INSURANCE LAW OF NEW YORK Being Chapter 28 of the Consolidated Laws and Chapter 33 of 1909 Including all amendments of 1916, with notes and annotations By AM AS A J. PARKER, Jr, of Albany, N. Y. THE BANKS LAW PUBLISHING COMPANY 23 PARK PLACE NEW YORK,N. Y. 1916 HG IS2\ Hi P3 Copyright, 1906 BY THE BANKS LAW PUBLISHING CO. COPYBIGHT, 1907 BY THE BANlvS LAW PUBLISHING CO. Copyright, 1908 BY THE BANKS LAW PUBLISHING CO. Copyright, 1909 BY THE BANKS LAW PUBLISHING CO. COPYBIGHT, 1910 BY THE BANI^S LAW PUBLISHING CO. Copyright, 1911 BY THE BANKS LAW PUBLISHmG CO. Copyright, 1912 BY THE BANKS LAW PUBLISHING CO. Copyright, 1913 BY THE BANI^S LAW PUBLISHING CO. ("OPYRIGIIT, 1914 : : . . Bt^ THE BANKS LAW PUBLISHING CO. Copyright, 1915 BY THE BANKS LAW PUBLlfilHING a). Copyright, 191(5 BY THE BANKS LAW PlIIU>ISIIIN[f; CO. Insurance La\¥ of Neyv York. CHAPTER 33 OF 1909. AN ACT in relation to insurance corporations, constituting chap ter twenty-eight of the consolidated laws. Approved by the Governor February 17, 1909. Passed, three-fifths being present. The People of the State of New York, represented in Senate and Assembly y do enact as follows: CHAPTER 28 OF THE CONSOLIDATED LAWS. Insurance Law. Article 1. General provisions. (§§ 1-67.) 2. Life, health and casualty insurance corporations. (§§ 70-108.) 3. Fire insurance corporations. (§§ 110- 149c.) 4. Marine insurance corporations. (§§ 150-162.) 5. Title and credit guaranty corporations. (§§ 170-183.) 5a. Mutual Employers' Liability and Workmen's Compensation Corporations. (§§ 185-194.) 6. Life or casualty insur.ance corporations upon the co-operative or assessment plan. (§§ 200-220.) 7. Fraternal benefit societies. (§§ 230-249.) 8. Corporations for insurance of domestic animals. (§§ 250-254.) 0. Co-operative Fire Insurance Corporations. (§§ 260-269.) 10. Lloyds and initer-insurers. (§§ .300-305.) 10a. Mutual fire insurance corporations. (§§ 320-328.) 10b, Mutual automobile casualty insurance corporations. m 340-348.) 11. Laws repealed; construction; when to take effect. (§§ 360-361.) 359280 2 — Tii: Insurance Law. AETICLE I. General Provisions. Section 1. Short title and application. 2. The superintendent of insurance. 3. Offices for insurance department. 4. Seal; and certificate, when evidence. 6. Deputy superintendent and clerks. 6. Fees. 7. Expenses of examinations. 8. Expenses of department, how defrayed. 9. Certificate of authorization of superintendent. 10. Certificate of attorney -general ; corporate names; number oi directors. 11. Examination by superintendent. 12. Minimum capital stock. 13. Deposit of securities. 14. Exchange of securities; interest. 15. State treasurer to countersign transfers of securities. 16. Investment of capital and surplus. 17. Securities must be interest or dividend-paying. 18. Stocks, bonds and other evidences of debt. 19. Lien on stock and profits. 20. Restrictions as to real property. 21. When corporation to be deemed insolvent. 22. Reinsurance. 23. Reinsurance by receiver. 24. Limitation of risk. 25. Jurisdiction of superintendent over foreign corporations. 26. Deposits by insurance corporations of other states. 27. Funds and capital of insurance corporations incorporated outside of the United States. 28. Special deposit required in certain cases. 29. Copy charter and verified statement to be filed. 30. Appointment of attorney. 31. Certified copy of superintendent's certificate to be filed in thf clerk's office. 32. Renewal of certificate of authority; revocation. 33. Reciprocal requirements. 34. Taxation of foreign corporations. 35. Superintendent to forward process. 36. Officers and directors not to be pecuniarily interested In transactions. 37. Corporations heretofore named. 38. Fiduciary capacity of agents. 39. Examiners and examinations. §§ 1, 2. General Provisions. 3 Section 40. Hlxamination by superinteudent upon reijuest of stockholder, policyholder or creditor. 41. Impairment of capital. 42. Stockholders to make good impairment or deficiency. 43. Impaired mutual insurance corporations. 44. Reports of corporations. 45. Forms of report to be furnished by superintendent. 46. Annual report of superintendent. 47. Deceptive statements prohibited. 48. Contents of advertisements. 49. Agents. 50. Agents' certificate of authority. 51. Examination of securities deposited by officers of corporation. 52. Reorganization of existing corporations and amendment of cer- tificates. 53. General penalties. 54. Conduct of insurance business by persons not incorporated. 55. Insurance without the consent of the insured prohibited. 50. Foreign insurance companies. 57. Application of article limited. 58. Policy to contain the entire contract; statements of insured to be representations and not warranties. 59. Certain provisions in policies prohibited. 60. Estimates and misrepresentations prohibited. 61. Receiver to make assessment on premium notes. 62. Surrender of policies to receiver. 63. Proceedings against and liquidation of delinquent insurance cor- porations. 64. Provisions of insurance law not to apply to religious orders. 65. Rebating and discriminating prohibited. 66. Promotion of insurance corporations; sale of securities. 67. Approval of premium rates. Section 1. Short title and application. This chapter shall be known as the " Insurance Law," and shall be applicable to all persons, partnerships, corporations, associ- ations and societies and to associations operating as Lloyds, inter- insurers or individual underwriters, authorized by law to make insurances. Source.— Former § 1 (L. 1892, chap. 690). Amended by L. 1912, chap. 265. § 2. The superintendent of insurance. There shall continue to be a separate and distinct department charged with the execution of the laws relatincr to insurance, to 4 The Insukance Law. § 3. be known as the insurance department, the chief officer of whicli shall be the superintendent of insurance, who shall be appointed by the governor, by and with the advice and consent of the senate, and, unless appointed to fill a vacancy, shall hold his office for the term of three years, beginning on the first day of July succeeding his appointment, and ending on the first day of July in the third calendar year thereafter; provided that the term of -office of the superintendent appointed to succeed the superintendent who was in office on the first day of January, nineteen hundred and twelve, shall continue until the first day of July, nineteen hundred and fifteen. A vacancy in such office shall be filled only for the balance of the unexpired term. The superintendent shall receive an annual salary of ten thousand dollars, which shall be in full of all services performed by him in any capacity. The superintendent and his deputies shall take and subscribe and file in the office of the secretary of state the constitutional oath of office within fifteen days from the time of notice of their appointments respectively. The superintendent shall, within the same time, give an official undertaldng in the sum of twenty-five thousand dollars, with two good sureties to be approved by the comptroller. !N"either the superintendent nor any deputy nor employee shall be directly or indirectly interested in any insur- ance corporation, except as an ordinary policy-holder. Source. — Former § 2, as amended by L. 1906, eliap. 326; originally revised from L. 1859, chap. 366, § 1, § 2, as amended by L. 1873, chap. 593, § 5, and L. 1868, chap. 732, § 6. Amended by L. 1912, chap. 265. Letters of the superintendent are not public documents; access to them is discretionary with the superintendent. Attorney-General Rep., March 1, 1807. During the absence and inability of the superintendent, the deputy becomes at once acting superintendent and his acts are to all intents and purposes those of the superintendent and he is entitled to the salary of that office while he so continues to act. People ex rel. Church v. Hopkins, 55 N. Y., 74. § 3. Offices for insurance department. There shall be assigned to the superintendent of insurance, by the trustees of the oapitol, suitable ofiices in the city of Albany i^^ 5. Genekal Provisions. for conducting the business of the insurance department. The superintendent shall, from time to time, furnish the necessary- furniture, stationery, fuel, lights and other proper conveniences for the transaction of such business, the expenses of which, and the rent of such offices, if any, shall be paid on the certificate of the superintendent and the warrant of the comptroller. Source. — Former § 3, originally revised from L. 1859, chap. 366, § 6, as amended by L. 1877, cliap. 423. § 4. Seal and certificate, when evidence. The seal of office now used by the superintendent of insurance shall continue to be the seal of his office and may be renewed whenever necessary. Every certificate, assignment, conveyance or other paper executed by him in pursuance of any authority conferred by law and sealed with such seal of office, shall be received as evidence and may be recorded in the proper recording offices in the same manner and with the like effect as a deed regu- larly acknowledged or proved before an officer authorized by law to take the proof or acknowledgment of deeds. Source. — Former § 4, originally revised from L. 1859, chap. 366, § 4. § 5. Deputy superintendent and clerks. The superintendent of insurance shall employ from time to time the necessary clerks to discharge such duties and to be paid such compensation as he shall prescribe. He shall appoint one or more of such clerks to be his deputies. Tn case of the absence of the superintendent or his inability from any cause to discharge the powers and duties of his office, the powers and duties of the office shall devolve upon his first deputy; and in the absence of both the superintendent and his first deputy or their inability from any cause to discharge the powers and duties of the office, the powers and duties of the office shall devolve upon his second deputy. The compensation of the clerks of the department shall be paid to them monthly on the certificate of the superintendent and on the warrant of the comptroller. 6 The Insurance Law. §§ 6, 7. Source. — Former § 5, originally revised from L. 1859, chap. 366, § 2, as amended by L. 1873, chap. 593. Service of a summons and complaint on a deputy is good service on the superintendent in the absence of the superintendent. Quinn v. Royal Ins. Co., 81 Hun, 207. During the absence and inability of the superintendent, the deputy becomes at once acting superintendent and his acts are to all intents and purposes those of the superintendent and he is entitled to the salary of that office while he so continues to act. People ex rel. Church v. Hopkins, 55 N. Y., 74. During a vacancy in the office of superintendent, the deputy has power to bring an action as acting superintendent. Smyth v. Lombardo, 15 Hun, 415. § 6. Fees. Every corporation or person to whom this chapter shall be applicable shall pay the following fees to the superintendent, unless remitted by him. For filing the declaration and certified copy of the charter required by law, thirty dollars. For filing the annual report required by law, twenty dollars. For each certifi- cate of authority and certified copy thereof, and for each certificate of deposit, valuation or compliance, not exceeding Rve dollars. For every copy of any paper filed in his office, ten cents per folio; and for affixing the official seal on such copy and certifying the same, one dollar. All fees, perquisites and moneys received by the insurance department, or any officer thereof, shall be paid into the state treasury as required by the state finance law. Source.— Former § 6, as amended by L. 1893^ chap. 725; originally revised from L. 1859, chap. 366, § 7, as amended by L. 1871, chap. 709; L. 1853, chap. 466, § 27; L. 1853, chap. 463, § 16; L. 1865, chap. 328, § 3; L. 1868, cliap. 732, § 5; L. 1883, chap. 175, § 15; L. 1885, chap. 538, § 7; L. 1889, ohap. 454, § 9. Amended by L. 1913, chap. 304. Note. — ^The purpose of the amendment of fhis section by chapter 304 of 1913 was to compel payment of all receipts of the department and other receipts to the State Treasurer. — Ed. § 7. Expenses of examinations. The expense of every examination or other investigation of the affairs of an insurance corporation, pursuant to tlie autliority conferred by tlie provisions of this chapter, shall be borne and paid by the corporation so examined, unless remitted by the ffuperintendeiit. §§ 8, 9. General Provisions. 7 No charge shall be made for any examination of an insurance corporation by the superintendent or his deputy personally, or by one or more of the regular clerks of the department except for necessary traveling and other actual expenses. All charges for making any examination and all charges against an insurance cor- poration by an attorney or appraiser of the department shall be presented in the form of an itemized bill approved by the superin- tendent, audited by the comptroller, and paid on his warrant drawn m the usual maimer on the state treasurer, to the person making the examination. The corporation examined on receiving a certified copy of such bill so approved, audited and paid, shall repay the amount thereof to the superintendent of insurance, to be by him paid into the state treasury to replace the money drawn out as above provided. No insurance corporation, or any officer or director thereof, shall either directly or indirectly pay by way of gift, credit or otherwise, any sum of money or other valuable thing to the superintendent or any clerk or employe of the insurance department or any examiner for extra service or for purposes of legislation, or by way of a loan, or on any other pretense whatsoever. Source. — Former § 7, as amended by L. 1898, chap. 171; L. 1906, chap. 326; originally revised from L. 1853, chap. 463, § 17, as amended by L. 1879, chap. 161; L. 1859, chap. 366, § 2, as amended by L. 1873, chap. 593. Amended by L. 1909, chap. 301, and L. 1910, chap. 634. The approval of a bill by the superintendent is not conclusive upon the comptroller, but the latter has power to examine and pass upon and readjust a bill approved by the superintendent and presented to him for audit and payment as prescribed in this section. Matter of Murphy, 24 Hun, 592, aff'd 86 N. Y., 627. § 8. Expenses of department; how defrayed. Repealed by chap. 301 of 1909. § 9. Certificate of authorization of superintendent. No corporation, nor any individual, as principal, shall transact the business of insurance within this state without the certificate of the superintendent of insurance, certifying under his hand and official seal that such corporation or individual has complied with all the requirements of law to be observed by such corpora- 8 The Insurance Law. § 9. tion or individual and that such corporation or individual is autliorized to transact the business of insurance specified therein in this state. Sucli certificate shall be recorded in the ofiice of the superintendent in a book to be kept by him for tbat purpose. Xo corporation or individual shall transact in this state any insurance business not specified in the certificate of authority granted b.v the superinteiuleiit. The superintendent may refuse to issue any such certificate to a doinestic or foreign corporation, if, in his judgment, such refusal will best promote the interests of the people of the state. ISTothing in this section contained shall apply to any insurance company organized prior to the first day of October, eighteen hundred and ninety-two, under any gen- eral or special law of this state and carrying on business on said date, but every such corporation is hereby recognized as an existing corporation and is hereby authorized to continue as such corpora- tion and to continue sucb business until the legislature shall other- wise provide, subject to such of the provisions of this chapter as are made applicable to such corporations. Source. — Former § 9, as amended by L. 1893, chap. 725; originally revised from L. 1849, chap. 308, § 11; L. 1853, chap. 463, § 7; L. 1853, chap. 406, § 23, as amended by L. 1875, chap. 555; L. 1871, chap. 888, § 5; L. 1883, chap. 175, § 3, as amended by L. 1887, ohap. 285. Amended by L. 1910, chap. 634. Note. — The purpose of the amenage 258; Nov. 19, 1902; Oct. 17, 1903, and March 5, 1908. A corporation, contracting with families or individuals whereby for an annual sum, the company agrees to supply a coffin, etc., would be transacting the business of insurance. Ruling Ins. Dept., Aug. 4, 1911. The adjustment of a loss by an agent is not transacting business in this state. People ex rel. McCall v. Gilbert, 44 Hun, 522. If a foreign corporation not authorized to transact business in this state makes out policies in Jersey City upon applications received in New York and delivers the policies in New York, such transactions constitute doing business in that state and such acts are unlawful. Employers' Assur. Corp. V. Employers' Ins. Co., 61 Hun, 552; 41 St. Rep., 390; 16 N. Y. Supp., 397. A citizen of this state is not prohibited from applying for insurance to a foreign corporation which is not authorized to transact business in this state, nor from receiving the policy here by mail; but an agent of the foreign com- pany is prohibited from making the delivery. People v. Imlay, 20 Barb., 68. A trust company, which is not an insurance company, cannot execute a contract which iS' in the nature of insurance or transact the business of insurance in this State. Attorney-General Rep., Dec. 11, 1902. VALIDITY OF ORGANIZATION.— Persons who have given premium notes to a mutual insiu-ance company, and have thus become members of the corporation, are not in a condition to assail the organization of the company. Cooper V. Shaver, 41 Barb., 151. If the company has, in form, a charter authorizing it to act as a body corporate, and is in fact in the exercise of corporate powers at the time of tak- ing a promissory note from an individual, it is, as to him and all third persons, a corporation de facto, and the validity of its corporate existence can only be tested by proceedings in behalf of the people. Jones v. Dana, 24 Barb., 394. ORGANIZATION. — One who has contracted with an insurance company as an existing corporation, and has executed a promissory note to it, and received a policy of insurance from it, of which he has enjoyed the benefit and protections, is not in a condition to object to the regularity and validity of the organization of the company. Hyatt v. Esmond, 37 Barb., 601. Parties who have contracted with a corporation as such cannot afterwards raise the objection that the company was not legally incorporated; if there are any defects in the organization of a company, they will be cured by a subsequent act of the legislature, which treats it as an existing corporation and changes its name. White v. Coventry, 29 Barb., 305. 10 The Insurance Law. § 9. DISCRETION OF SUPERINTENDENT.— Under the provisions of chap. 593 of 1873, the superintendent had the right to refuse to permit any foreign corporation to transact business in this state, whenever, in his judgment, such refusal to admit it would best promote the interests of the people; a similarity of name as would likely lead to confusion between the business of a foreign corporation and another company is a sufficient ground for refusal. Employers' Assur. Corp. v. Employers' Ins. Co., 78 Hun, 446. The superintendent of the insurance department may, in his discretion, issue to a foreign credit guarantee insurance company a certificate authoriz- ing it to transact business in this state. Attorney-Ge'neral Rep., 1892, page 375. Tlie suporinti'ndent has the riglit to refuse to renew the license of a ioreign company unless it complies with the statute. In re General Ace. Ins. Co., Attorney-General Rep., Jan. 8, 1906. Where the receiver of an insurance company, dissolved by an order of the court, entered into a contract with a foreign insurance company for reinsur- ance, which contract was approved by an order of the court, the foreign corporation is estopped from alleging, in its own defense, that the contract was made in violation of the laws of this state. Jay v. De Groot, 2 Hun, 205. An insurance policy is not void because, by its terms, it extends beyond a time limited by the charter of the company for its corporate existence. Huntley v. Merrill, 32 Barb., 626. An agreement for reinsurance with a foreign unauthorized company is not void if executed. Casserly v. Manners,- 9 Hun, 695. Where the president of an insurance company, knowing that the statutory prerequisites to its organization have not been complied with, issues and signs policies and places them in the hands of agents, who, to his knowledge, induce people to take them, representing that the laws authorizing the company to transact business have been complied with, he is guilty of a fraud, and an action lies against him to recover back the money so paid. Belding v. Floyd, 17 Hun, 208. DEMURRER. — A complaint in an action brought by a foreign insurance company is not demurrable for its failure to show that it has been duly authorized to do business in this state, the failure to comply being a matter of defense. Thompson v. Colonial Assur. Co., 33 Misc., 37. POWERS. — An insurance company, in the absence of a restriction imposed by statute, have the power necessary to enable them to transact the business authorized by their charter; they may borrow money for the purposes of their business, and for like purposes may procure sureties whose contracts of indemnity are valid, the same as if made with individuals. Hope Ins. Co. v. Perkins, 38 N. Y., 404. DEPOSIT. — Foreign life insurance companies seeking to do business here must deposit with the superintendent of insurance at least $200,000, but are not required to have their capital fully paid in. In re North Araer. Life Ins. Co., Attorney-General Rep., 1900, page 178. § 10. General Provisions. 11 MANDAMUS. — Mandamus will not lie to compel the superintendent to do an act regarding the admission to this state of a foreign insurance company. People ex rel. Equitable Ins. Co. v. Fairman, 12 Abb. N. C, 268. Mandamus will not lie to compel the superintendent to issue a renewal certificate to a foreign company. People ex rel. Hartford Ins. Co. v. Fairman, 12 Abb. N. C, 252. AGENTS. — Corporations may act as agents for insurance companies when expressly authorized so to do by their charters, and not otherwise. In re Carpenter & Co., Attorney -General Rep., 1893, page 369. § 10. Certificate of attorney-general; corporate names; number of directors. When application is made to the superintendent of insurance by any persons desiring to become incorporated as an insurance corporation, or for authority to transact the business of insurance in this state, under or pursuant to any declaration and charter presented for filing in the insurance department, or any amended declaration or charter required by law to be filed, or to be approved by the superintendent, the superintendent shall not file such decla- ration and charter or grant such certificate of authority until such declaration and charter shall have been examined by the attorney-general; and certified by him to tiie superintendent to be in accordance with the requirements of law. 'No certificate of authority to transact the business of insurance in this state, shall be granted by the superintendent of insurance to any insur- ance corporation hereafter applying therefor, if such corporation has the same name as another corporation authorized to transact such business in this state at the time of granting such certificate, or a name so nearly resembling it as to be calculated to deceive. %y^ The certificate of incorporation of a domestic insurance corpora- tion hereafter organized shall contain a provision that the number of directors shall in no case be less than the minimum number of incorporators required under this chapter to organize such a cor- poration. The number of directors of a domestic insurance corporation heretofore organized shall not be less than the number specified in the certificate of incorporation, except that the number of directors of such domestic insurance corporation may be reduced to the minimum number of incorporators required under this 12 The Insurance Law. § 11. chapter to organize such corporation; such reduction to be made pursuant to the provisions of the stock corporation law relating to the proceedings to be taken for the reduction of the number of directors of any stock corporation. Source.— Former § 10, as amended by L. 1893, chap. 725; L. 1898, chap. 171, and L. 1900, chap. 366; originally revised from L. 1849, chap. 308, § 11; L. 1853, chap. 403, § 4; L. 1853, chap. 466, § 10; L. 1883, chap. 175, § 3, as amended by L. 1887, chap. 285; L. 1889, chap. 454, § 3. See § 60, General Corporation Law. Change of name of corporation. See § 6, General Corporation Law, chap. 28 of 1909. Similarity of corporate names. SAJME NAME. — The superintendent of insurance may issue a certificate of authority to do business to a stock corporation having the same name as a mutual corporation, theretofore authorized to do business, on the surrender and cancellation of the certificate issued to the mutual corporation. In re Life Assn. of America, Attorney-General Rep., 1901, page 187. Evidence of dissolution must be established Iwfore a cor.poration can adopt a similar name. Attorney-General Rep., Jan. 9, 1906. Certificate of incorporation must contain definite number of directors. Attorney-General Rep., June 21, 1904. Certificate of incorporation must set forth time when directors and officers are elected. Attorney-General Rep., May 26, 1911. MANDAMUS. — Mandamus will not lie to compel the attorney-general to certify the charter and declaration of a proposed insurance company when the declaration stated the proposed business of the company, among other things, to be " the inspection and certification as to the sanitary conditions of buildings and premises," as such business is not insurance. People ex rel. Woodward v. Rosendale, 142 N. Y., 126, aff'g 76 Hun, 103. CHANGE OF NAME.— In re Locomotion F. B. H. & A. Assn. Attorney- General Rep., 1903, page 402. Where it appears that a foreign corporation has been doing an unauthorized business in this state under a name similar to that of a domestic corporation, the court will restrain the foreign corporation from continuing its business in this state. Employers' Assur. Corp. v. Employers' Ins. Co., 61 Hun, 552. Before one insurance company can recover in an action brought against another insurance company to restrain the use of certain words as a part of its corporate name by the latter company or in its business, the plaintiff must show tliat the defendant was issuing policies in violation of the law of the State, and that its acts had actually caused some special injury, or would necessarily cause injury, to the plaintiff's business. Employers' Assur. Corp. V. Employers' Ins. Co., 78 Hun, 446. § 11. Examination by superintendent. If the declaration and charter specified in the preceding section shall be approved by the attorney-general, the superintendent shall thereupon cause an examination to be made by himself or §11. General Peo visions. 13 by one or more competent and disinterested persons specially appointed by him for that purpose, into the affairs of the corpora- tion or proposed corporation. If such persons, after examination made, shall certify under oath, if it be a stock corporation, that the amount of capital required by law has been paid in and is pos- sessed by it in cash, or is invested in the manner required by law; or if a mutual or co-operative corporation, that it has received and is in actual possession of the capital, premiums or engagements of insurance to the full extent required by law, the superintendent shall file such certificate in his department. Every such insur- ance corporation shall also deposit with the superintendent of insurance, before receiving authority to transact business in this state, such sums of money or securities as may be required by law. Source.— Former § 11, as amended by L. 1893, chap. 725, and L. 1906, chap. 326; originally revised from L. 1849, chap. 308, § 11. See § 28, post. Special deposit required by certain foreign insurance companies before receiving authority to transact business in this state. DEPOSIT. — It is the policy of our Insurance Law to require foreign insurance companies to deposit approved securities with the Superintendent of Insurance, as a condition precedent to the transaction of business here. Attorney-General Rep., 1894, page 201. A foreign life insurance company may deposit with the superintendent of insurance bonds of the government under which it is organized, provided such government accepts from our insurance companies seeking to do business there government bonds of the United States or of this state. In re Holland, etc., Bonds. Attorney-General Rep., 1893, page 242. CAPITAL STOCK. — The capital stock of foreign credit guarantee com- panies must be paid in in cash, one-third thereof within one year, and the other two-thirds thereof within two years from their incorporation. In re Nat. Credit Ins. Co., Attorney-General Rep., 1893, page 164. The examiners are not compelled to do more than to state the facts in their report on which the superintendent is to determine whether the assets of -the corporation are sufficient to justify its continuance in business. People ex rel. Long Island Mutual v. Payn, 26 App. Div., 584; 60 N. Y. Supp., 334. The superintendent of insurance upon examination cannot recognize an issue of stock until the proceedings to increase the capital stock are com- pleted and the stock paid; sudh proceedings should be completed within a reasonable time after its' eommencement. Attorney-General Rep., Oct. 10, 1900. WITHDRAWALS. — Insurance companies retiring from business may with- draw from deposit with the superintendent of insurance all securities in excess of an amount sufficient to secure policyholders in the United States. In re Fire Ins. Assn. Attorney-General Rep., 1893, page 216. A deposit of funds with the superintendent cannot be assigned. In re Cred. Guar. Co., Attorney-General Rep., 1894, page 223. 14 The Insurance Law. § 12. § 12. Minimum capital stock. No domestic fire or marine stock insurance corporation shall be nereafter organized with a smaller capital stock than two hundred thousand dollars fully paid in in cash, but nothing in this section contained shall be understood to relate to the class of corporations provided for in articles nine or ten of this chapter. A domestic stock insurance corporation having the power to transact the kind of insurance business described in subdivisions one, two, five, six, seven, eight, nine and ten of section seventy of this chapter shall not be hereafter organized with a smaller capital stock than one hundred thousand dollars fully paid in in cash. A domestic stock insurance corporation having the power to transact any kind of insurance business described in subdivisions three or four of section seventy of this chapter shall not be hereafter organized with a smaller capital stock than two hundred and fifty thousand dollars fully paid in in cash if authorized to transact any kind of insurance business described in one of such subdivisions or a smaller capital stock than five hundred thousand dollars fully paid in in cash if authorized to transact the kinds of insurance business described in both such subdivisions. Except as to the requirements of a minimun) capital stock for the transaction of the kinds of insurance business described in subdivisions three or four of section seventy of this chapter every domestic stock insurance corporation hereafter organized having power to transact business under more than one subdivision of such section shall, in addition to the minimum capital stock prescribed in this section, have an additional capital stock of fifty thousand dollars fully paid in in cash, for every kind of insurance business more than one which it is authorized to transact. Any corporation to which this section is applicable shall also, at the time of its organization, have a surplus equal to fifty per centum of its capital stock, which surplus shall also be fully paid in in cash; provided that this requirement shall not apply to existing corporations reincorporated. Source. — Former § 12, and L. 1899, chap. 85, § 1; originally revised from L. 1840, chap. 308, § 5; L. 1853, chap. 463, § 6, as amended by L. 1881, chap. 5(50; L. 1853, chap. 460, § 6, as amended by L. 1862, chap. 367; L. 1865, chap. 328. § 2; L. 1877, chap. 200, § 1. as amended by L. 1878, chap. ,337. Amondnd by L. lOKi. din p. 634, and L. 1013, chap. 02. jq^ote. — The purpose of the amendment of this section by chapter 02 of 1913 was to compel companies carrying on the business of employer's liability in- § 13. General Provisions. 15 surance, and fidelity and surety insurance to possess a minimum ea.pital of $250,000 for each of these lines.— Ed. This section, before it was amended by L. 1913, chap. 92, was intended to be a consolidation of former § 12 of the Insurance Law (L. 1892, chap. 690), and L. 1889, chap. 85, § 1. The latter act was repealed by the present Insurance Law, and was a separate statute relating to the minimum capital stock re- quired for the organization of Fire or Marine Insurance Corporations. It was supposed to supersede § 111 of this Law, at least as to Fire or Marine Com- panies, and does not seem to have been replaced by any provision of the Con- solidated Laws, but as there was some question whether said L. 1889, chap. 85, was repealed by the present Insurance Law, because of the enactment of L. 1909, chap. 596, it was specifically repealed by L. 1913, ohap. 27, and as a result § 111 of the Insurance Law, relating to the incorporation of Mutual Fire Insurance Companies is unquestionably in force. CAPITAL STOCK. — As the law of this state requires that a domestic fire and marine insurance company shall have at least $200,000 capital stock, it would be unjust to permit a foreign company to do such business here with less capital. Attorney -General Kep., 1897, page 112. Foreign life insurance companies seeking to do business here must deposit with the superintendent of insurance at least $200,000, but are not required to have their capital fully paid in. In re North Amer. Life Ins. Co., Attorney- General Rep., 1900, page 178. A foreign fire insurance company need not have its maximum capital stock paid before it is allowed to do business in this state. In re Nat. Fire Ins. Co., Attorney-Ceneral Rep., 1897, page 234. The capital stock of fire insurance companies of other states must be fully paid up before such companies can be authorized to do business here. Attorney-General Rep., 1893, page 336. § 13. Deposit of securities. Every deposit made with the superintendent of insurance by any domestic or foreign insurance corporation, shall be in the stocks or bonds of the United States or of this state or in the bonds of a county or incorporated city in this state, authorized to be issued by the legislature, not estimated above their par or their current market value. Such deposit may be made by an insurance cor|:)oration incorporated under the laws of another state of the United States in the stocks or bonds of such state or in the bonds of a county or incorporated city therein authorized to be issued by the legislature, not estimated above their par or their current market value; provided that similar domestic insurance corpora- tions doing business in such state are authorized by the laws thereof to deposit or hold as security therein for the benefit or security of their policyholders and creditors in such state like securities of this state. Such deposit may be made by an insur- ance corporation incorporated under the laws of a country outside 16 The Insurance Law. § 13. of the United States authorized to do business in this state in the stocks or bonds of such country or of any province or city therein, or, if any securities other than those above named are offered as a deposit, they may be accepted at such valuation and on such con- ditions as the superintendent of insurance may direct, provided that similar domestic insurance corporations doing business in such country outside of the United States are authorized by the laws thereof to deposit or hold as security therein for the benefit or security of their policyholders and creditors in such country the stocks or bonds of the United States, the stocks or bonds of this state or of any county or incorporated city in this state and securities of the same general character as those which are offered for deposit in the insurance department; and provided, further, that if any country makes a deduction from the value of the securities deposited by similar domestic corporations a similar deduction shall be made from the securities deposited in the insur- ance department by corporations incorporated under the laws of such country. If the market value of any of the securities which have been deposited by any company shall decline below that at which they were deposited, the superintendent of insurance shall call upon the company; to make a further deposit, so that the market value of all securities deposited by any such company shall be equal to the amount which it is required to deposit. All deposits heretofore made pursuant to this chapter, and all deposits which shall or may hereafter be made pursuant thereto, and the proceeds thereof, shall be held in trust according to the law relating thereto without preference or priority for or on account of any cause or causes whatsoever to any beneficiary en- titled to share therein. Source. — Former § 13, as amended by L. 1893, chap. 725; originally revised from L. 1851, chap. 95, §§ 1, 2; L. 1853, chap. 453, § 14, as amended by L. 1862, chap. 300; L. 1877, chap. 439, § 1, as amended by L. 1881, chap. 628; L. 1881, chap. 600, § 1; L. 1888, chap. 517, § 1. Amended by L. 1910, chap. 634, and L. 1914, chap. 102. In effect April 3, 1914. The amondmcnt of 1910, cliap. 6.34, olirainatod mortn'a.urc loans on ini])rovod realty as authorized deposits for domestic companies. The amendment of this section by chapter 102 of 1914 added the last paragraph. See §5 17, 27, 28, post. As to deposit of securities. FOREIGN CORPORATION.— Within the meaning of the insurance law a foreitrn eorporation inehides one ineorjx)rated under flw laws of :ino|li(>r stale of the United States. In re Penn. Kire Ins. Co., AHoincx Ccnnal INi)., IS!),"), page 66. § 13. General Provisions. 17 It is the policy of our insurance law to require foreign insurance companies to deposit approved securities with the superintendent of insurance, as a condition precedent to the transaction of business here. Attorney-General Rep., 1894, page 201. A foreign life insurance company may deposit with the superintendent of insurance bonds, of the aovornmont und'or wliioh it is orojanized, prnvidod such government accepts from our insurance companies seeking to do bua> npss hore govornmcnt bondls of the Ignited Statos or of this state Tn re TTol- land, etc., Bonds, Attorney- General Rep., 1893, page 242. INVESTMENTS. — Investment of the surplus assets and funds may be made in dividend-paying stock of solvent trust companies in this or otiior states. Attorney-lGeneral IJej)., 1890, pape 278. (But see § 100.) Under the provisions of section 13 of the insurance law, the deposit required to be made by section 71 must be of the class of securities Get forth in said section 13 and not in cash, and the superintendent of insurance is not authorized to retain the accrued interest in order to make good any impair- ment in the amount of the deposit required. Attorney-General Rep., 1906, page 537. Investment of reserve fund of domestic insurance company in stocks and bonds. Attorney-General Rep., 1901, page 240. Investments made by foreign insurance corporations must be of the same class and kind required of domestic companies. In re Guar. Finance Co., Attorney-General Rep., 1897, page 325. EXCHANGE OF SECURITIES.— In the exchange of securities, those should only be accepted at their par value or of equal par and market value with those exchanged for. In re Continental Ins. Co., Attorney-General Rep., 1896, page 279. A life insurance company may not subscribe for new bonds, investment in which is prohibited by § 100 under rights as holders of old bonds. Right to exchange bonds discussed. Attorney-General Rep., July 22, 1907. SURRENDER OF SECURITIES.— Superintendent of insurance should not surrender the securities on deposit in insurance department for the benefit of policyholders in the United States. In re Baloise Fire Ins. Co., Attorney- General Rep., 1903, page 424. RECEIVER. — A receiver of an insolvent insurance company is not entitled to have transferred to him the securities deposited by the company with the superintendent of the insurance department. 'Matter of Guardian Mut. Life Ins. Co., 13 Hun, 115; alTirmed, 74 N. Y., 617. An order directing the issuing of a writ of mandamus requiring the super- intendent to deliver to a receiver of an insolvent insurance corporation the securities in his hands, was improperly granted; the distribution is to be made by the superintendent himself. People ex rel. R'uggles v. Chapman, 64 N. Y., 557. The receiver of an insolvent life insurance corporation, appointed in an action brought by a creditor and stockholder, under the provisions of the Revised Statutes, to procure its dissolution and a distribution of its assets has no authority to require from the superintendent the securities deposited with him. Ruggles v. Chapman, 59 N. Y., 163 EXCESS DEPOSITS.— Excess deposits, form of delivery of, to surety companies by 8uperintendei>t of insurance. Attorney-General Rep., 1903, page 489. 18 The Insurance Law. § 14. Excess deposits should not be withdrawn *' until all the conditions of the trust have been complied with." Attorney-General Kep., 1903, page 476. When a greater sum than $200,000 is deposited, it is held by the super- intendent on the same terms as the $200,000, and the excess over that amount cannot be withdrawn until all the conditions of the trust have been com- plied with. L. Ins. Co. v. Maxwell, 131 N. Y., 286. ESTOPPEL. — Where the superintendent has accepted from an insurance company an assignment of a mortgage as a part of the deposit, on the faith of a representation on the part of the mortgagor that there is no legal or equitable defense to the same, he can avail himself of the doctrine of estoppel prohibiting a debtor, upon the faith of whose statements an assign- ment of his obligation has been accepted, from disputing such statements. Smyth V. Munroe, 84 N. Y., 354; afl'g 19 Hun, 550. An offer of a mortgagor to prove, under his answer in foreclosure, that at the time the mortgagee, a domestic insurance company, made the loan on his premises, they were incumbered and not worth fifty per centum more than the loan, presents no defense to the action. Washington L. Ins. {3o. v. Clason, 162 N. Y., 305. . The superintendent has power to foreclose a mortgage deposited with him; if, at the time of the assignment of the mortgage, the mortgagor signed a certificate consenting to the assignment, stating that the whole principal sum, with interest, is due and that there was no defense against the mort- gage, such mortgagor will be estopped from setting up the defense ol usury. Smyth v. Lombardo, 15 Hun, 415. RETURN OF SECURITIES.— In the matter of returning to the depositors the securities which were deposited with the superintendent of insurance as condition precedent to insurance business. In re People's Life Insurance Company, Attorney -General Rep., 1896, page 133. ASSIGNMENT. — A deposit of funds with the superintendent cannot b« assigned. In re Cred. Guar. Co., Attorney-General Rep., 1894, page 223. § 14. Exchange of securities; interest. The stocks and securities deposited with the superintendent of insurance, pursuant to the provisions of this chapter, or heretofore deposited with him, may be exchanged from time to time for other securities receivable as provided in this chapter, and so long as the corporation depositing the securities shall continue solvent and comply with the laws of the state it shall be permitted by the superintendent to collect the interest or dividends on such deposits. Source. — Former § 14, originally revised from L. 1851, chap. 95, § 2; L. 1853, chap. 463, § 6, a;8 amended by L. 1881, chap. 560; L. 1853, chap. 466, § 23, as amended by L. 1875, chap. 555; L. 1888, chap. 517, § 2. The interest collected upon the securities follows the principal, and as a receiver of an insolvent insurance corporation cannot take possession of tlie principal, he cannot obtain possession of the interest collected thereon. IVoplo v. Insnraneo Co., 147 N. Y., 25; rov'g 87 Hun, 220. §§ 15, 16. General Provisions. 19 § 15. State treasurer to countersign transfers of securities No transfer of securities held by the superintendent of insur- ance shall be valid unless countersigned by the treasurer of the state or his deputy, and upon notice of at least five days to the corporation depositing such securities. The treasurer shall keep in his office or in the office of the superintendent a book in which shall be entered the name of the corporation from whose account such transfer of securities is made by the superintendent, the name of the transferee unless made in blank, the par value of the securities transferred, the amount for which every mortgage trans- ferred is held by the superintendent; and within five days after coimtersigning and entering the same, the treasurer shall advise by mail the corporation from whose account such transfer is made, of the kind of security and the amount of the same thus transferred. The treasurer shall have access at all times during office hours to the books of the superintendent of insurance for the purpose of ascertaining the correctness of any transfer or assignment pre- sented to him to countersign and the superintendent shall have access during office hours to the book herein mentioned kept by the treasurer to ascertain the correctness of the entries upon the same. The treasurer shall state in his annual report to the legislature the total amount of such transfer or assignment countersigned by him. Source. — Former § 15, as amended by L. 1906, chap. 326; originally revised from L. 1868, oliap. 732. § 16. Investment of capital and surplus. The cash capital of every domestic insurance corporation re- quired to have a capital, to the extent of the minimum capital required by law, shall be invested and kept invested in the stocks or bonds of the United States or of this state, not estimated above their current market value, or in the bonds of a county or incor- porated city in this state authorized to be issued by the legislature, not estimated above their par value or their current market value, or in bonds and mortgages on improved unencumbered real prop- erty in this state worth fifty per centum more than the amount loaned thereon. The cash capital of every foreign insurance cor- poration to the extent of the minimum capital required of a like domestic corporation shall be invested and kept invested in the 20 The Insukance Law. § 16. same class of securities specified for domestic insurance corpora- tionsj except that like securities of tlie home state or foreign country shall be recognized as legal investments for the amount of the miiiinmm capital required. The residue of the capital and the surplus money and funds of every domestic insurance corpora- tion over and above its capital, and the deposit that it may be required to make with the superintendent, may be invested in or loaned on the pledge of any of the securities in which deposits are required to be invested or in the public stocks or bonds of any one of the United States, or in bonds and mortgages on improved unencumbered real property in this state worth imy per centum more than the amount loantJ^ thereon, or except as in this chap^^ ter otherwise provided, in the stocks, bonds or other evidence of indebtedness of any solvent institution incorporated under the laws of the United States or of any state thereof; or in such real estate as it is authorized by this chapter to hold ; but no such funds shall be invested in or loaned on its own stock or the stock of any other insurance corporation carrying on the same kind of insurance business, except that any such company organized under section seventy of this chapter for the purpose of engaging in business principally as a surety company may, subject to the consent of the superintendent of insurance, invest such funds in or loan such funds on the stock of any other corporation carrying on the same kind of business outside of but not within the United States ; pro- vided, however, that the supcrintcndciit in determining the condi- tion of any such corporation so loaning or investing such funds shall not allow it as an assejt the amount of the funds so loaned or invested ; and, provided that, if a stock life insurance corporation shall determine to become a mutual life insurance corporation, it may, in carrying out any plan to that end under the provisions of section ninety-five of this chapter, acquire any shares of its own stock by gift, bequest or purchase. Any domestic insurance corporation may, by the direction and consent of two-thirds of its board of directors, managers or finance committee, invest, by loan or otherwise, any such surplus moneys or funds in the bonds issued by any city, county, town, village or school district of this state, pursuant to any law of this state. Any corporation organized under subdivision one-a, section one hundred and seventy of this chapter, for guaranteeing the validity and legality of bonds issued by any state, or by any city, county, town, village, school district, municipality or other civil division of any state, may invest by loan or otherwise any of such surplus moneys or funds as provided § 16. General Provisions. ?/1 in section one hundred of this chapter. Every such domestic cor- poration doing business in other states of the United States or in foreign countries may invest its funds in the same kind of securi- ties in such other states or foreign countries as such corporati'^'ji is by law allowed to invest in, in this state. Any life insurance com- pany may lend to any policyholder upon the security of the value of his policy a sum not exceeding the lawful reserve which it holds thereon, and such loan shall become due and payable and be satisfied as provided in the loan agreement or policy. But noth- ing in this section shall be held to authorize one insurance corpora- tion to obtain, by purchase or otherwise, the control of any other insurance corporation. Source.— Former § 16, as amended by L. 1893, ehap. 112; L. 1895, chap. 917; L. 1897, chap. 218; L. 1906, chap. 326; L. 1907, chap. 239; originally revised from L. 1840, chap. 287, §§ 1, 2; L. 1849, chap. 308, § 8, as amended by L. 1857, chap. 469; OL. 1853, chap. 463, § 6, as amended by L. 1881, chap. 560, § 8, as amended by L. 1868, chap. 318; L. 1853, chap. 466, § 8, as amended by L. 1871, chap. 608; L. 1868, chap. 482, § 1; L. 1875, chap. 423, § 2, as amended by L. 1886, chap. 394; L. 1885, chap. 538, § 14; L. 1886, cliap. 611, § 7. Amended by L. 1909, chap. 240 and chap. 302; L. 1910, chap. 634; L. 1911, chap. 150; L. 1912, chap. 233, and L. 1913, chap. 304. Note. — Section 16 was amended by L. 1910, chap, 634, so as to make clearer the requirements by law as to the investments of the capital surplus of domestic companies. — Ed. SPECIAL RESEKVE. — The second sentence of § 16 applies to investment of the special reserve fund, as provided for by § 130 in excess of one-half of its capital stock. Attorney -General Hep., 1901, page 240. BORROW MONEY. — An insurance corporation, in the absence of any statutory restriction, has the power to borrow money, and, as an incident thereto, the power to transfer its assets in trust for the security of the lenders. Nelson v. Eaton, 26 N. Y., 410. An insurance company may borrow money to pay losses, and it may borrow a note upon which to raise money for that purpose. Eurniss v. Gil- christ & Co., 1 Sandf., 53. NOTES. — A mutual insurance company may, in the ordinary prosecution of its business, indorse its notes to creditors in lieu of cash. Marine Bank V. Vail, 6 Bosw., 421. A fire insurance company has no right under the law to place its funds in the hands of an agent for the purpose of loaning the same upon call in conjunction with the funds of other parties. Attorney-General Rep., April 20, 1911. MORTGAGE. — An offer of a mortgagor to prove that at the time the mortgagee, a domestic insurance corporation, made him the loan on his premises they were incumbered and not worth fifty per centum more than the loan, presents no defense to an action on the mortgage. Washington fjfe Ins. Co. V. Clason, 162 N. Y., 305. The Department of Insurance should not admit as a legal investment any amount represented by a second purchase money mortgage 'held by an insur- 22 The Insurance Law. § 17. ance company where the first purchase mouey mortgage previously held by said company has been disposed of. Attorney-General Rep., March 23, 11)15. Real property charged with ground rent is incumbered and an insurance company is not permitted to invest in a mortgage on such property. In re Hunter, Attorney-General Rep., Jan. 24, 11>06. A life insurance company issuing policies on the tontine or " ten years dividend system," is in no sense a trustee of any particular fund for the holder of sucli a policy; tlheir relations are simply that of debtor and creditor, and the policyiholder at the expiration of the ten years is not entitled to an accounting, in the absence of any evidence of misappropriation, wrongdoing or mistake on the part of the company. Uhlman v. N. Y. L. Ins. Co., lOU N. Y., 421; Simons v. K Y. L. Ins. Co., 38 Hun, 300; Bogardus V. N. Y. L. Ins. Co., 101 N. Y., 328. When investments in mortgages of another state may be made by a domestic insurance company. Attorney-General Rep., 1890, page 145. SURPLUS. — Investinent of the surplus assets and funds may be made in dividend-paying stock of solvent trust companies in this or other states. Attorney-General Rep., 1896, page 278. The capital stock of an insurance company may be invested in bonds and mortgages executed directly to the company or obtained 'by assignment, where the charter does not provide the mode of investment, but impliedly gives the power to invest in .stocks. Mann v. Eckford's, 15 Wend., 502. An insurance company of this state cannot invest in a bond and mortgage on property in the state of Pennsylvania with outstanding ground rents. Attorney-General Rep., 1906, page 532. Insurance companies may invest their assets other than their capital in •bonds of the Canadian Southern Railway Company, guaranteed by the Mich- igan Central Railroad Company. Attorney-General Rep., 1912, page 573. A domestic life insurance company may invest its surplus moneys in car trust certificates of Pennsylvania Steel Freight Car Trust. Attorney-General Rep., 1906, page 577. Every domestic life insurance corporation doing business in other states of the United States or in foreign countries, may invest the funds required to meet its O'bligations incurred in such other states or foreign countries and in conformity to the laws thereof, in the same kind of securities in such othcx states or foreign countries that such corporation is by law allowed to invest in, in this state. A reasonable discretion is given by the statute to a board of directors of a domestic life insurance company doing business in a foreign country to invest such part of its fundb as may be required to meet its obligation under the laws of such foreign country, in lawfully prescribed securities at such times and in such amounts as will best subserve and protect the business interests of the company from year to year. A board of directors in authorizing trans- actions under this provision of the Insurance Law will be held to a strict account for any abuse of its discretionary powers. Ruling Ins. Dept., October 15, 1908. § 17. Securities must be interest or dividend-paying. The super intendent of insurance shall not credit any insurance corporation transacting business in this state with any security as § 18. Genekal Provisions. 