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Legislative History.

The original section is as follows: "Sec. 427. Every fire and marine insurance corporation may, by its board of directors, or as the by. laws direct, invest its funds in loans upon real or personal property, or in the purchase of stocks, bonds or other securities, but no loan must be made on the stock of the corporation, as security."

The amendment of 1873-74 put in place of the words "as security" the words “or on the notes or obligations of any of its stockholders."

The amendment of 1877-78, is as follows: “Corporations hereafter organized under the laws of this state for the transaction of business in any kind of insurance, may invest their capital and accumulations in the following named securities:

"One-In the purchase of, or loans upon, interest bearing bonds of the United States government.

Two-In the purchase of, or loans upon, interest bearing bonds of any of the states of the United States not in default for interest on such bonds.

“Three-In the purchase of, or loans upon, interest bearing bonds of any of the counties and incorporated cities and towns of the state of California, not in default for interest on such bonds.

“Four-In loans upon unencumbered real property, or upon merchandise in warehouse, worth at least one hundred per cent more than the amount loaned. But no investment in the sureties named in subdivisions one, two, and three, of this section, must be made in amount exceeding the par value of such securities, nor exceeding their market value.

The section as amended in 1887 is the same as now, except that it did not contain in subdivision 6 the words and corporations formed or organized for the transaction of business in any kind of insurance not enumerated in section four hundred and nineteen of the Civil Code may."

Section Cited.

Sun Insurance Co. v. White, 123 Cal. 203, 55 Pac. 902.

Annotation.

A finding that moneys loaned by an insurance company, under this section, “constituted parts of its capital and accumulations,” satisfies the requirement that such loans must be made out of its “capital and accumulations.” (Sun Insurance Co. v. White, 123 Cal. 203, 55 Pac. 902.)

LIMIT OF ONE RISK.

Sec. 428, C. C. Fire and marine insurance corporations must never take, on any one risk, whether it is a marine insurance or an insurance against fire, a sum exceeding one-tenth part of their capital actually paid in, and intact at the time of taking such risk, without reinsuring the excess above onetenth. En. March 21, 1872. Amd. 1873-74, 210.

Legislative History.

The original section did not contain the words “and intact at the time of taking such risk.”

AMOUNTS TO BE RESERVED BEFORE MAKING DIVIDENDS.

Sec. 429, C. C. No corporation formed subsequent to April first, eighteen hundred and seventy-eight, under the laws of this state, and transacting fire, marine, inland navigation insurance business, or insurance provided for by section four hundred and twenty (120) of this code, except insurance of the title to real property, must inake any dividends except from profits remaining on hand after retaining unimpaired:

1. The entire subscribed capital stock.

2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks.

3. A fund equal to one-half of the amount of all premiums on all other risks not terminated at the time of making such dividend.

4. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. En. March 21, 1872. Amd. 1877-78, 81; 1887, 23.

Declaring dividends generally: See ante, sec. 309, C. C.; see, also, ante, sec. 417, C. C., as to declaring dividends by insurance companies generally.

Legislative History.

The original section is as follows:

“No corporation transacting fire or marine insurance business under the laws of this state must make any dividends, except from profits remaining on hand after retaining, unimpaired:

"1. The entire subscribed capital stock;

2. All the premiums received or receivable on outstanding marine cr inland risks, except marine time risks;

“3. A fund equal to one-half of the amount of all premiums on fire risks and marine time risks not terminated at the time of mak. ing such dividend;

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

The amendment of 1877-78 is as follows:

No corporation, formed hereafter under the laws of this state, and transacting fire, marine, inland navigation insurance business, or insurance provided for by section four hundred and twenty of this code, inust make any dividends, except from profits remaining on hand after retaining unimpaired

"One-The entire subscribed capital stock.

“Two-All the premiunrs received or receivable on outstanding w.arine or inland risks, except marine time risks.

“Three-A fund equal to one-half of the amount of all premiums on all other risks not terminated at the time of making such dividend.

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

RESERVATION BY COMPANIES WITH LESS THAN TWO HUN.

DRED THOUSAND DOLLARS CAPITAL. Sec. 430, C. C. No fire or marine insurance corporation, with a subscribed capital of less than two hundred thousand dollars, must declare any dividends, except from profits remaining on hand after reserving:

1. A sum necessary to form, with the subscribed capital stock, the aggregate sum of two hundred thousand dollars;

2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks ;

3. A fund equal to one-half the amount of all premiums on fire risks and marine time risks not terminated at the time of making such dividend;

4. Á sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. March 21, 1872.

AMOUNTS TO BE RESERVED BY LIFE INSURANCE COM

PANIES. Sec. 431, C. C. No corporation formed under the laws of this state, and transacting life insurance business, must make any dividends, except from profits remaining on hand after retaining unimpaired

1. The entire capital stock.

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

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

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

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

CORPORATIONS FOR INSURING TITLES TO REAL ESTATE.

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

1. The entire subscribed capital stock.

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

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

CHAPTER III.

MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE COR

PORATIONS.

$437. Capital stock-Guarantee fund.

438. Of what guarantee fund shall consist.

439. What constitutes, and deficiency in fixed capital. $ 440. Declaration of fixed capital to be filed. § 441. Guarantee notes and interest, how disposed of. § 442. Insured to be entitled to vote, when.

443. Number of directors may be altered, how. $444. Investment of capital stock, 445. Limitations to the holding of stock and in other particulars

may be provided for in by-laws. $ 446. Premiums, how payable. $ 447. Insurance corporations to furnish data to insurance com

missioner- Employment of actuary. $448. No stamp required on accident insurance contract.

449. Valuation of policies, retaliatory provisions. § 450. Policy to contain what provisions.

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

CAPITAL STOCK-GUARANTEE FUND.

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

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