurisdiction plan, 511. 
 Solvency, 514, 516. 
 State organization, 511. 
 Subordinate lodge, investments by, 501. 
 Supreme governing body, 487. 
 Surplus, 501, 516. 
 Tabular basis of valuation, 516. 
 Tables of mortality, 489, 500, 503, 514, 516. 
 Taxes, exempt from occupation, 523. 
 Term certificate, 489. 
 Temporary or permanent disability, 489. 
 Tombstones, 489. 
 
 Transfer or consolidation of membership, 505. 
 Valuation of policies, 489, 500, 503, 514, 515, 522. 
 Waiver of constitution and laws forbidden, 511. 
 Whole family insurance, 493 to 498. 
 Withdrawal equities, 489. 
 
 Funds 
 
 Fraternal Benefit Societies, 495, 496, 497, 500, 501, 502, 505, 510, 514, 
 
 515, 516. 
 
 Handling of, by directors or officers, 114. 
 Mutual Companies may invest, 416, 434. 
 
 Garnishment 
 
 Compensation exempt from. 299. 
 
 Fraternal Benefit Society benefit exempt, 512. 
 
 General Basis Schedule 
 
 State Fire Insurance Commission, 194, 201, 202, 203, 206, 211. 
 
 Governor 
 
 Insurance Commission, appoints members, 192. 
 Reinsurance contracts, approves, 177. 
 Report of Commissioner, 25. 
 
 Government 
 
 Representative form of, defined, 487. 
 
252 INDEX. 
 
 Gross Premium Receipts 
 Defined, 275. 
 
 Reported, 137, 140, 141, 275, 276. 
 Taxation, 137, 138, 140, 141, 275, 276. 
 
 Guardian 
 
 Fidelity, Guaranty and Surety Companies may act as, 250. 
 Workmen's Compensation Act, 327. 
 
 Hail Companies 
 
 Mutual, 29, 407 to 437. 
 
 Health Companies 
 
 Annual statement, 75, 121, 129. 
 
 Association of companies, 266. 
 
 Capital stock, 69, 114, 118, 123, 227. 
 
 Certificate of authority, 74, 76, 233, 243, 263. 
 
 Charter, 49, 69, 70, 71, 122, 224, 271. 
 
 Consolidation of companies, 267 to 273. 
 
 Defined, 68. 
 
 Deposits, 97, 124, 125, 126, 127. 
 
 Directors, 70, 82. 
 
 Dissolution when companies consolidate, 272. 
 
 Dividends, 119, 264, 265. 
 
 Fees and taxes must be paid, 266. 
 
 Fire, Marine, Lightning, Tornado and Inland business cannot do, 28, 
 
 Foreign, 121 to 131. 
 
 Home office location, 50, 69. 
 
 Incorporation of, 69, 223. 
 
 Industrial Insurance, 118. 
 
 Inquiries, 42. 
 
 Investments and loans, 55, 56, 128. 
 
 Joint policies, 266. 
 
 Losses, when payable, 94, 95. 
 
 Mutual, 123, 402. 
 
 Organization, 69, 223. 
 
 Penalties, 265. 
 
 Policies, suits on, 92. 
 
 Policy forms, 116. 
 
 Publication of certificate of authority, 263. 
 
 Real estate holdings, 81. 
 
 Reinsurance, 83. 
 
 Reserve, 16, 264. 
 
 Service of process, 93. 
 
 Surplus profits, 119, 264. 
 
 Taxation, 91, 97, 266, 275 to 278. 
 
 Venue in suits, 92. 
 
 Hearings 
 
 Complaints to Insurance Board, 210, 211. 
 
 Home Companies 
 
 Annual statement, 75. 
 
 Capital stock, 50, 54, 55, 57, 69, 222, 291. 
 
 Charter, 49, 50, 51, 69, 224, 225, 392, 393, 410, 430, 431, 503. 
 
 Defined, 68. 
 
 Directors, 59, 60, 61, 62, 63, 64, 65, 66, 70, 82. 
 
 Dividends, 119, 264, 265. 
 
 Examinations, 51, 52, 53, 411. 419, 436, 503, 507, 517, 520. 
 
 Investments, 55, 56, 57, 80, 113, 154, 175. 
 
INDEX. 253 
 
 Home Companies Continued. 
 Liability Companies, 290, 291. 
 Losses, 94, 95. 
 
 Mutual Accident, 391 to 407. 
 Policies, suits on, 92. 
 Reserve, 264. 
 Service of process, 93. 
 Taxation, 91, 97. 
 
 Home Office of Companies 
 Denned, 68. 
 
 Fraternal Benefit Societies, 501. 
 Investments and loans, 133. 
 Location named in charter, 50, 69, 392, 410. 
 Mutual Accident Companies, 392. 
 
 Impairment of Capital Stock 
 
 Commissioner's duty, 18, 121, 172, 173, 174. 
 Fire and Marine Companies, 173, 174. 
 Life, Health and Accident Companies, 114. 
 
 Indemnity Contracts 
 Reciprocal, 438 to 450. 
 
 Industrial Accident Board, 311, 329, 335 to 349, 381, 384 
 
 Appointment, 335. 
 
 Clerical help, 335, 337. 
 
 Expenses, 335, 337. 
 
 Fees, 346. 
 
 Members, 336, 337. 
 
 Officers and offices, 337. 
 
 Notice to, 339, 344, 348. 
 
 Quorum and seal, 345. 
 
 Reports of injuries, 305. 
 
 Refund of part of premium, 381. 
 
 Rules and powers, 306, 307, 308, 321, 329, 330, 338, 340, 341, 346 to 349. 
 
 Industrial Life, Accident and Health Companies 
 Capital stock of company, 118. 
 x Organization of company, 118. 
 Policy forms, 116. 
 
 Ineligibility of Certain Persons, 8 
 
 Inquiries 
 
 Companies must answer, 42. 
 
 Injuries * 
 
 Action for, 297, 302. 
 
 Defense to action for, 297, 302. 
 
 Workmen's Compensation, 297 to 305, 316, 317, 319, 320, 339, 344, 371, 374. 
 
 Insured 
 
 Defined, 68. 
 
 Interest on Deposits 
 
 Commissioner may permit collection, 106. 
 
 State Treasurer may permit collection, .97, 237. 
 
254: INDEX. 
 
 Investments and Loans 
 
 Capital stock and other funds, 55, 56, 57, 80, 113, 128, 132 to 136, 227, 240. 
 
 Casualty Companies, 227, 240. 
 
 Co-Operative Savings and Contract Loan Companies, 607, 608, 609. 
 
 Directors, 82, 113. 
 
 Exempt from investments, 146, 147. 
 
 Foreign Companies, 128. 
 
 Fraternal Benefit Societies, 147, 501, 507. 
 
 Home Companies, all kinds, 55, 56, 78. 
 
 Life Companies, 80, 113, 132, 133, 134, 135, 142, 144, 146, 148, 155. 
 
 Loaning funds only, 148. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 416. 
 
 Mutual Hail Companies, 434, 436. 
 
 Mutual Life Insurance Companies, 153, 157, 163. 
 
 Penalty for failure to make, 144. 
 
 Taxes reduced by investments, 137, 277. 
 
 Schedule to be filed, 136. 
 
 Texas reserves, 132, 133, 134, 135, 146. 
 
 Texas securities, 132, 133, 134, 135, 146. 
 
 Judgments 
 
 Deposit liable for, 126. 
 
 Liability, under Workmen's Compensation Law, 375. 
 
 Must be paid, when, 44, 95, 257, 375. 
 
 Laborers 
 
 Exemption of certain, from Workmen's Compensation, 298. 
 
 Legislature 
 Report to, 43. 
 
 Liability- 
 Fraternal Benefit Societies, 500, 510. 
 Total permanent, 312, 316, 317, 327, 329. 
 No personal, 510. 
 
 Mutual Accident Company, 401, 402. 
 
 Mutual Burglary and Loss in Transportation Companies, 458. 
 Mutual Fire, Lightning, Hail and Storm Companies, 414, 415. 
 
 Liability Insurance' Compani 
 Agents, 462 to 484. 
 Capital stock, 291. 
 Organization, 223, 291. 
 Reports as to experience, 388, 389. 
 Reserves, how calculated, 388, 389, 390. 
 Resident agents, 470 to 474. 
 Workmen's Compensation, 325, 380. 
 
 License 
 
 Co-Operative Savings and Contract Loan Companies, 5851 
 
 Fraternal Benefit Societies, 503, 506, 521, 525. 
 
 Lloyds Exchange, 576. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 409, 410, 420, 424. 
 
 Mutual Hail Companies, 430. 
 
 Revocation of license, 18, 20, 33, 36, 44, 111, 119, 161, 182 (3), 212, 216, 
 
 233, 257, 261, 399, 411, 583, 600/606, 620. 
 Texas Employers' Insurance Association, 333, 360, 362. 
 
 Lien 
 
 Fire Companies cannot avoid responsibility, 208. 
 
INDEX. 255 
 
 Life Companies 
 
 Agents, 111, 142, 462 to 484. 
 