23 a part of its capital or as an investment of any part of its capital, or receive any security as a deposit, unless tlie security is interest or income-bearing or dividend-paying. Source. — Former § 17; originally revised from L. 1886, chap. 207, § 2. Foreign corporations must comply with the conditions imposed upon domestic corporations in regard to the class of securities which they may hold. Attorney-General Rep., 1894, page 201. § 18. Stocks, bonds and other evidences of debt. If any domestic insurance corporation shall have invested any of its funds in or loaned any of its funds upon the stock, bonds or other evidences of debt of other corporations or of any nation, state, county, city, town, village, school district, municipality, or other civil division of any state, pursuant to the laws of this state, and the superintendent shall have reason to believe that such stock, bonds or other evidences of debt are not amply secured or are not yielding an income he may direct it to report to him under oath the amount thereof, the security therefor and its market value. ISTo stock and no bond or other evidence of debt if in default as to principal or interest, or if not amply secured, shall be valued as an asset of the corporation above its market value. All bonds or other evidences of debt held by any life insurance corporation authorized to do business in this state shall, if amply secured and if not in default as to principal or interest, be valued as follows : If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield meantime the effective rate of interest at which the purchase was made ; provided that the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and provided further that the superintendent of insurance shall have full discretion in determining the method of calculating values according to the foregoing rule, and the values found by him in accordance with such method shall be final and binding ; provided, also, that any such corporation may return such bonds or other evidences of debt at their market value or their book value, but in no event at an aggregate value exceeding the aggregate of the values calculated according to the foregoing rula The superintendent of insurance may, at any time, in his discretion, require any insurance corpora- 24 The Insurance Law. §§ 19, 20. tion, other than a life insurance corporation, authorized to do business in this state to value its bonds or other evidences of debt in accordance with the foregoing rule. Source. — Former § 18; originally revised from L. 1875, chap. 423, § 1. Ajiiended by L. 1909, chap. 301, and L. 1910, chap. 634. X'ote. — Section IS was amended l)y J.. 1910, chap. 634, by exempting all insurance corporations, other than life companies, from the new ruling L. 1909, chap. 301, requiring amortization of securities of such corporations unless the superintendent determines at any time that bonds and securities in com- panies of other kinds shall he valued on amortization basis. — Ed. NOTES. — An insurance company, with a clause in the act incorporating it, enumerating the kind of securities upon which it can loan moneys, but not including promissory notes, has no power to loan money on promissory notes, or on any other security other than those specially enumerated. N. Y. Eire- man Ins. Co. V. Ely, 2 Cow., 678. SURPLUS. — The surplus assets and fund of the domestic insurance com- panies may be invested in the dividend- paying stock of solvent trust com- panies in this and other states. Attorney-General Rep., 1896, page 278. • ADVANCEMENT. — An insurance corporation has no power to advance its money or other obligations to sustain another corporation engaged in a similar business; an insurance company is not authorized to subscribe to the capital stock of a mutual insurance company, and to agree to give its notes in advance for premiums on insurance to be subsequently effected. Berry v. Yates, 24 Barb., 199. REINSURANCE. — One insurance company cannot acquire the property of another insurance company and reinsure its risks merely as an incident to the transaction. Pierson v. McCurdy, 33 Hun, 520; atf'd 100 N. Y., 60& § 19. Lien on stock and profits. Any domestic fire or marine insurance corporation may in its by-laws, prescribe that it shall have a lien upon the stock or cer- tificates of profits of any stockholder or member for any debt thereafter becoming due to such corporation for premiums from him, but a copy of such by-laws shall be indorsed upon the certifi- cate of stock or profits, and the lien may be waived by the written consent of the president of the corporation upon any transfer of such stock or certificate. Source. — Former § 19; originally revised from L. 1862, chap. 367, § 6. § 20. Restrictions as to real property. Every insurance corporation transacting business in tliis state may purchase, hold and convey real property only for tlio following purposes and in the following manner: 1. The building in which it has its principal office and the land upon which it stands. § 20. General Pkovisions. 25 2. Such as shall be requisite for its convenient accommodation in the transaction of its business. 3. Such as shall have been acquired for the accommodation of its business. 4. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted or for moneys due. 5. Such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings. 6. Such as shall have been purchased at sales upon judgments, decrees or mortgages obtained or made for such debts. 7. Such as shall have been acquired under sections thirteen and fourteen of the general corjx)ration law. All such real property specified in subdivisions three, four, five, six and seven of this section, as shall not be necessary for its accommodation in the convenient transaction of its business, shall be sold and disposed of within five years after it 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 superintendent of insurance that its interests will suffer materially by the forced sale thereof, in which event the time for the same may be extended to such time as the superintendent shall direct in such certificate. If it is a domestic marine insurance corporation, it may alsc acquire and hold such real property within the state or upon or in its waters as is or may be adapted to or available for use in protecting, storing and caring for wrecked vessels or cargoes, or in protecting, storing and caring for such vessels and appliances as are or may be employed for assisting the same, or is or may be adapted to or available for other purposes of or incident to marine salvage service, and may manage and dispose of such real property in the same manner and with like effect as if it were an unincorporated owner thereof. No real property shall be acquired by aay domestic life insur- ance corporation under subdivisions one or two hereof or under section fourteen of the general corporation law and no real property within the state shall be acquired by any foreign life insurance 26 The Insurance Law. §§ 21, 22. corporation under subdivision two hereof, except witJi the approval of the superintendent of insurance. No real property shall be disposed of by any domestic life insurance corporation and no real property within the state shall be disposed of by any foreign life insurance corporation, by exchange for other real property, wherever situated, as the consideration for the transfer in whole or part unless the acquisition of the latter shall be requisite for the convenient accommodation of the corporation in the ti*ansac- tion of its business and shall be approved by the superintendent Source. — Former § 20, as amended by L. 190G, chap. 326; originally revised from L. 1&49, chap. 308, § 9; L. 1853, cliap. 403, § t), as amended by L. 1870, chap. 357; L. 1853, chap. 400, § 9; L. 1881, chap. 484; L. 1885, chap. 538, § 2; L. 1880, chap. Oil, § 8; L. 1887, chap. 481, § 1. See § 53, post. Penalties for violation of any provision of the insurance law. CERTIFICATE. — The failure of an insurance company, which has pur- chased real estate upon the foreclosure of a mortgage thereon owned by it, and has held the same for more than live years, to procure within such live years the certificate of the superintendent does not affect or divest its rights in such real estate, and it may still sell and convey a good title to a purchaser. Home Ins. Co. v. Head, 30 Hun, 405. REAL PROPERTY. — A life insurance corporation has a right to purchase lands on which to erect a hospital for the care and treatment of its employees affected with tuberculosis. People ex rel. Metropolitan Life Ins. Co. v. Hotch- kiss, 130 App. Div., 150. A policyholder, without proof of special damage, cannot restrain the insur- ance company from purchasing land for building purposes. Levy v. Mutual Life Ins. Co., 54 Hun, 315. § 21. When corporation to be deemed insolvent. Every insurance corporation specified in aiiicles two, three, four and five of this chapter, whose assets and credits are not sufficient to reinsure its outstanding risks in a solvent insurance corporation, shall be deemed insolvent and may be proceeded against as an insolvent corporation. Source. — Former § 21; originally revised from L. 1851, chap. 95, § 6; L. 1853, chap. 403, § 17, as amended by L. 1879, chap. IGl. See § 101 et seq. General Corporation Law, Action to dissolve a corporation. § 22. Reinsurance. Every insurance corporation doing business in this state may reinflure the whole or any part of any policy obligation in anv § 22. General Provisions. 27 other insurance corporation; provided that if any domestic insur- ance corporation, other than a life insurance corporation, shall re- insure or determine to reinsure substantially all its risks, such reinsurance shall be submitted in advance to and have the approval of the superintendent of insurance, and provided further, that no domestic life insurance company shall reinsure its whole risk on any individual life except by permission of the superintendent of insurance, but may reinsure any portion of an individual risk and receive credit for the resen^e on any policy covering a risk rein- sured if the reinsuring corporation is authorized to transact busi- ness in this state, and may also receive credit for taxes on the premiums paid on any such policy. ^Nfothing in this chapter con- tained shall be construed as permitting the reinsurance of a life insurance corporation having over two hundred and fifty million dollars of insurance outstanding and in force. When a reinsurance agreement is made between other than life insurance corporations, the parties to such agreement shall, upon the policies involved, compute their unearned premium funds as follows : The reinsuring or ceding corporation shall, upon the por- tion of its liability not reinsured maintain a reserve to be computed in accordance with section 118 of the insurance law; the corpora- tion assuming liability by reinsurance from the corporation issuing the original policy shall maintain a reserve equal to that which the reinsuring corporation would have been required to maintain upon the amount reinsured had it retained the liability ceded by it. E"o credit of any kind shall be allowed or given, either as a reduction of taxes or of liabilities, to any corporation transacting business in this state, for reinsurance made in corporations not authorized to issue policies in this state. The superintendent of insurance S'hall require schedules of reinsurance to be filed by each corporation at the time of making its annual report to the department. Source. — Former § 22, as amended by L. 1904, cTiap. 759; originally revised from L. 1871, chap. 888, § G; L. 1877, chap. 229, §§ 1, 2; L. 1879, chap. 489, §§ 3, 4, as amended by L. 1885, chap. 276. Amended by L. 1909, chap. 301; L. 1910, chap. 168, and L. 1911, chap. 369. Xote. — Section 102 was amended by L. 1911, chap. 369, so as to provide that the section shoiikl not apply to policies of reinsurance. Its purpose was to supply a wider market for the roinsuranco of risks of failed life insurance corporations by permittin- pcriptions by them to the capital stock of a mutual insurance company. Herry v. Yates, 24 Barb., 199. § 2,3. Reinsurance by receiver. The receiver of any domestic insurance corporation may rein- sure, upon the written consent of the superintendent of insurance and the attorney-general, all of the policy obligations of the corpo- ration in any solvent corporation authorized to do business in this state, if the assets of the corporation of which he is receiver are suffiicient to effect such reinsurance. If such assets are insufficient for that purpose, the receiver, upon the like consent, may reinsure a percentage of each policy obligation on such corporation out- standing to the extent that its assets may be sufficient for thnt purpose. No contract of reinsurance shall be entered into by the receiver, except in pursuance of an order of the court in which the receiver was appointed directing the reinsurance and estab- lishing the general form of the contract for the same. Source. — Former § 23; originally revised from L. 1877, chap. 229, § 3. REINSURANOE. — The court, in directing a receiver of an insurance com- pnny to reinsure for the benefit of policyholders, should give a preference to domestic companies, and to the one which will afford the best security, not- withstanding many policyholders unite in preferring another company. Mooney v. British Com. Life Ins. Co., 9 A^bb. Pr., N. S., 103. The receiver of an insolvent fire insurance company isi justified in using the unearned premium fund for purposes of reinsurance or of restoring to the policyholders upon cancellation of their outstanding policies that part of the unearned premium applicable td such cancelled policies; policyhold'crs are preferred creditors to the extent of the unearned premium; a corporation, in contemplation of insolvency, may use its unearned premium fund in the acquiring of reinsurance as to all outstanding fire policies. Attorney-General Rep., 1906, page 558. The fact that a life insurance company is authorized to reinsure its risks does not release it from any of its existing obligations. People v. Empire Mut. Ins. Co., 92 N. Y., 105. Where the receiver of an insurance company entered intx) a contract in the state of N'ew Jersey with a foreign insurance company for reinsurance, which contract was ratified and approved by order of the court, the foreign company was estopped from setting up the defense that the contract was in violation of the laws of this state. Jay v. De Groot, 2 Hun, 205. 30 The Insurance Law. §§ 24, 25. § 24. Limitation of risk. No domestic insurance corporation, nor any insurance corpora- tion organized under the laws of any country outside of the United States, doing business in this state, shall expose itself to any loss on any one risk or hazard to an amount exceeding ten per centum of its capital and surplus. 'No insurance corporation incorporated under the laws of any other state of the United States, doing business in this state, shall expose itself to any loss on any one risk or hazard within this state to an amount exceeding ten per- centum of its capital and surplus. No portion of any such risk or hazard which shall have been reinsured in a corporation author^ ized to do insurance business in this state shall be included in determining the limitation of risk prescribed in this section. This section shall not apply to life insurance corporations, nor to marine insurance corporations authorized to do business in this state, nor to the certificates of title guarantee corporations, guaranteeing the correctness of searches for all instruments, liens or charges affecting titles to real property and chattels real, or guaranteeing and insuring the owners of real property and chattels real and others interested therein against loss by reason of defective titles thereto and incumibrances thereon. Source. — Former § 24, as amended by L. 1906, chap, 326; originally revised from L. 1849, chap. 308, § 5; L. 1853, chap. 466, § 6, as amended by L. 1862, chap. 367; L. 1871, chap. 888, § 1; L. 1879, e€uniarilj interested, either as prin- cipal, coprincipal, agent, or beneficiary, in any such purdiase, sale or loan ; provided that nothing herein contained shall prevent a life insurance corporation from making a loan upon a policy held therein by the borrower not in excess of the net value thereof. Any person violating any provision of this section shall be guilty of a misdemeanor. Source. — Former § 36, as amended by L. 1906, chap. 326. See § 53, post. Penalty imposed for violation of Insurance Law. See §§ 664, 665, 667, Penal Law. General provisions relating to officers and directors. See § 1191, Penal Law. Discriminations by insurance corporations and officers. See § 1197, Penal Law. Misconduct of officers and agents of co-operative insurance companies. See § 297, Penal Law. Misconduct of directors of monied corporations. Section 36 of the Insurance Law and § 297 of the Penal Law are complete and independent provisions and are not required to be construed together, and § 21 of the Penal Law is not applicable to the construction of said section of the Insurance Law; the deposit of moneys belonging to an insur- ance corporation in a bank returnable upon demand in accordance with the terms of certificates of deposits issued at the time is not a loan within the meaning of said § 36; nor will a mere verbal promise not shown to be binding upon the bank that the deposit should remain until a loan had been liquidated bring the transaction within said section. People v. Thomas, 71 Misc., 339. It is a violation of the spirit of § 36 for a director of a company to draw plans and supervise the construction of a building for his company. Ruling Ins. Dept., Oct. 8, 1919. § 37. Corporations heretofore formed; exemption of corpo- rations subject to supervision of banking department. Any domestic insurance corporation heretofore incorporated or extended under the provisions of any general or special law of the state is hereby brought under all of the provisions of this chapter relating to such corporation, except that its capital may continue of the amount named in its charter dui'ing the existing term thereof, unless it extends its business to other kinds of insur- ance, and it shall be entitled to all privileges granted by such 52 The Insurance Law. §§ 38, 39. charter not authorized by this chapter. A greater number than a majority of the directors of any such specially chartered corpora- tion shall not be required to be residents of this state notwithstand- ing the provisions of any special law. The provisions of this article shall not apply to any corporation subject to the supervision of or required by or in pursuance of law to report to the superin- tendent of banks, but any such corporation shall be subject to examination by the superintendent of insurance and shall make such report to him as he shall require. Source. — Former § 37; new. Amended by L. 1910, chap. 634. See § 52, post. Keorganization of existing corporations and amendments of certificates. SPECIAL CHARTERS. — Mutual fire insurance companies doing business in this state under special laws passed prior to chap. 308 of 1849 have the right to transact business under their original charters until the same expires by lapse of time. Attorney-General Rep., 1897, page 148. A marine insurance company, incorporated by special act before the pas- sage of the first general insurance law in 1849, may extend its charter in accordance with section 158 of the Insurance Law and continue to operate under its original charter, subject to the limitations contained in section 37 of the Insurance Law. Attorney-General Rep., March 21, 1912. § 38. Fiduciary capacity of agents. Every person appointed or acting in this state as agent of any insurance corporation who receives or collects any moneys as such agent, shall be responsible in a trust or fiduciary capacity to such cor.poration therefor. Source. — Former § 38; originally revised from L. 1873, chap. 688, § 1. RATE. — A representation that the rate charged by a board of under- writers of the city where the property to be insured is situated is less than it really is, the insuring company treating the regular board rate as important, and delivering its policy on the express agreement that it should be null and void in case the rate was higher than represented, is a material misrepresentation and renders the policy void. Armour v. Transatlantic Fire Ins. Co., 15 J. & S., 352. § 39. Examiners and examinations. The superintendent of insurance shall, as often as he deems it expedient, and, if a domestic life or casualty insurance corpora- tion, at least once in three years, or, if any other domestic insirrance corporation, association, society or order, at least once in five years, examine into the affairs of any insurance corporation doing business in this state, § 39. General Provisions. 53 and into the afTairs of any corporation organized under any law of this state or having an office in this state, which corporation is engaged in or is claiming or advertising that it is engaged in organizing or receiving subscriptions for or disposing of stock of, or in any manner aiding or taking part in the formation or busi- ness of, an insurance corporation or corporations, or which is hold- ing the capital stock of one or more insurance corporations for the purpose of controlling the management thereof as voting trustee or otherwise. For such purpose he may appoint as examiners one or more competent persons not officers of or connected with or inter- ested in any insurance corporation other than as policy holders; and upon such examination he, his deputy or any examiner author- ized by him may examine under oath the officers and agents oi such corporation and all persons deemed to have material informa- tion regarding the company's property or business. Every such corporation, its officers and agents, shall produce its books and all papers in its or their possession relating to its business or affairs, and any other person may be required to produce any book or paper in his custody deemed to be relevant to the examination, for the inspection of the superintendent, his deputies or examiners whenever required ; and the officers and agents of such corporation shall facilitate such examination and aid the examiners in making the same so far as it is in their power to do so. Every such exam- iner shall make a full and true report of every examination made by him, verified by his oath, which shall comprise only facts appearing upon the books, papers, records or documents of such corporation, or ascertained from the testimony, sworn to, of its officers or agents or other persons examined under oath concerning its affairs, and suchi conclusions and recommendations as may reasonably be warranted from such facts so disclosed, and said report so verified shall when filed be presumptive evidence in any action or proceeding in the name of the people against the corpora- tion, its officers or agents, of the facts stated therein. The super- intendent shall grant a hearing to the corporation examined before filing any such report; and may withhold any such report from public inspection for such time as he may deem proper and may, if he deems it for the interest of the public to do so, publish any such report or the result of any such examination as contained therein, in one or more newspapers of the state. Source. — Former § 39, as amended by L. 1906, chap. 326; originally revised from L. 1849, cliap. 308, § 23, as amended by L. 1866, chap. 577; L. 1851, chap. 54 The Insurance Law. §§ 40,41. 95, § 6; L. 1853, chap. 463, § 17, as amended by L. 1866, chap. 577; L. 1851, chap. 95, § 5; L. 1853, chap. 463, § 17, as amended by L. 1879, chap. 161; L. 1853, chap. 466, § 24; L. 1869, chap. <)02, § 15; L. 1886, ohap. 611, § 15. Amended by L. 1910, chap. 634, and L. 1913, diap. 304. Note. — The purpose of the amendment of this section by chapter 304 of 1913 was to require examinations of casualty companies at least once in three years instead of once in five years as formerly. See § 843, Code Civ. Proc. Examiner may administer oath. See § 1197, subd. 3, Penal Code. Refusal to permit superintendent to make examination is misdemeanor. See § 665, subd. 3, Penal Code. False statement of affairs of corporation. OATH. — Under the provisions of § 39 of the Insurance Law, and § 843 of the Code of Civil Procedure, examiners have the power to administer oaths to the officers and agents of any corporation subject to examination. Attorney-General Hep., 1900, page 259. FOREIGN OFFICIALS.— Officials of foreign states have no legal right to examine into the affairs of a domestic insurance company. Attorney- General Rep., 1894, page 196. § 40. Examination by superintendent upon request of stockholder, policyholder or creditor. The superintendent shall make an examination into the affairs of any insurance corporation doing business in this state, whenever any stockholder, policyholder or judgment creditor of any such corporation shall, by a declaration subscribed and sworn to by him, notify the superintendent of facts within the knowledge of the person making the declaration, and stated therein, or within the knowledge of persons whose affidavits stating the same are pre- sented therewith, which in the judgment of the superintendent makes such an examination advisable. Source. — Former § 40, as amended by L. 1906, chap. 326; originally revised from L. 1873, chap. 851, § 2. INSOLVENT COMPANY.— The Supreme Court has power to entertain pro- ceedings to close up the affairs of an insolvent life insurance company, on the petition of policyholders, when the superintendent of the insurance department does not institute proceedings. Mooney v. British Com. Life Ins. Co., 9 Abb. Pr., N. S., 103. § 41. Impairment of capital. Whenever it appears to the superintendent, from any state- ment made to him or from an examination made by him or by any examiner appointed by him, that the capital stock of any domestic insurance corporation, except a life insurance corporation, § 41. General Provisions. 55 is impaired to the extent of twenty-five per centum thereof or that its assets are insufficient to justify its continuance in business, he shall determine tlie amount of such impairment or deficiency, and issue a written requisition to the corporation to require its stocldiolders to make good the amount of the impairment or deficiency within such period as he may designate, not less than thirty nor more than ninety days from the service of the requisi- tion. If the amount of any such impairment or deficiency shall not be made good within the time specified in such requisition, and proof thereof filed with the superintendent of insurance, the corporation shall be deemed insolvent and shall be proceeded against as an insolvent corporation, by the attorney-general in the manner authorized by law. If the capital stock of ajiy foreign insurance corporation, except a life insurance corporation, doing business in this state is so found impaired the superintendent shall revoke the certificate of authority issued to such corporation and shall cause a notice thereof to be published in the state paper for four weeks and such corporation, its agent or agents, shall discontinue the issuing of any new policies within this state. Source. — Former § 41, as amended by L. 1904, chap. 451; originally revised from L. 1849, chap. 308, § 13, as amended by L. 1864, chap. 425, and § 23 as added by L. 1866, chap. 577; L. 1851, chap. 95, § 7; L. 1853, ohap. 463, § 17, as amended by L. 1879, chap. 161; L. 1853, chap. 466, § 24. See § 12, ante. Minimum capital stock of marine or fire stock company. MUTUAL INSURANCE COMPANIES.— The question as to the continu- ance in business of a mutual insurance company is to be determined by the superintendent under § 43 of the Insurance Law, and § 41 of that act does not apply to such companies. People ex rel. Long Island Mut. v. Payn, 26 App. Div., 584; 50 N. Y. Supp., 334. EXAMINERS. — It is erroneous for the official examiners of the insurance department to omit to credit the corporation with capital stock notes when such notes are in the possession of the company, unincumbered at the time when the examination is made. People v. Equitable Mut. Ins. Co., 1 App. Div., 84; aff'g 12 Misc., 556. CAPITAL STOCK. — ,The capital stock of fire insurance companies of other states must be fully paid up before such companies can be authorized to do business here. Attorney- General Rep., 1893, page 336. REQUISITION. — The superintendent of insurance having made requi- sition upon a fire insurance company to make good an impairment of its capital cannot withdraw the same. Attorney-General Rep., 1897, page 254. SPECIAL RESERVE FUND.— Special reserve fund should not be with- drawn where the surplus fund is impaired. In re Amer. Fire Insi, Co., Attorney-General Rep., 1896, page 237. 56 The Insurance Law. § 42. PUBLIC POLICY.— Where the board of directors of an insolvent fire insurance company having creditors passes a resolution to reinsure its risks, liquidate its afl'airs, or sell a majority of its stock, and thereafter accepts a proposition from another company to buy a majority of the stock and liquidate its affairs, the agreement is void as against public policy as o scheme to annihilate the fire insurance company without dissolution pro- ceedings as required by this section. Gerrett Co. v. Morton, 35 Misc., 10. INSOLVENCY. — An insurance company cannot be said to be insolvent, or to act in contemplation of insolvency, merely because the sums insured greatly exceed its capital; nor when its assets are more than sufficient to meet a.11 losses of which the company has any notice, information or suspicion. Holbropk v. Basset, 5 Bosw., 147. It is enough to prevent the dissolution of the company if the assets are sufficient at the time of the hearing before the referee though insufficient at the time when the application for dissolution was presented. In the Matter of World's Safe Ins. Co., 40 Barb., 499. FRAUDULENT TRANSFER.— Where an insurance company, being insolv- ent, distributes its capital among its stockholders, thus placing the fund beyond the reach of its creditors, the fund may be recovered back from those who received it, by a proper action. Osgood v. Laytin, 3 Abb. Ct. of App.; 3 Keyes, 521; aff'g 48 Barb., 463. § 42. Stockholders to make good impairment or deficiency. Upon the receipt of the requisition of the superintendent of insurance specified in the last preceding section, the directors of the corporation shall forthwith call upon its stocldiolders ratably for such amounts as will make up such impairment or deficiency. If any stockholder refuses or neglects to pay the amount called for after notice, personally given or by advertisement, in such time and manner as the superintendent shall approve, the directors may require the return of the certificate of stock held by the stock- holder, and in lieu thereof issue to him new certificates for such number of shares as he may be entitled to in the proportion that the ascertained value of the assets of the corporation as determined by the superintendent bears to its original capital, the corporation paying for any fractional parts of shares. The directors may create new stock and issue certificates there- for and dispose of the same at not less than par for an amount sufficient to mal^e up the original capital of the corporation. For any losses accruing upon new risks taken after the expira- tion of the period limited by the superintendent in any such requisition ard before such impairment or deficiency shall be § 43. General Pkovisions. 57 made up, the directors of the corporation shall be jointly and severally individually liable to the extent thereof. Any transfer of stock made during the pendency of any such examination or after any such report shall have been made and before any impairment or deficiency specified in any such requisi- tion shall be made good, shall not release the person making the transfer from his liability for losses accrued previous to such transfer. Source. — Former § 42; originally revised from L. 1849, chap. 308, § 13, as amended by L. 1864, chap. 425, and § 23 as added by L. 1866, chap. 677; L. 1853, chap. 466, § 24. IMPAIRMENT OF CAPITAL. — The superintendent of insurance having made requisition upon a fire insurance company to make good an impairment of its capital, cannot withdraw the same. Attorney-General Rep., 1897, page 254. § 43. Impaired mutual insurance corporations. If it appears to the superintendent from an examination made by him or by an examiner appointed by him that the assets or cap- ital of any mutual insurance corporation are insufficient to justify its continuance in business, he shall determine the amount of such deficiency and issue a written requisition to the officers of the corporation requiring them to make it good within a time to be specified therein, not less than thirty nor more than ninety days from the service of such requisition. Such service may be made by mail, directed to the corporation at its place of business in this state specified in its charter. Upon the service of such requisition the directors of the corporation shall forthwith cause such deficiency to be made good, and proof to be filed with the superin- tendent within the time specified in the requisition that the same has been made good. For any losses accruing upon new risks taken after the expira- tion of such time, and before such deficiency shall be made good, the directors of the corporation shall jointly and severally be personally liable therefor. If such deficiency shall not be made good within the time specified in such requisition and satisfactory proof thereof filed with the superintendent, the corporation shall be deemed insolvent and may be proceeded against by the attorney- 58 The Insukance Law. § 44. general as an insolvent corporation in the manner autliorized by law. Source.— Former § 43; originally revised from L. 1849, chap. 308, § 13, as amended by L. 1864, chap. 425, and § 23, as added by L. 1806, chap. 577; L. 1853, chap. 466, § 24. CONTINUANCE OF BUSINESS.— The question as to the continuance in business of a mutual insm*ance company is to be determined by the super- intendent under this section; § 41 does not apply at all, and § 118 applies only in part to a mutual insurance company. People ex rel. Long Island Mut. V. Payn, 26 App. Div., 584; 50 N. Y. Supp., 334. The provisions of this section do not operate as a limitation upon those provisions of the Code of Civil Procedure defining the cases in which the attorney -general may institute an action of this character; cases might arise where the delay of thirty days contemplated by § 43 might work irreparable injury and where immediate action is called for. People v. Equitable Mut. Ins. Co., 1 App. Div., 85. § 44. Reports of corporations. Every corporation, engaged wholly or in part in the transaction of the business of insurance in this state, whether heretofore or hereafter incorporated by a general or special law, shall annually, on the first day of January, or within two months thereafter, if a corporation under article two of this chapter, and on or before the fifteenth day of February, if a corporation under the other articles of this chapter, file in the office of the superintendent of insurance a statement verified by the oath of at least two of the principal officers of such corporation, showing its condition on the thirty- first day of December then next preceding which shall be in such form and shall contain such matters as the superintendent shall prescribe. If a foreign corporation incorporated under the laws of a state or country outside of the United Stated such oath may be made by the manager thereof within the United States. The superintendent may also address any inquiries to any such insurance corporation or its officers in relation to its doings or condition, or any other matter connected with its transactions. Every corporation so addressed shall promptly and tnithfully reply in writing to any such inquiries, and such reply shall be verified, if required by the superintendent, by such officer of the corporation as he shall designate. Source. — Former § 44, as amended by L. 1897, chap. 493; originally revised from L. 1849, chap. 308, § 7, and § 13, as amended hy L. 1864, chap. 425; L. 1851, ch^p. 95, § 4; L. 1853, chap. 463, § 12 and §§14 and 15, as amended by § 45. General Provisions. 59 L. 1862, chap. 300; L. 1853, chap. 406, § 22, as amended by L. 1854, chap. 309; L. 1801, chap. 320, § 2; L. 1801, chap. 334, § 1; L. 1865, chap. 199, § 2, as amended by [L. 1867, chap. 709; L. 1865, chap. 328, § 3; L. 1806, chap. 843; L. 1869, chap. 902, § 14; L. 1885, chap. 538, § 18; L. 1886, chap. Oil, § 10. Amended by L. 1910, chap. 634. See § 665, Penal Law. Misconduct of officers and employes. See §§ 1194, 1195, 1197, Penal Law. Misconduct of agents in certain insur ance companies. FOREIGN CORPORATION.— Within the meaning of the insurance law a foreign corporation includes one incorporated under the laws of another state of the United States. In re Penn. Fire Ins. Co., Attorney-Ceneral Rep., 1895, page 56. Section 20 of the Banking Law which requires that reports of certain corporations sihall contain a statement of conditions on a .particular day, does not contemplate that the market price of stocks established on that particular day shall be the value to determine the condition of the corporation on that day, but that the value of the stock investments shall be the estimated market value. Attorney-General Rep., July 19, 1907. The requirement of thie charter of a company, incorporated before the passage of first general insurance law in 1849, as to a general balance state- ment, is not in conflict with sections 44 and 45 of the Insurance Law, impos- ing the duty of filing reports with the Superintendent of Insurance. Attor- ney-General Rep., March 21, 1912. VERIFICATION.— It is not necessary that the oath of the officers of insurance companies should precede the preparation of their annual state- ment, but after it has been prepared it should be verified with their oaths. Case v. People, 6 Abb. N. C, 151. FALSE STATEMENT.— An action does not lie by a stockholder of a mutual insurance company to declare the franchise forfeited, and enjoin its exercise, and have a receiver appointed, on the ground that the defendants made a false annual statement. Fisher v. World Mut. Life Ins. Co., 15 Abb. Pr., N. S., 363. . § 45. Forms of report to be furnished by superintendent. The superintendent shall cause to be prepared and furnished to every corporation required by the provisions of this chapter to report to him, printed forms of the reports and statements required of such corporations. He may make such changes from time to time in the form of the same as shall seem to him best adapted to elicit from such corporations a true exhibit of their condition in respect to the several matters which they are required to report, or in respect to any other matters which he may deem material. The report of any corporation, the capital of whidi is composed 'M whole or in part of notes, shall, in addition to the foregoing, exhibit the amount of notes originally forming its capital, and also 60 The Insurance Law. § 45. what proportion of such notes is still held by the corporation and considered capital. If a corporation, incorporated under the laws of any state or country outside of the United States, such report with respect to the business done and assets held by or for the corporation, shall only contain a statement of the business done and assets held by or for it within the United States for the protection of all policy holders residing within the United States, and shall not contain any statement in regard to its assets and business elsewhere. In addition to any other penalty prescribed by law, every insurance corporation failing to make and file the reports and statements required by this chapter or to reply to any inquiry of the super- intendent, shall forfeit to the people of the state ^ve hundred dollars for the first offense, and an additional five hundred dollars for every montli that such corporation shall thereafter continue to transact any business of insurance in this state. Source.— Former § 46, as amended by L. 1906, chap. 326; originally revised from L. 1849, chap. 308, § 13, as amended by L. 1864, chap. 425; L. 1853, chap. 463, § 12; L. 1853, chap. 466, § 22, as amended by L. 1854, chap. 369; L. 1861, chap. 334, § 2; L. 1880, chap. 110, § 2; L. 1882, chap. 235, § 1; L. 1885, chap. 538, § 18; L. 1886, chap. 611, § 16. See § 665, Penal Law. Refusal or neglect of officer of corporation to make any report is a misdemeanor. FOREIGN OORPORATION.— Within the meaning of the Insurance Law, a foreign corporation includes one incorporated under the laws of another state of the United States. In re Penn. Fire Ins. Co., Attorney-General Rep., 1895, page 56. Where certain foreign ocean marine insurance companies doing business within this state collect the premiums within the state though losses upon which the certificates are made are payable abroad, the annual report of such companies should contain a statement of its losses paid abroad when such losses are upon policies written in this state. Attorney-General Rep., Feb. 20, 1911. The requirement of the charter of a company, incorporated before the passage of first general insurance law in 1849, as to a general balance state- ment, is not in confiict with sections 44 and 45 of the Insurance Law, impos- ing the duty of filing reports with the Superintendent of Insurance. Attor- ney-General Rep., March 21, 1912. A foreign reinsurance corporation authorized to do a fire reinsurance busi- ness in this State, must report to the New York Superintendent of Insurance all business done in the United States with direct writing companies therein, regardless of the facts that the business is done through foreign offices, and not through the United States branch of the company, or that the property insured is located in Canada, Mexico or Cuba; and such foreign corporation must maintain in the United States the proper unearned premium and unpaid loss reserves thereon. Attorney-General Op., June 22, 1915. §§ 46, 47. General Provisions. 61 § 46. Annual report of superintendent. The superintendent of insurance shall annually transmit to the legislature at the opening of its session, or within ninety days thereafter, a report containing the statements and reports made to him pursuant to tlie provisions of section forty-four of this chapter, as such statements and reports shall be audited and cor- rected by him, all arranged in tabular form, or in abstracts, in classes according to the kind of insurance made by the corporation, which report shall also contain : 1. A statement of all insurance corporations authorized to do business in this state during the year ending the thirty-first day of December next preceding, with their names, locations, amounts of capital, dates of incorporation, and of the commencement of business, and kinds of insurance in which tliey are engaged respectively. 2. A statement of the insurance corporations w^hose business has been closed during such year and the reasons for closing the same, with the amount of tlieir assets and liabilities so far as tlie same are known, or can be ascertained by him. 3. Any amendments to this chapter which in his judgment may be desirable. 4. The names and compensation of the clerks employed by him, and the whole amount of the expenses of the department. In addition to the usual number of copies for the nse of the legislature, there shall be printed and in readiness for disiribntion by the printer employed to print legislative documents, two thou- sand copies of such report for the use of the department. Source. — Former § 46; originally revised from L. 1849, chap. 308, § 13, as amended by L. 1864, chap. 425; L. 1853, chap. 463, § 13, as amended by L. 1873, chap. 849; L. 1853, chap. 466, § 22, as amended by L. 1854, chap. 369; L. 1859, chap. 366, § 3, as amended by L. 1866, chap. 514; L. 1885, chap. 538, § 18; J.. 1886, chap. 611, § 16. Amended by L. 1909, chap. 301; L. 1910, chap. 634, and L. 1912, chap. 89. § 47. Deceptive statements prohibited. No insurance corporation doing business in this state, or agent thereof, shall state or represent by advertisement in any newspaper, periodical or magazine, or by any sign, circular, card, policy of 62 The Insurance Law. § 48. insurance or certificate of renewal thereof or otherwise, that any funds or assets ar<^ in nossession of any sucli corporation not actually possessed by it and available for the payment of losses and claims, and held for the protection of its policy holders or creditors. Source. — Former § 47; originally revised from L. 1877, (^hap. 241, § 1. See § 665, Penal Law. Misconduct of officers and employees of corporations as to making reports. See §§ 1194, 1195, 1197, Penal Law. Misconduct of agents in certain insur- ance companies. See § 1203, Penal LaAv. Issue and circulation of false literature. § 48. Contents of advertisements. Every advertisement or public announcement, and every sign, circular or card issued by any insurance corporation or association incorporated by or existing under the laws of this state or of any other state of the United States and doing business in this state purporting to make known its financial standing, shall exhibit the amount of the capital actually paid in in cash, the assets owned, the liabilities, including therein the premium and loss reserves re- quired by law, and the amount of net surplus of assets over all its liabilities actually available for the payment of its losses and claims, and held for the protection of its policy holders, and shall correspond with the verified statement made by it to the insurance department next preceding the making or issuing of the same. Every advertisement or public announcement, and every sign, circular or card issued by any insurance corporation or association incorporated by or existing under the government or laws of a country outside of the United States and doing business in this state, purporting to make known its financial standing, shall exhibit as capital and as assets only the capital and asset-s held by its United States branch, the liabilities, including therein the premium and loss reserves required by law, and the amount of net surplus of assets over all its liabilities actually available for the payment of its losses and claims and held for the protection of its policyholders in the United States, and shall correspond with the verified statement made by it to the insurance department next preceding the making or issuing of the same. § 49. General Provisions. 63 For every violation of this and the preceding section by any such corporation, it shall forfeit for the first offense to the people of the st>ate tlie sum of five hundred dollars, and for every subse- quent offense the sum of one thousand dollars, which sums, when recovered, shall be paid into the treasury of the state. This sec- tion shall not apply to any life insurance corporation nor to any domestic or foreign insurance corporation or association engaged solely in the business of marine or transportation insurance or in such business in connection with the business of automobile insurance. Source. — Former § 48; originally revised from L. 1877, chap. 241, §§ 2-4. Amended by L. 1913, chap. 205. Note. — The purpose of the amendment of this section by chapter 205 of 1913 was to compel foreign fire or casualty companies in every advertisement or public announcement to give a statement of the capital and assets held by the United States branch. — Ed. See § 665, Penal Law. Misconduct of officers and employees of corpora- tions as to making or publishing false statement. ADVERTISEMENT. — Every advertisement made by an insurance company as to the amount of its resources must state the amount of its capital paid up in cash. Attorney-General Rep., 1892, page 269. § 49. Agents. Every agent of any insurance corporation doing business in this state shall, in all advertisements of such agency, publish the location of the corporation, giving the name of the city, town or village in which it has its principal business office, and the state or government under the laws of which it is organized. The term, " agent," in this chapter shall include an acknowl- edged agent or surveyor or any other person who shall in any manner aid in transacting the insurance business of any insurance corporation not incorporated by the laws of this state, and any broker whose business, in whole or in part, is to negotiate for and place risks, deliver the policies covering the same and collect premiums therefor. Source. — Former § 49; originally revised from iL. 1849, ohap. 308, § 7; L. 1853, chap. 466, § 23, as amended by L. 1875, chap. 555. See § 9, ante. No foreign corporation to transact business in this state without certificate of authorization by superintendent. See § 29, ante. Copy of charter and verified statement to be filed in office of superintendent of insurance. See § 31, ante. Agent not to transact business until certificate is filed in county clerk's office. 64 The Insurance Law. § 49. See § 32, ante. Renewal of certificate. See § 50, post. Agent's certificate of authority. See § 53, post. Penalty for violation of Insurance Law. See § 54, post. Agents not to act for unauthorized corporations. See § 91, post. Certificate of authority of agents. See § 137, post. License to agents in certain cases. The general superintendent of agencies of an insurance company assisting an agent in closing difficult cases is within the meaning of " agent " in § 49. Ruling Ins. Dept., Dee. 23, 1910. REVOCATION. — Where an insurance company, at the time of the revoca- tion of an existing agency, gave no public notice of the same, and left with the former agent policies in blank, signed by the company, such revocation is not effective as against a person subsequently insured in such company by such agent, in the absence of any proof that such revocation of authority was known to him at the time of the issuance to him of the policy. Mar- shall V. Reading Fire Ins. Co., 78 Hun, 83. DEFINITION. — The definition of an agent as contained in this section will not be imported into chap. 641 of 1892 in order to bring agents of the insured within the penalty of that statute and defeat a recovery by them on the agreement. Romberg v. Kouther, 27 Misc., 227. ENTIRE MANAGEMENT.— There is no warrant in law for the making of a contract which substantially places the entire management of the busi- ness of the company in the hands of a general agent. Attorney-General Rep., 1897, page 114. There is no provision in the insurance laAv which warrants the transfer of corporate rights and franchises to an individual acting as general agent in another state. Attorney-General Rep., 1896, page 276. LIMITATION OF AUTHORITY.— The powers possessed by agents of insurance companies are to be interpreted in accordance with the general law of agency. Where restrictions upon the agent's authority appear in a policy the insured is bound to take notice of them, and in the absence of evidence tending to show that his powers have been enlarged by the usage of the company, its course of business or by consent, express or implied, the policy must control, and the authority, as limited, must be regarded as the measure of the agent's power. Quinlan v. P. W. Ins. Co., 133 N. Y., 356. In determining the authority of agents, their instructions are not neces- sarily controlling, and, although an agent be instructed to do one thing or to exercise only a limited authority, if he is knowingly habitually suffered to exercise a greater authority, the principal is bound by the authority ho has allowed his agent to exercise, notwithstanding his instructions to the contrary. Powers v. Prudential Ins. Co., 83 Hun, 254; aff'd 145 N. Y., 654. Where the power of an agent is apparently limited, a person dealing with him is bound to inquire concerning the extent of his authority before acting upon the faith of its existence; and a principal who has not clothed an agent with either real or seeming authority is not bound by the simple declaration of such agent that the principal is bound by his acts or state- ments. Allen v. St. Lawrence F. Ins. Co., 88 Kun, 461. Authority to an agent to solicit applications for life insurance does not give him authority to collect premiums. Howell v. Charter Oak Ins. Co., 2 Wk. Dig., 383. § 50. General Provisions. 65 An agent authorized to represent one company may not, in case his company take^i part of a iproposed risk, place the remaining portion of the risk with another company through that other company's agent. Attorney-General Rep., Feb. 8, 1908. AGENT'S CONTRACT. — When a contract between an agent and insur- ance company is entered into without any fraud or misrepresentation on the part of the company, the agent is bound by its terms, even though it be a hardship. Levitt v. Prudential Ins. Co., 39 St. Rep., 91. Where the contract of employment of a life insurance agent requires him to devote his entire time and energies for a term of years in procuring applica- tions for insurance in the company so employing him and to act exclusively for such company, and his compensation depends upon the premiums on policies issued through his instrumentality, he is entitled to have applications offered by him treated in good faith, and cannot be deprived of his compensation by An arbitrary rejection of a claim procured by him. Madden v. Equitable Life Assur. Soc, 11 Misc., 540. FIRM. — Where a firm is appointed to an agency, such agency ceases upon the death of one of the members of the firm, and the principal is not bound by the subsequent acts of the surviving member. Martine v. International L. Ins. Soc, 63 N. Y., 339. CLERKS. — An ordinary agent of an insurance company has power to hire AS many clerks as may be necessary to do the business of the agency, and a provision in an insurance policy that no one not holding a commission ahall be considered as its agent, does not prevent the employment by a com- missioned agent of the usual and necessary clerical and other assistants to enable him to properly perform his duties. Arff v. Star Ins. Co., 125 N. v., 57. § 50. Agent's certificate of authority. !N"o person or corporation shall act as agent for any foreign insurance corporation in the transaction of any hnsiness of insur- ance within this state, or negotiate for or place risks for any such corporation, or in any way or manner aid such corporation in effecting insurances or otherwise in this state, unless such corpo- ration shall have fully complied with the provisions of this chapter. Every such agent shall, annually, on the first day of January, or within six months thereafter, procure a certificate of authority from the superintendent of insurance, who shall file in his office evidence of the issuance of such certificate to the agent aforesaid. Any person or corporation violating the provisions of this sectior shall forfeit to the people of the state the sum of ^ve hundred dollars for the first offense, and an additional sum of one hun- dred dollars for each month during which any such person or corporation shall continue to act in violation of this section. This 66 The Insurance Law. § 50. section shall not apply to the agents of corporations transacting business under the provisions of article six of this chapter. Source. — Former § 50, as amended, by L. 1893, chap, 725; originally revised from L. 1853, chap. 466, § 23, as amended by L. 1875, chap. 555. Amended by L. 1909, chap. 301. See § 9, ante. No foreign corporation to transact business in this state without certificate of authorization by superintendent. See § 29, ante. Copy of charter and verified statement to be tiled in office of superintendent of insurance. See § 31, ante. Agent not to transact business until certificate is tiled in county clerk's office. See § 32, ante. Renewal of certificate. See § 49, ante. Any person aiding in the transaction of business of foreign corporation is deemed an agent thereof. See § 53, post. Penalty for violation of Insurance Law. See § 54, post. Agents not to act for unauthorized corporations. See § 91, post. Certificate of authority of agents. See § 137, post. License to agents in certain cases. See § 1192, Penal Law. Overcharges by marine insurance agents. See § 1197, Penal Law. Acts as agent of foreign corporation which failed to obtain certificate to do business in this state. See §§ 1198, 1199, Penal Law. Misconduct of agents. FOREIGN CORPORATION.