his principal place of business, or deliver to him personally, notice of such revocation, and cause notice thereof to be filed in his office, and also to be published daily for four weeks in some newspaper published in the city of San Francisco. He must require such person after receiving notice of the revocation, or after the first publication thereof, to discontinue the issuing of any new policies and the renewal of any previously issued; and in such cases must require the person or the manager or agent of the business to repair the capital thereof within such period as he may designate in such requisition by assessment upon the stockholders for such amounts as will make the capital equal to the amount of the paid-up capital, exclusive of assets needed to pay all ascertained liabilities for losses reported, for expenses and taxes, and exclusive of the entire premiums received for outstanding risks. En. March 12, 1872.

Legislative History.

This and the following section are based on section 8 of the insurance commissioner's act of 1868, page 338.

Section Cited.

State I. & I. Co. v. Superior Court, 101 Cal. 144, 35 Pac. 549.

Annotation.

Insolvent Company-Action of Commissioner.-By this section, whenever the commissioner ascertains that any person engaged in the insurance business is insolvent, "within the meaning of this chapter," he must revoke the certificate granted, and require the person to repair the capital thereof within such period as he may designate. (State I. & I. Co. v. Superior Court, 101 Cal. 144, 35 Pac. 549.)

PROCEEDINGS ON FAILURE TO MAKE UP CAPITAL.

Sec. 601, Pol. C. In case any person, upon the requisition. of the commissioner, fails to make up the deficiency of the capital in accordance with the requirements of this chapter, or to comply in all respects with the laws of this state, the commissioner must communicate the fact to the attorney general, who must, within twenty days after receiving such communication, commence an action in the name of the people of this state, in the superior court of the county where the person in question is located or has his principal office, against such person, and apply

for an order requiring cause to be shown why the business should not be closed; and the court must thereupon hear the allegations and proofs of the respective parties as in other cases. it appears to the satisfaction of the court that such person is insolvent, or that the interests of the public so require, the court must decree a dissolution of such corporation, and a winding up of its affairs and a distribution of the effects of such person; but otherwise, the court must enter a decree annulling the act of the commissioner in the premises, and authorizing such person to resume business. But the commissioner must not be held liable for damages, if he has acted in good faith. In the event of any additional losses occurring upon new risks taken after the expiration of the period limited by the commissioner in the requisition, and before the deficiency has been filled up, the directors of any company, corporation, or association are individually liable to the extent thereof. En. March 12, 1872. Amd. 1880, 19; 1887, 7.

Legislative History.

For basis of section, see sec. 600, Pol. C., supra. The amendment changed district court" to "superior court," and inserted the words "within twenty days after receiving such communication."

Section Cited.

State I. & I. Co. v. Superior Court, 101 Cal. 138, 143, 145, 146, 35 Pac. 549.

Annotation.

Insolvent Insurance Company-Character of Insolvency. The insolvency upon which dissolution is authorized under section 601 of the Political Code is statutory and not an actual insolvency, and the court cannot control the property or interfere with the management of the business in proceedings under that section. (State Investment etc. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549.)

The insolvent act of 1880 includes corporations organized for the purpose of insurance, and has not been superseded by the provisions of this section providing for the dissolution of insurance corporations. (State Investment etc. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549.)

Jurisdiction of Superior Court.-The jurisdiction of the superior court in the dissolution of insolvent insurance corporations is statutory and limited, and a receiver cannot be appointed in such proceedings. (State Investment etc. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549. To same effect: Long v. Superior Court, 102 Cal. 452, 36

Pac. 807. See, also, Murray v. Surety Co., 70 Fed. 345; Liverpool ete. Co. v. Clunie, 88 Fed. 179.)

This section confers no power upon the court to distribute the effects of a dissolved corporation through its own action, or to appoint a receiver, or until the return day to enjoin the corporation from doing business or to assume control or management of the estate of the corporation. (State Investment etc. Co. v. Superior Court, 101 Cal. 135, 35 Pac. 549.)

In proceedings for the dissolution of an insolvent insurance corporation, the court cannot enjoin the corporation and its agents and attorneys, and creditors and their agents and atttorneys, from carrying on litigation or interfering with the assets of the corporation. (Harrison v. Hebbard, 101 Cal. 152, 35 Pac. 555.)

Though it was not the intent of the legislature that corporations organized under the acts of 1891 should be exempt from all laws, rule, or decision under the general laws of the state, yet that act provides a complete remedy by which corporations may be restrained from doing business, through the machinery provided in section 10 thereof. (Murray v. Superior Court, 129 Cal. 628, 62 Pac. 191.)

WHAT CONSTITUTES INSOLVENCY.