 Annual statement, 75, 121, 136, 137. 
 
 Assessment, 150, 151, 292. 
 
 Association of companies, 266. 
 
 Attorney for service, 130, 131. 
 
 Beneficiaries, 120. 
 
 Capital stock, 69, 114, 118, 123, 145. 
 
 Certificate of authority, 75, 77, 135, 140 to 143, 148, 153, 263. 
 
 Charter, 28, 69, 70, 71, 122, 152, 271. 
 
 Commissions, shall not pay officers, 111. 
 
 Consolidation of companies, 267 to 273. 
 
 Corporation cannot be agent, 476. 
 
 Deposits, 97, 98, 103, 105, 106, 108, 109, 110, 113, 124, 125, 126, 127, 145, 154. 
 
 Defined, 68. 
 
 Directors, 70, 82, 113, 122, 152, 153, 477. 
 
 Discrimination, 289. 
 
 Disbursements, 86. 
 
 Dissolution when companies consolidate, 272. 
 
 Dividends, 84, 119, 264, 265. 
 
 Estimates on policies, 293. 
 
 Examinations, 36, 37, 74, 140, 152. 
 
 Fees, 47, 70, 76, 107, 150, 164, 265. 
 
 Fire, Marine, Lightning, Tornado and Inland business, cannot do, 28, 96. 
 
 Foreign, 121 to 131. 
 
 Form numbers, 100. 
 
 Home office location, 69. 
 
 Industrial Insurance, 118. 
 
 Inquiries, must answer, 42. 
 
 Investments and loans, 80, 113, 128, 132 to 136, 142, 144, 145, 148, 154. 
 
 Joint policies, 266. 
 
 Laws govern other companies, 290. 
 
 Legal reserve, 132, 134, 135, 136. 
 
 Loan business, only, 148. 
 
 Losses, when payable, 94, 95. 
 
 Misrepresentation of policies, 280, 281, 282, 286, 293. 
 
 Mutual, 123. 
 
 Mutual Life Insurance Companies, 152 to 169. 
 
 Name, 69, 152. 
 
 Officer to employ agents, 477. 
 
 Officers, 122. 
 
 Organization, 69, 152. 
 
 Penalties, 265, 289. 
 
 Pension, shall not grant, 85. 
 
 Policies, Foreign Company, 89. 
 
 Policy, legal requirements of, 87, 89, 282, 283, 286, 287, 288. 
 
 Policy, shall not contain, 88, 283 to 288. 
 
 Policies, shall contain, 88, 282, 283 to 288. 
 
 Policies, suits on, 92, 280, 281, 282, 286. 
 
 Policy forms, 100, 115, 116, 160. 
 
 Premiums, report of, 137, 139, 140. 
 
 Preliminary term policy, 159, 287. 
 
 Publication of certificates of authority, 263, 274. 
 
 Real estate holdings, 81, 132, 154. 
 
 Registration certificate of deposit, 99. 
 
 Registration fees, 107. 
 
 Rebating, 289. 
 
 Reinsurance, 83, 109. 
 
 Reinsurance business only, 146. 
 
 Reserve, 34, 98, 103, 105, 106, 108, 158, 264. 
 
 Salaries of officers, 85. 
 
 f 
 
256 INDEX. 
 
 Life Companies Continued. 
 
 Service of process, 93, 130, 131. 
 
 Special or board contracts, 289. 
 
 Sub-standard risks, 110. 
 
 Surplus profits, 119, 159, 264. 
 
 Taxation, 91, 97, 137, 138, 140, 141, 266. 
 
 Texas reserves, 132, 133, 135, 136, 137. 
 
 Texas securities, 132, 133, 134, 135, 136. 
 
 Voucher showing disbursements, 86. 
 
 Venue in suits, 92. 
 
 Withdrawn, desiring renewal license, 141. 
 
 Withdrawn, may maintain agents, 142. 
 
 Lightning and Storm Companies 
 Capital stock, 50, 51, 55, 57. 
 Certificate of authority, 51. 
 Charter, 49, 50, 271. 
 Consolidation of companies, 267 to 273. 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66. 
 Dissolution when companies consolidate, 272. 
 Examination, 51, 52. 
 Inquiries must be answered, 42. 
 Investments and loans, 55, 56. 
 Laws govern other companies, 290. 
 Life business, cannot do, 28, 96. 
 Mutual, 408 to 427. 
 Name, 50. 
 Reserve, 16. 
 
 List- 
 Names of agents, etc., 77, 477. 
 
 Limitation 
 
 Time within which to bring suit, 284. 
 
 Live Stock Companies 
 Capital stock, 222. 
 Certificate of authority, 51. 
 Charter, 49, 271. 
 
 Consolidation of companies, 267 to 273. 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66. 
 Dissolution when companies consolidate, 272. 
 Examination, 51, 52. 
 Inquiries, must answer, 42. 
 Investments and loans, 65, 66. 
 Name, 50. 
 
 Organization and operation, 222. 
 Reserve, 16. 
 Taxation, 275 to 279. 
 
 Loan and Reserve Fund 
 
 Co-Operative Savings and Contract Loan Companies. 605. 
 
 Local Mutual Aid Societies 
 Advertising matter, 524. 
 Annual reports, 524. 
 Burial associations, 524. 
 Business limited to certain territory, 524. 
 Examinations, 524. 
 Expenses, 524. 
 
INDEX. 257 
 
 Location of Office 
 Blue Sky Law, 529. 
 Casualty Companies, 224. 
 Fraternal Benefit Societies, 503, 507. 
 Home Insurance Companies, 50. 
 Lloyds Exchange, 575, 576. 
 Mutual Fire, Lightning and Hail Companies, 409, 410. 
 
 Lloyds Exchange 
 
 Attorney in fact, 575. 
 Attorney for service, 582. 
 Examination, 579. 
 Fee, 577, 582. 
 Lloyds defined, 574. 
 Net assets, 578, 581. 
 Organization, 576. 
 Penalties, 579, 583. 
 Subscribers, 580. 
 Suits, 582. 
 
 Losses 
 
 Agent shall be liable to policyholder for, 468. 
 
 Classification by Insurance Commission, 195. 
 
 Failure to pay, 95, 257. 
 
 Fidelity, Guaranty and Surety Companies, failure to pay, 257. 
 
 Fire, 195, 197, 198. 
 
 Mutual Accident Companies, 401, 405. 
 
 Mutual Burglary, Robbery and Transportation Loss Company, 456. 
 
 Mutual Fire, Storm and Lightning Companies, 414. 
 
 Mutual Hail Companies, 434, 436. 
 
 Mutual Life Insurance Companies, 157. 
 
 Reciprocal indemnity contracts, 444. 
 
 Shall be paid when, 94. 
 
 Lump Sum Payment 
 
 By Industrial Accident Board, 329. 
 
 Marine and Inland Companies 
 Agents, 462 to 48*4. 
 Annual statement, 180, 181. 
 Association of companies, 266. 
 Capital stock, 50, 51, 55, 57, 173, 174. 
 Certificate of authority, 33, 51, 182, 263. 
 Charter, 49, 50, 271. 
 Consolidation of companies, 267 to 273. 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66. 
 Dissolution when companies consolidate, 272. 
 Dividends, 264, 265. 
 Examination, 51, 52. 
 Excess insurance, 182 (4, 5, 6), 470. 
 Fees and taxes, must be paid, 266. 
 Inquiries, must answer, 42. 
 Investments and loans, 55, 56. 
 Joint policy, 266. 
 Laws govern other companies, 290. 
 Life business, cannot do, 28, 96. 
 Name, 50. 
 Organization, 49. 
 
 Penalties for violating laws, 266, 464. 
 Powers, 170, 175. 
 
258 INDEX. 
 
 Marine and Inland Companies Continued. 
 
 Publication of certificate of authority, 263, 274. 
 
 Real estate holdings, 175. 
 
 Reinsurance, 170, 177, 182 (2). 
 
 Reserve, 17, 264. 
 
 Resident agents, 470 to 474. 
 
 Risk, limit of one, 181, 182 (1). 
 
 Surplus, how invested, 56. 
 
 Surplus profits, 264. 
 
 Taxation, 275 to 279. 
 
 Unauthorized companies, 182 (4, 5, 6). 
 
 Unearned premiums, 264. 
 
 Medical Examinations 
 
 Fraternal Benefit Societies, 492, 494, 522. 
 Mutual Life Insurance Companies, 161. 
 
 Meetings 
 
 Casualty Companies, 225, 268. 
 
 Fraternal Beneficiary Associations, 486, 487, 509. 
 
 Mutual Accident Companies, 396. 
 
 Mutual Fire, Lightning, Hail and Storm, 413. 
 
 Mutual Life Insurance Companies, 153, 167. 
 
 Policyholders, 153, 167, 396. 
 
 Stockholders, 268. 
 
 Texas Employers' Insurance Association, 352, 357, 358. 
 
 Membership 
 
 Fraternal Benefit Societies, 490, 503, 510, 511, 516, 517. 
 