— Within the meaning of the insurance law, a foreign corporation includes one incorporated under the laws of another state • of the United States. In re Penn. Fire Ins. Co., Attorney-General Rep., 1895, page 66. AGENTS. — Corporations may act as agent for insurance companies when expressly authorized so to do by their charters, and not otherwise. In re Carpenter & Co., Attorney -General Rep., 1893, page 369. The superintendent of agencies of a foreign corporation coming into the state and assisting and co-operating with agents in closing difficult cases should have an agent's license. Ruling Ins. Dept., Dec. 23, 1909. An unauthorized corporation cannot act as agent for procuring insurance within this state. July 22, 1897. A domestic corporation organized to conduct a general insurance agency may l>e licensed to act as such agent. Nov. 16, 1893. A general agent in this State signing policies issued! by a foreign company comes within the penalty of the section, Attorney-General Rep., June 2, 1904. A foreign life com,i>any not authorized to do business in this State cannot establish an agency in this State solely to collect premiums. Attorney-General Rep., Sept. 19, 1907. Where the Penal Codle has Ibeen violated, both by a foreign company and its agent, the matter should be referreoration which they may never have exercised, or, if exercised, abandoned. — Ed. See § 206, post. Reincorporation of co-operative insurance companies. TRANSFER. — There is no provision in the Insurance Law which warrants the transfer of corporate rights and franchises to an individual acting as general agent in another state. Attorney-General Rep., 1896, page 276. The provision of this section that " this section shall apply to insurance companies organized under or subject to article VI " was not intended to prevent insurance companies organized under the other articles of the Insur- ance Law from amending their charters by inserting therein any statement or matter which might have been originally inserted therein. In re Lawyers' Mort. Co., Attorney-General Rep., 1905, page 453. When the legislature reserves the right to amend or repeal charters, a law permitting mutual life associations to reincorporate as regular life insur- ance companies is not unconstitutional as impairing the obligations of con- tracts or depriving the policy holders of property without due process of law. Wright V. Minn. Mut. Life Ins. Co., 193 U. S., 657. Thp Tight to repeal or amend charters is equally effectual whether it be reserved in the original act of incorporation, the articles of association under B general law, or in the Constitution of the state. Polk v. Mut. Reserve Fund, 207 U. S., 310. Amendments to charter of an insurance company, which do not enlarge its franchises, do not render necessary a republication of the notice of inten- tion to organize. An insurance company whose charter and declaration were tiled and approved, but which was not organized under the former law, may be organized under the present Insurance Law without republication of notice. In re Great Eastern Cas., etc., Co., Attorney-General Rep., 1892, page 394. Section 52, as amended by chap. 722 of 1901 (and since this decision amended by chap. 326 of 1906), when taken together with the charter of the defendant, incorporated under chap 463 of 1853, cannot be construed as an act of the legislature authorizing the board of directors to alter the corporate control of the company by giving to policyholders power to partici- pate in the election of directors, and in the absence of express legislation permitting it said directors have no such power. Lord v. Equitable Life Assur. Soc, 109 App. Div., 253, below; 47 Misc., 187. The legislature by the amendment of § 52 by chap. 320 of 1900, enfranchised policyholders with the consent of stockholders holding a majority of the stock, to vote for directors and had the power to do so; while the directors had the right to limit the powers of the policyholders to vote for only a part of the directors, they had no right to thus limit the power of the stockholders. Lord V. Equitable Life Assur. Soc., 194 N. Y., 212, rev'g 126 App. Div., 937. The provisions of chap. 326 of 1906, although they take from the stock- holders of an existing corporation the right to vote for all of the directors and give to the policyholders an exclusive right to vote for a majority of them, are not for that reason unconstitutional. Lord v. Equitable Life Assurance Society, 57 Misc., 417. § 53. General Pkovisions. 71 BOARD OF DIREUTOKS.— Section 52, in regard to the amendment of a charter of a corporation, contemplates corporate action by the board ol directors only and not the coriwrate action of the stockholders. Lord v. Equitable Life Assur. Soc, 47 Misc., 187; aff'd 109 App. Div., 252. ASSESSMENT LIFE INSURANCE.— A company formed for the purpose of transacting the business of assessment life insurance cannot alter its charter to include casualty insurance if thereby the acquired rights and liabilities of existing policyholders are altered. Attorney-General Rep., 1892, page 293. TAX. — A corporation formed by the consolidation of previously existing corporations is liable to a tax of one-eighth of one per cent on the amount of its capital stock required to be paid on filing incorporation papers, though each of the corporations so consolidated paid such tax on its own incorpora- tion. People V. Rice, 11 N. Y. Supp., 249. VALUATION.— When an insurance company originally organized as a fraternal organization has thereafter successively incorporated as a mutual company and as a stock company, under chapter 690 of the Laws of 1893, the valuation of policies issued when the corporation was a mutual company for the purpose of ascertaining the amount of reserve, should be made under § 52 of the Insurance Law, if such valuation does not violate any provision, express or implied, of the original contract of insurance; the reserve need not be determined by valuing such policies as whole life policies under § 86 of the Insmrance Law. Elder v. Bankers' Life Insurance Co., 117 App. Div., 722. A surety corporation incorjx)rated' on June 9, 1897, may not change the number of directors or increase its capital stock by amending its c'harter under section 52 but must proceed under sections 26 and 64 of the Stock Corpora- tion Law. Attorney-General Rep., Jan. 24, 1911. § 53. General penalties. Any corporation or person violating any provision of thib chapter, except where such violation constitutes a felony, shall in addition to any penalty otherwise prescribed for such violation, be guilty of a misdemeanor. Source.— Former § 53, as amended by L. 1906, chap. 326; originally revised from L. 1851, chap. 95, § 9; L. 1853, chap. 463, § 18; L. 1871, chap. 888, § 9; L. 1877, chap. 439, § 3, as amended by L. 1881, chap. 628; L. 1879, chap. 489. § 5; L. 1880, chap. 110, § 5; L. 1880, chap. 428, § 3. See § 9, ante. No foreign corporation to transact business in this statr without certificate of authorization by superintendent. See § 29, ante. Copy of charter and verified statement to be filed ir office of superintendent of insurance. See § 31, ante. Agent not to transact business until certificate is fileo in county clerk's office. See § 32, ante. Renewal of certificate. See § 49, ante. Any person aiding in the transaction of business of foreign corporation is deemed an agent thereof. See § 50, ante- Agent's certificate of authority. 72 The Insuiiance Law. § 54. See § 54, post. Agents not to act for unauthorized corporations. See § 91, post. Certificate of authority of agents. See § 137, post. License to agents in certain cases. PENALTY. — To maintain an action to recover the penalty imposed by the act of 1853 it is not necessary to set forth the statute in the complaint; it is sufficient to state that the acts complained of were in violation of the insurance statutes of the state. People v. McCann, 67 N. Y., 506. LLOYDS. — Lloyds associations cannot engage in the business of insurance in this state except as agents of persons or corporations so authorized unless possessed of capital required of insurance corporations doing the same kind of business in this state and invested in the same manner; a violation of the provisions of § 54 of the Insurance Law is not a criminal oli'en&e; the only remedy is by an action for a penalty under § 53. In re Derrick, Attorney-General Hep., 1903, page 277. But see Art. X. § 54. Conduct of insurance business by persons not incor- porated. No person, partnership, or association of persons shall engage in the business of insurance in this state except as agent of a person or corporation authorized to do the business of insurance in the state, unless possessed of the capital required of an insurance corporation doing the same kind of business in the state and invested in the same manner; nor unless he or they shall have made and deposited with the superintendent of insurance securities of the same amount required of an insurance corporation doing business in this state, nor unless the superintendent of insurance shall have granted to him or them a certificate to the effect that he or they have complied with all the provisions of law which an insurance corporation doing business in this state is required to observe, and that the business of insurance specified therein may be safely intrusted to the person, partnership or association of persons to whom the certificate is granted. Every person, partnership or association receiving any such cer- tificate of authority shall be subject to the insurance laws of tlie state and to the jurisdiction and supervision of the superintendent of insurance in the same manner as if an insurance corporation authorized by the laws of the state to engage in the business of insurance specified in the certificate. No such person, partnership or association shall transact busi- ness under a corporate or fictitious name or under any name, stylo or title otlier than the true name of such person, or of the persona comprising such partnership or association. §55. General Provisions. 73 Source. — Former § 54; originally revised from L. 1853, chap. 463, §§ 14, 15, as amended by L. 1863, chap. 300; L. 1877, chap. 439, § 2, as amended by L. 1881, chap. 628. See § 9, ante. No foreign corporation to transact business in this stat** without certificate of authorization by superintendent. See § 29, ante. Copy of charter and verified statement to be filed in oflSce of superintendent of insurance. See § 31, ante. Agent not to transact business until certificate is filed in county clerk's office. See § 32, ante. Renewal of certificate. See § 50, ante. Agent's certificate of authority. See § 53, ante. Penalty for violation of insurance law. See § 91, post. Certificate of authority of agents. See § 137, post. License to agents in certain cases. CORPORATIONS. — Corporations may act as agents for insurance com- panies when expressly authorized so to do by their charters, and not other- wise. In re Carpenter & Co., Attorney-General Rep., 1893, page 369. DEMURRER. — A complaint in an action by a foreign corporation is not demurrable for its failure to show that they have been duly authorized to do business within the state of New York as the fact of compliance is not a necessary part of the complaint, the failure to comply being a matter of defense. Thompson v. Colonial Assur. Co., 33 Misc., 37. Where a tailor is hired to make up into trousers material supplied by the employers, and the latter agree to pay the tailor the value of his labor put upon the material, although it should be damaged or destroyed by fire, in consideration of the deduction of one per cent of the agreed price of the labor, the contract is one of employment and not of insurance within the meaning of the Insurance Law, and is not invalid under the provisions of §§ 54, 58 and 59 of that law. Stern v. Rosenthal, 71 Misc., 422. LLOYDS. — Lloyds associations cannot engage in the business of insurance in this state except as agents of persons or corporations so authorized unless possessed of capital required of insurance corporations doing the same kind of business in this state and invested in the same manner; a violation of the provisions of § 54 of the Insurance Law is not a criminal ofi"ense; the only remedy is by an action for a penalty under § 53. In re Derrick, Attorney-General Rep., 1903, page 277. But see Art. X. § 55. Insurance without the consent of the Insured prohibited. 'No policy of insurance shall be issued upon any property except upon the application and in the name of some person having an interest in the property. No policy or agreement for insurance shall be issued upon the life or health of another or against loss by disablement by accident except upon the application of the person insured; but a wife may take a policy of insurance upon 74 The Insurance Law. § 55. the life or health of her husband or against loss by his disablement by accident ; an employer may take out a policy of insurance cover- ing his employees collectively for the benefit of such as may suffer loss from injury, death or disablement resulting from sickness, and a person liable for the support of a child of the age of one year and upward may take a policy of insurance thereon, the amount payable under which may be made to increase with advancing age and which shall not exceed the sums specified in the following table, the ages wherein specified being the ages at time of death, for an amount not exceeding the sum specified in the table : Bet^veen the ages of one and two years, thirty dollars. Between the ages of two and three years, thirty-four dollars. Between the ages of three and four years, forty dollars. Between the ages of four and five years, forty-eight dollars. Between the ages of five and six years, fifty-eight dollars. Between the ages of six and seven years, one hundred and forty dollars. Between the ages r f seven and eight years, one hundred and sixty-eight dollars. Between tlie ages of eight and nine years, two hundred dollars. Between the ages of nine and ten years, two hundred and forty dollars. Between the ages of ten and eleven years, three hundred dollars. Between the ages of eleven and twelve years, three hundred and eighty dollars. Between the ages of twelve and thirteen years, four hundred and sixty dollars. Between the ages of thirteen and sixteen years, five hundred and twenty dollars. Between the ages of sixteen and seventeen years, six hundred and twelve dollars. Between the ages of seventeen and eighteen years, seven hundred dollars. Between the ages of eighteen and nineteen years, seven hundred and eighty-four dollars. Between tlie ages of nineteen and twenty years^ eight hundred and fifty-five dollars. Between the ages of twenty and twenty-one years, nine hundred and thirty dollars. §55. General Protisions. 76 In respect of insurance heretofore or hereafter, by any person not of the full age of twenty-one years but of the age of fifteen years or upwards, effected upon liie life of such minor, for the benefit of such minor or for the benefit of the father, mother, husband, wife, brother or sister of such minor, the assured shall not, by reason only of such minority, be deemed incompetent to contract for such insurance or for the surrender of such insurance, or to give a valid discharge for any benefit accruing, or for money payable under the contract. Source. — Former § 55, as amended by L. 1902, chap. 437 ; new. Amended by L. 1910, chap. G34, and L. 1913, chap. 519. In effect May 15, 1913. Note. — The purpose of tlhe amendment of this section by chap. 519 of 1913 was to authorize employers to take out policies covering employees col- lectively for the benefit of such as might suffer loss from death or disable- ment resulting from sickness; formerly sudi policies were limited to accident insurance. — Ed. N'ote. — Before the amendment of this section by chap. 634 of 1910, a person liable for the support of a child could only take out a yearly renewable term policy, but this limitation as to the form of policy was stricken out by siaidl amendment. — Ed. See § 52, Domestic Relation Law, chap. 19 of 1909. Insurance by wife of husband's life. See Personal Property Law, § 15. Personal property not alienable in certain cases. A policy issued prior to the enactment of this section insuring a manu- facturing company against loss to property from an explosion or rupture of boilers, "also against loss of human life or injury to person, whether to the assured, the employees, or to any other person or persons, caused by such explosion or rupture, payable to the assured for the benefit of the injured person or persons, or their legal representatives in case of death, and not contingent upon the legal liability of the assured," is to be deemed as having been intended at most as a pecuniary indemnity to the legal representatives of an employee for the loss sustained by them in consequence of his death. Embler v. Hartford Steam Boiler Ins. Co., 158 N. Y., 431. There is no provision of the Insurance Law, that prohibits the issuing of a life insurance policy, having an institution the beneficiary instead of a person, but if tbe application were made by the institution, it would fall within the prohibition of section 55. Ruling Ins. Dept., Aug. 10, 1011. CREDITOR'S LIEN. — A surrogate has no jurisdiction to enforce a cred- itor's lien against insurance moneys under § 22 of the Domestic Relations Law, chap. 272 of 1896; the proper course is by a representative action to establish and enforce the lien after the assets of the estate have been exhausted. Matter of Thompson, 184 N. Y., 36; rev'g 102 App. Div., 617. INFANTS. — Co-operative insiu-ance companies cannot insure the lives of infants. In re Mut. Life Assn., Attorney- General Rep., 1892, page 366. This section, providing that a minor shall not be deemed incompetent to contract for insurance, is not declaratory of the common law, but in con- '76 The Insurance Law. § 55. travention thereto; it is immaterial that the policy sought to be rescinded was an endowment policy, as the infant may make a valid contract in any of the common forms. Hamm v. Prudential Insurance Co., 137 App. Div., 504. If the personal contract of an infant, beneficial to himself, is fair and rea- sonable and free from fraud and has been wholly or partly executed on both sides and the infant has disposed of what he has received, or the benefits received by him are such that they cannot be restored as in a contract of insurance, he cannot recover back what he has paid. Johnson v. North West- ern Mutual Life Ins. Co., 56 CVIinn., 305; 45 Am. St. Rep., 473. Co-operative or assessment companies have no power to receive, as mem- bers, infants of such tender years that they are unable to exercise any . choice in becoming members or to exercise the powers with which members are invested under the act. Matter of G. M. B. Ass'n, 135 N. Y., 280. The general provisions of this section providing that a person liable for the support of a child of the age of one year and upward may take a yearly renewal term policy of insurance upon the life of such child, does not extend the scope of article 6 of the Insurance Law, which forbids a life insur- ance company, conducted upon the assessment plan, from issuing such a policy. People v. Industrial Benefit Ass'n., 92 Hun, 311; aff'd 149 N. Y., 606. The insuring of infants by assessment life and casualty insurance corpora- tions doing business under the provisions of article G of the Insurance Law is not permitted. Atty.-Gen. Dec, March 23, 1910. The provisions of § 55 fixing the amount of insurance which may be taken on the life of a child by a person liable for its support does not alone restrict the amount of insurance by a single policy, but limits the total amount of such insurance. Flynn v. Prudential Ins. Co., 207 N. Y., 315, rev'g 145 App. Div., 704. As this section makes an infant over fifteen years of age competent to con- tract for life insurance, a person who has paid the premiums for the infant at his request can recover the amount from the infant the same as he might recover for necessaries furnished. Equitable Trust Co. v. Moss, 149 App. Div., 615. ASSIGNMENT OF POLICY.— A policy of insurance for the benefit of a wife upon the life of her husband is not assignable except in the cases where assignments are authorized by statute, and an assignment thereof cannot be compelled by a decree of the court, nor can the avails thereof be appro- priated in advance by operation of law to the payment of debts, or sub- jected to the lien of creditors either of herself or her husband. Baron v. Drummer, 100 N. Y., 372. The provisions of chap. 248 of 1879, providing that policies of life insur- ance issued ** upon the lives of husbands for the benefit and use of their wives " shall be assignable by said wife, with the written consent of the husband do not require the written consent of the wife to a transfer by the husband of his interest, arising out of his option to convert the policy into cash. Travelers' Insurance Co. v. Ilealey, 25 App. Div., 53. §55. General Provisions. 77 An assignment of a policy in a foreign life insurance company, issued upon ♦;he life of a husband, in which the wife is the beneficiary, is valid, where the assignment is made by the wife with the written consent of her husband, although the assignee has no interest in the life of the husband, and merely takes the assignment upon an agreement that he shall have an interest of two-thirds in the policy, provided he pays the premiums upon it and prevents it from lapsing. Fuller v. Kent, 13 App. Div,, 529. Where a person takes out a policy of insurance upon his own life, and the amount is made payable to another having no interest in the life, or where the insured assigns his policy to one having no such interest, the beneficiary or the assignee may hold or enforce the policy, if it was valid in its inception, and was procured or the assignment made in good faith. Olmstead v. Keyes, 85 N. Y. 593. It is the doctrine of this state, that a policy of life insurance taken out by the insured himself or by another having an insurable interest in his life, ir> good faith and not for the mere purpose of assignment, may be lawfully assigned to one having no insurable interest in the life of the one insured; and that the assignee, when the assignment is general and absolute, will be entitled to the entire proceeds of the policy; the fact that the insured's con- dition of health has failed does not deprive him of the right to realize on hi» policy by its assignment. Steinback v. Diepenbrock, 158 N. Y., 24. Evidence that a husband delivered a policy of insurance upon his life to bi« wife as a gift, and that she thereafter paid all the premiums thereon, i« Buflficient to warrant a jury in finding both a gift and an assignment of the policy to the wife, vesting her with the legal title thereto, although the poliev contained a provision that it should not be assigned unless in writing. Griffir V. Prudential Ins. Co., 43 App. Biv., 499. A policy of insurance contained a clause declaring that it could be assigned only on the written approval of the company; it did not declare that a viola- tion of the provision would avoid the policy; in an action thereon it was held that a violation of this provision did not involve a forfeiture, and that an assignee could enforce the policy, although the insurer had not consented to the assignment. Marcus v. St. Louis Mut. L. Ins. Co., 68 N. Y. 62t:. Stipulation in a policy of insurance, issued upon the life of a husband for the benefit of his wife, against the assignment thereof, inserted solely for the advantage of the company, cannot avail the wife as against one to whoni she has assigned the policy under the statute, where the company has declined to take advantage of the stipulations and has paid the proceeds of the policy iuto court. Spencer v. Myers, 150 N. Y., 269. The statutes relating to life insurance issued for the benefit of a married woman, refer to a contract made by her in her own name, or in the name of a third person with his assent as her trustee, for insurance upon the life of her husband, and not to a contract made by him for her benefit. Bradshaw v. Mutual Life Ins. Co., 187 N. Y., 347; rev'g 109 App. Div., 375. A married woman as a beneficiary in a policy of insurance on the life oi her husband is entitled to the proceeds of the policy notwithstanding a divorce obtained by her before his death. Overhiser, Adm'x. v. Overhiser et al., 63 Ohio St., 77. But see § 1761, Code Civ. Proc. 78 The Insurance Law. §§ 56, 57. § 56. Foreign insurance companies. Companies from other states and countries hereafter applying for admission to this state shall be possessed of at least the amount of capital required 'for companies organized under the laws of this state, which amount of capital of such companies must be fully paid in cash. It shall be the duty of the super- intendent of the insurance department to refuse admission to any such company unless its assets are of the same general character that companies of this state are permitted to hold, nor shall any such company be admitted to transact business in this state unless it shall file in the office of the superintendent of the insurance department an agreement under its corporate seal that it will not transact in this state any business which any fire insurance com- panies of this state, organized under the general act, are pro- hibited from transacting; and any company violating the pro- visions of said agreement shall have its certificate of authority revoked by the said superintendent forthwith, provided the assent of the attorney-general shall be previously obtained. Source. — li. 1881, chap. 671, as amended by L. 1892, chap. 654, § 1. Amended by L. 1910, chap. 168. L. 1892, chap. 654, having been passed at the same session as the Insurance Law (L. 1892, chap. 690) was in force and effect under former § 33 of the Statutory Construction Act, notwithstanding that L. 1881, chap. 671, § 2, which it purported to amend, was repealed by L. 1892, chap. 690. § 57. Application of article limited. The provisions of this article shall not apply to any indi- vidual or partnership or association of underwriters known as Lloyds or as individual underwriters which, on the first day of October, eighteen hundred and ninety two, was law- fully engaged in the business of insurance within this state, and not required by law to report to the superintendent of insur- ance or the insurance department or subject to their supervision or examination, nor to any such association, notwithstanding any change hereafter made therein by the death, retirement or with- drawal of any such underwriters or by the admission of others to such association, except, however, that every such individual, part- §57. General Provisions. 79 nership or association of underwriters shall, on or before the first day of February of each year, make and file with the superin- tendent of insurance a statement of its affairs during the year ending on the thirty-first day of December immediately preceding, which statement shall be verified by tlie accredited attorney of the undenvriters of tlie association and shall be in such form and contain such matter as the superintendent of insurance shall prescribe. No partnership or association of underwriters knowm as Lloyda or as individual underwriters which was lawfully engaged or was lawfully entitled to engage in the business of insurance in this state on April first, nineteen hundred and two, and which failed to file with the superintendent of insurance, on or before September first, nineteen hundred and two, a copy of its original articles of association or co-partnership agreement, to- gether with any amendments thereto, duly verified by one of the members thereof by affidavit to the effect that it is a true copy, and stating where the principal office of such partnership or association is located, the kind of business in which it was engaged and the name under w^hich it did business, shall be permitted to engage in or transact the business of insurance. Source.— Former § 57, as amended by L. 1894, chap. 684; L. 1902, chap. 297; L. 1903, chap. 471; new. Amended by L. 1909, chap. 240; L. 1910, chap. 634. Repealed by L. 1910, chap. 638 (in effect Jan. 1, 1911.) Note. — Section 57 was affected by two laws, chaps. 634 and 638 of 1910. The first of these chapters struck from such section the excepting clauses as to fraternals, etc., but left in the clauses as to Lloyds. This law went into effect July 1st. Hence, section 57 had reference to Lloyds; but the Lloyds bill proper — chap. 638 of 1910 — repealed section 57 in toto, such repeal, how- ever, not going into effect until January 1, 1911. The purpose of this peculiar method of legislation was to prevent a repetition of what happened in 1892 by keeping up the bars against Lloyds until the new Lloyds article shall be put into full effect on January 1, 1911. The governor signed the life article bill on June 23d, and the Lloyds bill on the 24th. Hence, the Lloyds bill is the later of the two executive acts and thus controls. — Editor. LLOYDS. — The Columbia Fire Lloyd's, an association organized prior to :)rtober 1, 1892, and whose existence terminated September 30, 1897, is not =*mpowered to continue business as a " Lloyd's " association under section 67 of the Insurance Law. Attorney-General Rep., 1867, page 175. (See Art. X.) 80 The Insurance Law. § 57. An agent of the "American Lloyds," an association of individual tire under- writers not incorporated by the laws of this state, is not exempted from the application of section 523 of the New York City Consolidation Act by the fact that nc such association was in existence when the section was framed, or by the tact that the association was authorized to do business by a subse- quent law of the state. Fire Department v. Stanton, 159 N. Y., 225. Lloyds, not engaged in insuring against loss by theft or burglary prior to October 1, 1892, cannot now engage in such business. Attorney -General Rep., 1899, page 329. The present Insurance Law does not apply to Lloyd companies organized before said law went into effect, October 1, 1892, although organized subse- quently to the passage of said law, May 18, 1892. Attorney-General Rep., 1893, page 232. A Lloyds association actually engaged in the business of insurance on October 1, 1902, so that it was expressly exempted from the prohibition of the statute, does not forfeit its right by subsequent nonuser. Attorney- General's Rep., July 21, 1909. ACTION. — An action may be maintained under section 1948 of the Code of Civil Procedure against underwriters carrying on a Lloyds insurance. People V. Loew, 19 Misc., 248. PARTIES TO ACTION. — An action upon a contract to reinsure the risks of underwriters operating under the Lloyds system, must be brought by all of them, or by those officers, if there be such, who, under section 1919 of the Code of Civil Procedure, may sue for an unincorporated association of more than seven persons ; and, therefore, where less than all of the underwriters sue, their complaint is demurrable for defect of parties plaintiff. Thompson v. Colonial Assur. Co., 33 Misc., 37. ENGAGED IN BUSINESS.— The phrase, "engaged in business," as used in the Insurance Law, has reference to such associations as were actually doing business in this state, having outstanding policies and contingent liabilities, at the date when the Insurance Law took effect. Atton.ey-General Rep., 1894, page 99. PURPOSE. — Associations incorporated, not to engage in business under this section, but merely for purposes of sale, cannot lawfully transact the business of insurance in this state. People v. Loew, 23 Misc., 574. FRATERNAL BENEFICIARY SOCIETIES.— Section 63 extends the juris- diction of the Superintendent of Insurance to insurance corporations of every character and, by implication to authorize him to examine the affairs and question under oath the officers of any fraternal beneficiary society or town and county co-operative insurance corporation notwithstanding the previous exemption under section 57; the false swearing of any officer on such exarama- tion is perjury. People v. Reed, 66 Misc., 425. § 58. General Pkovisions. 81 § 58. Policy to contain the entire contract; statements of insured to be representations and not warranties. Every policy of insurance issued or delivered within the stnt<» on or after the first day of January, nineteen hundred and sevon, by any life insurance corporation doing business within the state shall contain the entire contract between the parties and nothitjn' shall be incorporated therein by reference to any constitution, by laws, rules, application or other ^vri tings unless tlie same arc endorsed upon or attached to the policy when issued; and all state ments purporting to be made by the insured shall in the absence of fraud be deemed representations and not warranties. Any waiver of the provisions of this section shall be void. Source.— Former § 58, as added by L. 1906, chap. 326. Section 58 of the Insurance Law will permit the indorsement upon or the attachment to a deferred annuity contract by annual premiums of additional options not conflicting with any provision of law. Ruling Ins. Dept., March 4th, 1909. An insurer who issues a policy covering only death by accidental means is, nevertheless, engaged in the business of life insurance and is within the provisions of section 58, providing that the policy shall contain the entire contract. L\Ioore v. The Prudential Casualty Co., 170 A. D., 849. This section applies only to policies issued on or after January 1, 1907. Perry v. Prudential Insurance Co., 144 App. Div., 780. Where a policy states that the consideration therefor is the application of the insured, which is made part of the contract and annexed to the policy, the insurer cannot set out other alleged misrepresentations as an inducing cause of the policy, for the reason that section 58 requires that every such policy shall contain the entire contract and nothing shall be incorporated therein by reference to other writings not indorsed upon or attached to the policy; so w^here the insurer in its answer sets out alleged misrepresentations made by the insured to its examining physician; said allegations should be stricken out where the questions of the physician and the answers were not attached to the policy. Becker v. Colonial Life Insurance Co., 153 App. Div., 382. Under § 58 of the Insurance Law, every policy of life insurance must contain the entire contract, and in an action thereon breaches of warranty in the application, which was not attached to the policy, are not available as a defense, in the absence of fraud. Cohen v. Metropolitan Life Insurance Co., 85 Misc., 406. Under § 58, which provides that every- policy of life insurance issued after January 1, 1907, shall contain the entire contract, statements of the insured in his application which were neither indorsed on, nor attached to, the 82 The Insurance Law. §§ 59, 60. policy may not be considered in an action thereon. Murphy v. The Colonial i/to Ins. Co. of America, 83 Misc., 475. A defense or fraudulent representations of the insured in his application as to his life, habits and other insurance cannot be sustained where the application or statements of the insured are not attached to and made part of the policy. Mees v. Pittsburgh Life & Trust Co., 169 App. Div., 87. False representations on the part of the insured in procuring the issuance of a policj^ are inadmissible where such representations were not endorsed upon or attached to the policy as required by this section; evidence as to a collateral agreement to the effect that the policy was not to take effect until the first premium was paid during the good (health of the insured is not admissible where such agreement is not part of the policy. The intent of this section is to require insurance companies when issuing policies to set out therein the entire contract and every statement which induced the company to enter into the agreement and upon which it relied in so doing must ibe annexed to and made part of the policy. Archer v. Equitable Life Asisoirance Society, 169 App. Div., 43. § 69. Certain provisions in policies prohibited. No corporation issuing policies of insurance upon tlie lives of persons, whether such corporation is a domestic one, existing under the laws of the state, or a foreign one which has become entitled to do business within the state, shall provide in any application, policy or certificate of insurance, that the person soliciting such in- surance, or any person who is engaged in the business of soliciting Insurance for the company issuing such policy, or certificate, and . whose compensation is either paid by said company, or is contin- gent upon the issuing of such policy, is the agent of the person insured under said policy or certificate, or shall insert in said policy or certificate any provision to make the acts or representa- tions of such person binding upon the person so insured under eaid policy or certificate. Source.^ — Former § 59, as added by L. 1905, chap. 568, and amended by L. 1906, chap. 320. § 60. Estimates and misrepresentations prohibited. No life, health or casualty insurance corporation, including corporations operating on the co-operative or assessment plan doing business in this state and no officer, director or agent therefor or any other person, co-partnership or § 60. General Pkovisions. 83 corporation shall issue or circulate, or cause or permit to be issued or circulated, any illustration, circular or statement of any sort misrepresenting the terms of any policy issued by any such corporation or the benefits or advantages promised thereby, or any misleading estimate of the dividends or share of surplus to be received thereon, or shall use any nam^e or title of any policy or class of policies misrepresenting the true nature thereof. Nor shall any such corporation or agent thereof or any other person, co-partnership or corporation make any misleading representation or incomplete comparison of policies to any person insured in any such corporation for the purpose of inducing or tending to induce such person to lapse, forefeit, or surrender his said in- surance. The superintendent of insurance may in his discretion revoke the certificate of authority issued to any corporation or agent on his being satisfied that such corporation or agent has violated any of the provisions of this section. Any violation of this section shall constitute a misdemeanor, and it shall be the duty of the superintendent of insurance to revoke the certificate of authority of the corporation or agent on a conviction for so offending. Source. — Former § 60, as added by L. 1906, chap. 326, and amended by L. 1908, chap. 347. Amended by L. 1911, chap. 533, and L. 1913, chap. 47. Note. — Section 60 was amended by L. 1911, chap. 533, so as to prohibit the making of any misleading representation concerning, or incomplete compari- sons of, life insurance policies. It was intended to penalize the practice of certain agents of furnishing incom,plete comparisons of the experience of various companies, and also to make it possible to reach certain so-called adjustment bureaus whicli were twisting insurance in this State. — Ed. Note. — The amendment by L. 1913, chap. 47, included health, casualty and co-operative companies within the provisions of the section. — Ed. Note. — The purpose of the amendment of this section by chapter 47 of 1913 was to extend the law in regard to misrepresentation and estimates so as to include health and casualty insurance companies, and co-operative or assess- ment associations. — Ed. A writ of prohibition does not lie to restrain the Superintendent of Insur- ance from proceeding with the hearing of one charged with a violation of § 60; such a proceeding by the Superintendent is judicial in its nature and subject to review. People ex rel. Burr v. Kelsey, 129 App. Div., 399. The prohibition in this section applies to false estimates only, " misrepre- sentations;" so held in relation to so-called partnership proposition of North- western Mutual Life Insurance Co. Ruling Ins. Dept., Oct. 31, 1910. 84 The Insurance Law. §§ 61-63. § 61. Receivers to make assessment on premium notes. In case the corporation, -in regard to which a receiver has been or shall hereafter be appointed, is or shall be a mutual insur- ance company, such receiver shall have full power under the jHithority and sanction of the court appointing him, to make all such assessments on the premium notes belonging to such corpora- tion as may be necessary to pay the debts of such corporation, as by the charter thereof the directors of such corporation have au- thority to make; and the notice of such assessment may be given in the same manner as is provided in the charter of said company for the directors of said company to give; and the said receiver shall have like rights and remedies, upon and in consequence of the non-payment of such assessments, as are given to the corpora- tion or the directors thereof by the charter of such corporation. Source.— L. 1852, chap. 71, S 2. § 62. Surrender of policies to receiver. Such receiver is authorized to receive a voluntary surrender of all policies issued by such corporation, or to cancel the policies issued by such corporation, in all cases where by the charter of such corporation, the directors thereof are authorized to receive the surrender of, or cancel the policies issued by such corporation. Source.— L. 1852, chap. 71, § 3. § 63. Proceedings against and liquidation of delinquent in- surance corporations. This section shall apply to all corporations, associations, societies and orders to which any article of this chapter is applicable, and to all corporations, associations, societies and orders which are subject to examination under any section of thi? chapter, or which are doing or attempting to do or representing that they are doing the business of insurance in this state, or which are in process of organization intending to do such business therein, anything as to any such corporations, associations, societies or orders provided in this article to the contrary not- withstanding; and the words ^'corporation" or '' corporntions " herein shall also include all such associations, societies and ordrr? as well as all voluntary or unincorporated associations. 1. Whenever any domestic corporation (a) is insolvent; or (b) has refused to submit its books, papers, accounts or affairs to the reasonable inspection of the superintendent, or his deputy or ex- g 63. General Pko visions. 85 aminer; or (o) has neglected or refused to observe an order of the superintendent to raake good within the time prescribed by law any deficiency, whenever its capital, if it be a stock corpora- tion, or its reserve, if it be a mutual corporation, shall have beoome impaired; or (d) has, by contract of reinsurance or otherwise, transferred or attempted to transfer substantially its entire prop- erty or business, or entered into any transaction the effect of which is to merge substantially its entire property or business in the property or business of any other corporation, association, society or order, without having first obtained the written approval of the superintendent ; or (e) is found, after an examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to the public; or (f) has wilfully violated its charter or any law of the state; or (g) whenever any officer thereof has refused to be examined under oath touching its affairs; or (h), if such corporation be organized under article six, seven or eight of this chapter, its condition is found, after examination, to be such that it could not meet the re- quirements for incorporation and authorization specified in such articles respectively — ^the superintendent may, the attorney-general representing him, apply to the supreme court or any justice thereof in the judicial district in which the principal office of such corporation is located for an order directing such corporation to show cause why the superintendent should not take possession of its property and conduct its business, and for such other relief as the nature of the case and the interests of its policyholders, creditors, stockholders or the public may require. 2. On such application, or at any time thereafter, such court may, in its discretion, issue an injunction restraining such corpo ration from the transaction of its business or disposition of its property until the further order of the court. On the return of such order to show cause, and after a full hearing, the court shall either deny the application or direct such superintendent, or his successor in office, forthwith to take possession of the property and conduct the business of such corporation, and retain such possession and conduct such business until, on the application either of the superintendent, the attorney general representing him, or of such corporation, it shall, after a like hearing, appear to the court that the ground for such order directing the superintendent to take possession has been removed and that the corporation can properly resume possession of its property and the conduct of its business. 86 The Insurance Law. § 63. 3. If, on a like application and order to show cause, and after a full hearing, the court shall order the liquidation of the business of such corporation, such liquidation shall be made by and under the direction of such superintendent, and his successors in office, who may deal with the property and business of such corporation in their own names as superintendents or in the name of the cor- poration, as the court may direct, and shall be vested by operation of law with title to all of the property, contracts and rights of action of such corporation as of the date of the order so directing them to liquidate. The filing or recording of such order in any record office of the state shall impart the same notice that a deed, bill of sale or other evidence of title duly filed or recorded by such corporation would have imparted. The rights and liabilities of any such corporation, and of its creditors, policyholders, stock- holders and members, and of all other persons interested in its assets, shall, unless otherwise directed by the court, be fixed as of the date of the entry of the order directing the liquidation of such corporation in the office of the clerk of the county wherein such corporation had its principal office for the transaction of business upon the date of the institution of proceedings under this section. 4. Whenever any of the grounds of jurisdiction over domestic corporations specified in subdivisions (a), (b), (c), (d), (e), (f) and (g) of subsection one of this section exist or arise with refer- ence to any corporation incorporated by or existing under the government or laws of any country outside of the United States and authorized to transact the business of insurance and having assets in this state; or whenever any foreign corporation so authorized and having assets in this state has been placed in the hands of a receiver or had its property sequestrated in its domiciliary state or country or in any other state or country, the superintendent may, the attorney-general representing him, ap- ply to the supreme court or any justice thereof in the judicial district in which such corporation has its principal office for the transaction of business in this state, for an order directing such corporation to show cause why the superintendent should not take possession of its property and conserve its assets for the benefit of its creditors, and for such other relief as the nature of the case and the interests of its policyholders, creditors, stockholders or the public may require. § 63. General Provisions. 87 5. On such application, or at any time thereafter, such court may, in its discretion, issue an injunction restraining such corpo- ration and its officers, agents and employees from the transaction of its business or disposition of its property until the further order of the court. On the return of such order to show cause, and after a full hearing, the court shall either deny the application or direct the superintendent forthwith to take possession of the property and conserve the assets of such corporation, and retain such possession until, on the application either of the superintendent, the attorney- general representing him, or of such corporation, it shall, after a like hearing, appear to the court that the gi-ound for such order directing the superintendent to take possession has been removed and that the corporation can properly resume possession of its property and conduct its business. If, on such application, the court shall direct the superintendent to take possession of the prop- erty and conserve the assets of such corporation, the rights and duties of the said superintendent with reference to such corpora- tion and its said assets shall be those heretofore exercised by and imposed upon ancillary receivers of foreign corporations in this state. 6. For the purposes of this section, the superintendent shall have power to appoint, under his hand and official seal, one or more special deputy superintendents of insurance, as his agent or agents, and to employ such counsel, clerks and assistants as may by him be deemed necessary, and give each of such persons such powers to assist him as he may consider wise. The compensation of such special deputy superintendents, counsel, clerks and assists laits, and all expenses of taking possession of and conducting the business of liquidating any such coi*poration shall be fixed by the superintendent, subject to the approval of the court, and shall, on certificate of the superintendent, be paid out of the funds or assets of such corporation. During the progress of any proceed- ings taken under this section, the superintendent, his deputies or any examiner authorized by him and the special deputy superin- tendent of insurance acting for the said superintendent therein shall have all of the powers given to the superintendent, his deputy or any examiner authorized by him, by section thirty-nine of this chapter, including the power to examine under oath the persons specified in such section, and to compel the production of books and papers as therein provided. 88 The Insurance Law. § 63. 7. For the purposes of this section, the superintendent shall have power, subject to the approval of the court, to make and pre- scribe such rules and regulations as to him shall seem proper. 8. The superintendent shall transmit to the legislature, in his annual report, the names of the corporations so taken possession of, whether the same have resumed business or have been liqui- dated, and such other facts as shall acquaint the policyholders, creditors, stocldiolders and the public with his proceedings under this section; and, to that end, the special deputy superintendent in charge of any such corporation shall file annually with the superintendent a report of the affairs of sudi corporation. 9. All acts of the superintendent of insurance in taking or con- tinuing in possession of any property, or in the regulation, con- duct or liquidation of the business, of any corporation to which this section is applicable, since the first day of January, nineteen hundred and nine, whether such taking possession, continuing in possession, regulation, conduct or liquidation was in pursuance of a contract, by mutual consent or otherwise, are hereby ratified, legalized and confirmed. 10. At any time after the court shall order the liquidation of the business of any such corporation, as provided in paragraph num- bered three of this section, the superintendent of insurance may apply for the dissolution of such corporation, and the same, after due notice and hearing and such other procedure as to the court shall seem proper, shall be dissolved. 11. The order to show cause and the papers upon which the same is made in any proceeding instituted under the provisions of this section shall he served upon the corporation named in such order in the manner prescribed for personal service of summons upon a domestic corporation by section four hundred and thirty- one of the code of civil procedure. When it is satisfactorily proved by affidavit that the ofiicers of the corporation named in the said order to show cause, upon whom service is required to be made as above provided, or, if a Lloyds association be named in the order to show cause, the duly designated attorney-in-fact, have departed from the state or keep themselves concealed therein with intent to avoid service, such order to show cause may provide for service thereof in such mianner as the court or justice by whom the same is made, shall direct. i § 63. General Provisions. 89 12. At any time after the commencement of proceedings under an order of liquidation made pursuant to this section, the said superintendent may remove the principal office of the corporation in liquidation to the county of Albany. In event of such removal the court shall, upon the application of the superintendent, direct the clerk of the county v^herein such proceeding was commenced to transmit all of the papers filed therein with such clerk to the clerk of the county of Albany, and the proceeding shall thereafter be conducted in the same manner as though it had been commenced in the county of Albany. Source.— Added by L. 1909, chap. 300. Amended by L. 1910, chap. 634; L. 1911, chap. 366; L. 1912, chap. 217, and L. 1913, chap. 29. Note. — The purpose of the amendment of this section by chapter 29 of 1913 was to permit the transfer of all liquidation proceedings brought by the Sup- erintendent of Insurance to the county of Albany. — ^Ed. The jurisdiction of the superintendent of insurance is extended over all fraternal beneficiary societies and town and county co-operative insurance corporations to examine their affairs and question their officers under oath, by section 63 of the Insurance Law. People v. Reed, 66 Misc., 425. § 63 of the Insurance Law, contemplates- that the determination, as to the creditors of an insolvent company and the proportionate share of the assets to which each is entitled, to be determined by some uniform standard, »hall be made as of the date of the entry of the order of liquidation, unless the court, at the time the order is made, shall otherwise direct by specifying some other date upon which this determination shall be made. By virtue of this provision, such date can be fixed only at the time of the entry of the order of liquidation and must apply equally to all Av'ho have claims against the insolvent estate. Three classes of claims against a surety com- pany considered and held that they had so far ripened and matured as to entitle claimants to share in the distribution of the assets in the hands of the Superintendent. Matter of Empire State Surety Company, 214 N. Y., 533, aflf'g 165 A. D., 135. It seems that subdivision 3 of § 63 of the Insurance Law, providing in relation to the date of the entry of the order directing the liquidation of a corporation, confers upon the court discretion to grant claimants, for damages for accidents which happened prior to the date of adjudication, and which had not been actually satisfied by the assured prior to such date, an oppor- tunity to perfect their claims into debts before excluding them from par- ticipation in the assets of the company. The word " liabilities " as used in the statute, should not be construed to mean " debts." Matter of Empire State Surety Ompany, 165 A. D., 135; aff'd 214 N. Y., 553. The language of section 63 is sufficiently broad to include in its scope town or county co-operative companies organized under article IX. Attorney- General Rep., July 20, 1909. 90 The Insurance Law. §§ 64, 65. The Supreme Court, in a proceeding directing the Superintendent of Insur- ance to take possession of the property and liquidate the business of a surety company under § 63 may grant an order restricting creditors of the surety company from taking proceedings for the purpose of recovering their claims, and where such a restraining order is served upon a creditor and he files his claim with the Superintendent of Insurance, the Supreme Court acquires jurisdiction and may punisih him for contempt. Matter of Empire State Surety Co., 164 App. Div., 586. Lloyds associations known as Lloyds or individual underwriters are included within the broad scope of section 63, and materially extends tne authority of the Superintendent of Insurance over such companies, since application may be made to the court, where such associations " have refused to submit books ** or " an officer thereof has refused to be examined," for an order to show cause why the superintendent should not take possession of its property; such application may also be made where an association has willfully violated any law of the state. Attorney-General's Rep., June 15, 1909. § 64. Provisions of insurance law not to apply to religious orders. None of tlie provisionfl of this chapter shall apply to any corpo- ration, organized under the laws of any state or territory of the United States solely for the purpose of providing for the support or relief of the priests, clergy or ministers of any religious denomi- nation, or for the support or relief of those dependent on them. Source.