Sec. 602, Pol. C. Wherever provisions for the liabilities of any person engaged in the business of fire, marine, or inland navigation insurance in this state, for losses reported, expenses, taxes, and reinsurance of all outstanding risks estimated at fifty per cent of the premiums received and receivable on all fire risks and marine time risks at the full premiums received and receivable on all other marine risks would so far impair his capital stock paid in as to reduce the same below two hundred thousand dollars, or below seventy-five per cent of said capital stock paid in, such person is insolvent, and in the case of a person engaged in such insurance in this state, on the mutual plan, if the available cash assets of such person shall not exceed his liabilities, as herein before enumerated, in the full sum of two hundred thousand dollars, such person is insolvent; and wherever provision for the liabilities of any person engaged in any kind of insurance business in this state, other than life and insurance of titles to real estate, provided for in section four hundred and twenty of the Civil Code of this state, for losses reported, expenses, taxes, and reinsurance of all outstanding risks, estimated at such rates as are accepted by the insurance authorities of the state of New York, would so far impair his capital stock paid in as to reduce

the same below one hundred thousand dollars, or below seventyfive per cent of the capital stock paid in, such person is insolvent; and in case of a person engaged in such insurance business in this state, on the mutual plan, if his available cash assets shall not exceed his liabilities, as hereinbefore enumerated, in the full sum of one hundred thousand dollars, such person is insolvent. In the case of a company or a corporation engaged in the business of life insurance, whenever its liabilities for losses reported, expenses, taxes, and reinsurance of all its outstanding risks, at rates based upon the American Experience Table of Mortality, and interest at the rate of four and one half per centum per annum, exceeds its assets, such company or corporation is insolvent. In the case of a corporation or company engaged in the business of insurance of the title to real estate, whenever provision for its liability for losses reported, expenses, and taxes, would, after exhausting its surplus fund, so far impair its capital stock paid in as to reduce the same below one hundred thousand dollars, or below seventy-five per cent of said capital stock paid in, such corporation or company is insolvent. En. March 12, 1872. Amd. 1873-74, 9; 1873-74, 62; 1877-78, 14; 1887, 19.

Legislative History.

This section is based on section 7 of the insurance commissioner's act of 1868, page 338.

The section was amended by another act of March 30, 1874 (Amendments 1873-74, 9), but by operation of section 117 of the last-named amendatory act of March 30, 1874 (see Amendments 1873-74, 60; post, 4457), the amendment given in the text, superseded both the original section and the following amendment of March 30, 1874.

"Sec. 602. Whenever provision for the liabilities of any person engaged in the insurance business in this state, for losses reported, expenses, taxes, and reinsurance of all outstanding risks estimated at fifty per cent of the premiums received and receivable on all fire risks and marine time risks, at the full premiums received and receivable on all other marine risks, and at rates for life risks, based upon the rate of mortality established by the American Experience Life Table, and interest at four and one-half per cent per annum, and such rates for accident and other kinds of insurance, as are accepted by the insurance authorities of the state of New York, would so far impair his capital stock paid in as to reduce the same below two hundred thousand dollars in gold coin of the United States, or below twenty per cent of said capital stock paid in, such person is insolvent. And in the case of a person thus engaged in

the insurance business in this state, on the mutual plan, if his available cash assets shall not exceed his liabilities, as herein before erumerated, in the full sum of two hundred thousand dollars in United States gold coin, such person is insolvent."

Section Cited.

State I. & I. Co. v. Superior Court, 101 Cal. 144, 145, 35 Pac. 549.

Annotation.

Insolvency-Nature of. The "insolvency" of an insurance corporation which will authorize the commissioner to revoke its certificate, or to require it to refrain from doing business until it shall have repaired its capital, is not the ordinary commercial insolvency, but is such as is defined by this section. (Palache v. Pac. Ins. Co., 42 Cal. 418. To same effect: State I. & I. Co. v. Superior Court, 101 Cal. 144, 35 Pac. 549.)

Initiation of Proceedings-Construction of Section.—In section 600 and this section the legislature has conferred the initiatory step for this visitorial power upon the insurance commissioner, and has declared that if upon a judicial investigation thereon it shall be ascertained that his acts have been authorized, and that the corporation has failed to comply with his requirements, a dissolution shall follow. (State I. & I. Co. v. Superior Court, 101 Cal. 146, 35 Pac. 549.)

MUST KEEP A RECORD.

Sec. 603, Pol. C. The commissioner must keep and preserve in a permanent form, a full record of his proceedings, including a concise statement of the condition of each person visited or examined by him. En. March 12, 1872.

Legislative History.

This section is based on section 16 of the insurance commissioners' act of 1868, page 431.

MAY EMPLOY ACTUARY, WHEN.

Sec. 604, Pol. C. The commissioner may employ an actuary to make the valuation of life policies, at the compensation of not exceeding three cents for each thousand dollars of insurance, to be paid by the person or corporation for which the valuation is made. En. March 12, 1872.

Legislative History.

This section is based on section 1 of an act to provide for official valuation of life insurance policies (Stats. 1861-70, page 859).