 Lloyds Exchange, 574. 
 
 Mutual Fire, Lightning, Hail and Storm Company, 413, 418. 
 
 Merger and Transfers 
 
 Fraternal Beneficiary Association, 496, 505. 
 
 Misappropriation of Funds 
 
 Mutual Insurance Companies, 421. 
 
 Misdemeanor 
 
 Agents, 289, 466, 479, 480, 482, 525, 545, 583, 618. 
 
 Blue Sky Law, 545. 
 
 Co-Operative Savings and Contract Loan Companies, 618, 619, 620. 
 
 Fraternal Benefit Societies, 525. 
 
 Insurance Commission Law, 217. 
 
 Lloyds Exchange, 583. 
 
 Medical examination, 161. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 421. 
 
 Mutual Life Insurance Companies, 161. 
 
 Rebates and discriminations, 214, 289. 
 
 Reciprocal indemnity contracts, 446. 
 
 Misrepresentation 
 
 Application for policy must be material, 282, 286, 294. 
 
 Blue Sky Law, 538. 
 
 Fraudulently made, 286, 469. 
 
 Pay roll, Workmen's Compensation, 382. 
 
 Policy forms, benefits, dividends or surplus, 293. 
 
 Stocks, sale, 538. 
 
INDEX. 259 
 
 Monopoly- 
 Defined, 552. 
 
 Penalties, 555, 557, 561, 563, 567 to 571. 
 Prohibited, 554. 
 
 Municipal Occupation Tax 
 Prohibited, 277. 
 
 Mutual Accident Companies 
 Act, subject to this, 395, 406. 
 Advance funds, must be deposited in bank, 393. 
 Admission fees, dues and assessments, 395, 401. 
 Affidavits of incorporators, 393. 
 Annual statement, 400. 
 
 Applications, must have 200 to organize, 393, 402. 
 Assessment plan, 392. 
 Assessments, 395, 401, 402. 
 
 - Attorney General, charter and affidavits presented to, 393. 
 Beneficiary, change of, 404. 
 Benefits, 401. 
 
 By-laws, 394, 396, 397, 401, 404, 405. 
 Capital stock, have none, 392, 396. 
 Certificate of authority, 394. 
 Charter, 392, 393, 394, 400. 
 Commissioner's duties, 394, 399. 
 Definition, 395. 
 Directors, 392, 394, 397. 
 Dividends, 396. 
 Examination, 398, 399. 
 Exempt from certain laws, 292. 
 Expense fund, 401. 
 Fees, 394, 400. 
 
 Forfeiture of charter and franchises, 400, 406. 
 Funeral benefit, 402. 
 Health insurance, 402. 
 Insurance in force at organization, 393. 
 Investment and loans, 401. 
 Liability, limit of, 405. 
 Lodge system, none, 395. 
 Losses, 401, 405. 
 Meetings, 396. 
 
 Members, 396, 397, 398, 403. 
 Name of company, 392. 
 Notice of assessment, 403. 
 Notice of by-law adoption, 397. 
 Office location, 392. 
 Organization, 391, 393. 
 Penalties, 406, 407. 
 Policy, 395, 401, 405. 
 Powers, 394, 395. 
 Profits, 396. 
 Reserve fund, 401. 
 Salaries of officers, 396. 
 
 Sickness or disease, may insure against, 402. 
 Term of existence, 392. 
 Workmen's Compensation, 380. 
 
260 INDEX. 
 
 Mutual Burglary, Bobbery and Loss in Transportation Companies 
 Admitted to do business, 454. 
 Agents, 456. 
 
 Annual report, 456, 460. 
 Assessments, 458. 
 Assets, 456, 460. 
 Attorney for service, 459. 
 Business limited, 457. 
 Certificate of authority, 456. 
 Charter, 456. 
 Fees, 461. 
 Impairment, 456. 
 Liability of policyholders, 458. 
 Limitation of business, 457. 
 Organization, 454. 
 Penalties, 460. 
 Policyholders, 458. 
 Premiums, 458. 
 
 Prerequisites to transacting business, 455, 456. 
 Membership fees, 458. 
 Reserve, reinsurance, 457. 
 Service of process, 459. 
 Statement, 456, 460. 
 Taxes,, 461. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 408 to 427 
 Affidavit, 409, 410. 
 
 Application for preliminary permit, 409. 
 Application for policies, must have, 409. 
 Annual premium, 414, 415. 
 Annual savings, ten per cent to surplus, 415. 
 Annual statement, 412, 427. 
 Assets of Foreign Companies, 29, 424. 
 Assessments, 414, 415, 420. 
 Attorney General, report to, 411, 420. 
 Benefits, shall share, 413. 
 Bonds of officers, 415. 
 Business office, 409, 410. 
 By-laws, 410, 414, 415. 
 
 Certificate of authority, 409, 410, 411, 420, 423, 424. 
 Charter, 410, 420. 
 
 Commissioner's duties, 409, 410, 411, 414, 420, 423 to 425. 
 Deposits, 426. 
 
 Declaration, as to withdrawal of securities, 426. 
 Directors, 410, 414. 
 Dividends, 418. 
 Examination, 419, 420. 
 Expenses, 414, 417. ' 
 Failure to report condition, 421. 
 False statement, 421. 
 Fees, 409, 410, 425. 
 Felony, 421. 
 
 Fire Companies, laws governing stock, 422. 
 Foreign Mutual Companies, 424. 
 Forfeiture of charter, 411, 420. 
 Funds, 416. 
 Insolvency, 411. 
 
 Insurance in force before granting charter, 410. 
 Investment and loans, 416. 
 Liabilities, 414, 415. 
 Losses, 414. 
 
INDEX. 261 
 
 Mutual Fire, Lightning, Hail and Storm Companies Continued. 
 Meetings of policyholders, 413. 
 Members, 413, 414, 415, 418. 
 Misappropriation of funds, 421. 
 Misdemeanor, 421. 
 Name, 408, 409, 410. 
 Note for first assessment, 410. 
 Number of risks, for granting charter, 410. 
 Number who may incorporate, 408. 
 Officers, election, term and bond, 415. 
 Organization, 408, 429, 430. 
 Penalty, 421, 423. 
 Policy, 409, 410. 
 
 Policyholders, 413, 414, 415, 418. 
 Preliminary certificate of authority, 409. 
 Premiums, 410, 414, 415, 418. 
 Profit or saving to members, 418. 
 Repeal of Chapter 10, Title 71, 427. 
 Revocation of license, 411, 420, 423. 
 Reserve, 418. 
 
 Residence of incorporators, 409. 
 Risk, largest single, 419, 420. 
 Securities, withdrawal of, 426. 
 Solvency of company, 411, 418. 
 Statement, 409, 418. 
 
 Stock Companies, subject to laws for, 422. 
 Suit for penalties, 423. 
 Surplus fund, 415. 
 Suspension of license, 420, 423. 
 Taxes, 425. 
 
 Title must contain the word "Mutual," 408. 
 Votes of policyholders, 413. 
 
 Mutual Compani 
 
 Accident Companies, 123, 391 to 407. 
 
 Burglary, Robbery and Transportation Loss Companies, 454 to 461. 
 
 Commissioner shall admit, when, 29. 
 
 Cyclone, Tornado, Hail and Storm Companies (foreign), 29, 424. 
 
 Farmers and Printers, 427, 453. 
 
 Fire Companies, 219, 278. 
 
 Fire, Lightning, Hail and Storm Companies, 408 to 437. 
 
 Inquiries, must answer, 42. 
 
 Insurance Commission Law, 219. 
 
 Licensed, 29. 
 
 Life, Health and Accident, 123. 
 
 Mutual Hail Companies, 428 to 437. 
 
 Mutual Life Insurance Companies, 152 to 169. 
 
 Printers' Mutual Fire and Storm Associations, 426, 451, 452, 453. 
 
 Taxes, exempt from occupation, 278. 
 
 Workmen's Compensation, 380. 
 
 Mutual Hail Insurance Companies, 428 to 437 
 Annual statement, 436. 
 Application for preliminary permit, 429. 
 Application for charter, 430, 431. 
 Assessments, 429, 430. 
 Attorney General, 434, 436. 
 Board of Directors, 432, 435. 
 Bond of officers, 432. 
 By-laws, 432. 
 
262 INDEX. 
 
 Mutual Hail Insurance Companies 428 to 437 Continued. 
 Certificate of authority, 429, 430. 
 Deposits, 434. 
 Directors, 431, 432, 435. 
 Dividend, 433. 
 Examination, 436. 
 Expenses, 433, 435, 437. 
 Fees, 431, 437. 
 Funds, 434. 
 
 Interest on investments, 434. 
 Investment, 434, 436. 
 Liability of policyholder, 430. 
 Losses, 433, 434, 436. 
 Name, 431. 
 
 Note for assessment, 429, 430, 433. 
 Number of applicants, 430. 
 Number of counties, 430. 
 Officers, 431. 
 