— Added by L. 1910, chap. 615. § 65. Rebating and discriminations prohibited. No insurance corporation, association, partnership, Lloyds or individual underwriters authorized or permitted to do any insur- ance business within this state, or any officer, agent, solicitor or representative thereof, shall make any contract for such insur- ance, on property or risk located within this state, or against liability, casualty, accident or hazard that may arise or occur therein or agreement as to such contract, other than as plainly express>ed in the policy issued or tx) be issued thereon; nor shall any such corporation, association, partnership, Lloyds or in- dividual underwriters, or officer, agent, solicitor ur represent- ative thereof, directly or indirectly, in any manner whatsoever, pay or allow or offer to pay or allow as inducement to such in- surance, or after the insurance shall have been effected, any rebate from the premium which is specified in the policy or any special favor or advantage in the dividends or other benefit to § 65. General Provisions. 91 accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy or contract of insurance, or give, sell or purchase, or offer to give, sell or purchase, as in- ducement to such insurance, or in connection therewith, any stock, bonds or other securities of any insurance company, or other corporation or association, or any dividends or profits accrued thereon, or anything of value whatsoever, not specified in the policy, nor shall any insurance broker, his agent or representative, or any other person, directly or indirectlv, either by sharing commissions or in any manner whatsoever pay or allow or offer to pay or allow as inducement to such insur- ance, or after the insurance shall have been effected, any rebate from the premium which is specified in the policy; nor shall the insured, his agent or representative, directly or indirectly accept or knowingly receive any such rebate from the premium specified in the policy; this section shall not prevent any cor- poration, person, partnership or association lawfully doing such insurance business in this state from the distribution of surplus and dividends to policyholders after the first year of insurance nor prevent any member of an inter-insurance or Lloyds associa- tion from receiving the profit of his or its underwriting; nor shall this section prevent any such corporation or other insurer, or his or its agent, from paying commissions to the broker who shall have negotiated for the insurance, nor shall this section pre- vent any licensed broker from sharing or dividing a commission earned or received by him with any other licensed broker or brokers who shall have aided him in respect to the insurance for the negotiation of which such commission shall have been earned or paid, and nothing herein contained shall be held to prevent the covering of risks by temporary binders or such other memoranda as do not conflict with the provisions of this chapter. !N'or shall this section prevent any such corporation or other insurer, or any agent or insurance broker, from distributing or presenting to any person or corporation any article of merchandise not exceeding one dollar in value, which shall have conspicuously stamped or printed thereon the advertisement of such insurance corporation, agent or broker. No person shall be excused from attending and, when ordered so to do, from testifying or producing any books, papers or other 92 The Insurance Law. . § QQ, documents before any court or magistrate, upon any investiga- tion, proceeding or trial for a violation of any of the provisions of this section, upon the ground or for the 'reason that the testi- mony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or subject him to a penalty or forfeiture, but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concer^ing which he may have been required so to testify or to produce evidence, documentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal investigation or proceeding. Any person or corporation violating the provisions of this section shall be guilty of a misdemeanor and shall forfeit to the people of the state the sum of ^ye hundred dollars for each such violation. This section shall not apply to any contract of life insurance nor to any con- tract of insurance upon or in connection with marine or trans- portation risks or hazards other than contracts for automobile insurance, nor to contracts made by persons, associations or cor- porations authorized to do business imder articles Ryq, seven and nine of this chapter. Added by L. 1911, chap. 416. Amended by L. 1912, chap. 225, and L. 1913, chap. 25. Note. — The purpose of the amendment of this section by chapter 25 of 1913 was to bring Assessment Insurance Associations within the prohibition against rebates and discrimination. — Ed. Commissions paid by the Fidelity and Casualty Company of New York city to t!he New York State Bankers' Association on insurance placed by its mem- bers with the company amount to rebates and discriminations as defined in the Insurance Law although the funds over are used for association purposes. Attorney-Gleneral Rep., 1912, page 535. § QQ. Promotion of insurance corporations; sale of securities. 1. As the terms are used in this section " promoting corpora- tion " means a corporation or joint stock association, engaged in the business of organizing or promoting or endeavoring to organize or promote the organization of an insurance corporation or corporations, or in any way assisting therein ; " holding cor- poration " means a corporation or joint stock association, which holds or is engaged in the acquisition of the capital stock or a major portion thereof of one or more insurance corporations for § QQ. General Provisions. 93 the purpose of controlling the management thereof, as voting trustees or otherwise ; and ^' securities " means the shares of capital stock, subscription certificates, debenture bonds and any and all other contracts or evidences of OAvn.ership of or interest in in- surance corporations, or in promoting or holding corporations as defined in this section. 2. No individual, partnership, association or corporation, as the agent of another or as broker, shall sell or offer for sale or in any way assist in the sale in this state of the securities of any promoting or holding corporations, as defined in this section, or of any insurance corporation which is not at the time of such sale or offer for sale, lawfully engaged or authorized to engage in the transaction of the business of insurance in this state, without first procuring, as hereinafter provided, a certificate of authority from the insurance department to sell such securities; nor shall any individual, partnership, association or corporation sell or offer for sale in this state the securities of any promoting or holding cor- poration as defined in this section, or of any insurance corpora- tion which is not at the time of such sale or offer for sale, lawfully engaged or authorized to engage in the transaction of the business of insurance in this state, unless such corporation shall have first procured from the superintendent of insurance, as hereinafter provided, a certificate that said corporation has fully complied with the provisions of this section and is authorized to sell such securities. Every certificate issued by the superintendent of in- surance pursuant to the provisions of this section shall state in bold type that the superintendent in no way recommends the securities thereby authorized to be sold, and shall be renewable annually, upon written application, filed on or before the first day of January of each year, and may be revoked for cause at any time by such superintendent. The superintendent shall prepare and furnish upon request suitable blank forms of application for the certificates required by this section. 3. Every individual, copartnership, association or corporation who or which desires or intends to sell or to offer for sale in this state, the securities of any insurance corporation or of any pro- moting or holding corporation as defined in this section, shall file with the superintendent of insurance an application for a cer- tificate of such authority. Such application shall contain a state- ment, verified by oath, setting forth the name and address of the 94 The Insurance Law. § 66. applicant, previous business experience, date and place of birth or organization, and such other and further information as the said superintendent may require. It shall be the duty of the superin- te^ent of insurance to examine the application so filed, and to make any further inquiry or examination of any such applicant as he may deem advisable. If upon such examination the super- intendent shall find that the applicant, or applicants, or if a cor- poration, the officers and directors thereof, is or are all trust- worthy persons of good business credit, the superintendent may issue to such applicant a certificate of authority to sell or offer for sale in this state, the securities of any insurance corporation or corporations and of any promoting or holding corporation previously authorized under this section which shall be mentioned therein. 4. Every such unauthorized insurance corporation, and every promoting or holding corporation, as defined in this section, whose securities are to be offered for sale in this state, shall file with the superintendent of insurance copies of all securities to be offered for sale, and an application for a certificate of authority under this section which shall contain a statement in detail of the plans and purposes of such corporation, the amount and par value of the securities to be offered for sale and the selling price thereof, the manner in which the moneys paid in therefor are to be spent or employed, the rate of commissions to be paid for the sale of such securities, the salaries to be paid io the officers of such corporation, and such other and further information as the said superintendent may require. No change shall thereafter be made in the form or character of the securities to be offered for sale, or in the plans or purposes of any such corporation with- out the approval thereof in writing by the said superintendent. It shall be the duty of the superintendent of insurance to examine the application and other documents so filed, and to make any further inquiry or examination of any such corporation as ho may deem advisable. If upon such examination the superintendent shall find that the plans and purposes of such corporation are proper, that its condition is satisfactory, that the amount of its securities is reasonable, that the price at which such securities are to be sold is adequate, and that the manner in which the moneys paid in therefor, the rate of commissions to be paid and the salaries of officers are fair, the superintendent may issno a § 66. General Provisions. 95 certificate that such corporation has complied with all the pro- visions of this section and is authorized to sell or offer its securi- ties for sale in this state. 5. The suporintendent of insurance may refuse to issue or re- new any certificate provided for by this section, if, in his judg- ment, such refusal will best promote the interest of the people of the state. No individual whose certificate of authority granted under this section is revoked, nor any copartnership of which he is a member, nor any corporation of which he is an officer or director, shall be entitled to any certificate of authority under this section for a period of five years after such revocation ; and if any such certificate held by a copartnership or corporation is so revoked, no member of such copartnership or officer or director of such corporation shall be entitled to any such certificate for the same period of time. 6. 'No printed matter shall be used in connection with the sale of securities of any such promoting, holding or insurance cor- poration, for advertising purposes, or in the dissemination of in- formation with reference thereto, unless such printed matter shall first be submitted to the superintendent of insurance and approved by him in writing. No such corporation and no offi- cer, director or agent thereof, or any other person, copartnership, association or corporation shall issue, circulate or employ or cause or permit to be used, issued, circulated or employed any circular or statement, whether printed or oral, of any sort, mis- representing or exaggerating the earnings of insurance corpora- tions or the value of their corporate stock, or other securities or the profits to be derived either directly or indirectly from the organization and management of insurance corporations or of organizing or holding corporations as defined in this section. No insurance or other corporation, and no individual, copartner- ship or association, transacting business in this state shall place or offer to place insurance in any corporation in connection with the sale or purchase of the securities of any insurance corpora- tion or of any promoting or holding corporation as defined in this section. Added by L. 1913, chap. 52. Note.— The purpose of the addition of this section by chapter 52 of 1913 was to bring all promotions of insurance corporations under the immediate supervision of the Insurance Department. — Ed. 96 The Insurance Law. § 67. § 67. Approval of premium rates. Every insurance corporation or association, except the state insurance fund as administered by the state workmen's compen- sation commission, authorized to transact business in this state, which insures employers against liability for compensation under the workmen's compensation law, shall file with the superintend- ent of insurance its classification of risks and premiums relating thereto, and any subsequent proposed classification of risks and premiums, together with basis rates and schedules, if a system of schedule rating be in use, none of which shall take effect until the superintendent of insurance shall have approved the same as ade- quate for the risks to which they respectively apply. The super- intendent of insurance may withdraw his approval of any premium rate or schedule made by any insurance corporation or association if, in his judgment, such premium rate or schedule is inadequate to provide the necessary reserves. Added by L. 1914, chap. 16. In effect March 4, 1914. Life, Health, Casualty Oorpokations. 97 AETICLE 11. Life, Health and Casualty Insurance Corporations. Section 70. Incorporation. 71. Completion of organization. 72. Withdrawal of securities upon relinquishment of business. 73. Special deposits to secure registered policies and annuity bonds. 74. Annual report of corporation of registered policies and annuity bonds. 75. Registration of policies and annuity bonds. 76. When depositing corporations to be deemed insolvent. 77. Proceedings by receiver. 78. Additional duties of receiver. 79. Annual investigation of affairs of such corporations; disposition of surplus. 80. Existing corporations. 81. Powers of receiver. 82. When receiver shall not be appointed or new policies issued. 83. Distribution of surplus to policy holders. 84. Valuation of policies. 85. When actual premium is less than net premium. 86. Assets and liabilities of life and casualty insurance corporations; method of computation; procedure in case of impairment; reserve. 87. Contingency reserve. 88. Surrender value of lapsed or forfeited policies. 89. Discriminations prohibited. 90. Discriminations against colored persons prohibited. 91. Certificate of authority of agents. 91 -a. Agents for health or accident insurance. 92. No forfeiture of policy without notice. 93. Valuation of policies of health insiu-ance. 94. Election of directors. 95. Conversion of a stock life insurance corporation into a mutual life insurance corporation. 96. Limitation of new business. 97. Limitation of expenses. 98. Salaries of officers and agents; when fixed by board of directors, 99. Vouchers. 100. Investments. 101. Standard forms of policies. 98 The Insurance Law. § 70. Section 102. Companies issuing participating policies not to do a non-partici- pating business. 103. Annual reports of life insurance corporations. 104. Transfer of deposits by superintendent of insurance to receiver. 105. Powers of certain existing corporations increased. 106. Boards of directors to be divided into classes. 107. Standard provisions for accident and health policies. 108. 'Discriminations under accident or health policies prohibited. Section 70. Incorporation. Thirteen or more persons may become a corporation for the purpose of making any of the following kinds of insurance : 1. Upon the lives or the health of persons and every insur- ance appertaining thereto, and to grant, purchase or dispose of annuities. 2. Against injury, disablement or death resulting from travel- ing or general accident, and against disablement resulting from sickness, and eveiy insurance appertaining thereto. 3. Insuring any one (a) against loss or damage resulting from accident to or injury suffered by an employee or other person, and for which the person insured is liable, and, (b) against loss or damage to property caused by horses or by any vehicle drawn by animal power, and for which loss or damage the person insured is liable. 4. Guaranteeing the fidelity of persons holding places of public or private trust. Guaranteeing the performance of contracts other than insurance policies; guaranteeing the performance of insur- ance contracts where surety bonds are accepted by states or munici- palities; executing or guaranteeing bonds and undertakings required or permitted in all actions or proceedings or by law allowed; and indemnifying banks, bankers, brokers, financial or moneyed associations, or financial or moneyed corporations, against the loss of any bills of exchange, notes, drafts, accept- ances of drafts, bonds, securities, evidences of debt, deeds, mort- gages, documents, currency and money, except that no such con- tract or indemnity indemnifying banks, bankers, brokers, finan- cial or moneyed associations, or financial or moneyed corporations, shall indemnify against loss caused by marine risks, or risks of transportation or navigation. § 70. LiFE^ Health J Casualty Corporations. 99 4-a. Guaranteeing and indemnifying merchants, traders and those engaged in business and giving credit from loss and damage by reason of giving and extending credit to their customers and those dealing with them; and corporations authorized to do such last named business in this subdivision mentioned shall have all the powers conferred by section one hundred and seventy-eight of this chapter. 5. Against loss by burglary, theft or forgery or any one or more of such hazards. C. Upon glass against breakage. 7. Upon steam boilers and pipes, fly-wheels, engines and machin- ery connected therewith or operated thereby, against explosion and accident and against loss or damage to life or property resulting therefrom, and against loss of use and occupancy caused thereby, and to make inspection of and to issue certificates of inspection upon such boilers, pipes, fly-wheels, engines and machinery. 8. Upon the lives of horses, cattle and other live stock or against loss by the theft of any of such property or both. 9. Against loss or damage to automobiles (except loss or damage by fire, or while being transported in any conveyance by land or water), including loss by legal liability for damage to property resulting f ronl the maintenance and use of automobiles. 10. Against loss or damage by water to any goods or premises, arising from the breakage or leakage of sprinklers, pumps or other apparatus erected for extinguishing fires, and of water ])ij)( >. and against accidental injury to such sprinklers, pumps or other apparatus, and against damage from loss of use or occupancy of premises by reason of such breakage or leakage. 11. Against loss or damage to elevators or other property, ex- cepting loss or damage by fire, caused by the maintenance, opera- tion or use of elevators, and including loss by legal liability for damage to property; resulting from such operation, maintenance orjise of elevators ; by making and filing in the office of the super- Tntendent of msurahce a certificate signed by each of them, stating their intention to form a corporation for the purpose or purposes named in some one of the foregoing subdivisions specifying the subdivisions; and setting forth a copy of the charter which they propose to adopt, which shall state the name of the proposed cor- poration, the place where it is to be located, the kind of insurance 100 The Insurance Law. § 70. to be undertaken, and under which of the foregoing subdivisions it is authorized, the mode and manner in which its corporate powers are to be exercised, the manner of electing its directors and officers, a majority of whom shall be citizens and residents of this state, the time of such elections, the manner of filling vacancies, the amount of its capital, if any, and such other particulars as may be necessary to explain and make manifest the objects and purposes of the corporation. Such certificate shall be proved or acknowledged and recorded in a book to be kept for that purpose, and a certified copy thereof delivered to the persons executing the same. A mutual company, without capital stock, may be organized for the purposes either separately or taken together, specified in the first and second sub- divisions of this section. Except as above provided, no such corporation shall b© formed under tliis article for the purpose of undertaking any other kind of insurance than that specified in some one of the foregoing subdivisions, or more kinds of insur- ance than are specified in a single subdivision; but a corpo- ration other than a mutual corporation may be formed for all the purposes combined, or any two or more of them, specified in the first and second subdivision and clause (a) of the third sub- division, or for all the purposes combined, or any two or more of them specified in the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth and eleventh subdivisions ; provided, however, that policies under subdivision nine shall be issued only by com- panies authorized to issue policies under subdivisions two, three or five, ^o corporation or association shall transact, in connection with any other kind of insurance mentioned in the foregoing sub- divisions, the business of guaranteeing and indemnifying mer- chants, traders and those engaged in business and giv- ing credit from loss and damage by reason of giving and extending credit to their customers and those deal- ing with them, except such corporation or association as was authorized to transact such business before June first, nine- teen hundred and five; but such corporation or association may continue to transact such business with all the powers and privi- leges theretofore possessed or enjoyed by it. No one policy issued § 70. LiFE^ Health^ Casualty Corporations. 101 by any one corporation shall embrace more kinds of insurance than are specified in one of such subdivisions, except that a policy may embrace risks specified in subdivisions one and two, and in sub- division two and clause (a) of subdivision three, and also that companies electing to issue policies under subdivision nine may embrace in one policy risks under subdivision two, clause (a) of subdivision three, and subdivisions ^ve and nine, or either of them, and also that companies electing to issue policies on resi- dences and private apartments may embrace in one policy risks under subdivisions three, five, six, seven, ten and eleven of this section, or any or either of them. Source.— Former § 70, as amended by L. 1895, chap. 917; L. 1899, chap. 693; L. 1901, chap. 634; L. 1905, chap. 573; L. 1906, chap. 326; L. 1907, chap. 206; originally revised from L. 1853, chap. 463, § 1, as amended by !•- 1889, chap. 338, and §§ 2, 3, as amended by L. 1879, chap. 485; L. 1869, chap. 634. Amended by L. 1909, chap. 302; iL. 1910, chap. 637; L. 1911, chap. 324; L. 1912, chaps. 231 and 232; L. 1913, chap. 304, L. 1914, chap. 204; and L. 1915, chap. 505. In effect May 3, 1915. Note. — The primary purpose of the amendment of this section by L. 1915, chap. 505 (indemnifying banks, bankers, etc.), was to give to authorized companies operating in the State the right to do a class of business which is now carried on almost exclusively by London Lloyds. — Ed. Note. — The purpose of the amendment of this section by chapter 204 of 1914, was to provide for the incorporation of companies to insure against loss or damage to elevators or other property, excepting loss or damage by fire, caused by the maintenance, operation or use of elevators, and to include loss by legal liability for damage to property resulting from such operation; and against damage from loss of use or occupancy of premises by reason of the breakage or leakage of sprinklers, pumps or water pipes; and to provide that companies electing to issue policies on residences and private apart- ments may embrace in one policy risks under subdivisions three, five, six, seven, ten and eleven of section seventy, or any or either of them. Note.— The purpose of the amendment of this section by chapter 304 of 1913 wa« to clarify the language in relation to surety bonds; subdividing the previous provision relating to credit bonds by making it a new subdivision — 4-a; in subdivision 5 to give additional power of insuring against forgery and in subdivision 8 to correct error of last year's legislation in relation to livestock companies. 'Note. — Subd. 8 of this section was amended by chap. 231 of 1912 by adding the words " or against loss by the theft of any such property, or both." The section was amended by chap. 232 of 1912 which amended the last paragraph by adding " in subdivisions one and two, and " but which left subd. 8 as it was before passage of chap. 231 of 1912. The amendment of 1913 clarifies this situation brought about as above. — Ed. See § 10, ante. Number of directors. See § 71, post. Deposit must be made with superintendent of insurance before any business is done. 102 The Insurance Law. § 70. See § 4, General Corporation Law, chap. 28 of 1909. Qualifications of Incorporators. See chap. 733 of 1900. Reincorporation of foreign moneyed corporations in this state. NATURE OF LIFE INSURANCE.— Life insurance is not regarded as a contract of indemnity merely; policies are governed by the same principles applicable to other agreements involving pecuniary obligations. St. John v. Am. Mut. L. Ins. Co.. 13 N. Y.. 39. The relations between a life insurance company and its policyholders are those of contractors, the contract being the policy, by which the liabilities of the company are to be determined. Mencken v. United States Life Ins. Co., 11 Daly, 289; atf'd 98 N. Y., 627. No trust is created between the stockholders and the insurance company or its directors. Bewley v. Equitable Life Assur. Soc, 61 How. Pr., 344. The business of physicians' liability insurance is authorized by the laws ci this state, provided that no insurance can be written against liability for criminal acts. Attorney-General Rep., 1906, page 552. CONSTRUCTION OF POLICY.— An insurance policy is to be construed like other contracts with the view to arrive at the intent of the parties; the rule that an insurance policy shall be construed most strongly against the insurer, can be resorted to only when, after using such helps as are proper to arrive at the intent of the parties, some of the language used, or some phrase inserted in the policy, is of doubtful import, in which case the rule should be applied because the insurer wrote the policy. Foot v. Aetna Life Ins. Co., 61 N. Y., 575. NAME. — A life insurance company is not prohibited from adopting a name formerly used by a tire insurance company. Commercial Union Assur. Co. v. Smith, 2 N. Y. Supp., 296; 18 St. Rep., 151. CHARTER. — The charter of a proposed insurance company should state specifically the casualty against which insurance is contemplated, else the superintendent of insurance is justified in refusing his certificate thereto. Attorney -General Rep., 1894, page 357. A certificate of incorporation must set forth the time when the directors and officers of a company are to be elected; a statement in the charter of such pro- posed corporation that the annual meeting of the stockholders shall be held on a date in January to be fixed by the by-laws is not sufficient. Attorney- General Rep., May 26, 1911. UNAUTHORIZED CORPORATIOJN^.- r^othing can lawfully become the subject of casualty insurance unless specified in one of the subdivisions of section 70 of the Insurance Law. Attorney-General Rep., 1893, page 89. Insurance against loss from imperfect sanitary conditions is not within the purview of the Insurance Law. Attorney -General Rep., 1893, page 335. A corporation, organized for the purpose of guaranteeing payment of losses under insurance policies, cannot do business under the Insurance Law. It. seems that such corporations are prohibited from operating under the Business Corporation Law. Attorney-General Rep., 1894, page 65. A corporation should not be invested with the power of doing both savings, loan and insurance business. In re United Security Life Insurance and Trust Company, Attorney-General Rep., 1896, page 153. § 70. LiFE^ Health^ Casualty Corporations. 103 An insurance company and a savings and loan company cannot issue a joint certificate to a proposed policyholder. Attorney-General Rep., 1893, page 259. A company organized to provide medical attendance, in case of sickness to one for a premium paid, and to furnish a coffin in case of death, cannot do business under the provisions of the Business Corporation Law, but may under the Insurance Law. In re U. & M. Supply Co., Attorney-General Rep., 1895, page 217. An insurance company cannot be incorporated to carry on the business specified in subdivision 4 of section 70 of the Insurance Law, in addition to the business specified in article V. Attorney-General Rep., 1897, page 230. The kind of insurance under section 170, subd. 2, and section 70, subd. 4, dillers in several material particulars and companies cannot be organized in tliis State for the purpose of combining the same, and while the superintendent is not required to interpret the law in other states, he should not sanction additional kind of insurance from that already .permitted to a company in this State. Attorney-General Rep., Mar. 12, 1897, Aug. 3, 1897. SURETY COMPANIES. — Surety companies have a legal right to insure the payment of deposits in banks. Attorney-General Rep., 1893, page 266. A corporation organized under section 70, subdivision 4, may insure entire risks of a foreign surety company. Attorney-General Rep., 1896, page 145. FOREIGN COMPANY. — An insurance company of a sister state doing ousiness here under a special statute applicable thereto has no greater rights than those conferred by the statute in question. Attorney-General Rep., 1892, page 392. A foreign casualty insurance company may be authorized to transact four kinds of casualty insurance business in this state on deposit of $250,000, although its charter authorizes it to do all kinds of casualty insurance Attorney-General Rep., 1893, page 249. DEPOSIT. — An insurance company, organized under the laws of another state of the United States, for the transaction of business specified in section 70 of the Insurance Law, must make the same deposit of securities that is required from a domestic company. Attorney-General Rep., 1897, page 169. A foreign company must deposit in home state $100,000 for each kind of insurance which it is organized to transact under § 70, or $250,000 if for three or more kinds. In re General I. Co., Attorney-General Rep., Jan. 8, 1906. The superintendent of insurance may return to the depositors the securities which were deposited as a condition precedent to insurance business where the corporation determined not to start in business and there were no liabilities against said corporation. In re People's Life Insurance Company, Attorney- General Rep., 1896, page 133. REINSURANCE. — An insurance company is not entitled to a deduction on account of reinsurance made by it in Lloyds which is not amenable and has not paid the tax provided for by section 34. In re Standard Marine Insurance Company, Attorney-General Rep., 1896, page 151. DECLARATION. — In a declaration presented to the superintendent of insurance by persons applying for incorporation as a casualty insurance company, the business proposed to be carried on was stated, among other things, to be " the inspection and certification as to the sanitary conditions 104 The Insurance Law. § '^1. of buildings and premises." In pursuance of the requirements of the Insurance Law, under section 70, the superintendent submitted the declaration and charter to the attorney-general for certification. That officer refused to certify. In proceedings by mandamus to compel the certification, held, that the business so stated in the declaration was not insurance in any legal sense, but an entirely different kind of business not within the purview of the Insurance Law, and so the declaration was not entitled to be tiled in the office of the superintendent, and the attorney -general properly refused to attach his certificate of approval thereto. People ex rel. Woodward v. Kosen- dale, 142 N. Y., 126; aff'g 76 Hun, 103. BONDS. — A domestic insurance corporation organized under subdivision 4 of section 70 of the Insurance Law, can issue bonds and undertakings for bail in proceedings of a criminal nature. Attorney-General Kep., 1901, page 257. QUORUM. — A quorum of directors must be a majority of all the directors unless otherwise provided in charter or other law; by-laws cannot change this rule. Boards of directors of insurance companies are subject to the pro- visions of section 34 of the General Corporation Law. Matter of New Amster- dam Casualty Company, Attorney-General Kep., 1900, page 253. GLA&S BREAKAGE. — A company may not extend its liability upon glass against breakage under subdivision 6 to include property injured by such breakage. Attorney -General Rep., Oct. 15, 1903. A business corporation engaged in replacing broken glass, although no money indemnity is promised in the contract, is doing an insurance business. Attorney-General Rep., 1914. Page 86. INSURING PROPERTY OF ANOTHER.— Insurance companies cannot in- sure a person against loss or damage resulting from accident to the property as well as to the person of another for which the person insured is liable. Attorney-General's Rep., July 9, 1909. BENEFICIARY. — The beneficiary under a policy issued by a casualty com- pany, doing business under article 2 of the Insurance Law, and which contains no provision permitting the insured to change the beneficiary named, has a vested interest in the policy and not a mere expectancy or inchoate right. Dunn V. Amsterdam Casualty Co., 67 Misc., 109. CONTINUOUS POLICY.— In a "continuous policy" of accident insurance a clause providing against the payment of benefits " for illness or death occurring before the policy has been in force two months " applies only to the first two months following the issuance of the policy. Turner v. New York Safety Reserve Fund, 158 App. Div., 835. § 71. Completion of organization. Upon receipt of the certified copy of the certificate of incor- poration from the superintendent, the persons signing such certifi- cate shall publish notice of their intention to form such corporation in a paper designated by the superintendent for six successive weeks, upon expiration of whidi time they may open books to receive subscriptions if a stock corporation, to the ca])ital stock, § 71. LiFE^ Health^ Casualty Coeporations. 105 or if a mutual corporation, for life insurance, and keep them open until the whole of such stock or the minimum amount of life insurance has been subscribed for and collect such subscrip- tions to the capital stock or the annual premiums payable upon such insurance; and may invest such capital or moneys in tJie manner prescribed in this chaptei\,.^ ' 'No such corporation shall transact any business of insurance until, if a stock corporation, the capital has been fully paid in in cash, or, if a mutual corporation, at least five hundred persons have subscribed in the aggregate for at least one million dollars of insurance upon tlieir lives and shall each have paid in one full annual premium in cash upon the insurance subscribed for, nor in either case until it shall have deposited with the superintendent of insurance one hundred thousand dollars in the securities required by law. If organized for purposes mentioned in two or more of the subdivisions of section seventy, it shall deposit with the superintendent the same amount in securities in the aggregate not exceeding two hundred and fifty thousand dollars, as if cor|X)rations had been separately formed for such purposes. The securities deposited pursuant to this section shall be held by the superintendent in trust for the benefit and protection of and as security for the policy holders of the corporation. A mutual corporation may borrow or assume liability for the repayment of a sum of money sufficient to defray the reasonable expenses of its organization and to provide the amount to be deposited with the superintendent as aforesaid upon an agreement that the same witli interest at a rate not exceeding eight per centum per annum shall be repaid only in the event that after such repayment with interest the corporation shall be left ]X)ssessed of sufficient assets to meet all its liabilities and to maintain a full legal reserve against its policies and not until said reserve shall be equal to at least one hundred thousand dollars ; and such agref^ ment shall provide that the corporation shall have the option to make such repayment whenever it shall be able to do so in accordance with the aforesaid conditions. Source.— Former § 71, as amended by L. 1906, chap. 326; originally revised from L. 1851, chap. 95, § 1; L. 1853, chap. 463, § 5, and § 6, as amended by L. 1881, chap. 560; L. 1865, chap. 328, § 2; L. 1877, chap. 439, § 1, as amended by L. 1881, chap. 628. See § 13, ante. Deposit of securities. See § 16, ante. Investment of capital and surplus. See 8 17, ante. Securities must be interest or dividend paying. 106 The Insurance Law. § 11. See § 18, ante. Stocks in other corporations. See § 26, ante. Deposits by insurance corporations of other states. See § 50 et seq., ante. Stock Corporation Law, chap. 61 of 1909, as to issue and transfer of stock. An insurance company of a sister state, doing business here under a special statute applicable thereto, has no greater rights than those conferred by the statute in question. Attorney -General Rep., 1892, page 392. DEPOSIT. — The securities deposited by a foreign insurance company with the insurance department are to be held for the benefit of those policyholders insured in the same class or classes of insurance which the company is author- ized to write in this state. Attorney-General Rep., 1892, page 389. A foreign company must deposit in home state $100,000 for each kind of insurance which it is organized to transact under § 70, or $250,000 if for three or more kinds. In re General I. Co., Attorney-General Rep., Jan. 8, 1906. AH deposits by a surety company with the superintendent constitute a single fund Avhich is im.pressed with a trust for the benefit of all policy- holders of the depositing corporation, and a surety company doing business under two subds. of § 70 may not, by amending its charter so as to restrict its business to one subdivision only, withdraw a portion of such deposit. Attorney-General Rep., Aug. 14, 1908. Section 71 only requires that the superintendent of insurance shall compel life insurance companies to keep on deposit with him securities to the value of $100,000. Raymond v. Sec. Trust & life Ins. Co., Ill App. Div., 191. A foreign life insurance company may be admitted to do business in this state on making the deposit of $200,000 required by section 27 of the Insurance Law, although the entire capital stock of such company is not paid up Attorney-General Rep., 1893, page 280. Only securities to the extent of the amount specified in the statute are to be held by the superintendent of insurance in trust for the benefit of policy- holders. Attorney-General's Rep., July 1, 1909. AMENDMENTS TO CHARTER.— Amendments to charter of an insurance company, which do not enlarge its franchises, do not render necessary a repub- lication of the notice of intention to organize. An insurance company whose charter and declaration were filed and approved, but which was not organized under the former law, may be organ- ized under the present Insurance Law without republication of notice. Attor- ney-General Rep., 1892, page 394. REDUCTION OF STOCK.— Capital stock may be reduced without payment of the full amount of stock named in original certificate, and the filing of said certificate of reduction of stock and the endorsement thereon of the superin- tendent of insurance operates as an amendment to the original certificate. Attorney-General Rep., 1903, page 249. All deposits made by a surety company with the Superintendent of Insur- ance constitute a single fund, which is impressed with the trust for the benefit of all the policyholders of the depositing corporation. The words " as if cor- porations had been separately formed for such purposes," as used in § 71, do not change this proposition, as such words are used merely to determine the aggregate amount of the deposit required. Attorney-General Opinion, August 14, aoos. § 72. Life, Health, Casualty Corporations. 10 Y § 72. Withdrawal of securities upon relinquishment of business. When any such corporation shall desire to relinquish its busi- ness, the superintendent shall, on the application of such corpora tion under the oath of its president or principal officer and secretary or actuary give notice of such intention in a paper at Albany in which notices by state officers are required by law to be published at least twice a week for six months. After such publication, he shall deliver up to such corporation the securities held by him belonging to it, upon being satisfied by an exhibition of tlie books and papers of such corporation and on examination made by him- self or by some competent person to be appointed examiner by him, and upon the oath of the president or principal officer and the secretary or actuary of such corporation that all its debts and liabilities of every kind are paid and extinguished that are due or may become due, upon any contract or agreement made within the United States. The superintendent may also, from time to time, deliver up to such corporation, or its assignees, any portion of such securities on being satisfied, in the manner and form hereinbefore required, or upon any other competent proof, that all the debts and liabili- ties of every kind that are due, or may become due, within the United States are less than the amount of the portion of such securities he shall still retain. Any foreign life insurance corporation desiring to discontinue business in this country and having made the publication hereinbe- fore required, may, in the discretion of the superintendent of insur- ance withdraw one-half of its deposits on registering, according to the provisions of law for the registry of policies, all its out- standing policies issued to citizens or residents of the United States, and covenanting to maintain unimpaired the reinsurance deposit for such registered policies for all future time, and spe- cially pledging for their security all future premiums payable on American policies. Source. — ^Former § 72; originally revised from L. 1861, cihap. 95, § 8; L. 1853, chap. 463, § 19, as amended by L. 1869, chap. 829. EXCESS DEPOSITS.— Excess deposits should not be withdrawn " until all tbe conditions of the trust have been complied with." Attorney-General Rep., 1903, page 476. 108 The Insurance Law. § 73. Excess deposits, form of delivery of, to surety companies by superintendent of insurance. Attorney-General Rep., 1903, page 489. RETURN OF SECURITIES.— The superintendent of insurance may return to the depositors the securities which were deposited as a condition precedent to insurance business where the corporation determined not to start in busi- ness and there were no liabilities aprainst said corporation. In re People's Life Insurance Company, Attorney-General Rep., 1896, page 133. Superintendent of insurance should not surrender the securities on deposit in insurance department for the benefit of policyholders in the United States. In re Baloise Fire Ins. Co., Attorney- General Rep., 1903, page 424. Insurance companies retiring from business may withdraw from deposit with the superintendent of insurance all securities in exceess of an amount suflBcient to secure policyholders in the United States. Such deposits are held in trust for all such policyholders. Attorney-General Rep., 1893, page 216. The provisions of § 72, relating to the withdrawal of securities deposited, apply only to such corporations as shall desire to relinquish all business in this state. The Superintendent of Insurance holds the securities as trustee for the policyholders and he should not surrender f»ny part of such deposit except by express direction either of the legislature oi the court. Attorney - General's Opinion, August 14, 1908. § 73. Special deposits to secure rcrii ter^a policies and annuity bonds. Any domestic life insurance corporation may depot it 'vvitli tlio superintendent of insurance securities of the kinds and in adiiitinn to the amount now required and authorized by law to be deposited with him, to any amount not less than twenty-five thousand dollars, which shall be legally transferred by it to the superintendent for the common benefit of all the holders of its registered policies and annuity bonds issued under the provisions of this article, and he shall hold the same in trust for the purposes and objects specified in this article; provided that no policies shall be registered or annuity bonds issued under the provisions of this section after the thirty-first day of December, nineteen hundred and ten. Such securities shall not be alienated from tlie purposes of such trust, nor transferred except in the manner provided in this article, and such transfer must be made by the superintendent under his seal of oifice upon the written application, under its corporate seal, of the corporation making the deposit, or of the receiver of such corporation, and in compliance with the laws of the state relating to such transfers. When such securities shall have been legally § 74. LiFE^ Health, Casualty Corporations. 109 transferred to the superintendent, he shall issue to such corpora- tion registered policies of insurance or annuity bonds of such denominations or amounts as the corporation may require. Such policies or bonds shall bear upon the face tliereof the words '' the resen^e on this policy (or bond) is secured by pledge of public stock or bonds and securities " with the seal of the department, and shall be countersigned by the superintendent or his authorized deputy. The corporation shall be cliarged by the superintendent upon the delivery of such policies or bonds with the amounts of the net value tliereof at the end of the policy year, valued according to the provisions of section eighty-four of this chapter, making proper allowances for semi-annual, quarterly or montlily premiums, bui in no case shall the amount of securities deposited under the provisions of this section be less than the amount of such aggregate values. Source. — Former § 73, as amended by L. 1906, chap. 326; originally revised from L. 1869, chap. 902, §§ 2-4. Amended by L. 1910, chap. 697. See § 13 et seq., ante. Deposit of securities. CONSTITUTIONAL. — An act authorizing deposit with superintendent is not unconstitutional under article 8, section 1, New York State Constitution. Attorney-General v. North Amer. L. Ins. Co., 82 N. Y., 172. COMMISSIONS. — The proceeds of the securities deposited with the super- intendent are assets in the hands of the receiver, and he is entitled to com- missions thereon. Attorney-General v. North Am. Life Ins. Co., 89 N. Y., 94. RECEIVER.— Under the provisions of chapter 902 of 1869, relative to deposits with the superintendent of insurance, it was held that it was the duty of the superintendent, where a receiver of such a company has been appointed, to convert the securities deposited with him into cash and pay over to the receiver the proceeds, to be applied by such receiver in payment of registered policies and annuities. Attorney-General v. North Am. Life Ins. Co., 85 N. Y., 485. § 74. Annual report of corporation of registered policies and annuity bonds. Every such corporation shall annually on July first or within sixty days thereafter report to the superintendent of insurance under the oath of the president and actuary the exact condition of the registered policies received from the superintendent and of the premimn account of such policies, and shall deposit with the superintendent additional securities of the kind in which the I 110 The Insueaitce Law. § 74. minimum amount of cash capital of domestic insurance corpora- tions is required to be invested by the provisions of section sixteen of article one of this chapter, to an amount equal to any increase in value of the policies heretofore issued and which shall rem,ain in force, valued by the same rule as upon the issue thereof. No one bond or mortg^age so deposited shall be for a less sum than five thousand dollars. The securities thus from time to time depos- ited, or so large an amount thereof as may be necessary to equal at all times, the net value of all the outstanding registered policies and annuity bonds of such corporation, shall be held by the super- intendent in trust, as provided in the preceding section, until the obligations of such corporation under such registered policies and annuity bonds, shall, to the satisfaction of the superintendent, b«^ fully liquidated, canceled and annulled. The state shall not be deemed to have incurred any obligation to pay tlie policies and annuity bonds so issued, beyond the proper application of the securities so deposited towards their liquidation, as in this article provided. The treasurer of the state, and any person duly autJiorized by the depositing or reinsuring corporation, shall, at all times, in the usual office hours, have access to the books and other documents in the insurance department relating to the deposits made, and policies and annuity bonds issued, under the provisions of thie article, and to such securities as may be necessary for the examination thereof. The treasurer shall for the services required by this chapter receive an annual salary of two hundred and fifty dollars to bo paid by the corporations availing themselves of tbe provisions of this and the preceding section. Any such depositing corporation may at any time withdraw any excess of securities above the net present value hereinbefore speci- fied, upon satisfying the superintendent by written proof to be filed in the department that such excess exists, and shall be allowed to receive the interest on all securities deposited and to exchange such securities by substituting other securities of the kind in wliich tlio minimum amount of cash capital of domestic insurance corpora- tions is required to be invested by the provisions of section sixteen of article one of this chapter. Source. — Former § 74; originally revised from L. 1869, chap. 902, §§ 4-6. §§ 75, 76. LiFE^ Health^ Casualty Corporations. Ill Amended by L. 1911, chap. 325. See § 297, Penal Law. Misconduct of officers as to report. See § 665, Penal Law. Misconduct of officers and employees as to written statement or report. § 75. Registration of policies and annuity bonds. Such corporation shall deliver to the superintendent of insurance the policy and annuity bonds engraved and printed or printed and written in such manner as tlie superintendent shall direct, Avith duplicate originals of the same duly signed. On their receipt by the superintendent he shall cause them to be duly registered in proper books kept for that purpose, in consecutive numbers, corre- sponding to the numbers on such policies and bonds, and shall cause his name or the name of his deputy to be inscribed on the policies and bonds and affix the seal of the department to the same, and shall return tlie original policies to the depositing corporation. The expenses necessarily incun-ed in registering, countersigning and sealing such policies and annuity bonds, and in otherwise executing the provisions of this article, including the salary of the treasurer, shall be audited and paid out of any moneys in the treasur}^ not otherwise appropriated. For the purpose of reim- bursing the same the superintendent shall charge against the depos- iting corporations respectively an amount sufficient for such pur- poses as may be just and reasonable. The superintendent shall receive mutilated policies and annuity bonds issued to any such corporation and deliver in lieu thereof other policies and bonds of like tenor and date, and, in case of lost policies or bonds, furnish certified copies of the duplicates on file in his office. Source. — Former § 75; originally revised from L. 1869, diap. 902, § 6. § 76. When depositing corporation to be deemed insolvent. If at any time tlie affairs of any such depositing corporation shall, in the opinion of the superintendent of insurance, appear to be in such a condition as to render the issuing of additional policies and annuity bonds by the corporation injurious to the public interests, such corporation shall be deemed insolvent and tbe superintendent shall report tbe fact to the attorney-general, who shall bring such action or institute such proceedings as may be authorized by law to be taken against an insolvent insurance 112 The Insurance Law. § 76. corporation. If in any such action or proceeding it shall appear to the satisfaction of the court that the assets and funds of the corporation are not sufficient to justify its further continuance of the business of insuring lives, granting annuities and incurring new obligations as authorized by its charter, it shall enjoin and restrain the corporation from the further transaction of its business and appoint a receiver of its assets and credits, who, upon filing his bond to the people of the state in an amount and with sureties approved by the court, conditioned for the faithful performance of his duties, shall take possession of all such assets and credits. including the securities deposited in the insurance department. Source. — Former § 76; originally revised from L. 1869, ciiap. 902, § 7. See § 297, Penal Law. When insolvency of a monied corporation is deemed fraudulent. RECErVEK. — Where the company has been declared to be insolvent and its affairs put into the hands of a receiver, judicial action thereafter must follow the statute; where the actuary's report shows that the company is not able to go on with its business, the assets must be turned into money, liabilities paid, and the corporate affairs closed up; the Supreme Court cannot order the receiver to call for premiums and keep up the business of the company, nor can it discharge the receiver and give back the property to the corporation. Attorney -General v. At. Mut. Ins. Co., 77 N. Y., 336. SUFFICIENT CAUSE.— Where it appeared by the proofs that the assets of the company were less than the amount of the values of the outstanding policies by about one-tenth of that amount; that the capital stock was entirely sunk; that the assets were of a kind not readily convertible or avail- able; that a large share of the assets had been kept as a cash deposit with a private banker, who was an oflficer of the company, without any agreement as to interest and without security as to loss; that the trustees were not in the practice of holding regular meetings, or of supervising the affairs of the company; that the dividends were paid without a regular meeting or a vote of the board of trustees, when there had been losses and a depreciation in the value of the assets, and when it was impossible to know whether or not the capital had been impaired, held that there was sufficient cause for interference. People V. Atlantic Mut. Ins. Co., 74 N. Y., 177; aff'g 53 How. Pr. 300. The Supreme Court has no power to review the preliminary action of the superintendent in making his report; if an error has been committed or mis- take made by the superintendent, the hearing, and that alone, will remedy it; but it must be proved to the satisfaction of the court, upon the investigation, that there is danger to the public interests by the continuance of the business of the company, before it would be warranted in making the final order, arresting future operations and appointing a receiver. Attorney-General v. At. Mut. Ins. Co., 53 How. Pr., 227. TITLE OF RECEIVER. — Assets means all the property, real and personal, of the company^ and the receiver, upon his appointment, becomes vested with the title to all the property of the company, including its real estate, and no § 76. LiFE^ Health, Casualty Corporations. 