 Organization, 407, 408, 409, 411, 428, 429, 430, 432. 
 Place of office, 431. 
 Policy, 412, 433. 
 Policyholder, 433. 
 
 Preliminary certificate of authority, 429. 
 Premium, 430, 433, 435, 436. 
 Rates, 435. 
 Reserve fund, 434. 
 
 Secretary of State, shall file charter, 430. 
 Settlement of losses, 433. 
 Suit on premium note, 430, 433. 
 Title must contain word "Mutual," 428. 
 
 Mutual Life Insurance Companies, 152 to 169 
 Agents, 165. 
 Annual report, 164. 
 Apportionment of surplus, 159. 
 Bonds of officers, 153. 
 Borrow money, 155, 163. 
 Business confined to Texas, 160. 
 By-laws, 153. 
 
 Cash value of policy, 163. 
 Certificate of authority, 152, 164, 165, 167. 
 Charter, 152. 
 
 Contract between company and agent, 165. 
 Debts, 155, 168. 
 
 Default in premium payment, 163. 
 Deposits, 98 to 112, 154. 
 Directors, 152, 153, 154, 161. 
 Dividends, 159. 
 Examination, 153, 166, 167. 
 Expenses, 157. 
 Fees, 164. 
 
 Felony ; officer or director, 154. 
 Funds, where deposited, 154. 
 Investments and loans, 154, 157. 
 Loan on policy, 157, 163. 
 Medical examination, 161. 
 Name, 152. 
 
 Net premium computed, 157. 
 Officers, 153, 154, 161. 
 Organization, 152. 
 Paid up insurance, 163. 
 
INDEX. 263 
 
 Mutual Life Insurance Companies, 152 to 169 Continued. 
 Penalties, 154, 161. 
 Policies, 152, 156, 160, 162, 163. 
 Policy form prescribed, 160. 
 Policyholders' loans, 157, 163. 
 Policyholders' meetings, 153, 167. 
 Preliminary certificate of authority, 152. 
 Preliminary term insurance, 157. 
 Premiums, 157, 159, 162, 163. 
 Real estate holdings, 154. 
 Receiver, 167. 
 
 Registration of policies, 98 to 112. 
 Reinsurance, 167. 
 
 Reserve, 98, 103, 105, 106, 108, 109, 110, 112, 158, 163, 167, 168. 
 Surplus to policyholders, 159. 
 Surrender value of policies, 163. 
 Suspension of license, 167. 
 Taxation, 168. 
 Valuation of policies, 156. 
 Winding up affairs of company, 167. 
 
 Name of Insurance Company 
 Casualty, 50, 224. 
 Consolidated Company, 269. 
 
 Co-Operative Savings and Contract Loan Companies, 611. 
 Fraternal Beneficiary Associations, 503. 
 Home Companies, 50. 
 Blue Sky Law, 518. 
 Life, Health and Accident, 69. 
 Lloyds Exchange, 576 (a). 
 Mutual Accident, 392. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 409, 410. 
 Mutual Hail Company, 431. 
 Mutual Life Insurance Companies, 152. 
 Reciprocal indemnity contracts, 440. 
 
 Negligence 
 
 Workmen's Compensation Law, defense and proof, 296. 
 
 Net Assets- 
 Defined, 69. 
 
 Net Value- 
 Companies must have on hand, 13. 
 Policies calculated, 12, 13, 14, 34, 40, 101, 103. 
 
 Notice- 
 Assessment or premium, 401. 
 Claim for damages, 285. 
 Fraternal Benefit Societies, 517, 521. 
 Meetings, 357. 
 
 Misrepresentation in policy application, 280. 
 Mutual Accident Companies, 397, 403. 
 Premium payment, 162, 401. 
 Publication of, 274. 
 Reasonable time, 281. 
 
 State Fire Commission shall give, 202, 207". 211. 
 Subscriber shall give to employes, 372, 374. 
 Workmen's Compensation Law. 300, 301, 305, 339, 340, 348, 357, 373, 374. 
 
264: INDEX. 
 
 Occupation Taxes 
 
 Casualty Companies, 275 to 282. 
 
 Fidelity, Guaranty and Surety Companies, 275 to 282. 
 
 Fire Companies, 275 to 282. 
 
 Live Stock Companies, 275 to 282. 
 
 No other shall be levied, 139, 278. 
 
 Life Companies, 137, 138, 139, 140, 141. 
 
 General agent, 483, 484. 
 
 Officers 
 
 Annual statement, 129, 181, 228. 
 
 Blue Sky Law, 529, 531, 539, 540, 545. 
 
 Bond given by, 153, 415, 432, 501. 
 
 Casualty Companies, 226, 246. 
 
 Commissioner or clerk cannot be, 8. 
 
 Commissions cannot be paid to, 111. 
 
 Co-Operative Savings and Contract Loan Companies, 597, 598, 618, 619. 
 
 Directors, chosen by, 63, 153, 432. 
 
 False statement, 129, 525. 
 
 Foreign Companies, 121, 129. 
 
 Fraternal Beneficiary Association, 487, 503, 510, 511. 
 
 Industrial Accident Board, 337. 
 
 Interest in purchase, sale or lease of company, 82, 1.13, 227. 
 
 List of authorized, and postoffice address filed, 539. 
 
 Misrepresentation of policy, 293. 
 
 Mutual Accident Companies, 395, 407. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 410, 415. 
 
 Mutual Hail Companies, 432. 
 
 Mutual Life Insurance Companies, 153, 154. 
 
 Printers' Mutual Companies, 452. 
 
 Service of process, 93, 246. 
 
 Texas Employers' Insurance Association, 353. 
 
 Organization 
 
 Accident Companies, 223. 
 
 Burglary and Theft Companies, 223. 
 
 Casualty Companies, 223. 
 
 Companies to do more than one kind of insurance, 283. 
 
 Co-Operative Savings and Contract Loan Companies, 585, 682. 
 
 Credit Insurance Companies, 223. 
 
 Fidelity, Guaranty and Surety Companies, 49, 249, 250. 
 
 Fire Companies, 49, 50, 228. 
 
 Fraternal Beneficiary Associations, 503. 
 
 Insurance Companies, all kinds, 49. 
 
 Liability Insurance Companies, 223. 
 
 Life, Health and Accident Companies, 69, 222. 
 
 Live Stock Companies, 222. 
 
 Lloyds Exchange, 576. 
 
 Marine Companies, 222. 
 
 Mutual Assessment Accident Companies, 391, 393, 394. 
 
 Mutual Burglary, Robbery and Loss in Transportation Companies, 454. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 408, 409, 410, 428, 430. 
 
 Mutual Life Insurance Companies, 152. 
 
 Printers' Mutual Companies, 451. 
 
 Title Insurance Companies, 223. 
 
 Penalties 
 
 Agent's false misrepresentation, 479. 
 
 Agent's license revoked, 217, 473, 502, 525. 
 
 Agents without license, 448 to 452, 455, 456, 463, 464, 466 to 475, 478, 479. 
 
INDIA. 265 
 
 Penalties Continued. 
 
 Anti-trust laws, 555, 557, 558, 561, 563, 565, 567, 568, 569, 570. 
 
 Blue Sky Law, 544, 545. 
 
 Bond of Fire Insurance Companies, 179. 
 
 Casualty Companies, 239. 
 
 Co-Operative Savings and Contract Loan Companies, 600, 606, 618, 619, 620. 
 
 Dividends unlawful, 264. 
 
 Embezzlement, 481. 
 
 Fraternal Beneficiary Associations, 519, 521, 525. 
 
 Life, fire and marine insurance laws, 150, 464. 
 
 Lloyds Exch;in<,M>. 579, 583. 
 
 Misrepresentation by agent, 480, 482. 
 
 Mutual Accident Companies, 406, 407. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 460. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 423. 
 
 Mutual Life Insurance Companies, 154, 157, 161. 
 
 Rebates and discriminations, 214, 289. 
 
 Resident agent's law, 473. 
 
 State Insurance Commission, 201, 211, 214, 216, 217, 218. 
 
 Surety company bond improperly canceled, 260. 
 
 Surety company, for accepting unlicensed, 259. 
 
 Venue for suits, 229. 
 
 Workmen's Compensation Act, 333, 344, 382. 
 
 Permit- 
 Mutual Fire, Lightning, Hail and Storm Companies, 409, 410. 
 Mutual Hail Companies, 429. 
 Stock sale, 532, 533, 534, 536, 537, 538, 542, 543. 
 
 Personal Property 
 Taxation, 280. 
 
 Plate Glass Insurance 
 
 Organization of company, 223. 
 
 Policies 
 
 Age of insured, 87, 88. 
 
 Agent cannot change, 475. 
 
 Application for, 280, 281, 282, 286, 288, 393, 499. 
 
 Casualty Companies, 231. 
 
 Classes of, 100. 
 
 Co-insurance 'clauses, 186, 187, 209. 
 
 Consolidated Companies, 273. 
 
 Entire contract, shall contain, 87, 286, 288. 
 
 Extended insurance, 87: 
 
 Fee for valuing, 47. 
 
 Fire Companies, 188, 189, 208, 209, 214, 231. 
 
 Foreign Life (may contain), 89. 
 
 Form number, 100. 
 
 Forms, 115, 116, 160, 207. 
 
 Fraternal Beneficiary Associations, 489, 499, 507, 514, 515. 
 
 Hazardous occupations, 88. 
 
 Indisputable after two years, 87, 286. 
 
 Installments, table of, 87. 
 
 Joint, 266. 
 
 Laws of Texas, govern contract, 283. 
 
 Level premium, shall not be issued, 287. 
 
 Life, shall contain, 87. 
 
 Life, shall not contain, 88. 
 
 Limiting time of suit upon, 88. 
 
266 INDEX. 
 
 Policies Continued. 
 
 Loans upon, 88, 162. 
 
 Misrepresentation in application, 280, 281, 282, 294. 
 
 Misrepresentations of, 280, 281, 282, 293, 294. 
 
 Mortgagor, interest in, 188. 
 
 Mutilated, 102. 
 
 Mutual Accident Companies, 394, 395, 401, 402, 405. 
 
 Mutual Hail Insurance Companies, 433. 
 
 Mutual Burglary, Robbery and Loss in Transportation Companies, 455. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 408, 409, 412, 414, 
 
 415, 417. 
 
 Mutual Life Insurance Companies, 152, 156, 160, 162, 163. 
 Net value calculated, 12, 110. 
 Preliminary term, limited to one year, 160, 287. 
 Premium reduction, 84. 
 Prerequisite to issuing, 231. 
 Reciprocal Exchange, 445, 446. 
 Registration, 99, 101, 103. 
 Reserve value of, 87. 
 Representations not warranties, 87. 
 Resident agents, must be written through, 470 to 474. 
 Surrender value, 88, 163. 
 Settlement at less than face of, 88. 
 Stipulations contrary to Texas laws, void, 283. 
 State Treasurer's receipt, 97. 
 Suicide, 88. 
 
 Table of loan values and options, 87. 
 Technical provisions, 184, 185. 
 Terminations, record of, 101. 
 Valuation, 101, 156, 158. 
 
 Valuation by Commissioners of other States accepted, 14. 
 Valued, a liquidated demand, 183. 
 Venue in suits on, 92. 
 
 Word "Mutual" shall appear on first page of, 408. 
 Workmen's Compensation Act, 359, 360, 361, 364, 366, 368, 371, 373, 374, 
 
 377, 380. 
 
 Policy-holder 
 
 Agent, liable to, when, 468. 
 
 Annual and special meetings, 153, 167, 396. 
 
 Complaints as to fire insurance rates, 210, 211. 
 
 Defined, 68. 
 
 Deposit, protection, 97, 98, 125, 126, 127, 434. 
 
 Dividends, Life Companies, 94, 157, 158. 
 
 Examination list in report of, 166. 
 
 Loans to, 157. 
 
 May maintain actions, 78, 211. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 458. 
 
 Mutual Fire, Storm and Lightning Companies, 413. 
 
 Mutual Hail Companies, 434. 
 
 Mutual Life Insurance Companies, 153, 157, 158, 159, 162, 166, 167, 168. 
 
 Notice of premium payment, 162. 
 
 Profit-sharing, 213, 413. 
 
 Rates and schedules of fire insurance, 205. 
 
 Surplus to, 13, 14, 33, 114, 123, 159, 171, 283. 
 
 Policy-holders' Fund 
 
 Mutual Hail Companies, 434. 
 
INDEX. 267 
 
 Power of Attorney 
 Blue Sky Law, 544. 
 Foreign Life Companies, 130. 
 Fraternal Beneficiary Associations, 507. 
 Reciprocal contracts, 441. 
 
 Powers 
 
 Fraternal Beneficiary Associations, 503, 504. 
 
 State Fire Insurance Commission, 194, 195, 201, 202, 203, 204, 205, 206, 207. 
 
 Preliminary Certificate of Authority 
 Fraternal Benefit Society, 503. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 409. 
 Mutual Hail Company, 429. 
 Mutual Life Insurance Companies, 152, 153. 
 
 Preliminary Term Policy 
 
 Limited to one year, 160, 287. 
 
 Mutual Life Insurance Companies, 160. 
 
 Premium Receipts 
 
 Annual statement, 137, 140, 141. 
 Gross, defined, 275. 
 
 Report of collections, 137, 138, 140, 141. 
 Taxation, 137, 138, 140, 141, 275, 276. 
 
 Premium Notes 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 401. 
 Mutual Hail Companies, 429, 430, 432, 433. 
 
 Premiums 
 
 Collection of, 162, 215, 458. 
 
 Default in payment, 163. 
 
 Excess insurance, 153, 181 (4, 5, 6), 182 (4, 5, 6). 
 
 Fire insurance, 190, 194, 195, 201, 202, 203, 204, 205, 206, 210, 211, 215. 
 
 Fraternal Benefit Society, 494, 500, 503, 514, 516. 
 
 Grace for payment of, 87. 
 
 Gross receipts, defined, 275. 
 
 Mutual Accident Companies, 401. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 458. 
 
 Mutual Hail Companies, 429, 433, 435, 436. 
 
 Mutual Fire, Storm and Lightning Companies, 409, 414, 418. 
 
 Mutual Life Insurance Companies, 157, ^62, 163. 
 
 Notice to policyholder, 162. 
 
 Payable in advance, 98. 
 
 Payable outside the State, 283. 
 
 Report of collections, 137, 140. 
 
 Reciprocal Exchange, 443, 444. 
 
 Sub-standard risk, 110. 
 
 Taxes, 137, 138, 275, 277, 425. 
 
 Workmen's Compensation, 324, 363 to 370, 380, 381, 382. 
 
 Printers' Mutual Fire and Storm Compani 
 Annual report, 427, 452, 453. 
 Bond of Treasurer, 452. 
 Certificate of authority, 452. 
 Corporation may be formed, 451. 
 Fee for filing statement, 453. 
 Organization, 451. 
 
68 INDEX. 
 
 Process, Service of Legal 
 Casualty Companies, 246. 
 
 Fidelity, Guaranty and Surety Companies, 252, 256. 
 Fraternal Beneficiary Associations, 507, 508. 
 Life Companies (foreign), 130, 131. 
 Life, Health and Accident Companies (home), 93. 
 Surety Company bonds, 256. 
 
 Profits 
 
 Defined, 68. 
 
 Dividends, 84, 119, 236. 
 
 Mutual Accident Companies, 396. 
 
 Sharing, 213, 219. 
 
 Promotion 
 
 Blue Sky Law, 527, 528, 530, 533, 535, 540. 
 
 Publication 
 
 Capital stock, notice of increase or decrease, 235, 247. 
 
 Certificate of authority, 263. 
 
 Examination reports, 19, 520. 
 
 Fidelity, Guaranty and Surety Companies, reports, 250. 
 
 Fraternal Benefit Society's examination, 520. 
 
 No adverse, 520. 
 
 When and how made, 263, 274. 
 
 Public Use 
 
 Surety Companies, charged with, 262. 
 
 Bates of Fire Insurance 
 Anti-trust Law, 540. 
 
 Insurance Commission, regulations by, 190, 194, 195, 201, 202, 203, 206, 210, 
 211, 212, 213, 215. 
 
 Heal Estate 
 
 Casualty Companies, 241, 242. 
 
 Fire and Marine Companies, 175. 
 
 Deposit held in trust, 98. 
 
 Holdings, 81, 154, 175, 241, 242. 
 
 Investment and loans, 55, 80, 154, 175, 227, 229. 
 
 Life Companies' holdings, 81, 133. 
 
 Taxation, 91/97, 277. 
 
 Bebates * 
 
 Anti-trust Law, 569. 
 Fire Companies, 213, 214. 
 Life, Health and Accident Companies, 289, 302. 
 
 Beceiver 
 
 Casualty Companies, 233. 
 
 Co-Operative Savings and Contract Loan Companies, 600. 
 
 Fidelity, Guaranty and Surety Companies, may act as, 250. 
 
 Fraternal Benefit Societies, 517, 518. 
 
 Life, Health and Accident Companies, 114. 
 
 Mutual Life Insurance Companies, 167. 
 
 Beciprocal Indemnity Contracts, 438 to 450 
 
 Application, number necessary to begin business, 440. 
 Annual reports, 443, 444. 
 
INDEX. 269 
 
 Reciprocal Indemnity Contracts, 438 to 450 Continued. 
 Attorney for service, 441. 
 Attorney in fact, 439, 440, 441, 442, 446, 447. 
 Commercial rating of subscriber, 442. 
 Corporations, may exchange, 438, 445. 
 Certificate of authority, 447. 
 Declaration of attorney, 440. 
 Deposit, 440. 
 Dividends, 434. 
 Examination, 444. 
 Expenses, 444. 
 Fees, 448. 
 
 Individuals may exchange, 438. 
 Insurance laws do not apply, 449. 
 Life insurance cannot be exchanged, 438. 
 Maximum indemnity of single risk, 442. 
 Misdemeanor, 446. 
 