113 formal conveyance to him thereof is requisite. Matter of Attorney-General v. Ins. Co., 100 N. Y., 279. A decree dissolving a company and appointing a receiver vests in the receiver all the property of the company; a receiver may maintain an action to set aside fraudulent transfers of property by the company; the Supreme Court, having acquired jurisdiction of proceedings for winding up a corporation, and having appointed a receiver, has jurisdiction to stay the suit of a creditor brought to recover assets to which the creditor is entitled, in whatever court such suit may be pending. Attorney-General v. Guard. Mut. L. Ins. Ca, 77 N. Y., 272; rev'g 15 Hun, 18. Where a receiver has been appointed of a registered policy life insurance company, and the superintendent has sold the securities deposited with him to secure such policies, the receiver is entitled to have the proceeds immedi ately paid over to him; the superintendent has no right to retain the fund until the receiver is ready to distribute it. Matter of Attorney-General v. North Am. Ins. Co., 80 N. Y., 152. The provision of this section which empowers receivers to take possession of the assets of the company, including the securities deposited in the state insurance department, refers only to companies issuing registered policies and annuity bonds. People v. Insurance Co., 147 N. Y., 25. STAY OF PROCEEDINGS.— The statute does not authorize the court to stay proceedings by creditors, pending an application to wind up the affairs ol the company. Whritner v. Universal Ins. Co., 4 Abb. N. C, 23. OTHER ACTIONS.— The fact that the affairs of a life insurance company are being wound up and adjusted in proceedings under the care of a receiver, will not prevent the court from entertaining an equitable action to ascertain and enforce the rights of policyholders in the company, either on the ground that there is a conflict of jurisdiction nor on the ground that a multitude of suits may be brought. Bedell v. North Am. Ins. Co., 7 Daly, 273. PARTIES. — In proceedings by the attorney-general for the appointment of a receiver of a life insurance company, the court has jurisdiction to permit parties interested in the administration of the assets of the corporation to appear and represent their own interests, and to be made parties to all pro- ceedings taken by or against the receiver by which their rights may be affected. Attorney-General v. North Am. Life Ins. Co., 77 N. Y., 297. EXCEPTIONS. — The receiver of an insolvent insurance company, appointed under the insurance act of 1869, could file exceptions to the report of the referee appointed to take proof of claims. Attorney-General v. North Am. Ins. Co., 82 N. Y., 172. INVESTMENT OF FUNDS.— The receiver has no authority without the direction or consent of the court, to invest the money in his hands; in the absence of directions it is his duty simply to keep and protect the trust fund, and hold it ready for distribution. Attorney-General v. North Am. Ins. Co., 89 N. Y., 95. INSOLVENT COMPANY. — An insolvent life insurance company organized under the laws of this state, may be dissolved and its affairs wound up at the instance of a single stockholder. Masters v. Eclectic Life Ins. Co. 6 Daly, 455. FORFEITURE OF POLICY.— One holding a policy of life insurance does noi forfeit his policy by omitting to pay annual premiums thereon after the com- 114 The Insurance Law. § 77. pany issuing the policy has ceased to do business, transferred all its assets and become insolvent. People v. Empire Mut. Ins. Co., 92 N. Y., 105. CONTRACTS OF COMPANY.— When a registered policy life insurance com- pany which has entered into a contract with a general agent for his services for a specified term at a stipulated salary, before any breach of the contract on its part, is restrained from further prosecuting its business or exercising its corporate franchises by order of the court, and a receiver of its assets ia appointed, the agent has no valid claim upon the fund in the hands of the receiver for damages for alleged breach of contract, because of the discontinu- ance of the employment; there is in such case, no breach on the part of the company, as performance is prevented and the contract dissolved by the action of the state. People v. Globe Mut. Life Ins. Co., 91 N. Y., 174. SERVICES OF ATTORNEY.— An action is not maintainable against the receiver of an insolvent life insurance company, to recover for services ren- dered by an attorney to the corporation after the appointment of a receiver; the company or its agents cannot, after such an appointment, subject the funds in the receiver's hands to any legal liability. Barnes v. Newcorab, 89 N. Y., 108. In a suit to distribute the assets of a defunct insurance company, no allow- ances should be granted to the counsel of the intervening creditors payable out of the fund, whether such allowance be claimed under the Code or whether they are claimed as reasonable counsel fees earned by the counsel of these creditors. Attorney-General v. Continental Ins. Co., 63 How. Pr., 129. § 77. Proceedings by receiver. Such receiver shall immediately, on entering upon the duties of his office, appoint a comj^etent actuary, approved by the super- intendent of insurance, who shall make a careful investigation according to the standard fixed by the laws of this state into the condition of the corporation, and report thereon in writing, under oath, to the court, the superintendent and the receiver. If it shall be found by such report that the securities deposited by such cor- poration in the insurance department and its assets and credits, including the future premiums that will mature on outstanding policies and other obligations^ are sufficient under the laws of the state to pay all the policies, annuities and other obligations of the corporation as they may mature by the terms thereof and the legal costs and expenses incident to the business, and if, uix)n due notice to the superintendent, such actuary's report shall be confirmed by the court, the receiver shall be discharged and nil the properties and effects of the corporation shall be immediately returned to the sama §77. LiFE^ Health^ Casualty Corpoeations. 115 If the report of the actuary shall show that such securities, assets, credits and premiums are not sufficient under the laws of the state to pay all the policies, annuities and other obligations of the corporation as they may mature by the terms thereof, and the legal costs and expenses of the receivership, and the report shall, upon due notice to the superintendent, be confirmed by the court, the court may direct the conversion of the securities held by the superintendent into money for the purpose of distribution, and tlie superintendent shall, thereupon, with the consent and advice of tlie treasurer of the state, and in such manner as the receiver, superintendent and treasurer, or a majority of them, shall determine, sell and convert such securities into money. The proceeds of such securities, when required for distribution, and when the court shall make an order for that purpose, with suitable provision for the safety of the moneys, shall be paid to the receiver on his giving his receipt to the superintendent and shall be applied by the receiver, under the direction of the court, to the payment of the registered policyholders of the corporation in proportion t< the net value of their policies respectively, and to the registered annuities of the corporation, in proportion to the then present value of their respective annuities, as estimated by the legal standard for valuing life insurance and annuity obligations within this state. The surplus of the proceeds of such securities, if any there be, with all the other assets of the corporation, shall then be applied to the payment of all the just debts of the corporation incurred in continuing and carrying on its lawful business. 5>ource. — Former § 77; originally revised from L. 1869, chap. 902, § 8, as amended by L. 1880, chap. 168. See § 79, post. Annual investigation of affairs of company. POWERS OF RECEIVER. — The receiver of a dissolved insolvent insurance company primarily represents the company, as well as all persons interested in the assets, including the policyholders, and possesses whatever rights the cor- poration possessed and might have enforced against its trustees for mis- feasance in oflEice; the receiver of an insolvent corporation may enforce the liability of its trustees or directors to make good the loss occasioned by the company by their misapplication of assets, either by an action at law for damages or by an action in equity for an accounting. Mason v. Henry, 152 N. Y., 529. A promissory note given upon an agreement for insurance to be consum- mated upon the organization of a mutual insurance company may be collected 116 The Insueance Law. § '^T. by the receiver upon the insolvency of the company. White v. Haiglit, 16 N. Y., 310; Hart v. Achilles, 28 Barb., 576. A receiver, so far as relates to his conduct, the distribution of assets, or any of the proceedings subsequent to his appointment, is governed by the pro- visions of the statutes in relation to corporations, and by the practice of court ^^^ •! equity. People v. Security Life Ins. Co., 78 N. Y., 114. The receiver of an insolvent insurance company may, at any time, apply to the court for instructions in regard to any matter touching the fund placed in his custody. People v. Security L. Ins. Co., 79 N. Y., 267. Before amendment of this section, the receiver had no authority to require from the superintendent the securities deposited with him, and the court had no povv^er to compel the superintendent to transfer the trust imposed upon him. Ruggles v. Chapman, 59 N. Y., 163; People ex rel. Ruggles v. Chapman, 64 N. Y., 557. ACTION, BY WHOM BROUGHT.— A stockholder or a creditor of a life insurance company cannot bring an action for the dissolution of the company and the distribution of its assets. Attorney-General v. Continental L. Ins. Co., 53 How. Pr., 16. ACTUARY'S REPORT.— Practice on motion to confirm actuary's report. People V. Globe Mut. L. Ins. Co., 60 How. Pr., 57. The duties of the actuary terminate with his report, unless such duties are continued by the coiu-t, and the compensation which is to be paid must be fixed by the court, and is not under the control of the receiver, superintendent of insurance or actuary. Matter of North Am. Ins. Co., 55 How. Pr., 465. in case the actuary's report sustains the solvency of the company, it must be confirmed by the court before the business can be continued as the statute directs; such confirmation is not required when the actuary's report is adverse to the company's solvency. Matter of Atlantic Mut. Ins. Co., 55 How. Pr., 77 Where the company has been declared to be insolvent and its afi"airs put into the hands of a receiver, judicial action must thereafter follow the statute; where the actuary's report shows that the company is not able to go on with its business, the assets must be turned into money, liabilities paid, and the corporate affairs closed up; the Supreme Court cannot order tht receiver to call for premiums, and keep up the business of the company, nor can it dis- charge the receiver and give back the property to the corporation. Attorney- General V. At. Mut. Ins. Co., 77 Hun, 336. PARTIES DEFENDANT.— Parties claiming interest in funds in hands of 1 receiver should not be made parties defendant. People v. Family Fund Soc, 31 App. Div., 627. PREFERENCE.— A creditor of an insolvent corporation whose debt accrued by reason of a loan to the company to pay a loss which had occurred previous to the calamity which rendered the company insolvent, is not entitled to a preference in payment out of the funds which the company held beyond their capital stock at the time of such calamity. De Peyster v. Am. Fire Ins. Co., 6 Paige, 486. Holders for claims for death losses, and the holders of assignments of such claims, are to be first paid by the receiver, and the balance remaining in his § 78. LiFE^ Health^ Casualty Coepoeations. 117 hands is to be divided pro rata among all tlie other creditors. Kitchen v. Conklin, 51 How. Pr., 308. RESERVE FUND. — As to right of policyholders and claimants to share in the reserve fund. Matter of Equitable Reserve Fund Ass'n, 131 N. Y., 354. SALARIES OF 0FFICE:RS.— The officers of an insolvent corporation are not entitled to have their salaries paid in full in preference to the debts of other creditors; they are only entitled to be paid their ratable proportion of the assets of the company as between them and other creditors. Matter of Croton Ins. Co., 3 Barb. Ch., 642. UNEARNED PREMIUMS. — The unearned premiums received in advance upon policies of insurance are not surplus profits which the directors are authorized to distribute as dividends among the stockholders of the company, but are the ordinary means, or primary fund, out of which the losses upon such policies should be paid. Scott v. Eagle Fire Co., 7 Paige, 198. PAYMENT OF PREMIUMS.— At the time of the appointment of a receiver, certain policies were running upon which premiums had been paid to some time subsequent to that date; the receiver gave notice that he would receive no more premiums; the persons insured died after the time to which premiums had been paid; the referee allowed the claims on these policies. Held, no error; that further payments of premiums were excused by the failure of the company, as well as by the express notice of the receiver; also, that the claimants were entitled each to be allowed the present value of the policy at the time of the dissolution of the company and the appointment of the receiver, deducting the amount of premiums unpaid at the time of death- Attorney-General V. Guardian Mut. L. Ins. Co., 82 N. Y., 336. § 78. Additional duties of receiver. Whenever the business of any such corporation shall be continued under the provisions of the next preceding section, if the receipts for premiums and from all other sources shall at any time be in excess of the sums required to meet the policy and other obligations of the corporation, such receiver, whenever such excess shall amount to twenty-five thousand dollars, shall invest the same in such securities as are authorized to be deposited in the insurance depart- ment, and shall deposit such securities with the superintendent of insurance in the manner herein provided. Source. — Former § 78; originally revised from L. 1869, chap. 902, § 9. The receiver has no authority without the direction or consent of the court to invest the money in his hands; in the absence of directions it is his duty simply to keep and protect the trust fund, and hold it ready for distribution. Attorney-General v. North Am. Ins. Co., 89 N. Y., 94. 118 The Insurance Law. § 79. § 79. Annual investigation of affairs of such corporation; disposition of surplus. An investigation shall annually be made on the first day of January, or within thirty days thereafter, by a competent actuary approved by the superintendent of insurance, into the affairs of such corporation. If, upon such investigation, it shall be found that a surplus of its assets, not less in amount than ten thousand dollars, exists, after making adequate provision for meeting after maturity all the obligations of the corporation and all the legal expenses of the receivership, and in case of a joint-stock corpora- tion, over and above tlie amount of its capital, such portion of such surplus as may, under the charter of the corporation, if a stock corporation, belong to its stockholders, shall be set aside and invested by the receiver in such securities as are authorized to be deposited by life insurance corporations in the insurance depart- ment as a contingent fund, and scrip therefor shall be issued by the receiver to such stockholders, respectively, in proportion to their respective shares bearing six per cent, interest, and payable on the final settlement of the aifairs of the corporation as herein provided. The remainder of such surplus, if the corporation be a stock corporation, and the whole of such surplus, if it be a mutual corporation, shall be disposed of as follows: One-quarter thereof shall be reserved by such receiver and invested by him in such securities as a contingent fund, for whidi scrip shall be issued by such receiver to all policy holders entitled under their policies to share in the surplus of the corporation. Sucli scrip shall bear interest at the rate of six per cent., payable annually, and shall be redeemable on the maturity of the policy on accoimt of which the scrip was issued. The remaining three-fourths of such surplus shall be paid by the receiver within one year from such first day of January, to such policy holders respectively in lawful money of the United States. jSTo scrip shall be issued for any fractional part of a dol- lar, and any scrip so issued may at any time be called in and canceled by the receiver without payment, if necessary, to better secure the remaining obligations of the corporation, and all the gcrip so issued shall have printed thereon a clause to the following § 79. LiFE^ Health^ Casualty Cokpoeations. 119 eifect: If, on the final accounting of tlie receiver, after the liqui- dation of all the obligations of the corporation as herein provided, and in case of a joint-stock corporation the return to the respective stocldiolders »f their respective amounts of stock and the scrip issued to them under this section, there shall remain a surplus in the hands of the receiver, it shall be divided by him among the stockholders, if in a stock corporation, proportionately to their respective shares, as provided by the charter of the corjx)ration, and the balance of such, surplus, if any, among the last ten policy holders of the corporation or their legal representatives in propor- tion to the amounts of their respective policies, and if not a stock corporation, among the holders of the last ten policies issued by the corporation or their legal representatives in proportion to the amount of tlieir respective policies. Source. — Former § 79; originally revised from L. 1869, chap. 902, § 10. See notes and annotations under §§76 and 77. VALUATION OF POLICIES. — The damages for every policy of insurance should be computed according to the facts as they existed upon the last day of the presentation of claims to the receiver, and that in the exercise of a sound discretion the court should not take into consideration the fact that death had subsequently occurred in making such valuation; when the policies have been valued and a dividend made which was ascertained and computed upon the facts as they existed on the day when claims were required to be presented, they should not be revalued because a death had since occurred. Matter of Attorney-General v. Continental Ins. Co., 64 How. Pr., 73. Claims under policies of a life insurance company which has been dissolved for insolvency and placed in the hands of a receiver, in an action instituted by the attorney -general, must be valued and determined, and their status fixed as of the date of the commencement of the action for dissolution, and are not affected by the death of the insured after that date and before th© distribution of assets. Attorney- General v. Guard. Life Ins. Co., 82 N. Y., 336. REVALUATION. — When a claim will not be revalued on account of the uninsurable condition of the assured at the time of the valuation. People v. Knickerbocker Ins. Co., 38 Hun, 601. Where, after the expiration of the time specified in the published notice for the Dresentation of claims to a receiver of an insolvent life insurance corpora- tion, t-ei-tain policyholders, whose claims had been presented and allowed, died, the court held that it had power to direct a revaluation of such policies, and tiie exercise of this power was within its discretion; and that therefore an order denying an application for such revaluation on the ground solely of lack of power was error. Matter of Attorney-General v. Continental Ins. Co., 88 N. Y.. 77. DEATH CLAIMS. — An order was made directing a claim, under a policy issued by defendant, to be filed with the receiver as of August 15, 1883, and 120 The Insurance Law. § 80. directinj? a reference for its valuation; before the hearing the person upon whose life the policy was issued died, and evidence was given tending to show that at the time when the company became insolvent and suspended its business he had attained an age and had become subject to a mortal disease which would have precluded a reinsurance or further insurance of his life by any life insurance company in good standing; the disease continued until the time of his death, and was in part the cause of that event; it was shown upon the hearing that no disturbance in the accounts or dividends of the receiver would be made by valuing this as a death claim, and that it could be provided for and disposed of as such without substantial injustice to other claimants. People v. Knickerbocker Ins. Co., 40 Hun, 44. When, after a policy in an insolvent insurance company has been valued and placed upon the receiver's dividend list, the holder thereof dies, the court will not, upon the application of his executor, direct that the policy be revalued as a death claim and order the receiver to pay dividends thereon upon the basis of the latter valuation. People v. Sec. Ins. Co., 23 liun, COl. Where the insured died after the claim on the policy was presented to the receiver and the proofs required by the policy were afterward filed and retained by the receiver, the wife was entitled to have her policy valued upon the basis of her husband's death, and not as an existing and continuing insur ance. People v. Knickerbocker Life Ins. Co., 34 Hun, 476. COUNTEKCLAIM. — Where, at the time of the appointment of the receiver, the insurance company held certain claims against the defendant and the defendant held two endowment policies not yet due, issued by the company, the defendant was not entitled to offset the reserve value of the policies Newcomb v. Almy, 96 N. Y., 308. ACCOUNTING OF RECEIVER — Where, during the pendency of proceedings for an accounting instituted by the receivers of an insolvent insurance com- pany, one of the receivers dies, the court has power to make an order reviving and continuing the accounting against his executors and directing them to come into such accounting and stand by such orders and decrees as may be made therein. Matter of Columbian Ins. Co., 30 Hun, 342. § 80. Existing corporations. Any life insurance corporation whicli by virtue of any law was niaking deposit of securities and receiving registered policies on the eighteenth day of May, eighteen hundred and ninety-two, shall make such deposits and receive such policies in accordance with this chapter, and not otherwise. Such corporation shall be authorized to issue such policies and annuity bonds as shall be registered under this article, and shall, whenever required by the holders of its unregistered policies and annuity bonds, issued previous to the passage of this chapter, u|)on their compliance with the terms and conditions of such corporation for registered policies and annu- ity bonds, issue to them respectively, registered policies and annuity § SI. Life, Health, Oasualty 'Ookpokations. 121 bonds in exchange for and in value equal to those previously issued to tliein. Any corporation availing itself of the provisions of this article, may issue unregistered policies and annuity bonds as here- tofore authorized by its charter, but subject to the provisions of this article in relation to the distribution of its assets. Source. — Former § 80; originally revised from L. 1853, chap. 463, § 21, as amended by L. 1880, chap. 427; L. 1869, chap. 902, § 11. § 81. Powers of receiver. The receiver of any such corporation shall have all the powers in cideut to the successful management of its affairs, and, to that end, authority to purchase policies issued by the corporation, to make any other compromise or settlement of its outstanding obligations, and to use the corporate seal of the corporation whenever necessary to the transaction of the business of his receivership. The receiver may employ such clerks and actuaries as he may deem necessary for the proper conduct of his business as such receiver, and such clerks and actuaries shall be paid such reason- able compensation as he may determine, subject, however, to the approval of the superintendent of insurance. The compensation of such receiver, clerks and actuaries shall be a charge upon the funds of such corporation and paid out of such funds. Source.— Former § 81; originally revised from' L. 1869, chap. 902, §§ 12, 13. FEES. — The Supreme Court has power in the first instance to order the fees of a referee, appointed to take proofs and report as to the claims of a receiver of an insolvent life insurance company for compensation and expenses, to be paid out of the fund. Attorney-General v. Continental Life Ins. Co., 93 N. Y., 45. Where a receiver has advanced money to pay taxes on lands covered by mortgages in the hands of the superintendent then being foreclosed, which advances were repaid from the proceeds of the foreclosure, the receiver is not entitled to commissions upon the sum so refunded. Attorney-General v. North Am. Ins. Co., 89 N. Y., 94. SERVICES OF ATTORNEY.— An attorney who, upon the retainer of cer- tain of the policyholders in an insolvent insurance company, has appeared and resisted improper claims made by the receiver against the assets in his hands, has no legal claim to be compensated for such services by the receiver out of the assets of the corporation. Attorney-General v. Continental Life Ins. Co., 31 Hun, 623. An action is not maintainable against the receiver of an insolvent life insurance company to recover for services rendered by an attorney to the 122 The Insurance Law. §§ 82, 83. corporation after the appointment of the receiver; the company or its officers cannot, after such an appointment, subject the funds in the receiver's hands to cmy legal liability. Barnes v. Newcomb, 89 N. Y., 108. SPECIAL COUNSEL. — The attorney -general has no authority to appoint special counsel to act generally for him in the conduct of suits or proceedings in which the state is interested; and no authority exists to employ counsel to aid him, save where it is expressly authorized by statute. Matter o^ Attorney- General v. Continental Ins. Co., 88 N. Y., 571. § 82. When receiver shall not be appointed, or new policies issued. No receiver for any life insurance corporation shall be appointed if such corporation has actual funds invested according to law, of a net cash value equal to its outstanding liabilities, exclusive of any contingent liability incurred under the provisions of section seventy-one of this chapter relating to the organization of a mutual corporation, and a sufficient reserve on policies and claims not matured, calculated according to the American experience table of mortality, with interest at four and one-half per centum pei annum, and in computing such liabilities, capital stock shall be considered as a liability of the corporation. But no such corpo- ration shall issue new policies if its capital stock is impaired to the extent of fifty per centum tliereof, after charging said corpora- tion with a reserve liability calculated according to the provisions of section eighty-four of this chapter, until such impairment is made good; in the case of a corporation having no capital stock, it shall not issue new policies if its assets are less than its liabili- ties as above defined and upon the basis last before mentioned, until such deficiency is made good. Source. — Former § 2, as amended by L. 1901, cliap. 514, and L. 1906, chap. 326; originally revised from L. 1884, chap. 341, § 2; L. 1887, ohap. 328. § 83. Distribution of surplus to policy holders. Except as herein provided, every domestic life insurance cor- poration heretofore or hereafter organized, whether incorporated by special act or under a general statute, anything in its charter or certificate of incorporation or in such special act or general statute to the contrary notwithstanding, shall provide in every policy issued on or after the first day of January nineteen hundred and seven, § 83. Life, Heai^tfi, Casualty Corporations. 123 that the proportion of the surplus accruing upon said policy shall be ascertained and distributed annually and not otherwise. Upon the thirty-first day of December of each year, or as soon thereafter as may be practicable, every such corporation shall well and truly ascertain the surplus earned by such corporation during said year. After setting aside from such surplus such sums as may be re- quired for the payment of authorized dividends upon the capital stock, if any, and such sums as may properly be held for account of existing deferred dividend policies, and for a contingency resei'A^e not in excess of the amount prescribed in this article, every such corporation shall apportion the remaining surplus equitably to all other policies entitled to share therein. Except in the case of a term or an industrial policy, the share of surplus so appor- tioned in the case of a policy issued on or after the first day of January, nineteen hundred and seven sliall, at the option of the owner of the policy, be payable in cash, or shall be applicable to the payment of any premiimi or premiums upon said policy or to the purchase of a paid-up addition thereto or shall be permitted U) accumulate to the credit of the policy at such rate of interest as shall be allowed by the company, and with such interest shall be payable upon the maturity of the policy or shall be withdrawable in cash by the owner of the policy on any anniversary of the dat^ of issue thereof. Such corporation may require the owner of the policy to elect the manner in which said dividends shall be applied as above provided by mailing a written notice of the amount of the said dividends and the options available as afore- said in a sealed envelope in the manner required by the provisions of this chapter for notices of premium payments, and in case the owner shall fail to notify the company in writing of his election within three months after the date of the mailing of said notice, the surplus shall be applied by the company to the purchase of a paid-up addition to the sum insured. In the case of a term policy issued on or after the first day of January, nineteen hundred and seven the share of surplus so apportioned shall be payable to the owner of the policy in cash or shall be applicable to tlie payment of any premium or premiums upon said policy, or if so provided in the policy shall be permitted to accumulate to the credit of the policy at such rate of interest as shall be allowed 124 The Insurance Law. § 83. by the company and in vSnch case shall be payable upon the maturity or expiration of the policy or shall be withdrawable in cash by the holder of the policy on any anniversary of the date of issue thereof. In case of industrial policies the share of surplus so apportioned shall be payable annually in such manner as may be determined hy the com,pany with approval of the superintend- ent of insurance. The dividends declared as aforesaid in the case of a policy issued on or after the first day of January, nineteen hundred and seven, shall be payable respectively either upon the anniversary of the policy next after said thirty-first day of Decem- ber or upon a day certain in the year following said date, accord- ing to the rules of the corporation or the terms of the policy, and upon the sole condition that the premium payments for the policy year current upon said thirty-first day of December shall have been completed. This section shall not apply to any stock life insurance corpora- tion which on or after the first day of January, nineteen hundred and seven, ijhall transact and shall represent itself as transacting its business exclusively upon a nonmutual basis and shall after said date issue only nonparticipating policies. Xor shall this sec- tion apply to paid-up or temporary and pure endowment insurance issued or granted in exchange for lapsed or surrendered policies. A foreign life insurance corporation which shall not provide in every participating policy issued or delivered in this state on or after the first day of January, nineteen hundred and seven, that the proportion of the surplus accruing upon said policy shall be ascertained and distributed annually and not otherwise, and which shall not ascertain and distribute the surplus accruing upon said policies annually either by providing for their payment in cash or their application to the payment of premiums or to the purchase of paid-up additions or for their accumulation as above provided in the case of domestic corporations shall not be permitted to do business within thij state. Source. — Former § 83, as amended by L. 1906, chap. 32(); originally revised from L. 1872, chap. 100. Amended by L. 1915, chap. 617. In effect May 12, 1915. Note. — The amendment of 1915 providted for annual distribution of surplus to industrial policyholders in such a manner as may ibe approved by the superintendient. The purpose was to enable a stock company which had changed into a mutual company to continue its foniu r i»ractice of granting § 83. LiFE^ Health^ Casualty Coeporations. 125 participation in piofits to industrial policyholders, which participation had not l)oen a inattt>r of Ic^ai riglit, there ])eing no provision in the statute requiring annual distribution to industrial policyholders. — Ed. See § 87, post. Restrictions as to dividends removed. See § 604, Penal Law, which makes it a misdemeanor for a director to make a dividend except from surplus profits. EQUITY. — A complaint in an action by the holders of a policy of life insurance against the insurance company, which alleges that the action is brought " as well in behalf of these plaintiffs as of all other policyholders similarly situated who may choose to come in," etc.. is necessarily li)nited to equitable relief. Taylor v. Charter Oak Ins. Co.. 9 Daly, 489. An action by the holder of a policy in a mutual life insurance company for equitable relief cannot be maintained upon an alleged trust in the defend ants for the benefit of the plaintiff; the relations between the company and its policyholders are those of contractors, the contract being the policy, by which the liabilities of the company are to be determined. Mencken v. United States Life Ins. Co., 11 Daly, 282. TONTINE POLICY. — An action on a tontme policy is premature if brought before the tontine period has expired. Simons v. N. Y. Life Ins. Co., .S8 Hun, 309. A life insurance company issuing policies on the tontine or " ten years dividend system," is in no sense a trustee of any particular fund for the holder of such a policy; their relations are simply that of debtor and creditor, and the policyholder at the expiration of the ten years is not entitled to nn accounting in the absence of any evidence of misappropriation, wrongdoing or mistake on the part of the company. Uhlman v. N. Y. Life Ins. Co., 109 N. Y., 421. It was held in Illinois that companies doing business on the tontine savings fund plans do not come within a statute providing for distribution of surplus to policyholders. Romer v. Equitable Life, 101 III. App. Ct. Rep., 621. SURPLUS. — Where, under a contract of life insurance, only the propor- tion of the company's surplus which equitably belonged to the policy was to be credited to it and paid to the policyholder, an ascertainment and deter- mination of that proportion is a condition precedent to the poUcy-hohler's right of recovery of any portion of the surplus in an action at law. Greetf v. Equitable Life Assur. Soc, 160 N. Y., 19. DIVIDENDS. — An insurance company can only pay dividends out of surplus and profits; they cannot lawfully be paid out of capital contributed by shareholders for the purpose of carrying on the company's business and for the protection of its creditors; such ''dvidends are prohibited by § 694 of the Penal Coa«J and § 83 of the Insurance Law. Berryman v. Bankers' Life Insurance Co., 117 App. Div., 730. Tlie superintendent upon examining a life insurance company as to its financial condition cannot disregard the liability created by the company against itself by^ the credit and payment of dlividends paid out of accumulated surplus andJ the capital of the company, nor allow as an asset the lien sought to be created on the policy^ — contracts of those who have been paid the dividends in cash; that is within the power of the company and policy-- holders to establish their exact financial relation in reference to declared dividends by^ resorting to the courts. Attorney-General Rep., June 20, 1906. 126 The Insurance Law. § 84. An insurance company cannot lawfully pay dividends out of capital con- tributed by shareholders for the purpose of carrying on the company's busi- ness for the protection of its creditors, and such dividends are prohibited by section 664 of the Penal Law and section 83 of the Insurance Law. Berryman V. Bankers' Life Ins. Co., 117 App. Div., 730. POLICIES. — A life insurance company, originally organized on a non- participating basis, which has afterwards elected to do a participating busi- ness cannot thereafter return to a nonparticipating basis. Attorney-General's Opinion, Sept. 24, 1909. Application of Dividend. — A policyholder under this section may give notice as to his selection of the manner he wishes his dividend applied, such selection to hold good imtil further notice, the change, if any, to take eflfeet on an anniversary of the date of issue of the policy. Ruling of Ins. Dept., February 26, 1914. § 84. Valuation of policies. The superintendent of insurance shall annually make valuation? of all outstanding policies, additions thereto, unpaid dividends, and all other obligations of every life insurance corporation doing business in this state. All valuations made by him or by his authority shall be made upon the net premium basis. The legal minimum standard for contracts issued before the first day of January, nineteen hundred and one,. shall be the actuaries' or com- bined experience table of mortality with interest at four per centum per annum, and for contracts issued on or after said day shall be the American experience table of mortality with interest at three and one-half per centum per annum; provided that tho legal minimum valuation of all contracts issued on or after tbe firat day of January, nineteen hundred and seven, shall be in accord ance with the select and ultimate method, and on the basis that the rate of mortality during die first five years after the issuance of said contracts respectively shall be calculated according to tlic following percentages of the rates shown by the American experi- ence table of mortality, to wit, first insurance year fifty pei centum thereof, second insurance year sixty-five per centum thereof, third insurance year seventy-five per centum thereof, fourth insurance year eighty five per centum thereof, and fifth insurance year ninety-five per centum thereof. The super intendent may vary the standards of interest and mortality in thr case of corporations from foreign countries as to contracts issued by such corporations in other countries than the Unit>ed States; § 84. LiFE^ Health^ Casualty Corporations. 127 and in particular cases of invalid lives and other extra hazards, and value policies in groups, use approximate averages for frac tions of a year and otherwise, and accept the valuation of the department of insurance of any other state or country if made upon the basis and according to the standards herein required in place of the valuation herein required. No policy issued after the thirty- first day of December, nineteen hundred and six, shall be valued as term insurance unless premiums are based upon net term rates; and no policy with level premiums issued after said date shall be v^alued as term insurance for the first policy year. The legal minimum standard for the valuation of annuities issued after January first, nineteen hundr^ and seven, shall be McClintock's " Tables of Mortality among Annuitants " with interest at three and one-half per centum per annum, but annuities deferred ten or more years and written in connection with life or term insur- ances shall be valued on the same mortality table from which the consideration or premiums were computed, with interest not higher than three and one-half per centum per annum. The legal mini- mum standard for the valuation of industrial policies issued after the first day of January, nineteen hundred and seven, shall be the American experience table of mortality with interest at three and one-half per centum per annum, provided, that any life insurance corporation may voluntarily value its industrial policies written on the weekly premium payment plan according to the standard industrial mortality table or the substandard industrial mortality table. Any life insurance corporation may voluntarily value its policies, or any class thereof, according to the American experi- ence table of mortality, or if industrial, at its option, according to the standard industrial mortality table or substandard industrial mortality table, at a lower rate of interest that that above pre- scribed, but not lower than three per centum per annum, and with or without reference to the select and ultimate method of valuation, and in every such case shall report the standards used by it in making the same to the superintendent of insurance in its annual statement, provided that no such standards if adopted shall be abandoned without the consent of the superintendent of insurance first obtained in writing. 128 The Insukance Law. § 85. Source.— - Former § 84, as amended by L. 1893, chap. 147; L. 1901, chap. 346; L. 1906, chap. 326, and L. 1909, chap. 301 ; originally revised from L. 1853, chap. 463, § 13, as amended by L. 1873, chap. 849; t. 1884, chap. 341, §§ 1, 2. Amended by L. 1910, chap. 616, and L. 1913, chap. 304. Note. — ^The purpose of the amendment of this section by chapter 304 of 1913 was to broaden the powers of the superintendent in reference to receipts of certificates of valuation of life insurance policies made by other state de- partments and by eliminating the words — " any excess of its valuation over those computed by the said legal minimum standard and also," and to relieve companies not using Select-and-Ultimate valuation from unnecessary labor and expense. — Ed. Note. — The amendment by L. 1910, chap. 616, provided that the legal minimum standard for the valuing of industrial policies should ibe based on the Standard or Sub- standard Industrial Mortality Table. — Ed. An insurance company, originally organized as a fraternal organization, thereafter reorganized under the assessment plan and later as a stock com- pany, maintains a suflBcient reserve on the policies of former Class A when it provides that members of the former Class A should be assessed one dollar for each death, and that there should be set aside a fund of one dollar per 1,000 on all insurancfe issued on the new Class B, which fund should go to meet any deficit in assessments of Class A when the membership dropped below 1,000, and the mortuary fund was continued until the corporation organized as a stock company when it was discontinued, because no longer required, and when upon the last reorganization the company carried a reserve figured under § 84 of the Insurance Law, the reserve being applicable to all classes of policies. Kelshaw v. Bankers' Life Insurance Co., 117 App. Div., 726. In view of the change in this section omitting " any excess of its valuations over those computed by the said legal minimum standard and also," it will not be necessary to prepare a valuation for 1913 on the " Select and Ultimate " basis. Ruling of Ins. Dept., July 8, 1913. § 85. When actual premium is less than net premium. When the actual premium charged for an insurance by any life insurance corporation doing business in this state is less than the net premium for such insurance computed according to the table of mortality and rate of interest prescribed in this article, such corporation shall be charged as a separate liability with the value of an annuity, the amount of which shall equal the difference between such premiums and the term of which in years shall equal the number of future annual payments due on such insurance at the date of the valuation. Source. — Former § 85; originally revised from L. 1884, chap. 341, § 1. § 86. LiFE^ Health^ Casualty Corporations. 129 § 86. Assets and liabilities of life and casualty Insurance corporations; method of computation; procedure in case of impairment; reserve. 1. In estimating the condition of any life insurance corporation, under the provisions of this chapter, or in any examination made by him, or by an examiner appointed by him, the superintendent shall allow as assets only such investments as are author- ized by the laws of this state, and shall charge as liabilities, in addition to the capital stock, all outstanding indebtedness of the corporation, and the premium reserve on poli- cies, and additions thereto in force computed according to the table of mortality and rate of interest prescribed in this article. Any assets or securities lawfully held or acquired for the satisfaction, reduction or guaranty of any indebtedness to the corporation shall be allowed as assets at their just value in the judgment of the superintendent, but the total assets invested and otherwise of every domestic life insurance corporation shall be held to be accumula- tions for the exclusive benefit of policy holders, and no payment to stockholders shall be made therefrom until all obligations to policy holders and creditors have been fully provided for, including the reserve required by section eighty-four of this chapter to be deter- mined by the superintendent of insurance. Whenever it shall appear to the said superintendent from the statement of any life insurance corporation made to the insurance department, or from an examination of the affairs of any such corporation, if a stock corporation, that its capital stock is impaired to the extent of fifty per centum thereof upon the basis of such reserve liability for policies and annuities in force as may be the standard used within this state at the time of ascertaining such impairment, it shall be the duty of said superintendent, if the corporation is organized under the laws of any other state or country, to revoke the certificate of authority issued to the agent or agents of such corporation, and cause a notice thereof to be published in the state paper for four weeks, and the agent or agents of such corporation are, after such notice, required to discontinue the issuing of any new policies. If the corporation so impaired is organized under the laws of this state, it shall be the duty of said superintendent to direct the officers thereof to require the stockholders to make 130 The Insurance Law. § 86. good in cash the amount of such deficiency within ninety days after the date of his requisition. And upon the failure of the stockholders to make good such deficiency within the time specified in such requisition, tlie corporation shall then he subject to the provisions of section twenty-one of this chapter. Provided that any corporation organized under tlie laws of tliis state, whase 3apital is impaired as above fifty per centum, may by a vote of a majority of its directors at a meeting called for that purpose reduce its capital stock to an amount not less than one hundred thousand dollars ; and the said directors are hereby empowered to issue new certificates of stock to the stockholders for the amount of the reduced capital, and require in return all certificates pre- viously issued. 2. In estimating the condition of any casualty insurance corporation, under the provisions of this chapter, the super- intendent shall allow as assets only such investments as are authorized by the existing laws of this state, at the date of its investigation; and shall charge as liabilities, in addition to the capital stock, all outstanding indebtedness of the corporation, and the premium reserve on policies in force, equal to the unearned portions of the gross premiums charged for covering the risks, computed on each respective risk from the date of the issuance of the policy. The indebtedness for outstanding losses under insur- ance against loss or damage resulting from accident to or injuries suffered by an employee or other person and for which the insured is liable, and under insurance against loss from liability on account of the death of or injury to an employee not caused by the negligence of the employer, shall be determined as follows: Each corporation which writes policies covering any of the said kinds of insurance shall include in the annual statement required by section forty-four of this chapter a schedule of its experience thereunder, in the United States and foreign countries in the ease of corporations organized in the United States, and in the United States only in the case of corporations organized outside of the United States, giving each calendar year's experience sep- arately, and crediting or charging each item to the year in which the policy to which it relates was written, as follows: (1) the e-arned premiums on all such policies written during the period of § 86. LiFE^ Health^ Casualty Cobpokations. 131 ten years immediately preceding the date as of vvLicli the state- ment is made, being the gross premiums on all such policies including excess and additional premiums and premiums in course of collection, less return premiums and premiums on canceled policies, and less the unearned premiums on policies Jn force as shown in such annual statement; (2) the amount of all pay- ments of whatsoever nature made by reason or on account of injuries covered by such policies written during said period. This amount shall include medical and surgical attendance, payments to claimants, legal expenses, salaries and expenses of investigators, adjusters, and field men, rents, stationery, telegraph and telephone charges, postage, salaries and expenses of office employees, home office expenses, and all other payments made on account of such injuries, whether such payments are allocated to specific claims or are unallocated; (8) the number of suits being defended at the date as of which the statement is madd under policies written during said period, except suits in which liability is not dependent upon negligence of the insured, and a charge of seven hundred and fifty dollars for each suit; (4) the number of deaths for which the insured are liable without proof of negligence, covered by policies written during said period, and not paid for at the date as of which the statement is made and a charge of the amount necessary to pay for such deaths; (5) the number of unpaid claims at the date as of which the statement is made on account of nonfatal injuries for which the insured are liable ^vithout proof of negli- gence, covered by policies written during said period, and a charge equal to the present value of the estimated future payments; (6) the loss ratio determined from the foregoing as to each year separately using as the divisor the earned premiums shown in item (1) and as the dividend the amount of payments shown in 'tern (2) plus the amounts charged in items (3), (4), and (5); (7) the number of suits being defended at the date as of which the statement is made under policies written more than ten years prior to such date, except suits in which liability is not dependent upon negligence of the insured; (8) the number of deaths for which the insured are liable without proof of negligence, covered by policies written more than ten years prior to the date as of which the statement is made, and not paid for at such date; 132 The Insueance Law. § 86. (9) the number of unpaid claims at the date as of which the state- ment is made on account of nonfatal injuries for which the insured are liable without proof of negligence, covered by policies written more than ten years prior to such date. All unallocated pay ments in item (2) made in a given calendar year subsequent to the first four years in which a corporation has been issuing such policies shall be distributed as follows: Thirty-five per centum shall be charged to the policies written in that year, forty per centum to the policies written in the preceding year, ten per centum to the policies written in the second year preceding_, ten per centum to the policies written in the third year preceding, and five per centum to the policies written in the fourth vear pre- ceding, and such payments made in the first four calendar years in which a corporation has been issuing such policies shall be distributed as follows: in the first calendar year one hundred per centum shall be charged to the policies written in that year, in the second calendar year fifty per centum shall be charged to policies written in that year and fifty per centum to the policies written in the preceding year, in the third calendar year forty per centum shall be charged to the policies written in that year, forty per centum to the policies written in the preceding year, and twenty per centum to the policies written in the second year preceding, and in the fourth calendar year thirty-five per centum shall be charged to the policies written in that year, forty per centum to the policies written in the preceding year, fifteen per centum to the policies written in the second year preceding, and ten per centum to the policies written in the third year preceding, and a schedule showing such distribution shall be included in such annual statement. Each such corporation shall be charged with indebtedness for outstanding losses upon such policies determinecl as follows: (10) for all suits being defended under policies Avritten more than ten years prior to the date as of which the statement is made, except suits in which liability is not dependent upon negligence of the insured, one thousand dollars for each suit; (11) for all suits being defended under policies written more than five years and less than ten years prior to the date as of which the statement is made, except suits in which liability is not dependent upon negligence of the insured, seven huii(]rc(] and § b(j. LiFE^ Health^ Casualty Coepokations. 133 fifty dollars for each suit; (12) for all deaths for which the insured are liable without proof of negligence, covered by policies written more than five years prior to the date as of which the statement is made, the amount necessary to pay for such deaths; , (13) for all unpaid claims on account of nonfatal injuries for which the insured are liable without proof of negligence under policies written more than five years prior to the date as of which the statement is made, the present value of the estimated future payments; (14) for the policies written in the five years imme- diately preceding the date as of which the statement is made an amount determined as follows: Multiply the earned premiums of each of such five years as shown in item (1) by the loss ratio ascertained as in item (6) on all the policies written in the first five years of the said ten-year period using as the divisor the sum of the earned premiums shown in item (1) for such first ^Ye years, and as the dividend the sum of the payments shown in item (2) for such first five years plus the sum of the charges in items (3), (4) and (5) for such first five years, but the ratio to be used shall in no event be less than fifty per centum at and after December thirty-first, nineteen hundred and eleven, nor less than fifty-one per centum at and after December thirty-first, nineteen hundred and twelve, nor less than fifty-two per centum 'at and after Decem- ber thirty-first, nineteen, hundred and thirteen, nor less than fifty- three per centum at and after December thirty-first, nineteen hun- dred and fourteen, nor less than fifty-four per centum at and after December thirty-first, nineteen hundred and fifteen, nor less than fifty-five per centum at and after December thirty-first, nineteen hundred and sixteen, and from the amount so ascertained in each of the last five years of said ten-year period deduct all payments made under policies written in the corresponding year as shown in item (2), and the remainder in the case of each year shall be deemed the indebtedness for that year, provided, however, that if the remainder in the case of any year of the first three years of the five years immediately preceding the date as of which the statement is made shall be less than the sum of the three following items for that year at that date — (a) the number of suits, except suits in which liability is t^-"^ dependent upon negligence of the insured, being defended under policies written in that year and 134 The Insurance Law. § 86. a charge of seven hundred and fifty dollars for each suit, (b) the amount necessary to pay for all deaths for which the insured are liable without proof of negligence, covered by policies written in that year, and (c) the present value of estimated unpaid claims on account of nonfatal injuries for which the insured are liable without proof of negligence, covered by policies written in that year — then the sum of said items (a), (b) and (c) shall be the indebtedness for that year. A corporation which has been issuing such policies for a period of less than ten years shall nevertheless include in its annual statement, a schedule as hereinbefore re- quired for the years in which it shall have issued such policies, and shall be charged with an indebtedness determined in the same manner, but in determining the indebtedness for policies written in the five years immediately preceding the date as of which tlie statement is made, the minimum ratio hereinbefore prescribed shall be used subject to the same deductions and provisions as in the case of corporations that have been issuing such policies for ten years or more. Source.— Former § 86, as amended by L. 1901, chap. 514; L. 1903, chap. 566; L. 1904, chap. 486; iL. 1905, chap. 113; originally revised from L. 1853, chap. 463, § 17, ae amended by L. 1879, chap. 161. Amended by L. 1911, chap. 183, and L. 1913, chap. 304. Note. — The purpose of the amendment of this section by chapter 304 of 1913 was to eliminate a previous ambiguity regarding allowance of assets in the examination of a life company. — Ed. REAL ESTATE.— Investments may be made in real estate mortgages ol another state under § 16 by an insurance company of this state which rein sures the risks held by a company of that state. Attorney-General Rep., 1896, page 145. VALUATION. — When an insurance company originally organized as a fraternal organization has thereafter successively incorporated as a mutual company and as a stock company, under chapter 690 of the Laws of 1893, the valuation of policies issued when the corporation was a mutual company for the purpose of ascertaining the amount of reserve, should be made under S 52 of the Insurance Law, if such valuation does not violate any provision, express or implied, of the original contract of insurance; the reserve need not be determined by valuing such policies as whole life policies under § 86 of the Insurance Law. Elder v. Bankers' Life Insurance Co., 117 App. Div., 722. Liquor tax certificates are issued as of October first in each year, and per- sons taking out such liquor tax certificates file surety company bonds for the year. The financial statements of surety companies uniting in such bond? should carry as unearned premium reserve for such bonds seventy-five per cent of the premium receipts, such financial statements dating as of December thirty-first, and, therefore, at the date of such financial statement, such bonds would have been in existence three months. Chapter 720 of T^ws 1893 does § 87. LiFE^ Health^ Casualty Cokporations. 135 not expressly repeal or amend the provisions of section 86 of chapter 690 of Laws 1892, which has been re-enacted and amended in the years 1901, 1903, 1904 and 1905. Thus it may be assumed that the legislature intended both statutes to remain in force, and it is therefore desirable to so construe them that both may be given effect. Attorney-Generars Opinion, December 14, 1908. Tiie stockholders of a domestic life insurance company cannot be held for an amount exceeding the sum collected or collectible from the stockholders, upon their stock subscriptions. There is a provision of the Insurance Law relating to the duty of the superintendent in case a stock life insurance corporation becomes impaired; the superintendent must direct the officers to require the stockholders to make good the deficiency within ninety days; upon tlheir failure to do so, the corporation may be proceeded against as an insolvent corporation. Ruling of Ins. Dept., Feb. 27, 1915. Section 86 (reserve requirementsi) is applicable to corporations organized under section 70, subd. 9. Attorney-General Kep., July 13, 1905. § 87. Contingency reserve. Anv domestic life insurance cor}X)ration may accumulate and maintain in addition to an amount equal to the net values of its policies computed according to the standard adopted by it under section eighty-four of this chapter a contingency reserve not exceeding the following respective percentages of said net values, to wit : When said net values are less than one hundred thousand dollars, twenty per centum thereof or the sum of ten thousand dollars, whichever is the greater ; when said net values are greater than one hundred thousand dollars, the percentage thereof measuring the contingency reserve shall decrease one-half of one per centum for each one hundred thousand dollars of said net values up to one million dollars ; one-half of one per centum for each additional one million dollars up to ten million dollars ; one- half of one per centum for each additional two million five hun- dred tliousand dollars up to twenty million dollars ; one-fourth of one per centum for each additional ^ve million dollars up to fifty million dollars ; and if said net values equal or exceed the last mentioned aanount, the contingency reserve shall not exceed seven and one-half per centum thereof; provided that as the net values of said policies increase and the maxi- mum percentage measuring the contingency reserve decreases such corporation may maintain the contingency reserve already accumu- lated hereunder, although for the time being it may exceed the maximum percentage herein prescribed, but may not add to the contingency reserve when the addition will bring it beyond the 136 The Insurance- Law. § 88. maximum percentage. Provided however that nothing herein con- tained shall be construed to affect any existing surplus or con- tingency reserves held by any such corporation save that when- ever the existing surplus and contingency reserves, exclusive of said net values and of all accumulations held on account of existing deferred dividend policies or groups of such policies, shall exceed the limit above mentioned it shall not be entitled to main- tain any additional contingency reserve. Provided further that for cause shown the superintendent of insurance may at any time and from time to time permit any corporation to accumulate and maintain a contingency reserve in excess of the limit above men- tioned for a prescribed period, not exceeding one year under any one permission, by filing in his ofiice a decision stating his reasons therefor and causing the same to be published in his next annual report. This section shall not apply to any corporation doing exclusively a non-participating business. Source. — Former § 87, as added by L. 1906, chap, 326. Amended by L. 1916, chap. 119. In effect April 3, 1916. See § 83, ante. Distribution of surplus to policyholders. See § 664, Penal Law. Misconduct of directors of monied corporations as to loans, etc. See § 28, Stock Corporation Law, chap. 61 of 1909. Liability of directors for making unauthorized dividends. The provisions of section 87, relating to the limitation of the contingency reserve of any domestic life insurance corporation, d>o not apply to life insur- ance corporations incorporated under the laws of other states. Ruling Ins. Dept., April 29, 1913. The contingency reserve provisions of this section are not applicable to foreign life companies, lluling Ins. Dept., April 29, 1913. An insurance company may lawfully issue a policy containing a clause " upon default of payment of premium this policy will be binding upon the company as participating paid-up insurance of reduced amount, payable at the same time and on the same conditions as under the original contract." Kuling Ins. Dept., Aug. 16, 1910. § 88. Surrender value of lapsed or forfeited policies. Whenever any policy of life insurance issued after January first, eighteen hundred and eighty, and before January first nine- teen hundred and seven, by any domestic life insurance corpora- tion after being in force three full years, shall, by 'its terms, lapse or become forfeited for the non-payment of any premium or any note given for a premium or loan made in cash on such policy § 88. LiFE^ Health^ Casualty Corporations. 137 as security, or of any interest on such note or loan, the reserve on such policy computed according to the American experience table of mortality at the rate of four and one-half per centum per annum shall, on demand made, with surrender of the policy within six months after such lapse or forfeiture, be taken as a oingle premium of life insurance at the published rates of the corporation at the time the policy was issued, and shall be applied, as shall have been agreed in the application or policy, either to continue the insurance of the policy in force at its full amount so long as such single premium will purchase temporary insurance for that amount, at the age of the insured at the time of lapse or forfeiture, or to purchase upon the same life at the same age paid up insurance payable at the same time and under the same conditions except as to payments of premiums, as the original policy. If no such agree- ment be expressed in the application or policy, such single premium may be applied in either of the modes above specified at the option of the owner of the policy, notice of such option to be contained in the demand hereinbefore required to be made to prevent the forfeiture of the policy. The reserve hereinbefore specified shall include dividend addi- tions calculated at the date of the failure to make any of the payments above described according to the American experience table of mortality with interest at the rate of four and one-half per centum per annum after deducting any indebtedness of the insured on account of any annual or semi-annual or quarterly premium then due, and any loan made in cash on such policy, evidence of which is acknowledged by the insured in writing. The net value of the insurance given for such single premium under this section, computed by the standard of this state, shall in no case be less than two-thirds of the entire reserve computed according to the rule prescribed in this section after deducting the indebtedness as specified; but such insurance shall not participate in the profits of the corporation. If the reserve upon any endowment policy applied according to the provisions of this section as a single premium of temporary insurance be more than sufficient to continue the insurance to the end of the endowment term named in the policy, and if the insured survive tlint term, the excess shall be paid in cash at the 138 The Insurance Law. § 88. end of such term, on the conditions on which the original policy was issued. This section shall not apply to any case of a policy issued before January first, nineteen hundred and seven, where the provisions of the section are specifically waived in the applicatior and notice of such waiver is written or printed in red ink on the margin of the face of the policy when issued. If any policy of life insurance (other than a term policy for twenty years oi less), issued on or after January first, nineteen hundred and 3even, by any domestic life insurance corporation, after being in force tliree full years shall by its terms lapse or become forfeited by the nonpayment of any premium or any note therefor or any loan on such policy or of any interest on such note or loan, the reserve on such policy computed according to the standard adopted by said company in accordance with section eighty-four of this chapter, together with the value of any dividend additions upon said policy, after deducting any indebtedness to the company and one-fifth of the said entire reserve, or the sum of two and fifty one- hundredths dollars for each one hundred dollars of the face of said policy if said sum shall be more than the said one-fifth, shall upon demand not later than three months after the date of lapse with surrender of the policy be applied as a surrender value as agreed upon in the policy, provided that if no other option expressed in the policy be availed of by the owner thereof, and if the policy itself does not direct what option shall become operative in default of selection by the owner, the same shall be applied to continue the insurance in force at its full amount including any outstanding dividend additions less any outstanding indebtedness on the policy but without future participation and without the right to loans, so long as such surrender value will purchase nonparticipating temporary insiTranco at net single premium rates by the standard adopted by the company, at the age of the insured at the time of lapse or forfeiture, provided in case of any endowment policy if the sum applicable to the purchase of temporary insurance shall be more than sufficient to con- tinue the insurance to the end of the endowment term named in the policy, the excess shall be used to purchase in the same manner pure endowment insurance payable at the end of the § 88. LiFE^ Health^ Casualty Corporations. 139 endowment term named in the policy on the conditions on which the original policy was issued, and provided further that any attempted waiver of the provisions of this paragraph in any application, policy or otherwise, shall be void, and provided further that any value allowed in lieu thereof shall be at least equal to the net value of the temporary insurance or of the temporary and pure endowment insurance herein provided for. The term of temporary insurance herein provided for shall include the period of grace, if any. In every case where a contract pro vides for both insurance and annuities, the foregoing provisions shall apply only to that part of the contract which provides for insurance, but every such contract containing a provision for a deferred annuity on the life of the insured only (unless paid for by a single premium) shall provide that in the event of the nonpayment of any premium after three full years' premiums shall have been paid, the annuity shall automatically become converted into a paid-up annuity for such a proportion of the original annuity as the number of completed years' premiums paid bears to the total number of premiums required under the contract. Source. — Former § 88, as amended by L. 1906, diap. 326; originally revised from L. 1879, cliap. 347, §§ 1, 2. Amended by L. 1909, chap. 301; L. 1909, chap. 595 and L. 1910, chap. 614. FORFEITURE. — The rule that a strict construction is to be given to a provision of forfeiture in a policy of insurance, and that it may not be extended for the purpose of working a forfeiture beyond the strict and literal meaning of the words used, applies only where the meaning is doubtful and the words capable of two constructions; where the language is plain and unequivocal and the meaning not in doubt, in the absence of fraud or mistake, the contract must be enforced as it reads. Holly v. Metropolitan Life Ins. Co., 105 N. Y., 437. Where it is expressly provided that the premium on a life insurance policy shall be paid on or before a certain day, and in default thereof the policy shall be void, that the non-payment of the premium upon the day named works a forfeiture. Fowler v. Metropolitan L. Ins. Co., 116 N. Y. 389. One holding a policy of life insurance does not forfeit his policy by omitting to pay annual premiums thereon after the company issuing the policy has ceased to do business, transferred all of its assets and become insolvent. People V. Empire Mut. Life Ins. Co., 92 N. Y., 105. Where the defendant in its answer alleges a forfeiture of the policy by reason of the non-payment of a single specified premium, it cannot, upon the trial, assert a forfeiture because of the non-payment of subsequent premiums. Meeder v. Provident Sav. Soc, 58 App. Div., 80. A paid-up policy may only be demanded within six months after default, and if the time has been extended by any act or omission of the company, 140 The Insurance Law. § 88. that fact should be pleaded as one essential to the plaintiflf's right to the relief sought. Stayner v. Equitable L. Assur. Soc, 22 Misc., 53. Where a policy of insurance contains a provision that if it should become void, after the payment of the premiums for three years, because of a default in the payment of any subsequent premium, the insurer would issue in lieu thereof, a new paid-up policy, " provided that said policy shall be surrendered duly receipted within six months of the date of default in payment of premium on said policy," the fact that the policy sought to be exchanged had been stolen, and that it is impossible for the policyholder to surrender the identical instrument, does not excuse him from his duty to deliver to the insurer a sufficient surrender of the policy and a sufficient receipt of all liability thereon. Wilcox V. Equitable L. Assur. Soc, 55 App. Div. 529. § 88 perjnits parties to a life insurance contract to agree in the application or in the policy itself, in the event of a lapse for non-payment of a premium, either to the continuance of the policy at its full amount so long as such single premium will purchase temporary insurance, or to the issuance of a policy of paid-up insurance. It is only when no such agreement is expressed in the application or policy that a choice of the modes specified in the statute is available to the insured. Warren v. Postal Life Insurance Co., 163 App. Div., 638. After a new policy is issued, the insured has no further right or claim under the old policy, and whatever claim he has, he must base upon the new policy. Matter of Attorney -General v. Continental Ins. Co., 91 N. Y., 647. The provisions of the statutes of New York relative to forfeiture of policies by insurance companies doing business therein, for nonpayment of premiums or interest, does not control policies issued by a New York corporation in another State to residents of that state. Mut. Life Ins. Co. of New York V. Cohen, 179 U. S., 262. Where an insurance company doing business within a state issues its policies to residents of that state, the validity of clauses in its policies must be deter- mined by the laws of that state. Price v. Conn. Mut. Life Ins. Co., 48 Mo. App., 281; Equitable Life Society v. Clements, 140 U. S., 226. As § 88 provides in substance that if a premium be not paid when due, the insured is entitled to have his policy extended for the full amount from the date it lapses for such time as the reserve on the policy taken as a single premium at the age of the insured at the time of forfeiture would purchase temporary insurance, after deducting any indebtedness of the insured on ac- count of premiums due, the beneficiary of one holding a policy containing a similar provision inserted pursuant to said statute is entitled to recover the full amount of the policy on the death of the insured where, having been un- able to pay the full amount of a certain premium, he gave the insurance company a six months' note for the balance, which was accepted by it as payment of the premium and on maturity of the note, made another part payment, giving a similar note for the balance, even though the latter note was not paid when due, if in fact at the death of the insured the difference between the part payments and the amount of the second note was sufficient to purchase continuing insurance for a period extending beyond the death of the insured. Taylor v. New York Life Insurance Co., 148 App. Div., 815. An insured paid premiums on his policy for three years and gave a note the fourth year, and thereafter wholly defaulted; the insurer rightfully deducted § 89. LiFE^ Health^ Casualty Coepoeations. 141 the amount due on the note in computing the time for which the insured was entitled to continued insurance, and as such period expired before his death the personal representatives are entitled to nothing. Taylor v. New York Life Ins. Co., 197 N. Y., 324; rev'g 131 App. Div., 922. A life insurance company which accepts a premium note under an agreement that the policy shall become void if the note is not paid, after having given notice of the date when the premium became due, is not obliged to give a similar notice respecting the maturity of the note in order to declare a for- feiture of the policy; where an insured dies within six months after his polici lapsed, the beneficiary is entitled to the protection of § 88 of the Insurance Law, which provides for the continuation of the policy for such period of insur- ance as may be purchased by any reserve without making the demand men- tioned in said law, or exercising the option to continue the policy;, a demand and the exercise of the option provided for by the policy is necessary only where the insured lives for the six months following the forfeiture. Bar- tholomew V. Security Mutual Life Insurance Co., 140 App. Div., 88. Cash surrender values may be included in policy contracts. Ruling Ins. Dept., July 9, 1906. Cash payments on surrender not mandatory on company; policy controls. Ruling Ins. Dept., July 27, 1914. Surrendier values described, in law are minimum values and larger values may be allowed. Ruling Ins. Dept., July 26, 1906. The amendments as to surrender values do not apply to foreign life insur- ance companies. Ruling Ins. Dept., June 14, 1906. The options granted the insured under this section for the period of six months may be exercised by the insured during his life and by the benefi- ciary after the death of the insured, if any part of said six months has not expired. Bartholomew v. Security Mut. Life Ins. Co., 204 N, Y., 649. § 89. Discriminations prohibited. No life insurance corporation doing business in this state shall make or permit any discrimination between individuals of the same class or of equal expectation of life, in the amount or pay- ment or return of premiums or rates charged for policies of insurance, or in the dividends or other benefits payable thereon, or in any of the terms and conditions of the policy; nor shall any such company permit or agent thereof offer or make any contract of insurance or agreement as to such contract other than as plainly 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 inducement to any person to insure, or give, sell or purchase, or offer to give, sell or purchase as such inducement or in connection with such insurance, any stocks, bonds or other securities of any insurance company or other corporation, asso- ciation or partnership, or any dividends or profits accruing 142 The Insurance Law. § 89. thereon, or any valuable consideration or inducement whatever not specified in the policy, nor shall any person knowingly receive as such inducement, any rebate of premium, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any paid employment or contract for services of any kind or any valuable consideration or inducement whatever, not specified in the policy. 'No person shall be excused from attending and testifying or producing any books, papers or other documents before any court or magistrate, upon any investigation, proceed- ing or trial for a violation of any of the provisions of this section, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or subject him to a penalty or forfeiture; 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 so testify or produce evidence, docu- mentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal investigation or proceeding. No premium upon any policy of life insurance issued on or after January first, nineteen hundred and seven, shall be charged for term insurance foi one year, higher in amount than the premium for term insurance for one year at the same age under any other form of policy issued by such corporation; provided, that nothing in this chapter shall be so con- strued as to forbid a company, transacting industrial insurance on a weekly payment plan, from returning to policyholders, who have made premium payments for a period of at least one year, directly to the company at its home or district offices, a percentage of the premium which the company would have paid for the weekly collection of such premium. Source. — Farmer § 89; originally revised from L. 1889, chap. 228, § 1, as amended by L. 1890, chap. 401. Amended by L. 1911, chap. 249. Note.— The amendment by L. 1911, chap. 249, provided that nothing in the Insurance Law shall prevent an industrial insurance company on a weekly payment plan from returning to policyholders who have made premium pay- ments for a period of at least one year direct to tlio (M)nii>any, the part of tlio premium which the company would have paid foi- wcd^ly collections. — Ed^ See S 1191, Penal Law. Discriminations and rebates by life insurance com- panies prohibited. Section 89 is not limited to the issues m this state of a life insurance cor- poration doing business in this state. Ruling Ins. Dept., Nov. 16, 1909. § 89. LiFE^ Health^ Casualty Corporations. 143 For the purposes of § 89 annuities are to be considered as insurance. Rul- ing Ins. Dept., May 1, 1912. LOTTERY. — An insurance company cannot issue policies payable in an order to be determined by lot. Attorney -General Rep., 1892, page 231. Chap. 282 of 1889, from which this section is in part derived, was held to be constitutional. People v. Formosa, 131 N. Y., 478. COMMISSION. — A firm of brokers may place life insurance on a member who is entitled to share in the commission as a general firm profit. Ruling Ins'. Dept., Jan. 2, 1912. A corporation may accept commissions earned by memibers. Ruling Ins. Dept., July 1, 1913. Payment of commissions to sub-agents for the purpose of remitting tthe cost of insurance constitutes a rebate. Ruling Ins. Dept., August 4, 19Q8. The acceptance of less than the face amount of a note in payment of a premium constitutes a rebate. Ruling Ins. Dept., Dec. 17, 1914. Where it is found) that an agent is clearly violating the law prohibiting discrimination he will be proceeded against. Ruling Ins. Dept., June 16, 1911. The payment of a commission -to an agent on a policy on bis own life written by a company not represented by him is prohibited. Ruling Ins. Dept., July 8, 1913. An officer of an insurance company may insure his own life in his company, if no rebate is granted or commission paid. Ruling Ins. Dept., Dec. 3, 1906. A bona fide agent taking out a policy of insurance on his own life in good faith is entitled to commissions thereon. Ruling Ins. Dept., Nov. 22, 1909. A general agent may not legally appoint as agent a man in another line of business, at the same time write his application for insurance, apply for state license, and allow the applicant and prospective agent the full first year com- mission on his policy. Ruling Ins. Dept., January 18, 1909. The object of § 89 is to require life insurance companies to give equal terms to be fixed in the policies to insurers of the same class, and to give special favor to no one, and its operation is directly against considerations and induce- ments to a contract of insurance which are not specified in the policy. McGee V. Felter, 75 Misc., 349. REBATE. — A note accepted in payment of a life insurance policy without the legal interest charge is equivalent to a rebate. Ruling Ins. Dept., May 28, 1909. Any arrangement whereby the policyholder does not pay the full amount of the premium, as set forth in the policy, is a rebate within the meaning of the law. Ruling Ins. Dept., April 7, 1915. The act of an authorized agent to send circular letters to members of a church and solicit insurance on the condition that part of his commissions will be turned back to the church is a violation of the spirit if not the letter of § 89. Ruling Ins. Dept., Oct. 24, 1910. It would be a violation of § 39 either (1) for a life insurance agent to sell a policy of life insurance to a person at the rate stipulated by the company and to collect the entire premium and in addition to give without cost a building lot valued at $50 or (2) to sell a policy and to sell such lot for the nominal charge of $1.00. Ruling Ins. Dept., June 30, 1910. 144 The Insurance Law. § 89. Interest collectible on premiums after the expiration of the grace period. Ruling Ins. Dept., April 7, 1914. An agent may not buy stock of insured's corporation in consideration of his taking out a life policy. Ruling Ins. Dept., Oct. 14, 1911. A reduction of premium guaranteed in a policy of insurance does not con- stitute a rebate. Ruling Ins. Dept., Dec. 9, 1911. A policyholder who pays and an agent who receives less than the full amount of the premium is guilty of a misdemeanor. Ruling Ins. Dept., April 7, 1915. A life company which does business direct with policyholders through the mail may provide in the contract for a reduction of premiums. Ruling Ins. Dept., Dec. 18, 1911. The dating back of a life insurance policy is prohibited by the provisions of section 89. Ruling Ins. Dept., Feb. 21, 1910. The giving of a new policy at the old rate of five years previous is a discrimination. Ruling Ins. Dept., Sept. 9^ 1910. The antedating of a substituted policy without increase in premium is not a discrimination. Ruling Ins. Dept., May 12, 1910. There is no law that specifically prohibits the antedating of a policy. Ruling Ins. Dept., July 10, 1911. This section does not provide a specific penalty for giving rebate which sihould be considered exclusive, but simply provides the manner in which the Superintendent of Insurance may restrain future disobedience. Equitable Trust Co. V. Newman, 72 Misc., 52. A reduction in the rate of premiums charged by a company is not a rebate, so long as it applies to all applicants for insurance; the prohibitio^i of section 89 is against discriminations. Ruling Ins. Dept., May 9, 1911. It is not a violation of this section for a life insurance agent, in writing a new policy, to advance and pay to the insuring company out of his own funds, the full first year premium when he delivers the policy to the insured — taking in exchange therefor a three monthsi noite of the insured, to the agent individually, for the full amount advanced with interest — ' the same being done in good faith and without any qualifying agreement. Ruling Ins. Dept., MarcTi 15, 1912. If a person on a salary such as a clerk or Supervisor of Agents is allowed a commission on a policy on his own life, it is a rebate unless the com- mission is determined in advance and that if it will exceed $5,000 for any one year, the contract for such commission is passed upon by the board of directors. Ruling of Ins. Dept., December 11, 1913. DATING BACK. — A new policy may be issued in place of one allowed to lapse and may be dated back as many years as premiums were paid on the original policy. Ruling Ins. Dept., May 19, 1910. Dating back of a policy, to give the insured the benefit of a younger age, is clearly discriminating and falls within the prohibition of § 89. Ruling Ins. Dept., Oct. 27, 1909. Section 89 does not prohibit dating back absolutely but does prohibit dis- criminations. Ruling Ins. Dept., Nov. 11, 1909. § 89. LiFE^ Health, Casualty Corporations. 145 If A should now apply to Company B for the cancellation of his five-year old policy, and the issue of a new one in lieu thereof on the company's new form with same date of entry as the olo policy, and the company should grant his request and give him the new policy on the new form at age 40, at the old date of five years ago, it would be a violation of § 89. iRuling Ins. Dept., Sept. 9, 1910. SPECIAL CONTRACTS.— " Special contracts," frequently described as " board contracts," are prohibited by section 89 of the Insurance Law as amended by Laws 1906, chapter 326. Ruling Ins. Dept., November 6, 1908. The employment of a person for the bona fide purpose of procuring prospects would not in itself be a violation of § 89. Ruling Ins. Dept., Jan. 4, 1910. INTEREST ON CHECKS.— In regard to requiring interest on checks tendered in payment of premiums with a request that they be held. Insurance Companies should be governed by the terms of the grace clause contained in the policy on which a premium is to be paid. Ruling of Ins. Dept., April 7, 1914. The giving of tickets or chances upon a building lot to purchasers of insurance constitutes a rebate. Ruling Ins. Dept., June 24, 1913. The gift of a gold weddling ring to prospective policyholders constitutes a discrimination. Ruling Ins. Dept., May 6, 1915. Renewable term rates may be used for non-renewa.ble term insurance on impaired lives. Ruling Ins. Dept., 'May 20, 1907. DISORIMIN^ATIONS. — The word; "class" means a number of persons hav- ing characteristics in common as occupation, education and habits of life. Ruling Ins. Dept., April 26, 1907. Writing lives of bank official's and employees as a class at a lower premium falls within the prohibition of the section. Ruling Ins. Dept., May 20, 1907. The new $5,000 ordinary life policy of the Metropolitan Life Insurance Com- pany does not violate the provisions of this section. Ruling Ins. Dept., July 19, 1909. Discriminations in cash surrender values and paid-up insurance on lapsed policies is within the prohibition of this section. Ruling Ins. Dept., July 27, 1909. The failure to state the rate of interest on premiums for period of grace may result in discrimination. Ruling Ins. Dept., Aug. 7, 1909. There is no discrimination where the reserve valtie of a small paid-up policy is applied towards purchase of new insurance. Ruling Ins. Dept., Sept. 1, 1909. Where a privilege is offered to every applicant there is no discrimination. Ruling Ins. Dept., Dec. 12, 1910. Annual premium policies may not be paid for in monthly installments. Ruling Ins. Dept., Sept. 25, 1912. A plan to insure twelve or fourteen members of a trust company at a lower premium is not a rebate, but in the nature of group insurance. Ruling Ins. Dept., Dec. 6, 1912. The consideration must be expressed in the policy contract. Ruling Ins. Dept., April 15, 1913. 146 The Insurance Law. §§ 90, 91. § 90. Discriminations against colored persons projiibited. No life insurance corporation doing business within this state shall make any distinction or discrimination between white persons and colored persons, wholly or partially of African descent, as to the premiums or rates charged for policies upon the lives of such persons, or in any other manner whatever; nor shall any such corporation demand or require a greater premium from such colored persons than is at that time required by such corporation from white persons of the same age, sex, general condition of health and prospect of longevity; nor shall any such corporation make or require any rebate, diminution or discount upon the amount to be paid on such policy in case of the death of such colored persons insured, nor insert in the policy any condition, nor make any stipulation whereby such person insured shall bind himself, or his heirs, executors, administrators and assigns to accept any sum less than the full value or amount of such policy in case of a claim accruing thereon by reason of the death of such person insured, other than such as are imposed upon white persons in similar cases ; and any such stipulation or condition so made or inserted shall be void. Source. — Former § 90; originally revised from L. 1891, chap. 119, § 1. See § 1191, Penal Law. Discriminations and rebates by life insurance cor- porations prohibitea. Life insurance corporations doing business within this state are not per- mitted to make any discrimination against " persons wholly or partly of African descent." Ruling Ins. Dept., Sept. 22, 1914. § 91. Business to be accepted from licensed agents only; agents' certificate of authority. No life insurance corporation doing business within this state, or agent thereof, shall pay any commission or other compensation to any person for services in obtaining new insurance, unless such person shall have first procured from the superintendent of insur- ance a certificate of authority to act as an agent of such company as hereinafter provided. No person shall act as agent, sub-agent or broker, in the solicitation or procurement of applications for insurance, or receive for services in obtaining new insurance any commission or other compensation from any life insurance corpo- ration doing business in this state, or agent thereof, without first procuring n certificate of authority so to act from the superin- tendent of insurance, which must be renewed annually on the first § 91. LiFE^ Health^ Casualty Cohporations. 147 clay of Jfiiiuarj, or within six months thereafter. Such certificate Khali be i^snrd by the superintendent of insurance only upon the wTitten application of persons desiring such authority, such appli- cation being approved and countersigned by the company such per- son desires to represent, and shall be upon a form approved by the superintendent of insurance, giving such information as he may require. The superintendent of insurance shall have the right to refuse to issue or renew any such certificate in his discretion. No such certificate shall be valid, however, in any event after the first day of July of the year following the issuing of such certificate. Renewal certificates may be issued upon the application of the com- pany. Such certificate of authority shall be executed in tripli- cate; one copy thereof shall be filed in the ofiice of the superin- tendent, and two copies thereof shall be issued to such agent, aubagent or broker, one of which copies such agent, subagent or broker shall, within thirty days after such certificate is issued, cause to be filed in the ofiice of the county clerk of the county in which such agent, subagent or broker resides, or, if a non-resident, in the ofiice of the county clerk of the county in this state in Avhich he has an office for the transaction of business. Agents operating solely for companies transacting industrial or prudential insurance on the weekly-payment plan of insurance are exempted from the provisions of this section, and nothing contained herein shall be construed as prohibiting any corporation transacting in- dustrial or prudential insurance on the weekly-payment plan from accepting business on the plan from unlicensed agents. Any per- son or corporation violating the provisions of this section shall forfeit to the state the sum of five hundred dollars. On the con- viction of any person acting as agent, subagent or broker, of the commission of any act which is a violation of any of the provisions of this chapter the superintendent of insurance shall immediately revoke the certificate of authority issued to him and no such cer- tificate shall thereafter be issued to such convicted person by the superintendent within three years from the date of his conviction. Source.— Former § 91, as amended by L. 1895, chap. 995; L. 1907, chap. 623; originally revised from L. 1851, chap. 95, § 3; Ij. 1889, chap. 282, §§ 1, 2, as amended by L. 1890, chap. 401. Amended by L. 1909, chap. 301. Xote. — The amendment by L. 1900, chap. 301, clarified the provisions of the section which exempted agents doing industrial insurance on the weekly plan from the provisions of the section by providing that corporations doing such business may accept business from unlicensed agents who are operating to sell that kind of insurance only. — Ed. 148 The Insurance Law. § 91. See § 0, ante. No foreign corporation to transact business in this state without certificate of authorization by superintendent. •See § 29, ante. Copy of charter of verified statement to be filed in the office of superintendent of insurance. See § 31, ante. Agent not to transact business until certificate is filed in county clerk's office. See § 32, ante. Renewal of certificate. See § 49, ante. Any person aiding in the transaction of business of foreign corporation is deemed an agent thereof. See § 50, ante. Agent's certificate of authority. See § 54, ante. Agents not to act for unauthorized corporations. See § 137, post. License to agents in certain cases. See § 1192, Penal Law. Acting as agent of life insurance corporation with- out certificate of authority. OONSTITUTIONAL.— Section 91 which provides in substance that no life insurance company shall pay a commission unless the agent has procured authority to act as agent and that such authority shall be issued by the superintendent of insurance upon a form approved by him and that said super- intendent may " refuse to issue or renew such certificate in his discretion " is not unconstitutional on the theory that it vests the superintendent with arbitrary power to prevent a person from pursuing a lawful calling; the sec- tion may be construed to mean that the superintendlent is clothed with power to determine w'hether an applicant has complied with the statute and said construction, which renders the statute constitutional, will be adopted. Stern v. Metropolitan Life Insurance O)., 169 App. Div., 217; aff' d 217 N. Y. (Mem.). AGENT'S AUTHORITY.— It was apparently the legislative intent that agents soliciting insurance, other than industrial or prudential on the weekly payment plan, should secure a certificate of authority therefor from the superintendent of insurance. Attorney-General Rep., 1897, page 207. The payment by a company of a commission on account of business secured in the State, to a manager, who does not hold a New York life agent's cer- tificate of authority, and who does not participate in any way in securing the application for insurance, is a violation of this section. Ruling Ins. Dept., Feb. 17, 1912. Agents of life insurance cltib on neighborhood plan must procure certificates of authority. Attorney-General Rep., March 10, 1904. Field canvassers and office help obtaining birthdays and insurance informa- tion must be licensed agents. Ruling Ins. Dept., June 23, 1909. Any unauthorized company may pkce insurance on life of a citizen pro- vided the contract is made direct with the company. Ruling Ins, Dept., Sept. 21, 1911. An actuary acting as adviser must have agent's certificate. Ruling Ins. Dept., Oct. 1, 1912. Each of the persons composing a firm must make individual application to be licensed as life agents. Ruling Ins. Dept., June 18, 1913. § 91-a. Ljfe^ Health^ Casualty Corpobations. 149 ANNUITIES. — Annuities may be issued without the services of a licensed agent on the application of any person interested so long as no commission is allowed for the consideration received. Ruling Ins. Dept., July 29, 1909. There is no prohibition in the Insurance Law against an insurance com- pany or other corporation authorized to do an annuity business from paying commissions or compensation for such business to persons not licensed. Ruling Ins. Dept., March 7, 1912. COMMISSION. — A person cannot accept lawfully commission on a life insurance policy on his own life which is written by a company wihioh he does not represent. Ruling Ins. Dept., July 8, 1913. If the contracts of the members of ^ a corporation with the corporation provide for the turning in of commissions on life business produced, there is no reason why such commissions on such business may not be turned over to such corporation, provided, however, that this w^ould not apply to business written on the life of any member of the corporation. Ruling Ins. Dept., July 1, 1913. A licensed agent may not share commissions with a non-resident agent wiio does not hold a license. Ruling Insi. Dept., Oct. 25, 1911. A New York agent may not sihare commissions with a non-licensed foreign agent procuring prospects. Ruling Ins. Dept,, Nov. 25, 1912. A life agent may not share comanissions with a broker licensed under section 143. Ruling Ins. Dept., Oct. 3, 1914. An agent may not share commissions with the insured. Ruling Ins, Dept., Dec. 29, 1914. The superintendent 'has discretionary power to issue or refuse to issue a license to an agent. Ruling Ins. Dept., April 18, 1910. § 91-a. Agents for health or accident insurance. 1^0 corporation transacting the business of health and accident insurance within this state, or agent thereof, shall pay any commis- sion or other compensation to any person, partnership, association or corporation, except to a broker duly authorized under the pro- visions of section one hundred and forty-three of this chapter, for services in obtaining new insurance or in collecting premiums from policyholders in this state, unless such person, partnership, •association or corporation shall have first procured from the superintendent of insurance a certificate of authority to act as an agent of such corporation as hereinafter provided. I^o person, i partnership, association or corporation shall act as agent in the solicitation or procurement in this state of applications for health and accident insurance or in the collection of premiums for such insurance, or receive for such services any commission or other 150 The Insurance Law. § 91-a. compensation from any corporation transacting the business of health and accident insurance in this state, or agent thereof, with- out first procuring a certificate of authority so to act from the superintendent of insurance which must be renewed annually. Before any agent's certificate of authority shall be issud by the superintendent of insurance pursuant to this section, there shall be filed in his ofiice: (1) A written application by the person, partnership, association or corporation desiring such au- thority which shall be in the form or forms and supplements thereof prescribed by the superintendent of insurance and con- tain such information as he may require. (2) A certificate by the corporation desiring to employ the applicant as agent, duly verified by one of its executive officers or managing agents, that such corporation has duly investigated the character and record of the applicant and has satisfied itself that he is trustworthy and competent to act as its agent. The superintendent of insurance may refuse to issue or renew and may revoke any such certificate for cause, which shall include violations of the insurance law and fraudulent practices, provided that no such action shall be taken without an investigation and a hearing either before the superintendent or before a salaried employee of the insurance department designatd for that purpose, whose report the super- intendent may adopt. Every such corporation shall, upon the termination of the employment of any agent for the solicitation of health and accident insurance in this state or the collection of premiums therefor, forthwith file with the superintendent of insurance a statement of the facts relative to the employment of such agent and the termination of such employment and the cause thereof. Every such certificate shall expire upon the termination of the employment of the agent by the corporation for which he is authorized to act as agent, or in any event, on the thirty-first day of December of the calendar year in which the same shall have been issued, provided, however, if an application for the renewal of any such certificate shall have been filed with the superintendent of insurance before January first of any year, such agent may continue to act as such under such expired cer- tificate until the issuance to him by the superintendent of insur- g 92. LiFE^ Health^ Casualty Corpoeations. 151 aiice of a new certificate or until ^ve days after the superintendent of insurance shall have refused to issue such certificate and shall have served notice of such refusal on such agent. Service of such notice may be made either personally or by mail, and, if by mail, shall be deemed complete if such notice is deposited in the post- office, postage prepaid, directed to the applicant at the place of residence or business specified in his application. Added by L. 1914, chap. 14. In effect February 26, 1914. Note. — Section 2 of chap. 14, L. 1914, further provides: This act shall take effect on the first day of July, nineteen hundred and fourteen, provided that any person, partnership, association or corporation, acting as the agent in this state of any corporation transacting the business of health and accident insurance, who or which shall or may have procured a certificate of authority to act as agent of such corporation under and pur- suant to the provisions of section one hundred and forty-two of this chapter prior to the said first day of July, nineteen hundred and fourteen, shall not be required to make application for a certificate of authority hereunder for the year nineteen hundred and fourteen, and that, if such agent, so authorized, shall apply for a certificate of authority to act as agent pursuant to this section prior to the first day of January, nineteen hundred and fifteen, such agent may continue to act as such under such expired certificate until the issuance to him or it by the superintendent of insurance of a certificate thereunder or until five days after the superintendent of insurance shall have refused to issue such certificate and shall have served notice of such refusal in the manner above provided. § 92. No forfeiture of policy witiiout notice. 'No life insurance corporation doing business in this state shall within one year after the default in payment of any premium, installment or interest declare forfeited, or lapsed, any policy here- after issued or renewed, and not issued upon the payment of monthly or weekly premiums, or unless tlie same is a term insur- ance contract for one year or less, nor shall any such policy be forfeited, or lapsed, by reason of nonpayment when due of any premium, interest or installment or any portion thereof required by the terms of tlie policy to be paid, within one year from the failure to pay such premiimi, interest or installment, unless a writ- ten or printed notice stating the amount of such premium, interest, installment, or portion thereof, due on such policy, the place where it shall be paid, and the person to whom the same is payable, shall have been duly addressed and mailed to the person whose life is 152 The Insurance Law. § 92. insured, or tlie assignee of tlie policy, if notice of the assignment has been given to the corporation, at his last known post- office address in this state, postage paid by the corporation, or by any officer thereof, or person apjwinted by it to collect such pre- mium, at least fifteen and not more than forty-five days prior to the day when the same is payable. The notice shall also state that unless such premium, interest, installment or portion tliereof, then due, shall be paid to the corporation, or to the duly appointed agent or person authorized to collect such premium by or before the day it falls due, the policy and all paym.ents thereon will become for- feited and void except as to the right to a surrender value or paid-up policy as in this chapter provided. If the payment de- manded by such notice shall be made within its time limited there- for, it shall be taken to be in full compliance with the requirements of the policy in respect to the time of such payment ; and no such policy shall in any case be forfeited or declared forfeited, or lapsed, until tlie expiration of thirty days after the mailing of such notice. The affidavit of any officer, clerk, or agent of the corporation, or of any one authorized to mail such notice that the notice required by this section, has been duly addressed and mailed by the corpo- ration issuing such policy shall be presumptive evidence that such notice has been duly given. 'No action shall be maintained to recover under a forfeited policy, unless the same is instituted within two years from the day upon which default was made in paying the premium, installment, interest or portion thereof foi which it is claimed that forfeiture ensued. Source.— Former § 92, as amended by L. 1897, chap. 218, and L. 1906, chap. 326; originally revised from L. 1876, chap. 341, § 1, as amended by L. 1877, chap. 321, and § 2. See § 210, post. Notice of assessment by co-operative companies. See Personal Property Law, § 15, as amended by L. 1911, chap. 327, as to proceeds of life insurance policy under a trust with an insurance company. § 92 of the Insurance Law, relating to forfeitures of policies of life insur- ance and prohibiting same without notice, construed. Liesny v. Metropolitan Life Insurance Co., 86 Misc., 650. EFFECT OF SECTION.— This section allows to the holder of a policy of life insurance, who has defaulted in the payment of his premiums, a year of grace during which to pay the premiums and become reinstated, only where the insurance company has neglected, before the due day, to give the statutory notice of the time when the premium became due, or, after the due day, has § 92. LiFE^ Health^ Casualty Coepoeations. 153 failed to require payment at a fixed date within the year; if the insurance company gives the necessary notice no grace is allowed. Schnell v. Mut. L. Ins. Co., 53 App. Div., 172. The mailing of the notice of forfeiture may be shown by the direct testi- mony of agents authorized to mail such notice, although there were many agents engaged in the various steps of mailing notices; the requirement of section 92 is satisfied if the notice be mailed whether actually received by the insured or not. Wolarsky v. N. )[. Life Ins. Co., 120 App. Div., 99. Section 92, forbidding forfeiture of policies within one year from default unless notice has been mailed to the insured at his last known post-office address in this state, is applicable only to persons having a known post-office address in this state; § 312 (now repealed), requiring notice to the insured, applied only to " stipulated premium " policies or to companies incorporated as stipulated premium companies and was not to be read in connection with I 92 or to be taken as extending its provisions. Napier v. The Bankers' Life Ins. Co., 51 Misc., 283. The provisions of § 92 apply to and govern a policy issued and to be per- formed in New York, though the assured resides in another state. Equitable Life Assur. Soc. v. Nixon, 81 Fed. Rep., 796. The provision in the statutes of New York that "no life insurance com- pany doing business in the state of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed, by reason of non- payment of any annual premium, or interest, or any portion thereof, except as hereinafter provided," does not apply to or control such a policy issued by a corporation of New York in another state, in favor of a citizen of the latter state, but is applicable only to business transacted within the state of New York; and in such case the rights of the parties are measured by the terms of the contract. Mut. Life Ins. Co. v. Cohen, 179 U. S., 262. SUBSTANTIAL COMPLIANCE.— To enable a life insurance company to avail itself of the provisions of section 92, permitting the forfeiture of a policy, it must substantially comply with all the terms of the statute though the notice to be mailed need not literally follow the words of the statute. The failure to state in said notice that the person named therein as defend- ant's general agent was the duly appointed agent to collect the premium, and that it should be paid before a certain date is not a substantial compliance with the statute. Flint v. Provident Life & Trust Co., 76 Misc., 673. PAYMENTS. — The duration and validity of a policy, whatever may be its terms, is not dependent upon payment of premium on the day named, but upon payment within thirty days after notice is given; the statute is part of the contract, and governs the rights and obligations of the parties, the same as if all its terms and conditions had been incorporated therein. Baxter v. Brooklyn L. Ins. Co., 119 N. Y., 450. When one holding a term life insurance policy has an option to change it for a straight life insurance policy at a diflFerent rate, on failure of the insured to pay three premiums on the new policy, it lapses. McGuire v. Union Mut. Life Ins. Co., 114 App. Div., 344. Mere proof of non-payment of premiums when due will not defeat an action upon a policy, unless coupled with proof of the service of the notice of for feiture required by section 92. Auspitz v. Equitable Life Assurance Co., 62 Misc., 469. 