 Name or title of exchange office, 440. 
 Office of attorney, 439, 440. 
 Partnerships may be exchanged, 438. 
 Penalties, 446. 
 
 Power of attorney to exchange indemnity contracts, 439, 440,. 
 Policy of contracts, 440. 
 Repealing clause, 450. 
 Reserve, 443. 
 Service of process, 441. 
 Subscribers, 438, 439, 440, 441, 442. 
 Who may exchange, 438. 
 Workmen's Compensation, 380. 
 
 Records 
 
 Agent for excess insurance, 182 (6). 
 Charters, 70, 394, 503. 
 Commissioner shall keep, 23. 
 Directors shall keep, 65. 
 Fee for certified copies, 47. 
 Fire losses in this State, 195. 
 Injuries to workmen, 344. 
 
 Registration 
 
 Fees, 107. 
 
 Policies, 99, 101, 103, 104, 107. 
 
 Reincorporation 
 
 Fraternal Beneficiary Associations, 504. 
 
 Reinsurance 
 
 Fidelity, Guaranty and Surety Companies, 254. 
 Fire and Marine Companies, 169,, 178, 182. 
 Fraternal Beneficiary Associations, 505. 
 Life, Health and Accident Companies, 83, 109. 
 Mutual Life Insurance Companies, 167. 
 Reserve of 50 per cent, 457. 
 
 Reinsurance Reserve 
 
 How calculated, 16, 35, 264. 
 
 Mutual Burglary and Robbery Companies, 457. 
 
270 INDEX. 
 
 Repealing Clause 
 
 Fire insurance laws, 189. 
 Fraternal benefit act, 526. 
 Reciprocal insurance laws, 450. 
 Workmen's Compensation, 383. 
 
 Reports to Governor and Legislature 
 Commissioner shall make, 25, 43. 
 Send to other States, 26. 
 
 Reserve 
 
 Accident and Health Companies, 16. 
 
 Co-Operative Savings and Contract Loan Companies, 592, 597, 605. 
 
 Deposits, 98, 103, 104, 105, 106, 108, 109, 110. 
 
 Employers' Liability Insurance, 388 to 390. 
 
 Fidelity, Guaranty and Surety Companies, 16, 252. 
 
 Fire Companies, 16, 264. 
 
 Fraternal Beneficiary Associations, 489, 495, 500, 503. 
 
 Life Companies, 34, 98, 103, 105, 106, 108, 109, 110. 
 
 Manner of reporting and calculating, 388 to 390. 
 
 Marine and Inland, 17, 264. 
 
 Mutual Accident Companies, 401. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 457. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 418. 
 
 Mutual Hail Companies, 434. 
 
 Mutual Life Insurance Companies, 163, 167, 168. 
 
 Report shall be filed, 136. 
 
 Reciprocal exchange, 443. 
 
 Sub-standard risks, 110. 
 
 Taxation, 168. 
 
 Value of policy, 87. 
 
 Reserve Liability (Home Companies) 
 How computed, 34. 
 
 Resident Agents 
 
 Policies must be written through, 470 to 474. 
 
 Revocation of License or Certificate 
 
 Fraternal Beneficiary Association, 507, 515, 521. 
 
 Reciprocal indemnity contracts, 447. 
 
 Mutual Fire, Lightning, Hail and Storm Companies, 420, 423. 
 
 Life Insurance Companies, 143. 
 
 Fire and Fire and Marine, 182 (3), 212, 216. 
 
 Risks- 
 Largest amount of, 181, 420. 
 Rules and regulations for certain, 203. 
 Mutual Fire, etc., single risk, 409, 418, 419, 420. 
 Must have not less than one hundred separate, 409. 
 
 Robertson Law 
 
 Companies exempted from investment, 146, 147. 
 
 Failure to comply with, 143, 144. 
 
 Fraternals, exempt, 147. 
 
 Investments, taxes and legal process, inclusive, 130 to 151. 
 
 Penalties, 141, 143, 144. 
 
I^DEX. 271 
 
 Salaries- 
 Industrial Accident Board, 337. 
 Insurance Board, 193, 196. 
 Life, shall not pay excessive, 85. 
 Mutual Accident Companies, 396. 
 
 Secretary 
 
 Industrial Accident Board, 337. 
 State Fire Insurance Commission, 196. 
 
 Secretary of State- 
 Blue Sky Law, 529, 530, 531, 532, 533, 536, 537, 538, 539, 541, 542, 546, 
 
 549, 550. 
 Mutual Hail Insurance Company, charter, 430. 
 
 Securities 
 
 Co-Operative Savings and Contract Loan Companies, 589, 595, 607, 614. 
 
 Custodian of, 107. 
 
 Deposits, 97, 98, 103, 104, 105, 106, 108, 109, 145, 178, 227, 234, 237, 250, 254. 
 
 Fidelity, Guaranty and Surety Companies, 252. 
 
 Foreign Companies, 124, 125,. 128, 178. 
 
 How and where kept, 106. 
 
 Industrial Companies, 118. 
 
 Investments and loans, .55, 56, 80, 240. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 456, 460. 
 
 Record of, 104. 
 
 Texas securities defined, 133, 134. 
 
 Transfer to State Treasurer by Commissioner, 38, 39, 40. 
 
 Withdrawal of, 105, 234, 241, 244, 252, 426. 
 
 Service of Process 
 Blue Sky Law, 544. 
 Casualty Companies, 246. 
 
 Fidelity, Guaranty and Surety Companies, 250, 256. 
 Fraternal Beneficiary Associations, 507, 508. 
 Life Companies, foreign, 130, 131. 
 Life, Health and Accident (home), 93. 
 Lloyds Exchange, 582. 
 
 Mutual Burglary, Robbery and Transportation Loss Company, 459. 
 Reciprocal exchange, 441. 
 
 Set of Books 
 
 Blue Sky Law, 541. 
 
 Shares of Stock 
 Fractional, 72. 
 How divided, 54, 69. 
 Number of, 69. 
 Transferable, 73. 
 Voted, 72. 
 
 Sheriff and Other Peace Officers 
 
 Will serve process issued by Commissioner, 32. 
 
 Special or Board Contracts 
 Prohibited, 289. 
 
272 INDEX. 
 
 State Fire Marshal 
 
 Authority and powers of, 198, 199. 
 Duties, 202. 
 Expenses, 199. 
 Selection of, 196. 
 
 State Fire Insurance Commission 
 Action may be brought against, 211. 
 Amendment of rates, 203, 204, 206, 210, 211. 
 Appointment and term of office of members, 192. 
 Authority and powers of, 201, 202, 203, 204, 206, 207, 210, 211. 
 Certificate of authority to companies, 191, 212, 216. 
 Clerical assistants, 193, 194. 
 Credits for reduction of hazard, 204. 
 Companies subject to commission law, 191. 
 Complaints, 210, 211. 
 Examination, 201. 
 Expenses, 193, 194, 196, 199, 220. 
 Experts employed by Commission,. 202, 203, 204. 
 Extension of credit not forbidden, 215. 
 Fire losses, to classify, 195. 
 Fire marshal, 196, 197, 198, 199, 200. 
 General basis schedules, 194, 201, 202, 205, 206, 211. 
 Hearings, 210, 211. 
 Lien does not render policy void, 208. 
 Losses, record and classification of, 195. 
 Members and term of office, 192, 196. 
 Mutual or profit-sharing companies, 219. 
 Notice of hearings, 207, 211. 
 Penalties, 201, 211, 214, 216, 217, 218. 
 Policies, establishing uniform, 212, 213, 214, 218. 
 Policyholder, furnished with analysis of rates, 210. 
 Powers of, 194, 195, 201, 202, 203, 204, 205, 206, 207. 
 Premium collections, 215. 
 Publication of schedules, 202. 
 Public, rates and schedules open to, 205. 
 Rates of fire insurance, 190, 194, 195, 201, 202, 203, 204, 206, 210, 211, 212, 
 
 213, 215. 
 
 Rebates or discriminations, 213, 214. 
 Repealing former laws, 189, 192. 
 Salaries of members, 193, 196. 
 Secretary, 196. 
 
 Statements from companies, 201. 
 Suits against, 211, 212. 
 Tax for support of, 220, 278. 
 Testimony given, 218. 
 Unconstitutional, if part of act is held, 221. 
 
 State Treasurer 
 
 Bond, in lieu of securities withdrawn from deposit, 254. 
 
 Deposits, 97, 124, 125, 145, 178, 227, 236, 239, 252, 254, 257, 427. 
 
 Duties as to transfer of securities, 38, 39, 40. 
 
 Fees to be turned over to, 40. 
 
 Interest on deposits, 245, 250. 
 
 Losses of Surety Companies, paid by, 257. 
 
 Securities transferred, shall countersign, 38, 39. 
 
 Taxes, 138, 140, 276, 425. 
 
 Statutes- 
 Casualty Companies, applying only to, 244. 
 Cumulative, 248. 
 
INDEX. 273 
 
 Statutes Continued. 
 