154 The Insurance Law. § 92. Where a life insurance policy for one month provides for its renewal for each successive month upon payment of premiums provided to be paid, viz., on the first day of each year from the date of the policy of an expense premium, and also for the payment, within thirty days after the notice of a demand therefor, of mortuary premiums, the timely payment of the expense premium does not operate to continue the policy in force to the end of the month in wihich a mortuary premium not paid falls due; the payment of such mor- tuary premium is not simply a condition precedent to the right to renew the policy for the succeeding month; such a policy falls within the exception stated in this section, requiring that notice be given to the insured before his policy can be forfeited. Baldwin v. Provident Life Assur. Soc, 23 App. Div., 5. FRATERNAL BENEFIT SOCIETY.— Chap. 341 of 1876, as amended by chap. 321 of 1877, requiring notice to be given of the time when assessments are payable, was repealed by chap. 690 of 1892, and, by virtue of the provi- sions of § 233 of that act, fraternal benefit societies are now exempted from the necessity of giving such a notice. Bopple v. Supreme Tent of Macabees, 18 App. Div., 488. ASSESSMENT COMPANY. — This section does not apply to assessments of an assessment insurance company, but such assessments are governed by § 210 of the Insurance Law. Greenwald v. United L. Ins. Assn., 18 Misc., 91. RENEWAL. — The payment of each annual premium constitutes a "renewal" of a policy within the meaning of this section; this section, there- fore, applies to a policy issued before the passage of the act, but renewed thereafter by the payment of premiums as they fell due. Carter v. B. L. Ins. Co., 110 N. Y., 15. When the insurance company accepts a premium after it has become due and payable, the company revives and reinstates the policy from the time the payment is made. Wyman v. Phoenix Mut. L. Ins. Co., 45 Hun, 184. MORTALITY ASSESSMENTS.— Under chap. 321 of 1877, providing that before a forfeiture of a life policy can be declared for non-payment of princij)al or interest, notice must be mailed to the holder, it was held that it applied only to premiums or interest payable at stated intervals, not to mortality assessments. Merriman v. K. M. B. Ass'n, 138 N. Y., 116. NOTICE. — Notice to the person insured is sufficient; notice need not be given to a beneficiary. Rowe v. Brooklyn L. Ins. Co., 11 App. Div., 532. A notice to the insured under section 02, which fails to state that the policy will become forfeited if payment is not made " by or before the date it falls due " is not sufficient to authorize a forfeiture for non-payment of the pre- mium. Flint V. Provident Life & Trust Co., 215 N. Y., 254. A notice which contains statements reminding the assured of the time and place when and where to make any payments required by the terms of the contract, the amount thereof and the effect of non-payment, is sufficient, although it does not follow literally the words of the statute. McDougall v. Provident Sav. Soc, 135 N. Y., 551. Where the notice, after stating the amount of the premium, the time when it would fall due, where it was to be paid, and that the conditions of the policy required payment to be made on or before the premium is due, added,^ " and members neglecting so to pay are carrying their own risks," and, as a postscript, " prompt payment is necessary to keep your policy in force," and there was no statement that if payment was not made the policy would § 92. LiFE^ Health^ Casualty Corporations. 155 " become forfeited and void," such notice was not a compliance with the requirements of the statute and was insufficient to work a forfeiture. Phelan V. Northwestern Mut. L. Ins. Co., 113 N. Y., 147. Although § 92 of the Insurance Law makes the affidavit of the person mailing the notice of forfeiture of the policy presumptive evidence of such mailing, such affidavit made in a foreign state is insufficient to establish the mailing of the notice in opposition to testimony that it was never received, unless the official character of the notary is authenticated; § 92 prevents the forfeiture of the policy during the thirty-day period. Carr v. Prudential Ins. Co., 115 App. Div., 755. A notice which states, " if your payment should not be made when due, your policy will cease to be in force " is not sufficient ; unless good reasons for a departure therefrom appear, a strict compliance on the part of insur- ance corporations with the words of the statute is necessary to legalize the forfeiture or lapse of a policy. Schad v. Security Mut. Life Assoc, 11 App. Div., 487. In an action to recover upon a life insurance policy, it is error to charge that even though there was a defauLt in the payment of premium, the verdict must be for the plaintiff, if the notice of the date for payment was not given as provided by section 92, for the reason that under the statute then in force, the policy became forfeited and lapsed one year after default in the payment of the premium, even though the notice required by said section 92 had not been served. Liesny v. Metropolitan Life Insurance Co., 166 A. D., 625. When the notice required by the statute is served before the premium Is due, no further notice is required. Conway v. P. M. Tj. Ins. Co., 140 N. Y., 79. It is an essential prerequisite for a life insurance company, which seeks to declare forfeited a policy issued by it, to establish that the notice required by § 92 was mailed to the insured. Howell v. Hancock Mut. Life Ins. Co., 107 App. Div., 200. A life insurance company which accepts a premium note under an agreement that the policy shall become void if the note is not paid, after having given notice of the date when the premium became due, is not obliged to give a similar notice respecting the maturity of the not^ in order to declare a for- feiture of the policy; where an insured dies within six months after his policy lapsed, the beneficiary is entitled to the protection of § 88 of the Insurance Law, which provides for the continuation of the policy for such period of insur- ance as may be purchased by any reserve without making the demand men- tioned in said law, or exercising the option to continue the policy; a demand and the exercise of the option provided for by the policy is necessary only where the insured lives for the six months following the forfeiture. Bar- tholomew V. Security Mutual Life Insurance Co., 140 App. Div., 88; 204 N. Y., 649. Notice is not required under § 92 of the Insurance Law, prior to notes becoming due which are given for a premium, when the statutory notice has been given as required thereby prior to the premium becoming due. O'Brien V. Union Central Life Ins. Co., 207 N. Y., 180; aft''g 140 App. Div., 362. INSUFFICIENT NOTICE.— A notice under this section is insufficent where its form, its verbiage, its surplusage, its suggestions, intimations and advice, 156 * The Insurance Law. § 92. intermingled with the language of the statute, are all repugnant to directness and simplicity. The notice is intended to be a " danger signal " but here it is confused with a dozen other signals. McCormack v. Securities Mutual Life Insurance Co., 161 App. Div., 33. CONTENTS OF AFFIDAVIT.— The affidavit which this section declares shall be presumptive evidence that the notice has been duly given, should show to the court the contents of the notice in order that the court may determine whether the notice sent complied with the requirements of the statute; an affidavit which does not identify the particular policy to which the notice related is ineffective. McCall v. Prudential Ins. Co., 98 App. Div., 225. QUESTION OF FACT.— What proof as to the mailing of such notice pre aents a question of fact for the jury. Howell v. Hancock Mut. L. Ins. Co., 107 App. Div., 201. PLEADING. — Evidence of service of the notice required by this section is inadmissible unless service of notice is pleaded. Fischer v. Met. L. Ins. Co., 167 N. Y., 178. When, in an action on a policy, the insurance company seeks to interpose the defense that the policy is forfeited for non-payment of premiums, it is bound to allege and prove both that the premium was not paid, and that the notice required by the statute had been served more than thirty days before the policy had been declared forfeited. Fischer v. Metropolitan L. Ins. Co., 37 App. Div., 575. BURDEN OF PROOF.— The burden of proving that the notice has been served rests upon the insurance company, and the insured is not required to allege the failure of the insurance company to serve it in the complaint. Baxter v. Brooklyn L. Ins. Co., 44 Hun, 184. WAIVER OF FORFEITURE.— In the absence of any agreement a waiver of forfeiture of a policy of life insurance results only from negotiations or transactions with the insured, by which the insurer, after knowledge of the forfeiture, recognizes the continued existence of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some expense or trouble. Ronald v. M. R. F. L. Assn., 132 N. Y., 378. It is within the general powers of the secretary of a life insurance company to waive prompt payment of premiums about to fall due on one of its policies, and the valid exercise of his power in this respect does not depend upon the particular place where he may be at the time. Hastings v. B. I. Ins. Co., 138 N. Y., 473. The statute of New York prescribing the condition upon which a life insurance policy may be forfeited for the non-payment of a premium is man' datory, and its provisions may not be waived by either or both parties. Ruling Ins. Dept., June 2, 1909. MODIFICATION OF TERMS.— It is competent for the parties to modify the terms of the original contract with respect to the time of payment and the effect of a failure to make punctual payments, and when such an agree- ment exists a forfeiture does not work on account of it. DeFrece v. Nat. L. Ins. Co., 136 N. Y., 144. A company may not omit the "grace clause" in policies on the monthly payment plan. Ruling Ins. Dept., May 9, 1907. §§ 93, 94. Life, Health, Casualty Corporations. 157 The assignment of a policy is effective 'between the parties without notice to the company. Ruling Ins. Dept., Aug. 9, 1909. An attempt to limit the time for action on a policy to one year is pro- hibited. Ruling Ins. Dept., Aug. 3, 1909. DEATH OF MEMBER.— Where the holder of a mutual benefit certificate dies after he has been notified of an assessment, but before the time allowed for its payment, his failure to pay does not forfeit the certificate; though the holder may have failed to pay an assessment which he was notified to pay, the certificate is not forfeited if the notice did not state that unless it was paid the certificate would be forfeited. Elmer v. Mut. Benefit L. Assn., * 19 N. Y. Supp., 289. NOTE. — A foreign life insurance company, which has due notice of the assignment of a policy issued by it in this state, cannot forfeit the policy for a failure to pay the premium, without giving the assignee the notice to pay and of the intention to forfeit if not paid; and the fact that part of the premium when due was paid in cash and the balance by the assignee's note, reciting that default in payment would render the policy void, does not, in the absence of the statutory notice of the maturing premium, entitle the company to insist upon a forfeiture for the non-payment of the note at maturity. Strauss v. Union Cen. L. Ins. Co., 170 N. \'., 349. § 93. Valuation of policies of health insurance. The superintendent of insurance shall make annual valuations of the policies of any company, insuring against disablement be- cause of sickness, on the net premium basis, according to the British Friendly Society Tables (eighteen hundred and seventy- six, eighteen hundred and eighty) and with interest at tliree and one-half per centum per annum. He may in his discretion vary the standard in particular cases and may also require additional rescn^es because of hazardous occupations, impairment of the live? of the insured or insufficient net premiums. This provision shall not apply to jxdicies insuring against s])ecified diseases only and for not longer than one year v^rithout privileges or renewal. Source.— Former § 93, as added by L. 1901, chap. 635. § 94. Election of directors. The following provisions are Jiereby established for the election of directors: 1. At every election of directors in any domestic mutual life insurance corporation, whether incorporated by special act or un- der general law and anything to the contrary in its charter, cer- tificate of incorporation or by-laws notwithstanding, every policy- holder whose insurance shall be in force and shall have been in force for at least one year prior thereto shall be entitled to vote dthout other qualification. 158 The Insurance Law. § 94. 2. Every such policyholder, and every other person having a right to vote by virtue of any contract made prior to the enact- ment of this section which shall remain in force until the date of such election, shall be entitled to vote in person or by proxy or by mail, as herein provided. 3. Except as otherwise now provided with reference to existr ing policies, every policyholder shall be entitled to one vote only irrespective of the number of policies or the amount of insurance held by him; and unless a policy shall hlave been assigned more than six months prior to the election by an assignment absolute on its face to an assignee other than the corporation whHch shall have issued the policy the person upon whose application the policy shall have been issued, or if the application be signed by more than one person, the person whose life is insured shall be deemed to be a policyholder entitled to vote as aforesaid ; in case a policy shall have been assigned as aforesaid, the assignee shall be deemed to be a policyholder entitled to vote, provided his sig- nature, either attested by the assignor or acknowledged in like manner as in case of a deed to be recorded in this state, shall have been filed at the home office of the corporation which shall have issued the policy. 4. 'Not less than five months nor more than eight months prior to every such election, on request of not less than twenty-five policyholders entitled to vote at the last prior election, which re- quest must be signed by each of said policyholders and acknowl- edged by each of them in the same manner as in the case of a deed to be recorded in the state of Xew York, a duplicate of such request to be filed with such corporation and notice of not less than five days of a hearing thereon given to such corporation, the superintendent of insurance, may in his discretion require such corporation within forty-five days, and not less than thirty days, to file in his office a full and correct copy of its list or card cata- logue of the names and last known post-offi'ce addresses of all policyholders who have been insured for at least one year under a policy for one thousand dollars or more, or any part of such list or card catalogue as he may specify. Such list or any part thereof which may be ordered filed shall be arranged, classified and corrected as may bo directed by the superintendent of insur- ance; provided, however, that if nominations are made, other than those nominalcil dn ilic iKlnilTiislrnlion licls'ct liy iIk* Ixiai'd of directors, a complete list or card catalogue of names of all of §94. LiFE^ Health^ Casualty Corporations. 159 such policyholders shall be so filed within forty-five days after the copy of said certificate of such nominations certified by said superintendent of insurance, shall be filed at the home office of the said corporation, which list or card) catalogue shall be cor- rected from the records of the home office of such corporation so that a list or card catalogue as nearly correct as may be shall be on file to within three months of such election. 5. iSaid list or card catalogue or any part thereof so filed while in the custody of the superintendent shall be subject to inspec- tion under regulations prescribed hy the superintendent of insur- ance at any time during business hours by any policyholder in said corporation or hy his authorized representative, and in case of a contested election, under regulations to be prescribed by the superintendent, may be used in the canvass of the policyholders of the company; provided, however, that after such election, or, if no candidate shall have been nominated other than those nomi- nated by the board of directors, then after the time for such inde- pendent nominations shall have expired, such list or card cata- logue shall be returned to the corporation filing the same as aforesaid. 6. Where policyholders of any domestic stock life insurance corporation have become or shall become entitled to vote for di- rectors, they shall be entitled to vote in person, by proxy or by mail, as herein provided and a similar list or card catalogue of policyholders, qualified to vote, in accordance with the charter or by-laws of such corporation, except the holders of industrial poli- cies, shall be filed and maintained in the office of the superin- tendent of insurance and at the home office respectively, similarly arranged and similarly subject to inspection and copy and with- drawal as in the case of mutual corporations as above provided. 7. Where policyholders in any company shall have made nom- inations as hereinafter prescribed, they, or a committee repre- senting them, shall upon demand, with the approval of the super- intendent of insurance and the payment to the company of the actual cost of making such copies, be furnished by such company with a copy of such list of policyholders or with a copy therefrom of the list for a separate jurisdiction. A copy of a list so taken, or of any part thereof, shall be held by persons receiving the same inviolate for the purposes of said nominators in a pending election and shall not be transferred to other persons for any other use 160 The Insurance Law. § 94. whatever. At the close of the canvass of the votes all copies of such lists shall be returned to the company. 8. At least seven months prior to the date of any election of directors in any such corporation, the board of directors shall nominate candidates for every vacancy to be filled at such election and shall also appoint three persons, jointly or severally, to re- ceive proxies to be voted for said nominees, and shall also file with the superintendent of insurance and at its home office a certificate of the names of the candidates so nominated and of the persons so designated to receive said proxies which shall bo described as the " administration ticket." 9. In every such corporation which had over one hundred thousand policies in force at its last preceding election, each in amount of one thousand dollars or more, any qualified voters equal in number to one-tenth of one per centum of such total policies in force, and in every other such corporation, any one hundred or more qualified voters may make other nominations for one or more vacancies to be filled at any such election by filing with the superintendent of insurance at least five months before the election a certificate signed and acknowledged, giving the names and addresses of the candidates nominated, the names and addresses of three persons, jointly or severally, designated to receive proxies to be voted for said nominees, and an appropriate name or title designated by the superintendent of insurance to distinguish the ticket from the administration ticket and other nominations. Such nominat- ors must also file a copy of said certificate, certified by said super- intendent, at the home office of the company at least five months before such election. 10. All certificates of nomination shall be accompanied by a written acceptance of such nomination by each nominee thereon. A court of record may for cause shown direct the name of any candidate to be stricken from a ticket on file and may authorize the nominators of such ticket to substitute th ranted on the same plan within each group, under a contract with a given person, finn or corporation, covering groups of not less than one hundred live^ all in the employ of such person, firm or corporation, and indus- trial policies issued ujx)n the weekly premium plan and all pre- rniuans on such policies and the expenses in connection with such policies, shall be excluded and there shall be included only that insurance upon '\Ahich the first premium or instalment thereof has actually ibeen received. If it appear that in the ordinary course of its business for any calendar year the amount of insurance issued by any corporation will probably exceed the limitation imposed by this section, tlie superintendent of insurance may before tlie expiration of such year authorize such corporation in writing to issue additional insurance not to exceed ten per centum of the limitation for such year; bnt snch additional insurance shall be charged as a part of the new ]x>licies for llic next succeeding year, in accordance witli i1h> li mi In I inns of this section. A foreign §97. LiFE^ Health^ Casualty Corpoeations. 169 life insurance corporation, which shall not conduct its business within the limitation and in accordance with the requirements im'posed by this section upon domestic corporations, shall not be permitted to do business within this state. Source.— Former § 96, as added by L. 1906, chap. 326. Amended bj L. 1010, chap. 697; L. 1911, chap. 369; L. 1913, chap. 304, and L. 1916, chap. 360. In effect May 1, 1916. Note. — The amendment of 1916 eliminated group insurance, as defined, from the limits prescribed by the section and modified .percentages and amounts of insurance, whidi may be written. — Ed. Note. — The purpose of the amendment of this section by chapter 304 of 1913 was to allow the superintendent to authorize the issuing ol additional insurance in excess of limitation to amount of ten per centum of limitation; but such additional insurance is charged as a part of the new policies for the next succeeding year. — Ed. Section 96 is not a local or private bill and does not violate § 16 of article 3 of the State Constitution providing that no such bill shall be expressed in the title; nor is it unconstitutional under § 18 of article 3, because corpora- tions with a certain kind of insurance are excepted. Bush v. New York Life Ins. Co., 135 App. Div., 447. Annuity contracts, whether survivorship annuities or not, do not come within the provisions of §§ 96, 97, except as to the provisions of the latter relating to expenses other than investments. Ruling Ins. Dept., Aug. 2, 1909. Only policies actually paid for and of which the company has received proper advice so as to make the proper entries on its books prior to December first in any given year are contemplated by the word " issue " in § 97. Ruling Ins. Dept., July 23, 1909. The words " policies of re-insurance " as used in section 96 cover the case of the assumption by one company of the policies of another. Ruling Ins. Dept., Nov. 9, 1911. Policies issued under a reinsurance contract between Postal and Mutual Reserve companies not regarded as new business. Attorney-General Rep., Sep- tember 13 and July 22, 1909. Limitations of section 96 apply to foreign life insurance corporations doing business in this State. Ruling Ins. Dopt., October 3, 1912. Where a company has written an excess under permission of the Super- intendent, in arriving at the limit for the succeeding year, it should start with the total amount paid for and apply the fraction of increase to that amount without deducting the excess issued, and after getting the increase add it to the original amount written and then deduct the excess as a final part of the computation. Ruling Ins. Dept., June 30, 1915. Excess of preceding year does not enter into computation. Ruling Ins. Dept., June 30, 1915. § 97. Limitation of expenses. [N'o domestic life insurance corporation shall in any calendar year, after the year nineteen hundred and six, expend or become 170 The Insurance Law. § 97. liable for, including any and all amounts whioh any person, firm or corporation is permitted to expend on its behalf or under any agree- ment with it (1) for commissions on first year's premiums, (2) for compensation, not paid by commission, for services in obtain- ing new insurance exclusive of salaries paid in good faith for agency supervision either at the home office or at branch offices, (3) for medical examinations and inspections of pro- posed risks, and (4) for advances to agents, a total amount exceed- ing in the aggregate (a) the loadings upon the premiums for the first year of insurance received in said calendar year (calcu- lated on the basis of the American experience table of mortality with interest at the rate of three and one-half per centum per annum) and (b) the present values of the assumed mortality gains for the first five years of insurance on policies in force at the end of said calendar year on which the first premium, or instalment thereof, has been received during said calendar year, as ascertained by the select and ultimate method of valuation as provided in sec- tion eighty-four of this chapter; and (c) on policies issued and terminated in said calendar year the full gross premiums received, less the net cost of insurance for the time the insurance was in force, computed by the American experience select and ultimate table, three and one-half per centum. 'No such corporation shall make or incur any expense or permit any expense to be made or incurred upon its behalf or under any agree- ment with it, except actual investment expenses (not exceeding one-fourth of one per centum of the mean invested assets) and except taxes and also except outlays- exclusively in connection with real estate, in excess of the aggregate amount of the actual loadings upon premiums received in said year calculated according to the standards adopted by the company under section eighty-four of this chapter, and the present values of the ^assumed mortality gains hereinbefore mentioned. Provided, however, that any such corporation having less than eighty millions of insurance in force, may incur a total expenditure exceeding the limits of expenditure as herein defined by an amount not greater than the following percentages . of its loadings for the preceding calendar year, to wit: having at the end of such year less than ten millions, forty per centum ; having twenty but loss than thirty millions, thirty-five per centum ; having thirty but less than forty millions, § 97. LiFE^ Health^ Casualty Coepobations. 171 thirty per centum; having forty but less than fifty millions, twenty-five per centum ; having fifty but less than sixty millions, twenty per centum; having sixty but less than seventy millions, fifteen per centum ; having seventy but less than seventy-five mil- lions, ten per centum ; having seventy-five but less than eighty mil- lions, five per centum. 'No such corporation, nor any person, firm or corporation on its behalf or under any agreement with it shall pay or allow to any agent, broker or other person, firm or corporation for procuring an application for life insurance, for colk?cting any premium thereon or for any other service performed in connection therewith any compensation other than that which has been determined in advance. Except as hereinafter provided all bonuses, prizes and rewards, and all increased or additional commissions or compensation of any sort based upon the volume of any new or renewed business or the aggregate of policies written or paid for, are prohibited. Noth- ing herein contained is to be construed as prohibiting the institu- tion of contests or competitions among agents, and the recognition of success in such competitions by the awarding of ribbon deco- rations, medals, pins, buttons or other tokens of small intrinsic value, given not as compensation but as a bona fide recognition of merit. No such corporation shall pay commissions upon renewal premiums received upon policies issued after the year nineteen hundred and six, in excess of five per centum of the pre- mium annually for fourteen years after the first year of insurance in the case of endowment policies providing for less than twenty annual premiums, nor in excess of seven and one-half per centum of the premium annually for the first nine years after the first year of insurance and five per centum of the premium annually for the next ensuing five years in the case of other forms of poli- cies ; provided that an amount found to be equivalent to the aggre- gate amount so payable by a calculation approved by the super- intendent of insurance and based upon mortality, interest and lapse rates, may be distributed through three or more years, or through a period exceeding fourteen years, but not more than two-fifths of such amount shall be payable for any one year; provided further that in any agency district subject to the supervision of a local sala- ried representative the renewal commission payable to agents of such district shall not exceed two-thirds of the foregoing rates annu- 172 The Insurance Law. § 97. ally for fourteen years, subject to the calculation as aforesaid; pro- vided further that any such corporation may condition the allow- ance or payment in whole or in part of any of the renewal commissions allowed to be paid as aforesaid upon the efficiency of service of the agent receiving the same or upon the amount and quality of the business renewed under his supervision; and also provided that a fee not exceeding three per centum may be paid for the collection of premiums which shall be received for any year after the fifteenth year of insurance. If any such corporation shall compensate its agents, or any of them, after the first insur- ance year, in whole or in part, upon any other plan than commis- sions and collection fees, the aggregate sum so paid shall in no year exceed the limitations herein imposed and the schedule and plan of such compensation shall be submitted to and approved by the super- intendent of insurance. No such corporation, nor auy person, firm or corporation on its behalf or under any agreement with it, shall miilve any loan or advance to any person, firm or corporation solicit- ing or undertaking to solicit applications for insurance without ad- equate collateral security, nor shall any such loan or advauce be made upon the security of renewal commissions, or of other compen- sation earned or to be earned by the borrower except advances against compensation for the first year of insurance. A foreign life insurance corporation which shall not conduct its business within the limitations and in accordance with the requirements imposed by this section upon domestic corporations shall not be permitted to do business within the state. Any stock corporation which has heretofore issued and represented itself as issuing non- participating policies exclusively, and which has changed and become a mutual company, or become a company issuing and representing itself as issuing participating policies exclusively, or any such stock corporation which may hereafter change and become a mutual company, or become a company issuing and representing itself as issuing participating policies exclusively, may incur a total expenditure exceeding the limits of expendi- ture herein defined by an amonnt not greater than six per centum of the aggregate net premiums according to the standards adopted by the company as aforesaid. No cmnpany transacting business exclusively on the mutual plan shall issue after June tliirtieth, nineteen hundred and sixteen, any policy of life or endowment ninsuranoe (other tlian group insurance and reinsurance) upon which the premium loading is less than would enable the company to comply with the provisions of this section limiting total ex])enses § 97. LiFE^ Health^ Casualty Corporations. 173 if the premium loading; for all its policies were calculated accord- ing to tlie rule employed by the company for the calculation of the premium loading on such policy. This section shall not apply to expenses made or incurred in the business of industrial insurance nor, except as to the limitation of expenses for the first year of insurance and as to compensation of and loans and advances to agents or solicitors, to stock corporations issuing and representing themselves as issuing nonparticipating policies exclusively. Source.— Former § 97, as added by L. 1906, chap. 326. Amended by L. 1909, chap. 301; L. 1910, chap. 697; L. 1913, chap. 304; L. 1914, chap. 103; L. 1915, chap. 617, and L. 1916, chap. 120. In effect April 3, 1916. Note. — The purpose of the amendment of this section by chapter 304 of 1913 was to clarify it as to giving of prizes and tokens of merit. — Ed. The amendment of this section by chapter 103 of 1914 added the third sentence, " Provided, however, that any such corporation * * * but less than oigiity millions, five per centum." — Ed. Salaries based on the premiums or on account of new business issued are commissions and must be enlarged to the cost of new business. Ruling Ins. Dept., Nov. 9, 1911. The whole of the first year's premium may not be used for expenses, leaving nothing for the required reserve. There must be first set aside from the premiums received an amount sufficient to pay the cost of carrying the policy at select rates to the date when the next premium is due, and the whole balance of the premium actually received by the company is available to the company as a margin provided that said balance docs not exceed the margin permitted, that is the aggregate of the loading and the assproved, and if so, the form number of the form, to be superseded. " Indorsement Forms. " 10. Indorsement stamps. Forms of indorsements for formal approval should be submitted by means of triplicate impressions of a rubber stamp. A typewritten draft of a proposed form of indorsement may be submitted for examination preliminary to the preparation of the rubber stamp. The rub- ber stamp should bear a form number at the lower left-hand corner; it should provide a line for the diate of execution, and it should show that the indorse- ment is to be executed in the name of tlie company by one or more of its exec- utive officers, and their titles should appear on tlio stamp. The blanks in the impressions of an indorsement stamp sliould be filled out in the same manner as policy forms and supplementary forms. " 11. Blank indorsement forms printed on policy. Certain indorsement forms that are frequentlj^ used on life policies may very well be printed on the back of a policy form, ready to be fiiled in and executed at any time as occasion may arise. Such, for example, are indorsements for changing the beneficiary; changing the time of premium payments; or changing mode of payment of proceeds of policy. Each such blank indorsement form must be designated by an appropriate form number, printed at the loAver left-hand corner of the form. " Rider Forms. " 12. Rider forms printed. Rider forms, such, for instance, aS" those for re- moving policy restrictions as to residence, or military or naval service, or for reinstatement after lapse, should be printed and submitted in triplicate, with all blanks filled in with hypothetiea] data appropriate to the case. Each such rider form must be designated by a suitable form number, printedi at the lower left-hand corner of the form; it should provide a line for the d^te of execu- tion, and it should show that it is to be executed in the name of the company by one or more of its executive officers, and their titles should be printed in the rider. The word '.printed' in this rule is used in its ordinary sense, and it does not includie work of the mimeograph, multigraph or other styles of duplicating machines.'' Forms of contracts based upon persistence, or cessation of a human life or lives, must be filed with and approved by superintendent. Ruling Ins. Dept., July 20, 1909. Forms of life and endowment insurance and application blanks for delivery after Jan. 1, 1910, and all advertising literature should conform to present law. Ruling Ins. Bept., Aug. 3. 1909. 188 The Insurance Law. § 101. Policy forms and application blanks should be submitted in triplicate. Ruling Ins'. Dept., Dee. 19, 1912. Application blanks must be completely filled out and filed in triplicate. Ruling Ins. Dept., Aug. 2, 1911. • Photographic copies of application must be reproduced full size. Ruling Ins. Dept., Feb. 25, 1913. Form number must be printed at lower left-hand corner of first page of policy. Ruling Ins. Dept., May 25, 1911. 'Separate form number for each policy form. Ruling Ins. Dept., Jan. 2, 1912. Place for signatures of officers of policy form is at foot of first page or at end of policy. Ruling Ins. Dept., Oct. 24, 1911. Only indorisement forms for use with approved policy forms should be submitted. Ruling Insi. Dept., Sept. 25, 1913. Approved endorsement form covering war conditions. Ruling Ins. Dept., April 29, 1914. Pure endowments are to be considered as insurance. Ruling Ins. Dept., July 20, 1909. Standard provisions applicable to children's endowment policies. Ruling Ins. Dept., Sept. 9, 1911. Companies organized under section 70, subd. 1, may attach to their life insurance policy health insurance riders. Ruling Ins. Dept., Nov. 3, 1909. Shortening of limitation of claim period in policy form disapproved. Ruling Ins. Dept., Nov. 9, 1909. Waiver of right to have medical examinations treated as confidential not permissible. Ruling Ins. Dept., Aug. 3, 1909. Policies delivered in New York State must not be made subject to laws of foreign states. Ruling Ins'. Dept., Aug. 3, 1909. Use of the term " New York State Official Policies " prohibited. Ruling Ins. Dept., Aug. 3, 1909. Words " renewable-convertible " may be used in term forms. Ruling Ins. Dept., Mardh 31, 1910. Words *" non-renewable," " non-convertible," must be used, when term form does not provide for renewal or conversion. Ruling Insi. Dept., Jan. 15, 1913. Privilege of renewal clause must state whether medical re-examination is required. Ruling Ins. De,pt., March 31, 1910. Use of word " pension " in installment policy disapproved. Ruling Ins. Dept., April 16, 1913. Aggregate amount of installments and commuted value should be stated on face of installment policy. Ruling Ins. Dept., Jan. 12, 1914. Commuted value of installment policy and aggregate of installments certain. Ruling Ins. Dept., June 12, 1911. Installment option riders should not be used concurrently with issue of policy. Ruling Ins. Dept., Nov. 23, 1911. Waiver of premiums and disability provision may be inserted in policy or used as a rider. Ruling Ins. Dept., Jan. 9, 1912. DLsability clause may be inserted in outsitanding policies providing policy does not prohibit its use. Ruling Ins. Dept., Feb. 17, 1914. Policy form with new provision added must bear now form number. Ruling Ins. Dept., Fob. 26, 1914. § 101. LiFE^ Health, Casualty Corporations. 189 Clause maturing policy at face amount on proof of total disability dis- approved. Ruling Ins. Dept., April 27, 1914. Basis of conversion charge must be stated in policy. Ruling ins. Dept., Dec. 3, lUi3. . Life policy may ibe assigned to one having no insurable interest and assignee may not be required to furnisih proof of interest. Ruling Ins. Dept., July 22, 1914. Assignee should not be required to furnish proof of interest; dili'erent forms of assignment should be used depending on whether assignment is collateral or absolute. Ruling Ins. Dept., Sept. 19, 1914. Requirements as to applications and beneficiaries in group policies. Ruling Ins. Dept., April 6, 1915. Employer may not name beneficiary in group policy. Ruling Ins. Dept., April 21, 1915. Proposed beneficiary clause in group policy. Ruling Ins. Dept., Oct. 9, 1914. Incontestability clause must follow language of statute. Ruling Ins. Dept., Aug. 7, 1909. Provision making policy incontestable from date of issue contrary to public policy. Ruling Ins. Dept., Feb. 26, 1910. Provision for incontestability after one year approved. Ruling Ins. Dept., Dec. 10, 1912. Exception in incontestable clause may not be extended to aviation risks. Ruling Ins. Dept., April 9, 1913. Date of issue is the date the policy bears for original issues. Ruling Ins. Dept., Nov. 16, 1909. Words " date of issue " must appear in incontestable clause. Ruling Ins. Dept., Feb. 9, 1911. Railroad employment clause voiding policy disapproved. Ruling Ins. Dept., Nov. 29, 1913. Railroad employment; extra hazards should be covered by extra premium. Ruling Ins. Dept., Dec. 11, 1913. Where application is made part of contract, policy sihouid state that fact. Ruling Ins. Dept., Aug. 3, 1909. Application not to be printed in policy. Ruling Ins. Dept., Oct. 24, 1911. Where application is made part of contract, application blank must be filled out and submitted with policy. Ruling Ins. Dept., Jan. 18, 1912. Policy must contain specific provision for relief in cases of misstatement of age. Ruling Ins. Dept., Aug. 3, 1909. ^lisstatement of age provision in annuity contract. Ruling Ins. Dept., Sept. 8, 1909. Misstatement of age provision may be omitted from industrial policies. Ruling Ins. Dept., April 25, 1912. Waiver of lapse or forfeiture provisions in application not permissible. Ruling Ins. Dept., Aug. 7, 1909. Cancellation clause in " Avif e insurance " policy disapproved. Ruling Ins. Dept., Feb. 1, 1910. Basis of values should be stated in policy. Ruling Ins. Dept., April 7, 1913. Dividends may bo applied to payment of premiums. Ruling Ins. Dept., Sept. 19, 1912. Policy loan provision should state a definite rate of interest. Ruling Ins. Dept., Aug. 7, 1909. 190 The Insurance Law. § 10L>. Words " at any time " should not be omitted from loan provision. Ruling Ins. Dept., Feb. 29, 1912. Promissory note must not be taken as additional security for a policy loan. Ruling Ins. Dept., Jan. 4, 1912. Headings for first column of table of values in life policies are lawful, footnote, when necessary. Ruling Ins. Dept., Nov. 5, 1909. Loan values in single premium policies m.ust begin first year. Ruling Ins. Dept., Sept. 11, 1912. When no surrender charge is made, tabular value should be carried to cents, and extended term to diays. Ruling Ins. Dept., Dec. 19, 1913. Policy should contain reinstatement provision. Ruling Ins. Dept., Aug. 3, 1909. Policy may state that rate of interest on premiums in default shall not exceed six per centum per annum. Ruling Insi. Dept., Nov. 9, 1909. § 102. Companies issuing participating policies not to do a nonparticipating business. ]^o domestic mutual life insurance corporation and no do- mestic stock life insurance corporation hereaftx^r issning or pro- fessing to issue any participating policies, shall issue any policies, except annuities, which do not by their tenns give to the holders thereof full right to participate in the accumulations of said cor- poration as provided in this chapter. This section shall not apply to paid-up or temporary and pure endo^vment insurance issued or granted in exchange for lapsed or surrendered policies, nor to policies of reinsurance. Source.— Former § 102, as added by L. 1<)06, chap. 326. Amended by L. 1911, chap. 369 A company can do a participating and non-participating business up to January 1, 1907, and thereafter can only do one form; the company, how- ever, may change from one class of business to another. Attorney-General Rep., 1906, page 539. Foreign life insurance corporations heretofore licensed may hereafter be licensed if they do both a participating and non-participating business. Attorney-General Rep., 1906, page 549. Under section 102 of the Insurance Law, " foreign life insurance corporations heretofore licensed may hereafter be licensed if they do both a participating and non-participating businees." Ruling Ins. Dep., May 4, 1908. A domestic stock life insurance company can change from a non-participat- ing to a participating business, but at any particular time must Ix^ one or the other. Ruling Attorney-General, June 20, 1906. Foreign life insurance corporations of other states, heretofore licensed, need not comply with the provisions of this section. Ruling Ins. Dept., January 22, 1908. § 103. LiFE^ Health^ Casualty Corporations. 191 There sTiould be no distinction in the application of this law between a mutual life insurance company doing participating business exclusively and a stock company doing a non-participating business exclusively. Opinion of Attorney-General, January 27, 1908. A life insurance company which issued non-participating policies up to August 11, 1908, at which time it elected to do only a participating businesa and -(ince that time has issued only participating policies, cannot change from a participating to a non-participating business. Attorney-General's Dec, Sept. 24, 1909. A stock life insurance corporation of another State, transacting its business exclusively upon a non-mutual basis may be licensed to do business in this State, and thereafter shall issue only non- participating policies. Ruling Ins. Dept., Feb. 1, 1911. Non-participating company after January 1, 1907, may not use participating forms. Ruling Ins. Dept., Nov. 20, 1906. Old lapsed participating policy may be reinstated after January 1, 1907. Ruling Ins Dept., Dec. 13, 1906. Companies may issue paid-up non-participating .policies on deferred dividend forms issued prior to January 1, 1907. Ruling Ins. Dept., Feb. 19, 1907. Old participating policy may bo changed for another form of participating policy. Ruling Ins. Dept., Dec. 13, 1906. Term " annuities " includes survivorship annuities. Ruling Ins. Dept., Dec. 20, 1Q06. Company may make non-participating dividend additions to policies issued prior to 1907. Ruling Ins. Dept., March 12, 1907. The word " issued " as used in sections 83 and 102 are synonymous with the word " written " as used in section 103. Ruling Ins. Dept., Jan. 8, 1907. § 103. Annual reports of life insurance corporations. In addition to any other matter whicli may be required by law or pursuant to law by the superintendent of insurance to be stated therein every annual report of every life insurance corporation doing business in the state of New York, made pursuant to sec- tion forty-four of this chapter, shall contain an accurate, concise and complete statement of the following matters, to wit: (1) All the real property held by the corporation-, the dates of acqui- sition, the names of the vendors, the actual cost, the value at which it is carried on the company's books, the market value, the amounts expended during the year for repairs and improvements, the gross and net income from each parcel, and if any portion thereof be occupied by the company the rental value thereof, a statement of any certificate issued by the superintendent extending the time for the disposition thereof, and all purchases and sales 192 The Insurance Law. § 103. made since the last annual statement, witli particulars as to dates, names of vendors and vendees, and the consideration. (2) The amount of existing loans upon the security of real property, stat- ing the amount loaned upon property in each state and foreign country. (3) The moneys loaned by the corporation to any per- son other than loans upon the security of real property above men- tioned and other than loans upon policies the actual borrowers thereof, the maturity and rate of interest of such loans, the securities held therefor, and all substitutions of securities in con- nection therewith, and the same particulars with reference to any loans made or discharged since the last annual statement. (4) All other property owned by the company or in which it has any interest including all securities, whether or not recognized by the law as proper investments, the dates of acquisition, from whom acquired, the actual cost, the value at which the property is carried upon the books, the market value, the interest or divi- dends received thereon, during the year ; also all purchases and sales of property other than real estate made since the last annual statement, with particulars as to dates, names of purchasers and sellers, and the consideration; and also the income received and outlays made in connection with all such property. (5) All commissions paid to any persons in connection with loans or pur- chases or sales of any property, and a statement of all payments for legal expenses, giving particulars as to dates, amounts and names and addresses of payees. (6) All moneys expended in con- nection with any matter pending before any legislative body or any officer or department of government, giving particulars as to dates, amounts, names and addresses of payees, the measure or pro- ceeding in connection with which the payment was made, and the interest of the corporation therein. (7) The names of the officers and directors of the company, the proceedings at the last annual election, giving the names of candidates and the number of votes cast for each and whether in person, by proxy or by mail. (8) The salary, compensation and emoluments received by officers or directors and where the same amounts to more tlian five thou- sand dollars that received by any person, firm or corporation, with particulars as to dates, amounts, payees and the autliority by which the payment was made; also all salaries paid to any repre- § 103. LiFE^ Health^ Casualty Corporations. 193 sentative either at the home office, or at any branch office, or agency, for agency supervision. (9) The largest balances carried in each bank or trust company during each month of the year. (10) All death claims resisted or compromised during the year, with particulars as to sums insured, sums paid and reasons assigned for resisting or compromising the same in each case. (11) A complete statement of tlie profits and losses upon the business transacted during the year and the sources of such gains and losses, and a statement showing separately the margins upon premiums for the first year of insurance ascertained according to the select and ultimate method of valuation as provided in section eighty-four of tliis chapter and the actual expenses charge- able to the procurement of new business incurred since the last annual statement, as enumerated in section ninety-seven of this article. A foreign corporation, issuing both participating and nonparticipating policies, shall make a separate statement of profits and losses, margins and expenses, as aforesaid, with reier- ence to each of said kinds of business, and also showing the manner in which any general outlays of the company have been appor- tioned to each of such kinds of business. (12) A statement separately showing the amount of the gains of the company foi the year attributable to policies written after December thirty-first^ nineteen hundred and six, and the precise method by which the cal- culation has been made. (13) The rates of annual dividends de Glared during the year for all plans of insurance and all durations and for ages at entry, twenty-five, thirty-five, forty-five and fifty- five, and the precise method by which such dividends have been cal- culated. (14) A statement showing the rates of dividends declared upon deferred dividend policies completing their dividend periods for all plans of insurance and the precise methods by which said dividends have been calculated. (15) A statement showing any and all amounts set apart or provisionally ascertained or calcu- lated or held awaiting apportionment upon golicies with deferred dividend periods longer than one year for all plans of insurance and all durations and for ages of entry as aforesaid, together with the precise statements of the methods of calculation by which the same have been provisionally or otherwise determined. (16) A statement of any and all reserve or surplus funds held by the com- 194 The Insueance Law. § 104. pany and for what purpose tbey are claimed respectively to be held. (17.) A statement showing all sums of money expended in, or in any way connected with, the election of directors or trustees, with a statement when expended, by whom expended, to whom paid and for what purpose. Source.— Former § 103, as added by L. 1906, chap. 326, subd. 17, and amended by L. 1907, chap. 623. Under section 103 the provisions concerning the annual report of an insur- ance company may not be disregarded, and this section is a direct instruction that every annual statement under this provision shall be complete in itself and without reference to details contained in any prior annual statement. Ruling Ins. Dept., September 23, 1908. The Superintendent of Insurance has not made and does not contemplate making a rule on the subject of division of expenses under subdivision 12 of this section, it being assumed that the insurance companies will comply with the statute. Ruling Ins. Dep., February 10, 1908. Accounts should be so kept as to separate repair and improvement items from the other expenses on real estate. Ruling Ins. Dept., Dec. 06, 1906. Real estate bid in by an insurance company on mortgage foreclosure insti- tuted by it constitutes a purchase of real estate, which should appear in the annual report. Ruling Ins. Dept., Jan. 14, 1907. All mortgages acquired or disposed of during the year must be included in the annual report. Ruling Ins. Dept., Jan. 23, 1907. All payments over $5,000, including payments made to agents in the nature of a commission, must be returned' in Schedule O. Ruling Ins. Dept., Jan. 29, 1907. A company must make return of all salaries paid any representative either at home or at a branch office or agency of the company for agency super- vision. Ruling Ins. Dept., Dec. 13, 1906. Separate statement is required! in reporting participating and non- participating business. Attorney-General Rep., iSept. 7, 1906. A separate statement of profit and loss of participating and non-participat- ing parties must be made by foreign corporations. Ruling Ins. Dept., Sept. 28, 1906. Separate statement of profit and loss exhibit on participating and non- participating policies not necessary when a foreign company has discontinued use of one form. Ruling Ins. Dept., Jan. 8, 1907. § 104. Transfer of deposits by superintendent of insurance to receiver. Tn every case where life insurance or annuity companies, or any corporation of either of the classes provided for by this article and article five of this chapter, whether formed under said articles or prior thereto, has been or hereafter may be dissolved, and a re- § 104. LiFE^ Health^ Casualty Corpoeations. 195 ceiver thereof appointed, upon the application of the attorney- general, or by action begun in the name of the people of the state of New York, each and every security and fund which shall have been deposited by such company prior to its dissolu- tion, with the superintendent of the insurance department, for the security and protection of its policyholders or any class of such policyholders, under the statutes in such oases made and provided, may, by an order of the supreme court, made at a special term thereof held within the judicial district in which the principal office of such company was located, prior to its dis- solution, upon the application of the attorney-general, after service of eight days' written notice of such application upon the super- intendent of the insurance department, be transferred from the said superintendent of the insurance department to the receiver of such company; and thereupon the said superintendent shall deliver such funds and securities to such receiver, and in him the title thereto shall immediately vest. Such receiver shall thereupon convert such securities and funds into money, and ishall distribute the proceeds thereof, and of each and every class of such funds or securities among the respective holders of valid policies of such company for whose benefit and security the deposit or deposits were originally made proportionately to tlie respective valuation of such policies, as shall be ascertained in proceedings taken by such receiver for the valuation of policies, and the determination of the liabilities of such company under the statutes in such cases made and provided, and the course and practice of the supreme court in cases of insolvent corj)orations, until such valuation shall have been paid in full. If any portion of such proceeds shall then remain, such balance may, under an order of the supreme court in such behalf duly made at special term, be made a part of the general assets of such receivership, and thereupon be distributed by said receiver in payment of or upon the general liabilities of such dissolved company according to law. And in case of a corporation formed under the laws of any other state, doing insurance business in this state of the nature of that done by the corporations above mentioned, in case of any action or proceeding brought or hereafter to be brought in this state by the attorney-general, or in the name of the people of the 196 TriE Insurance Law. §§ 105, 106. state of ITew York, for the winding up of its business in this state, or for or involving distribution of its assets therein, the same pro- ceedings may be had with reference to any securities and funds deposited by such corporation with the superintendent of the in- surance department of this state under the statutes in such case made and provided, as are hereinbefore provided with reference to deposits of corporations of this state, save only that the order for transfer of the deposit may be made in the judicial district in which the principal offi(;e of the corporation in this state was located at the commencement of the action or proceedings, or in the third judicial district. Source.