 Fraternal Beneficiary Associations, exempt from certain, 147, 151, 277, 292, 
 
 488, 522. 
 
 Govern 'different kind of companies alike, 290. 
 Mutual Accident Companies, subject to certain, 294, 395, 406. 
 Mutual Fire, Hail, Storm and Lightning Companies, governing, 422. 
 Policy contracts, governed by Texas laws, 283. 
 Repealed, 189, 279, 427, 450. 
 Unconstitutional, if held, 221, 385. 
 
 Stock of Corporations, Regulating the Sale of 
 Blue Sky Law, 527 to 550. 
 
 Stockholders 
 
 Amend charter, 71. 
 
 Capital stock, impairment of, 172, 173. 
 
 Casualty Companies, 225. 
 
 Consolidation of companies, 267, 268. 
 
 Dividends to, 84. 
 
 Elect directors, 59, 60, 61, 62, 70, 225. 
 
 May maintain actions, 78. 
 
 Meetings, 60, 61, 62, 70, 74, 225. 
 
 Quorum, 62, 70. 
 
 Records inspected by, 65. 
 
 Transfer of stock, 73. 
 
 Votes, 70. 
 
 Sub-contractor 
 
 Workmen's Compensation, 342. 
 
 Subscriber Under Uoyds Exchange 
 Attorney for service, 582. 
 Attorney in fact, 575. 
 Additional subscribers, 580. 
 
 Subscribers to Reciprocal Contracts 
 Attorney in fact, 439 to 442. 
 Attorney for service, 441. 
 Commercial rating, 442. 
 Declaration, 440. 
 
 Deficiency of annual deposits, 443. 
 Names and addresses, 444. 
 
 Subscriber Under Workmen's Compensation Law 
 
 299 to 302, 305, 323 to 325, 339, 340, 342, 343, 344, 351, 352, 356 to 367, 
 
 371 to 375, 378 to 382, 387. 
 Action against, 299 to 302, 342, 375. 
 Assessment, 365, 366, 367. 
 Contingent liability of, 364. 
 Defined, 378. 
 
 First meeting of the subscribers, 351, 352, 357. 
 Groups, distributed into, 363, 366. 
 Industrial Accident Board, 372. 
 
 List of, filed with Department of Insurance and Banking, 360. 
 Liability insurance, responsible for, 325. 
 Notice, 339, 373, 374, 387. 
 Number must not be below fifty, 359, 360. 
 Physician, 323. 
 Powers of, 370. 
 
274 INDEX. 
 
 Subscriber Under Workmen's Compensation Law Continued. 
 Premium, cannot collect, 324. 
 Record of injuries, 344. 
 Voting power of, 358. 
 Who may become a, 356, 380. 
 
 Suits 
 
 Against Commissioner, 143. 
 
 Attorney General to forfeit charter, 411, 420, 556. 
 
 Blue Sky Law, 538, 542. 
 
 Commissioner may institute, 37. 
 
 Damage for withdrawing from bond, 260. 
 
 Fire Commission, 211. 
 
 Lloyds Exchange, 582. 
 
 Mutual Hail Company's premium notes, 430, 433. 
 
 Penalty for accepting unauthorized surety company, 259. 
 
 Removal to Federal court, 33. 
 
 Suits on Policies 
 
 Life, Health and Accident (home and foreign), 92. 
 
 Bond or any obligation, 256. 
 
 Bond by reason of misrepresentation, 538. 
 
 Limitation as to time, 284. 
 
 Misrepresentation in application, 280, 281, 282, 286, 294. 
 
 Nqtice of claim, 286. 
 
 Surety or Guarantor 
 
 Fidelity, Guaranty and Surety Companies, may act as, 250 to 253. 
 
 Surplus Money 
 
 Casualty Companies, 240. 
 
 Dividends, 84, 119, 159, 264. 
 
 Fraternal Beneficiary Associations, 500, 516. 
 
 How invested, 56, 240. 
 
 Mutual Companies, 123, 415. 
 
 Surplus to Policyholders 
 
 Amount required to do business, 114, 172. 
 
 Company must have, 13, 14, 114. 
 
 Foreign Companies, 122. 
 
 Life Companies, 114, 159. 
 
 Misrepresentation, 293. 
 
 Mutual Life Insurance Companies, 159. 
 
 Requisite before issuance of certificate of authority, 33. 
 
 Taxation 
 
 Agents, 468, 484, 485. 
 
 Casualty Companies, 275, 276. 
 
 Certificate to State Treasurer, 138, 276. 
 
 Collecting taxes, 138, 276. 
 
 Commissioner's duties, 138, 148. 
 
 Co-Operative Savings and Contract Companies, 610. 
 
 Excess insurance, 182 (6). 
 
 Exceptions to Life Companies, 138. 
 
 Fidelity, Guaranty and Surety Companies, 275, 276. 
 
 Fire Companies, 220, 275, 276, 425. 
 
 Fraternal Beneficiary Associations, 277, 523. 
 
 Gross premiums defined, 275. 
 
 Gross premiums reported, 137, 140, 141, 275. 
 
 Home Companies, 91, 97. 
 
INDEX. 275 
 
 Taxation Continued. 
 
 Life Companies, 137, 138, 139, 140, 141. 
 
 Live Stock Companies, 275, 276. 
 
 Marine and Inland Companies, 275, 276. 
 
 Municipal and county occupation taxes prohibited, 277, 278. 
 
 Must be paid, 266. 
 
 Mutual and Co-Operative Fire Companies, exempt, 219. 
 
 Mutual Burglary, Robbery and Transportation Loss Companies, 461. 
 
 Mutual Fire, Hail, Storm and Lightning Companies, 425. 
 
 Mutual Life Insurance Companies, 168. 
 
 Premium receipts, 137, 138, 140, 141, 142, 275. 
 
 Real and personal property, not exempt, 278. 
 
 Receipt for taxes, 138. 
 
 Reduced by investments, 137, 277. 
 
 State Fire Insurance Commission, support, 220, 278. 
 
 State Treasurer, 139, 140, 276, 291. 
 
 Withdrawn companies, 141, 142. 
 
 Term of Office 
 Commissioner, 2. 
 Industrial Accident Board, 335. 
 Texas Employers' Board of Directors, 351. 
 Fire Insurance Commission, 192. 
 
 Texas Employers' Insurance Association 
 
 Appeals to Industrial Accident Board, 340, 341. 
 
 Assessments, 363 to 370. 
 
 Attorney's fees, 308, 341. 
 
 By-laws, 352, 354. 
 
 Certificate as to subscribers, 360, 361, 362. 
 
 Compensation paid by, 299, 305, 310, 311, 313, 314, 315, 332, 333, 339, 341, 
 
 343, 348, 349, 386. 
 
 Contingent liability of subscriber, 364, 366, 367. 
 Created, 350. 
 
 Commissioner's duties, 333, 360, 362, 377. 
 Corporate powers, 350, 376. 
 Definition of association, 378. 
 Directors, 351, 353, 354, 355, 357, 363, 369. 
 Dividends, 363, 366, 370. 
 Employes, 302, 322, 359. 
 Employers, 302, 356, 357, 378. 
 Expenses, 313. 
 Funds, 365, 366. 
 
 Hospital service, 305, 306, 307, 322. 
 Inspection, 371. 
 Liability for judgment, 375. 
 License, 333, 360, 362. 
 Medical aid, 305, 306, 307, 323, 338. 
 Meetings, 357. 
 
 Notice, 339, 357, 372, 373, 374, 387. 
 
 Number of subscribers and employes, 357, 359, 361, 362. 
 Officers, 353. 
 
 Policies, 359 to 361, 364, 366, 368, 373, 374, 377, 380. 
 Premiums, 324. 363 to 370, 380, 381, 382. 
 Refund of parts of premiums, 381. 
 Reserves, 377. 
 Subscribers, 299, 300, 302, 305, 323, 324, 325, 339, 340, 342, 343, 344, 351, 
 
 352, 356 to 367, 371 to 375, 378 to 383, 387. 
 Voting power of subscribers, 358. 
 
276 INDEX. 
 
 Title Insurance Companies 
 Organization, 223. 
 
 Tornado Companies 
 Agents, 462 to 484. 
 Capital stock, 50, 51, 55, 57. 
 Certificate of authority, 51. 
 Charter, 49, 50, 51. 
 Consolidation of companies, 267 to 273. 
 Directors, 58, 59, 60, 61, 62, 63, 64, 65, 66. 
 Dissolution when companies consolidate, 272. 
 Examination, 51, 52. 
 Excess insurance, 470. 
 Inquiries, must answer, 42. 
 Investments and loans, 55, 56. 
 Laws govern other companies, 290. 
 Life business, cannot do, 28, 96. 
 Mutual, 29, 408 to 427, 451 to 453. 
 Name, 49. 
 Resident agents, 470 to 474. 
 
 Townsite Corporations 
 
 Blue Sky Law, 531 to 532. 
 
 Trust 
 
 Defined, 552. 
 
 Penalties, 555, 557, 561, 563. 567 to 571. 
 
 Prohibited, 554. 
 
 Trustee 
 
 Fidelity, Guaranty and Surety Companies, may act as, 250. 
 
 Unauthorized Compani< 
 
 Excess insurance, 182 (4, 5, 6). 
 
 Unconstitutionality 
 
 Fire Insurance Commission law, 221. 
 Workmen's Compensation Law, 385. 
 
 Vacancies 
 
 Commissioner, 12, 13, 16, 34, 35, 101, 103, 104, 156. 
 
 Commissioners of other States, 14. 
 
 Fraternal Benefit Society, 489, 503, 514, 515, 516, 522. 
 
 Valued Policy 
 
 Liquidated demand, 183. 
 
 Venue 
 
 Anti-trust suits, 558, 561, 571. 
 
 Fidelity, Guaranty and Surety Company, suit against, 256. 
 
 Penalty suits, 339. 
 
 Policy, suits on, 92. 
 
 Surety Company bonds, 256. 
 
 Votes 
 
 Policyholders in Mutual Companies, 396, 413. 
 
 Stockholders, 70. 
 
 Subscriber under Workmen's Compensation, 358. 
 
INDEX. 277 
 
 Water and Leakage Damage 
 Organization of company, 223. 
 
 Waiver of the Provisions of the Laws 
 Fraternal Benefit Societies, 511. 
 Workmen's Compensation Act, 300, 301, 328. 
 
 Witness 
 
 Compelled to testify and give information, 31, 565. 
 
 Workmen's Compensation, 296 to 387 
 Accident Insurance Companies, 380. 
 
 Action against employer, 299, 300, 301, 303, 331, 342, 343, 375, 382. 
 Adequate rates, 380. 
 Alien beneficiaries, 332. 
 Amendment of previous law, 296. 
 Appointment of Industrial Accident Board, 335. 
 Appeal to the court, 340, 341. 
 
 Appointment of Board of Directors of Association, 351. 
 Assessment levied by Association, 363, 364, 365, 366, 367, 368, 369, 370. 
 Assignment of compensation prohibited, 299. 
 Assumed risk, no defense, 297, 302. 
 Attachment, compensation free of, 299. 
 Attorney's fees, 308, 309, 310. 
 Average weekly wages, 310, 314, 315, 317, 378. 
 
 Beneficiaries, 299, 302, 309, 310, 311, 313, 332, 341, 343, 378, 383, 384, 386. 
 By-laws of Association, 352, 353. 
 Cases of necessity, 386. 
 Cause of action, shall survive, 331. 
 Certified copies of records, 346. 
 Classification of premiums, 363, 366, 369, 370. 
 Clerical help, of Industrial Accident Board, 337. 
 
 Commissioner of Insurance and Banking, 333, 360, 362, 370, 380, 381. 
 Compensation, amount, how and when payable, 304 to 323, 326 to 330, 332, 
 
 334, 338 to 343, 347 to 349, 386. 
 Compensation, shall begin on the eighth day, 304. 
 Compromise settlements, 349. 
 
 Contracts, must cover both compensation and liability, 325. 
 Contributory negligence, no defense, 297, 302. 
 Corporate power of Association, 350, 376. 
 
 Damage for personal injuries, 297, 298, 299, 300, 302, 303, 341, 343. 
 Death, 302, 303, 310, 311, 312, 313, 319, 329, 331. 
 Decision of Industrial Accident Board, 340, 371. 
 Defense, to action to recover damages, what shall not be a, 297. 
 Defenses removed, 297. 
 Definitions, 316, 378, 384. 
 
 Disability, total, 312, 314, 316, 317, 327, 329. 
 Disability, partial, 312, 315, 316, 317, 327. 
 Disputed claim, 340. 
 
 Dividends, paid by Association, 363, 366, 370. 
 Domestic servants not subject to Act, 298. 
 Emergency, cases of necessity. 386. 
 
 Employer, 299, 300, 302, 303, 324, 325, 336, 342, 344, 356, 357, 372, 378. 
 Employment, of not more than three employes, 298. 
 Employer of labor member of Board, 336. 
 Employes, 299 to 329, 334, 338 to 344, 349, 358 to 361, 372 to 375, 378, 379, 
 
 381, 382, 383, 385, 386. 
 Examination of injured employe, 319. 
 Exemptions from Workmen's Compensation Law, 298. 
 Exemplary damages, 303, 375. 
 
278 INDEX. 
 
 Workmen's Compensation, 299 to 387 Continued. 
 Expenses of Industrial Accident Board, 337. 
 Failure to promptly pay compensation, 333, 341. 
 Farm laborers, not subject to Act, 298. 
 Fees of Board, 346. 
 
 Fellow servant's negligence, no defense, 297, 302. 
 Filing claim for compensation, 339. 
 First week, 304, 305. 
 Funeral benefit, 313. 
 Garnishment, compensation free of, 299. 
 Guardian, of minor, or mentally incompetent, 327. 
 Hernia, 319. 
 
 Hospital services, 304 to 307. 
 
 Industrial Accident Board, 321, 329, 330, 335 to 349, 381, 384. 
 Injuries, 297 to 305, 316 to 320, 339, 344, 371, 374. 
 Injured employe, 298 to 307, 310 to 315, 317, 318, 320, 322, 323, 325 to 327, 
 
 329, 331, 334, 338, 341, 342, 343, 344, 349, 372, 378, 386. 
 Injured outside of State, 334. 
 Insurance companies, 380. 
 Judgment, 375. 
 
 Liability insurance companies, 380. 
 
 License to Texas Employers' Insurance Association, 333, 360, 362. 
 Lump sum payment, 329. 
 Members of Industrial Accident Board, 336. 
 Medical aid, 304 to 307, 319. 
 Medicine, 304 to 308. 
 
 Meeting of the Board of Directors of the Association, 352, 357, 358. 
 Minor or mentally incompetent employe, 326, 327. 
 Misrepresentation of pay roll, 382. 
 Monthly or quarterly payments, 349. 
 Mutual or contingent liability, 364, 366. 
 Mutual and Reciprocal Insurance Associations, 380. 
 Negligence, 297, 302. 
 No legal beneficiary, 313. 
 Non-subscriber employer, 302. 
 Notice of meeting to subscribers, 357. 
 Notice of injury, 305, 339, 340. 
 
 Notice of right of action or waiver of same, 300, 301. 
 Notice to Board by subscribers, 372. 
 Notice of suspensions of payments of compensation, 348. 
 Notice to employes, 373, 374. 
 
 Number of subscribers and employes, 360, 361, 362, 380. 
 Officers and offices of Industrial Accident Board, 337. 
 Officers of a subscriber, 379. 
 Operation demanded, 319, 322. 
 Partial incapacity, 312, 315, 316, 317, 319, 327. 
 Penalty, 333, 344, 382. 
 Physician, 305, 306, 319, 323, 338. 
 
 Policies, 359 to 361, 364, 366, 368, 371, 373, 374, 376, 380. 
 Power and rules of Industrial Accident Board, 306 to 308, 321, 329, 330, 
 
 338 to 341, 343, 346, 347, 349. 
 Period to pay compensation, 304, 310 to 317. 
 Premiums, 324, 363 to 370, 380, 381, 382. 
 Quorum of Board, 345. 
 Railway employes, exempt, 298. 
 Representatives of deceased employes, 299, 302, 303. 
 Recovery of exemplary damages, 303. 
 Record of injuries to workmen, 344. 
 Refund of part of premium, 381. 
 Refusal of employe of suitable employment, 318. 
 Regulations and rules for the condition of plants, 371. 
 
INDEX. 279 
 
 Workmen's Compensation, 299 to 387 Continued. 
 Repealing clause, 383. 
 Report of injury to employe, 344, 390. 
 Reserves of Association, 380. 
 Revocation of license, 333. 
 
 Salaries of members of Industrial Accident Board, 337. 
 Specified injuries, 317, 318. 
 Seal of Board, 345. 
 Subcontractor of subscriber, 342. 
 Subscriber, 299, 302, 305, 306, 308, 310, 314, 315, 322, 323, 332, 333, 338 to 
 
 341, 343, 348 to 378, 380 to 383, 386, 387. 
 Subsequent injury, 320. 
 Texas Employers' Insurance Association, 299, 302, 305, 306, 308, 310, 314, 
 
 315, 322, 323, 332, 333, 338 to 341, 343, 348 to 378, 380 to 383, 386, 387. 
 Total incapacity, 312, 314, 316, 317, 327, 329. 
 Unconstitutionality of part of the law, 385. 
 Unearned premium, 381. 
 Vacancies, how filled, 354. 
 Voting power of subscribers, 348. 
 Waiver of employe's rights, 300, 301, 328. 
 Weekly payment of compensation, 304, 305, 310, 311, 314, 315, 317, 319. 
 
Texas, Laws 
 
 468972 I HG8621 
 statutes T4 
 
 Insuran< 
 
 e laws* 
 
 1921 
 
 UNIVERSITY OF CALIFORNIA LIBRARY