— L. 1884, chap. 285, § 2, as amended by L. 1902, chap. 162, § 1. § 105. Powers of certain existing corporations increased. Every health or casualy company, existing on May thirty-first, eighteen hundred and eighty-nine, formed under the provisions of the second department of section one of chapter four hundred and sixty-three of the laws of eighteen hundred and fifty-three, shall possess the same powers as though it were formed pursuant to said act as amended by chapter three hundred and thirty-eight of the laws of eighteen hundred and eighty-nine. Source.— L. 1889, chap. 338, § 2. Section 2 of Laws 1889, chapter 338, was not repealed by the repealing sec- tion of the former Insurance Law (L. 1892, chap. 690, § 290), but was spe- cially excepted from repeal. The section conferred upon insurance companies additional powers. It was consolidated and made a part of Article 3 of the present Insurance Law relating to life, health and casualty insurance corporations. § 106. Boards of directors to be divided into classes. Boards of directors of every domestic mutual life insurance cor- poration, elected under and pursuant to the provisions of laws of nineteen hundred and six, chapter one hundred and twenty-three, as amended by laws of nineteen hundred and six, chapter three hundred and fifty-four, shall divide themselves by lot into two classes as nearly equal as may be, one class to hold oflSce until the annual meeting of the company to be held in accordance with its charter or by-laws in the year nineteen hundred and eight, and the other class to hold office until the annual meeting to be so § 107. LiFE^ Health^ Casualty Coepoeations. 197 held in the year nineteen hundred and nine. There shall be no election of directors at the annual meeting in nineteen hundred and seven. In case of the death or resignation of any director elected in nineteen hundred and six his successor shall be chosen by the board of directors to hold office only until the next election of directors. At the annual meeting in nineteen hundred and eight directors shall be elected for a term of one year in the place of those whose terms of office then expire. At the annual meeting to be held in nineteen hundred and nine, and biennially thereafter, an entire new board of directors shall be elected for the term of two years. The election of directors of every domestic mutual life insurance corporation, whether incorporated by a special act or under a general law, which according to its charter or by-laws would be held prior to the month of April, nineteen hundred and eight, shall be postponed and held on the day in that month cor- responding to the day of the month when it would otherwise occur ; and the directors of said corporations whose terms would other- wise earlier expire shall continue to hold office until such time and until their successors are elected. Source.— L. 1906, chap. 123, § 3, as amended by L. 1907, chap. 625, § 1. Laws 1906, chapter 123, as amended by Laws 1906, chapter 354, provided for the election of new boards of directors of mutual life insurance companies on December 18, 1906. As the object of the act has been attained and the time limited in the first two sections has expired, those sections were eliminated and are repealed as obsolete, but section 3, which provides for a continuance in office of the directors elected under said act until 1908 and 1909, respectively, is consolidated in this section. § 107. Standard provisions for accident and health policies. Subdivision (a). On and after the first day of January, nine- teen hundred and fourteen, no policy of insurance against loss or damage from the sickness, or the bodily injury or death of the insured by accident shall be issued or delivered to any person in this state by any corporation organized under article two of this chapter, or, if a foreign corporation, authorized to do busi- ness in this state, until a copy of the form thereof and of the classification of risks and the premium rates pertaining thereto have been filed with the superintendent of insurance; nor shall it be so issued or delivered until the expiration of thirty days after it has been so filed unless the said superintendent shall 198 The Insueance Law. § 107. sooner give his written approval thereto. If the said superin- tendent shall notify, in writing, the company, corporation, association, society or other insurer which has filed such form that it does not comply with the requirements of law, speci- fying the reasons for his opinion, it shall be unlawful thereafter for any such insurer to issue any policy in such form. The action of the said superintendent in this regard shall be subject to review by any court of competent jurisdiction, provided, how- ever, that nothing in this section shall be so construed as to give jurisdiction to any court not already having jurisdiction. Subd. (b). ]^o such policy shall be so issued or delivered (1) unless the entire money and other considerations therefor are expressed in the policy; nor (2) unless the time at which the insurance thereunder takes effect and terminates is stated in a portion of the policy preceding its execution by the insurer; nor (3) if the policy purports to insure more than one person; nor (4) unless every printed portion thereof and of any endorse- ments or attached papers shall be plainly printed in type of which the face shall be not smaller than ten point; nor (5) unless a brief description thereof be printed on its. first page and on its filing back in type of which the face shall be not smaller than fourteen point; nor (6) unless the exceptions of the policy be printed with the same prominence as the benefits to which they apply, provided, however, that any portion of such policy which purports, by reason of the circumstances under which a loss is incurred, to reduce any indemnity promised therein to an amount less than that provided for the same loss occurring under ordinary circumstances, shall be printed in bold face type and with greater prominence than any other portion of the text of the policy. Subd. (c). Every such policy so issued shall contain certain standard provisions, which shall bo in the words and in the order hereinafter set forth and be preceded in every policy by the caption, " Standard Provisions." In each such standard pro- vision wherever the word " insurer " is used, there shall be sub- stituted therefor " company '* or " corporation " or " association '' or " society " or such other word as will properly designate the insurer. Said standard provisions shall be: § 107. LiFE^ Heai.tii^ Casualty Cokpokations. 199 (1) A standard provision relative to the contract which may he in either of the following two forms: Form (A) to he used in policies which do not provide for reduction of indemnity on account of change of occupation, and Form (B) to he used in policies which do so provide. If Form (B) is used and the policy provides indemnity against loss from sichness, the words " or contracts sickness " may he inserted therein immediately after the words " in the event that the insured is injured '' : (A) : 1. This policy includes the endorsements and attached papers, if any, and contains the entire contract of insurance. No reduction shall be made in any indemnity herein provided by reason of change in the occupation of the insured or by reason of his doing any act or thing pertaining to any other occupation. (B) : 1. This policy includes the endorsements and attached papers, if any, and contains the entire contract of insurance except as it may be modified by the insurer's classification of risks and premium rates in the event that the insured is injured after having changed his occupation to one classified by the in- surer as more hazardous than that stated in the policy, or while he is doing any act or thing pertaining to any occupation so classified, except ordinary duties about his residence or while engaged in recreation, in which event the insurer will pay only such portion of the indemnities provided in the policy as the pre- mium paid would have purchased at the rate but within the limits so fixed by the insurer for such more hazardous occupation. If the law of the state in which the insured resides at the time this policy is issued requires that prior to its issue a statement of the premium rates and classification of risks pertaining to it shall be filed with the state official having supervision of insurance in such state, then the premium rates and classification of risks men- tioned in this policy shall mean only such as have been last filed by the insurer in accordance with such law, but if such filing is not required by such law then they shall mean the insurer's premium rates and classification of risks last made effective by it in such state prior to the occurrence of the loss for which the insurer is liable. 200 The Insurance Law. § 107. (2) A standard provision relative to changes in the contract, which shall be in the following form: 2. 1^0 statement made by the applicant for insurance not in- cluded herein shall avoid the policy or be used in any legal pro- ceeding hereunder. "No agent has authority to change this policy or to waive any of its provisions, l^o change in this policy shall be valid unless approved by an executive officer of the insurer and such approval be endorsed hereon. (3) A standard provision relative to reinstatement of policy after lapse which may he in either of the three following forms: Form (A) to he used in policies which insure only against loss from accident; Form (B) to he used in policies which insure only against loss from sichness; and Form (C) to he used in policies which insure against loss from hoth accident and sichness, (A) : 3. If default be made in the payment of the agreed pre- mium for this policy, the subsequent acceptance of a premium by the insurer or by any of its duly authorized agents shall reinstate the policy, but only to cover loss resulting from accidental injury thereafter sustained. (B) : 3. If default be made in the payment of the agreed pre- mium for this policy, the subsequent acceptance of a premium by the insurer or by any of its duly authorized agents shall reinstate the policy but only to cover such sickness as may begin more than ten days after the date of such acceptance. (C) : 3. If default be made in the payment of the agreed pre- mium for this policy, the subsequent acceptance of a premium by the insurer or by any of its duly authorized agents shall reinstate the policy but only to cover accidental injury thereafter sustained and such sickness as may begin more than ten days after the date of such acceptance. (4) A standard provision relative to time of notice of claim which may he in either of the three following forms: Form {A) to he used in policies which insure only against loss from accident; Form (B) to he used in policies which insure only against loss from sichness, and Form (C) to he used in policies which insure § lOT. Life, IlKAi/rii, (\\slalty 'Cokpohations. 201 against loss from both accident and sicJcness. If Form (A) or Form (C) is used the insurer may at its option add thereto the fol- lowing sentence, " In event of accidental death immediate notice thereof must he given to the insurer/' (A) : 4. Written notice of injury on which claim may be based must be given to the insurer within twenty days after the date of the accident causing such injury. (B) : 4. Written notice of sickness on which claim may be based must be given to the insurer within ten days after the con- mencement of the disability from such sickness. (C) : 4. Written notice of injury or of sickness on which claim may be based must be given to the insurer within twenty days after the date of the accident causing such injury or within ten days after the commencement of disability from such sickness. (5) A standard provision relative to sufficiency of notice of claim which shall he in the following form and in which the in- surer shall insert in the blank space such office and its locajtion as it ma^y desire to designate for such purpose of notice : 5. Such notice given by or in behalf of the insured or bene- ficiary, as the case may be, to the insurer at or to any authorized agent of the insurer, with particulars suffi- cient to identify the insured, shall be deemed to be notice to the insurer. Failure to give notice within the time provided in this policy shall not invalidate any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible. (6) A standard provision relative to furnishing forms for the convenience of the insured in submitting proof of loss as follows: 6. The insurer upon receipt of such notice, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not so furnished within fifteen days after the receipt of such notice, the claimant shall be deemed to have complied with the requirements of this policy as to proof of 202 The Insurance Law. § 107. loss upon submitting within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, character and extent of the loss for which claim is made. (7) A standard provision relative to filing proof of loss which shall he in such one of the following forms as may be appropriate to the indemnities provided: (A) : 7. Affirmative proof of loss must be furnished to the in- surer at its said office within ninety days after the date of the loss for which claim is made. (B) : 7. Affirmative proof of loss must be furnished to the in- surer at its said office within ninety days after the termination of the period of disability for which the company is liable. (C) : 7. Affirmative proof of loss must be furnished to the in- surer at its said office in case of claim for loss of time from dis- ability within ninety days after the termination of the period for which the insurer is liable, and in case of claim for any other loss, within ninety days after the date of such loss. (8) A standard provision relative to examination of the person of the insured and relative to autopsy which shall he in the fol- lowing form: 8. The insurer shall have the right and opportunity to ex- amine the person of the insured when and so often as it may rea- sonably require during the pendency of claim hereunder, and also the right and opportunity to make an autopsy in case of death where it is not forbidden by law. (9) A standard provision relative to the time within which payments other than those for loss of time on account of disability shall be made, which provision may he in either of the following two forms and which may be omitted from any policy providing only indemnity for loss of time on account of disability. The in- surer shall insert in the blank space either the word '' immedi- ately " or appropriate language to designate such period of time, not more than sixty days, as it may desire; Form (A) to be used in policies which do not provide indemnity for loss of time on ac- § I'OT. Life, Health, CasUxVlty Corpokations. 2'0'3 count of disability and Form (B) to he used in policies which do so provide. (A) : 9. All indemnities provided in this policy will be paid after receipt of due proof. (B) : 9. All indemnities provided in this policy for loss other than that of time on account of disability will be paid after receipt of due proof. (10) A standard provision relative to periodica} payments of indemnity for loss of time on account of disability, which pro- vision shall be in the following form, and which may be omitted from any policy not providing for such indemnity. The insurer shall insert in the first blank space of the form appropriate language to designate the proportion of accrued indemnity it may desire to pay, which proportion may be all or any part not lessf than one-half, and in the second blank space shall insert any period of time not exceeding sixty days: 10. Upon request of the insured and subject to due proof of loss accrued indemnity for loss of time on ac- count of disability will be paid at the expiration of each during the continuance of the period for which the insurer is liable, and any balance remaining unpaid at the termination of such period will be paid immediately upon receipt of due proof. (11) A standard provision relative to indemnity payments which may be in either of the two following forms: Form {A) to be used in policies which designate a beneficiary, and Form (B) to be used in policies which do not designate any beneficiary other than the insured. (A) : 11. Indemnity for loss of life of the insured is payable to the beneficiary if surviving the insured, and otherwise to the estate of the insured. All other indemnities of this policy are payable to the insured. (B) : 11. All the indemnities of this policy are payable to the insured. 204 The Insurance Law. § 107. (12) A standard provision providing for cancellation of the policy at the instance of the insured which shall he in the follow- ing form: 12. If the insured shall at any time change his occupation to one classified by the insurer as less hazardous than that stated in the policy, the insurer, upon written request of the insured and surrender of the policy, will cancel the same and will return to the insured the unearned premium. (13) A standard provision relative to the rights of the bene- ficiary under the policy which shall he in the following form and which may he omitted from any policy not designating a, heneficiary : 13. Consent of the beneficiary shall not be requisite to sur- render or assignment of this policy, or to change of beneficiary, or to any other changes in the policy. (14) A standard provision limiting the time within which suit may he hr ought upon the policy as follows: 14. 1^0 action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after proof of loss has been filed in accordance with the requirements of this policy, nor shall such action be brought at all unless brought within two years from the expiration of the time within which proof of loss is required by the policy. (15) A standard provision relative to time limitations of the policy as follows: 15. If any time limitation of this policy with respect to giving notice of claim or furnishing proof of loss is less than that permitted by the law of the state in which the insured resides at the time this policy is issued, such limitation is hereby ex- tended to agree with the minimum period permitted by such law. Subd. (d). No such policy shall be so issued or delivered which contains any provision (1) relative to cancellation at the instance of the insurer; or, (2) limiting the amount of indemnity § 107. Life, Health, Casuaety Cokpokations. 206 to a sum less than the amount stated in the policy and for which the premium has been paid; or, (3) providing for the deduction of any premium from the amount paid in settlement of claim; or, (4) relative to other insurance by the same insurer; or, (5) relative to the age limits of the policy; unless such provisions which are hereby designated as optional standard provisions, shall be in the words and in the order in which they are hereinafter set forth, but the insurer may at its option omit from the policy any such optional standard provision. Such optional standard provisions if inserted in the policy shall immediately succeed the standard provisions named in subdivision (c) of this section. (1) An optional standard provision relative to cancellation of the policy at the instance of the insurer as follows: 16. The insurer may cancel this policy at any time by written notice delivered to the insured or mailed to his last address, as shown by the records of the insurer, together with cash or the insurer's check for the unearned portion of the premiums actu- ally paid by the insured, and such cancellation shall be without prejudice to any claim originating prior thereto. (2) An optional standard provision relative to reduction of the amount of indemnity to a sum less than that stated in the policy as follows: 17. If the insured shall carry v^ith another company, corpora- tion, association or society other insurance covering the same loss without giving written notice to the insurer, then in that case the insurer shall be liable only for such portion of the indemnity promised as the said indemnity bears to the total amount of like indemnity in all policies covering such loss, and for the return of such part of the premium paid as shall exceed the pro rata for the indemnity thus determined. (3) An optional standard provision relative to deduction of premium upon settlement of claim as follows: 18. Upon the payment of claim hereunder any premium then due and unpaid or covered by any note or written order may he deducted therefrom. 206 The Insurance Law. § 107. (4) An optional standard provision relative to other insurance by the same insurer which shall he in such one of the following forms as may he appropriate to the indemnities 'provided, and icfi the hla^k spaces of which the insurer shall insert such upward limits of indemnity as are specified hy the insurers' classification of rishs, filed as required hy this section. (A) : 19. If a like policy or policies, previously issued by tlie insurer to the insured be in farce concurrently berewith, making the aggregate indemnity in excess of $ , the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured. (B) : 19. If a like policy or policies, previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for loss of time on account of disability in excess of $ weekly, the excess insurance shall be void and all premiums paid for such excess shall be returned to the insured. (C) : 19. If a life policy or policies, previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for loss other than that of time on account of disability in excess of $ , or the aggregate indemnity for loss of time on account of disability in excess of $ weekly, the excess insurance of either kind shall be void and all premiums paid for such excess shall be returned to the insured. (5) An optional standard provision relative to the age liinits of the policy which shall he in the following form and in the blank spaces of which the insurer shall insert such number of years as it may elect: 20. The insurance under this policy shall not cover any per- son under the age of years nor over the age of years. Any premium paid to the insurer for any period not covered by this policy will be returned upon request. § 107. Life, Health, Casualty Cok'poiiations. 207 Subd. (e). No such policy shall be so issued or delivered if it contains any provision contradictory, in whole or part, of any of the provisions hereinbefore in this section designated as " Stand- ard Provisions " or as '' Optional Standard Provisions ; " nor shall any endorsements or attached papers vary, alter, extend, be used as a substitute for, or in any way conflict with any of the said " Standard Provisions " or the said " Optional Standard Pro- visions ; " nor shall such policy be so issued or delivered if it con- tains any provision purporting to make any portion of the charter, constitution or by-laws of the insurer a part of the policy unless such portion of the charter, constitution or by-laws shall be set forth in full in the policy, but this prohibition shall not be deemed to apply to any statement of rates or classification of risks filed with the superintendent of insurance in accordance with the pro- visions of this section. Subd. (f). The falsity of any statement in the application for any policy covered by this section shall not bar the right to re- covery thereunder unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer. Subd. (g). The acknowledgment by any insurer of the receipt of notice given under any policy covered by this section, or the furnishing of forms for filing proofs of loss, or the acceptance of such proofs, or the investigation of any claim thereunder shall not operate as a waiver of any of the rights of the insurer in de- fense of any claim arising under such policy. Subd. (h). No alteration of any written application for insur- ance by erasure, insertion or otherwise, shall be made by ary person other than the applicant without his written consent, and the making of any such alteration without the consent of the applicant shall be a misdemeanor. If such alteration shall be made by any officer of the insurer, or by any employee of the insurer with the insurer's knowledge or consent, then such act ^0§ The Insurai^ce Law. § 107, shall be deemed to have been performed by the insurer thereafter issuing the policy upon such altered application. Subd. (i). A policy issued in violation of this section shall be held valid but shall be construed as provided in this section and when any provision in such a policy is in conflict with any pro- vision of this section, the rights, duties and obligations of the insurer, the policyholder and the beneficiary shall be governed by the provisions of this section. Subd. (j). The policies of insurance against accidental bodily injury or sickness issued by an insurer not organized under the laws of this state may contain, when issued in this state, any provision which the law of the state, territory or district of the United States under which the insurer is organized, prescribes for insertion in such policies, and the policies of insurance against accidental bodily injury or sickness issued by an insurer organized under the laws of this state may contain, when issued or delivered in any other state, territory, district or country, any provision re- quired by the laws of the state, territory, district or country in which the same are issued, anything in this section to the contrary notwithstanding. Subd. (k). (1) Nothing in this section, however, shall apply to or affect any policy of liability or workmen's compensation insurance or any general or blanket policy of insurance issued to any municipal corporation or department thereof, or to any corpo- ration, copartnership, association or individual employer, police or fire department, underwriters' corps, salvage bureau, or like associations or organizations, where the officers, members or em- ployees or classes or departments thereof are insured for their individual benefit against specified accidental bodily injuries or sickness while exposed to the hazards of the occupation or other- wise in consideration of a premium intended to cover the risks of all tlie persons insured under such policy. § 107. Life, IlKAi/nr, Casuat.ty Corporations. 20-9 (2) Nothing in this section shall apply to or in any way affect contracts supplemental to contracts of life or endowment insur- ance where such supplemental contracts contain no provisions except such as operate to safeguard such insurance against lapse or to provide a special surrender value therefor in the event that the insured shall be totally and permanently disabled by reason of accidental bodily injury or by sickness; provided that no such supplemental contract shall be issued or delivered to any person in this state unless and until a copy of the form thereof has been submitted to and approved by the superintendent of insurance, under such reasonable rules and regulations as he shall make con- cerning the provisions in such contracts and their submission to and approval by him. (3) Nothing in this section shall apply to or in any way affect fraternal benefit societies. (4) The provisions of this section contained in clause (5) of subdivision (b) and clauses (2), (3), (8) and (12) of subdivision (c) may be omitted from railroad ticket policies sold only at rail- road stations, or at railroad ticket offices by railroad employees. Subd. (I). Any company, corporation, association, society or other insurer or any officer or agent thereof, which or who issues or delivers to any person in this state any policy in willful viola- tion of the provisions of this section shall be punished by a fine of not more than five hundred dollars for each offense, and the super- intendent of insurance may revoke the license of any company, corporation, association, society or other insurer of another state or country, or of the agent thereof, which or who willfully violates any provision of this section. Subd. (m). The term " indemnity " as used in this section means benefits promised. Former § 107, added by L. 1910, chap. 636, repealed by L. 1913. chap. 155. Added by L. 1913, chap. 155. In effect October 1, 1913. Note. — The amendment of this section by chapter 155 of 1913 repealed former section 107 and inserted two new sections, numbers 107 and 108, pre- scribing standard provisions for health and accident policies and prohibiting discriminations. By the terms of section 107, certain standard provisions which must be used by all corporations of this character are made part of the 210 The Insurance Law. § 108. statute, such provisions having been prepared for the purpose of correcting certain practices found to exist in health and accident insurance business. This law has been approved by the National Ctonvention of Insurance Com- missioners. — Ed. Note. — The purpose of the addition of sections 107 and 108 by chapter 155 of L. 1913, was to correct certain practices found to exist in the health and accident insurance business and to meet some objectionable features of the policy contracts used by this class of corporations by compelling certain standard provisions to be used by all corporations of this character. — Ed. The holder of a life or accident policy held not to be entitled to the sick indemnity when he had paid the premium when it web past due. Greenwaldt v. U. S. H. & A. Ins. Co., 52 Misc., 353. § 108. Discriminations under accident or health policies prohibited. 'Nk} insurance corporation authorized to make insurance in this state under subdivision two of section seventy of this chap- ter, nor any agent of sucli corporation, shall make or permit any discrimination between individuals of the same class in the amount of premiums, policy fees, or rates charged for any policy of acci- dent or health insurance, or in the benefits payable thereunder, or in any of the terms or conditions of such insurance contract, or in any other manner whatsoever. Any person or corporation violating any provision of this section shall be guilty of a misde- meanor, and shall forfeit to the people of the state the sum of five hundred dollars for each such violation. Added by L. 1913, chap. 155. In effect October 1, 1913. Note. — For purpose of addition of this section see note to § 107 ante. It is not lawful for a company to have in use at the same time two tables of rates for the same class of policies. Ruling Ins. Dept., March 1, 1915. FiEE Insurance Cokpokation. 211 AETICLE IIL FiBE Insurance Cokpokation. Section 110. Incorporation. 111. Mutual fire insurance corporations. 112. Subscriptions to capital. 113. Capital stock notes and deposit notes. 114. May unite cash capital as an additional security. 115. Deposit notes and cash payments by members of mutual cor porations. 116. Assessments in mutual corporations. 117. How surplus profits to be estimated. 118. Allowance of assets and estimation of liabilities upon exami- nations. 119. Liability of directors and corporators. 120. What to appear on face of policy. 121. Standard fire insurance policy to be prescribed and used. 121-a. Appointment of umpire by court. 122. Payment of return premiums on cancellation of policy* 123. Cancellation of policies by receiver and issue of certificates oJ indebtedness. 124. Extension of joint -stock corporations. 125. Mutual may become stock corporations. 126. Extension of term of charter of mutual corporations. 127. Existing corporations may reincorporate. 128. Duration of charter. 129. Merger or consolidation of fire insurance corporations. 130. Guaranty and special reserve funds. 131. Funds, how invested. 132. Proceedings in case of extensive conflagrations. 132-a. Discontinuance of special reserve and guaranty surplus funds. 133. Payment of tax by agents of foreign fire insurance corporationv to fire departments. 134. Undertaking of agent. 135. Penalty for refusal to pay. 136. Penalty for refusal to exhibit foreign fire policies. 137. License to agents in excepted cases 138. License to persons, partnerships, associations and corporations in excepted cases. 138-a. Public adjusters; certificate of authority. 139. Organizations for assisting underwriters in insurance business generally. 140. Organizations for assisting in establishing insurance rates. 141. Hate-making associations. 142. Agent's certificate of authority. 143. Broker's certificate of authority. 144. Fee not to be included in consideration for fire insurance. 145. Report of consideration to company. 146. Fees and charges to be indorsed on policy. 212 The Insueance Law. § 110. Section 147. Penalty for violation by company. 148. Penalties for violations by officers and agents. ^ 149. Aut'horizaition of foreign mutual fire insurance corporations. 149a. Premium or assesisment tax. 149b. Agents. 149c. Distribution of annual tax. 'Section 110'. Incorporation. Thirteen or more persons may become a corporation for tlie purposes of making insurances on dwelling-liouses, stores and all kinds of buildings and housebold furniture, and otber property against loss or damage, including loss of use or occupancy, by fire, ligbtning, windstorm, tornado, cyclone, earthquake, bail, frost or snow, and by explosion whether fire ensues or not, except explo- sion on risks specified in subdivision seven of section seventy of this chapter, and also against loss or damage by water to any goods or premises arising from the breakage or leakage of sprinklers, pumps or other apparatus erected for extinguishing fires, and of water pipes, and against accidental injury to such sprinklers, pumps or other apparatus, and upon vessels, boats, cargoes, goods, merchandise, freights and other property against loss or damage by all or any of the risks of lake, river, canal and inland navigation and transportation, as well as by any or all of the risks specified in section 150' of this chapter, including insurances upon automobiles, whether stationary or being operated under their own power, which shall include all or any of the hazards of fire, explosio-n, transportation, collision, loss by legal liability for damage to prop- erty resulting from the maintenance and use of automobiles, and loss by burglary or theft or both, but shall not include insurance against loss by reason of bodily injury to the person, and to effect reinsurance of any risks taken by it, by filing in the office of the superintendent of insurance a declaration signed by all of them of their intention to form a corporation for the purpose of transacting the business of making any or all of such insurances, which shall comprise a copy of the charter proposed to be adopted by them, setting forth the name of the corporation, the place of location of its office, the mode in which its corporate: powers are to be exercised and its directors elected, a majority of whom shall be citizens of this state, and if a stock corporation, the owner in his own right of at least five hundred dollars of the stock of the corporation at its par value, the mode of filling vacancies in the office of director, the period for the commencement and termina- § 110. FiEE Insurance Corpokation. 213 tion of its fiscal year and the amount of capital to be employed in the transaction of its business; provided that a corporation including in its charter a provision to assume any of the risks of ocean marine insurance as specified in section 150 of this chapter must have a capital, paid in in cash, of at least $400,000. 1^0 such declaration shall be filed, unless the persons signing the same shall have previously published for at least two weeks succes- sively a notice of their intention to form such a corporation in a public newspaper in the county wliere its olHce is to be located. Every such corporation shall be known as a fire insurance cor- poration. No sucb corporation shall directly or indirectly deal or trade in buying or selling any goods, wares, merchandise or other commodities whatever, except such articles as may be insured by it, and are claimed to be damaged by any cause so insured against Source.— Former § 110, as amended by L. 1907, chaps. 206 and 503; L. 1908, chap. 346; originally revised from L. 1853, chap. 466, §§ 1-2, 4-5, 3, as amended by L. 1873, chap. 851; L. 1861, chap. 92, §§ 1, 2; L. 1880, chap. 452; L. 1882, ohap. 218. Amended by L. 1910, chap. 168; L. 1911, chap. 126 and L. 1913, chap. 296. Note. — The purpose of the amend-ment of this section by chapter 296 of 1913 was to give fire insurance corporations all the corporate rights belonging to this class of corporations vt^hich are already accorded to them under the laws of other states by adding to those they already possess the right to in- sure against cyclone, hail, frost, snow and by explosion whether fire ensues or not. — Ed. Note. — 'The purpose of the amendment by K 1910, chap. 168, was to allow a fire company to write ocean marine insurance, also provided in its charter empowered it specifically so to do and it possessed a paid-in capital of $400,000.— Ed. The amendment by chap. 206 of 1907 added the words " including insurance! upon automobiles whether stationary or being operated under their own power; " the subsequent amendment by chap. 503 of 1907 struck out these words and added the word " earthquakes." The words " including insurances upon automobiles, etc.," were also added to § 150 post by said chap. 206 of 1907. See § 6, ante. Fees for filing declaration, etc., with superintendent. See § 10, ante. Certificate of attorney-general; corporate names; number of directors. See § 11, ante. Examination by superintendent as to capital stock, etc. See § 12, ante. Minimum capital stock of fire or marine company. See chap. 733 of 1900. Reincorporation of foreign moneyed corporation. See chap. 205 of 1903. Fire insiu-anee company for Roman Catholic Diocese of Brooklyn. It is unlawful for a fire insurance company, engaged in business in this State, to guarantee payment of claims found to be due upon policies of 214 The Insurance Law. § 111. another fire insurance company doing business in this State. Attorney-Gen- eral Rep., Sept. 4, 1902. DOMESTIC ANIMALS. — Only legally organized fire insurance companies can insure against loss of domestic animals by fire. Attorney-General Rep.., 1893, page 317. LLOYDS. — Action against Lloyds under § 1948 of the Code of Civil Procedure for carrying on business. People v. Loew, 19 Misc., 248. SUBSCRIPTIONS. — Section 110 does not require organization papers of a stock insurance company to be accompanied by any subscription for capital stock, and as section 112 provides for opening books for stock subscription, the corporation is created before subscriptions are invited; subscriptions are gov- erned by section 53 (formerly section 51), Stock Corporatioi' Law. and are void unless ten per cent be paid. Van Schaick v. Mackin, 129 App. Div., 335. § 113 of the Insurance Law seems to construe § 110 as solicitous only that tihe $200,000 capital be adequately secured, and not as insisting that the precise provisions precedent in § 111, asi to doing business in New York and Kiugs counties, continue in force in a case where the $200,000 is already held in accumulated profits. Attorney-General Rep., Oct 15, 1913; July 23, 1913. § 111. Mutual fire insurance corporations. No domestic mutual fire insurance corporation shall commence business if located in the city of New York, as said city existed on tlie first day of October, eighteen hundred and ninety-two, or in the county of Kings, nor establish any agency for the trans- action of business in either New York or Kings county, until agreements have been entered into for insurance with four hundred applicants, citizens of this state and freeholders, each owning real estate within this state to the value of at least five thousand dollars, the premiums on which insurance shall amount to two hundred thousand dollars, of which forty thousand dollars shall have been paid in, in cash, and notes of solvent parties, founded on actual diid bona fide applications for insurance, shall have been re- ceived for the remainder. No such corporation in any other county of the state shall commence business until agree- ments have been entered into for insurance with at least two hun- dred applicants, citizens of this state and freeholders, each owning real estate within this state to the value of at least two thousand five hundred dollars, the premiums on which insurance shall amount to one hundred thousand dollars, of which twenty thou- sand dollars shall have been paid in in cash, and notes of solvent parties, founded on actual and bona fide applications for insur- § 111. Fire Insueance Corpobation. 215 unce, shall have been received for the remainder. No one of such notes shall amount to more than five hundred dollars. No two shall be given for the same risk, or be made by the same person or firm, except where the whole amount of such notes shall not exceed five hundred dollars. No such note shall be represented as capital stock unless a policy be issued upon the same within thirty daya after the organization of the corporation upon a risk located within this state, and such policy shall be for no shorter period than one year. Such notes shall be called capital stock notes and shall be payable, in part or whole, at any time when the directors shall deem the same requisite for tlie payment of losses and such inci- dental expenses as may be necessary for transacting the business of the corporation. The solvency of each of the makers of such notes shall be examined into by the superintendent of insurance, or by one or more competent and disinterested persons specially appointed by him for that purpose. No note shall be received as a capital stock note unless the maker thereof shall be approved by the superintendent of insurance, or by the person or persons ap- {)ointed by him for that purpose, as being pecuniarily good and re- sponsible for the same, and is also owner of real estate as required by this section, nor until such note has heen finally approved by the superintendent of insurance. No such note shall be valid as a capital stoclc note, unless the corporators or officers of such corpora- tion shall certify under oath that it is the bona fide property of the corporation. No domestic mutual fire insurance corporation trans- acting business with capital stock notes or deposit notes shall underwrite any property not located within this state, or reinsure policies written upon such property by other insurance corpora- tions. Source. — Former § 111, as amended by L. 1898, chap. 147; originally revised from L. 1853, cliap. 466, § 6, as amended by L. 1862, chap. 367. See § 12, ante. Minimum capital stock of fire and marine companies. And note that this section, because of the enactment of L. 1913, ch. 92, is now undoubtedly in force. VIOLATION. — A company which had, when it began business, $40,000 in cash in the bank, the proceeds of certain sight drafts deposited by it with the bank, being 20 per cent of the $200,000 worth of premiums referred to in this section, and made by statute a preliminary requirement to the trans- action of any business, has not in any manner violated this section. People v. Equitable Mut. Ins. Corp., 1 App. Div., 84. SPECIAL CHARTERS. — Mutual fire insurance companies doing business in this state under special laws passed prior to chap. 308 of 1849 have the right to transact business according to the terms of their original charter until the same expires. Attorney-General Rep., 1897, page 148. 216 The Insurance Law. § 111. NOTE GIVEN FOR INSURANCE.— A note given to a mutual insurance company, for premiums in advance, payable " in such portions, and at such time or times, as the directors of the company may, agi-eeably to their charter and by-laws require," is in etlect payable on demand. Hill v. Reed, 16 Barb., 280. A note constituting part of the capital stock of a mutual insurance com- pany is payable absolutely, may be indorsed and transferred by the corpora- tion at its pleasure, an^ upon the insolvency of the company may be collected by its receiver. White v. Haight, 16 N. Y., 310. An incorporator of an equitable mutual fire insurance company who gives to the company a capital -stock note, the payment of which is made subject to the conditions of the Insurance Law, and who, upon the incorporation of the company, receives the benefit of the note in the form of a policy of insurance, and becomes one of the directors of the company, and acts in that capacity until the corporation, becoming insolvent, passes into the hands of a receiver, is not in a position to interpose, as a defense to an action brought by the receiver to enforce payment of such note, that because of a failure to comply with the condition imposed by § 111 of the Insurance Law, requiring a specified amount to be paid in in cash by the incorporators before the corporation was authorized to commence business, the incorporation was illegal. Raegener v. McDougall, 33 App. Div., 231. The promise to pay expressed in the note and the requirement of § 111 that a policy must be issued within thirty days after the organization of the corporation are independent covenants, and the issuance of the policy within the required time is not a condition precedent to a recovery upon the note. Raegener v. Hubbard, 167 N. Y., 301. A person who agrees with the promoters of a mutual fire insurance com- pany to become a member thereof and delivers a capital-stock note to them may, unless estopped from so doing, withdraw his proposal for insurance and secure the return of his note at any time before the company is actually incorporated and has accepted his proposition. Raegener v. Brockway, 5P A.pp. Div., 166. All the notes of a mutual insurance company constitute its capital stock White V. Ross, 15 Abb. Pr., 66. An insurance company is not authorized to subscribe to the capital stock of a mutual insurance company, and to agree to give its notes in advance for premiums on insurances to be subsequently etfected. Berry v. Yates, 24 barb., 199. DIVISION OF BUSINESS. — A mutual insurance company may divide it? business and risks into distinct departments, or classes, pledging the pre- miums received in each department as the primary fund for the payment of losses in that department. Sands v. Boutwell, 26 N. Y., 233. CAPITAL. — A mutual fire insurance company cannot insure property in the counties of New York and Kings unless it has complied with the pro- visions of § 111 of the Insurance T^w and has organized with a capital of $200,000. Attorney-General Rep., 1896, page 190. § 113 of the Insurance Law seems to construe § 111 as solicitous only that the $200,000 capital be adequately secured, and not as insisting that t/he precise provisions precedent in § 110, as to doing business in New York and Kings counties, continue in force in a case where the $200,000 is already held in accumulated profits. Attorney-General Rep., 1914, page 78. §§ 112, 113. Fire Insurance Corporation. 217 Where a receiver is appointed in an insolvent mutual fire insurance com- pany, the outstanding policies of said company are thereupon cancelled by operation of law, and subsequent loss under S'uch policies are not liabilities which may be enforced against the receiver. Attorney-General Rep., July 23, 1909. INCORPORATION. — Persons who have contracted with a corporation, as such, cannot afterwards raise the objection that the company was not legally incorporated. White v. Ck)ventry, 29 Barb., 305. This section is construed by § 113 as solicitous only that the $200,000 capital be adequately secured and does not insist that the precise provisions precedent in this section as to doing business in New York and Kings Counties continue in force in a case where $200,000 is already held in accumulated profits". Attorney -General's Rep., October 15, 1913; July 23, 1913. § 112. Subscriptions to capital. Upon filing in the office of the superintendent of insurance the declaration and copy charter and proof of publication of notice of intention to form a corporation as hereinbefore required, which proof of publication shall be made by the affidavit of the publisher of the newspaper in which the notice was published, or his foreman or clerk, such corporation, if a stock corporation, may open books for subscription to its capital stock and keep the same open until the full amount specified in the charter is subscribed. If it is a mutual insurance corporation, it may open books to receive propositions and enter into agreements and receive capital stock notes in the manner and to the extent specified in this article. Source. — Former § 112; originally revised from L. 1853, chap. 466, § 7. See § 53, Stock Corporation Law, chap. 564 of 1890. Subscriptions to capital stock. See § 660, Penal Law. Frauds in the organization of corporations. See § 662 et seq., Penal Law. Fraudulent issue of stock, etc. § 113. Capital stocic notes and deposit notes. All capital stock notes of any domestic mutual fire insurance corporation shall remain as security for all losses and claims, until the accumulation of profits invested as required by law shall equal the amount of cash capital required to be possessed by stock fire insurance corporations, the liability of each note decreasing pro- portionately as the profits are accumulated. Any note which may have been deposited with any mutual fire insurance corporation subsequent to its organization in addition to the cash premium on 218 The Insurance Law. § 113. any insurance affected with such corporation, may, at the expira- tion of the time of such insurance, be relinquished and given up to the maker thereof or his representative, upon his paying his proportion of all losses and expenses which may have accrued thereon during such term. The directors of any such corporation shall have the right to determine the amount of tlie note to be given in addition to the cash premium by any person insured therein, but in no case shall the note be more than five times the whole amount of the cash premium, and every person affec^ ing insurance in any mutual fire insurance corporation, and his heirs, executors, administrators and assigns continuing to be bo insured, shall thereby become members of the corporation during the period of insurance, and shall be bound to pay for losses and necessary expenses accruing in and to such corporation in proportion to the amount of his deposit note or notes. Source. — Former § 113; originally revised from L. 1853, chap. 466, § 13, as amended by L. 1854, chap. 369. PRIVILEGES. — In the matter of certain rights and privileges of mutual fire insurance companies, organized under article III of the Insurance Law of this state, in regard to capital stock and policies. Attorney-General Rep., 1896, page 190. STATUTE OF LIMITATIONS.— The statute of limitations is not a defense to the makers of a capital-stock note given to a mutual fire insurance company where the statute under which it was given was incorporated in the note by reference thereto. Raegener v. Mcdicus, 32 Misc., 591. AS BONA FIDE HOLDERS. — Parties receiving from the company capital- stock notes given for the purpose of paying claims and transferred as collateral security are entitled to be protected as bona fide holders to the same extent and under the same circumstances as parties who become owners of such paper. Brockman v. Metcalf, 32 N. Y., 691. NEGOTIABILITY OF NOTES.— The notes are in the hands of the com- pany valid binding notes which the company has a right to negotiate for the purpose of paying claims, or otherwise, in the course of it-s 'business, notwithstanding it ultimately appears that some of the subscriptions were not valid binding subscriptions. Holbrook v. Basset, 5 Bosw., 14V. Holders of policies in a mutual fire insurance company, who paid tlieir premiums in cash, occupy similar positions to holders of policies who gave deposit notes for such premiums, and under § 115 such policyholder is entitled, upon the cancellation of the policy, to the return of such cash premium. Raegener v. Willard, 44 App. Div., 41. INCORPORATION.— Tliis section construes § 110 as solicitous only that the $200,000 capital be adequately secured and does not insist that the pre- cise provisions precedent in § 111 as to doing business in New York and Kings Counties continue in force in a case where $200,000 is already held in accumulated profits. Attorney-General's Rep., October 15, 1913; July 23, 1913. §§ 114, 115. Fire Insurance Corporation. 219 § 114. May unite cash capital as an additional security. Any domestic mutual fire insurance corporation may unite a cash capital to any extent as an additional security to its members, over and above their cash premiums and premium notes. Such cash capital shall not be less than thirty thousand dollars, and shall be invested as capital of stock fire insurance corporations is required to be invested. The corporation may allow interest on such cash capital, and a participation in its profits, and prescribe the liability of the owners thereof to share in the losses of the corporation, and such cash capital shall be liable as the cash capital of the corpora- tion in the payment of its debts. Such cash capital shall in all cases be paid in at the organization of the corporation, and satis- factory evidence of that fact furnished to the superintendent be- fore it shall be authorized to do business. Any existing joint-stock fire insurance corporation, and any cor- poration formed under this article, may, upon obtaining the writ- ten consent of the holders of three-fourths in amount of its stock, permit the insured to participate in the profits of the business of such corporation, and provide how far any scrip issued to the insured for such profits shall be liable for the losses to be sustained. Whenever an amount not less than one hundred thousand dollars has been accumulated, and scrip issued therefor, the corporation may, with the written consent of the holders of three-fourths in amount of its stock, pay off and cancel an amount of the original cash capital equal to one-half of the accumulated profits, and so may continue from time to time until the whole amount of the original cash capital is paid off. Before any portion of such capi- tal stock shall be so paid off, proof shall be made to the superinten- dent and certified by him to be satisfactory, that an amount of accumulated profits has been realized, scrip issued therefor, and investments made thereof in the maimer required in this chapter, at least equal to double the amount so desired to be paid off and canceled. Source. — Former § 114; originally revised from L. 1853, chap. 466, § 14. § 115. Deposit notes and cash payments by members of mutual corporations. Every person becoming a member of any domestic mutual fire insurance corporation by affecting insurance therein, shall, before 220 The Insurance Law. § 115. he receives his policy, deposit his promissory note for such a sum of money as shall be determined by the directors of the corpora- tion. Such part of such note, not exceeding twenty per cent, as shall be required by the by-laws of the corporation, shall be im- mediately paid, and the remainder of such deposit note shall be payable in whole or in part., as the exigencies of tlie corporation shall require for the payment of losses by fire and incidental ex- penses of the corporation. At the expiration of the term of insur- ance such note, or the part thereof which shall remain unpaid after receiving thereon from the maker a proportionate share for all losses or expenses occurring during sucb term, shall be relinquished by the corporation to the maker, and the corporation may loan such portion of the money received upon any such note or from any such members as may not be immediately wanted for its use, if the same shall be secured by a bond and a mortgage on unincumbered real property of double the value of the sum loaned. Source. — Former § 115; originally revised from L. 1848, ohap. 205. PREMIUM NOTES. — A note made and delivered to persons organizing a mutual insurance company, for the purpose of being presented to the com- missioners appointed by the comptroller to examine the capital and securities of such company, is a premium note. Sands v. Campbell, 31 N. Y., 345. A note given for premiums on an open policy of insurance to the makers, and afterwards substituted for notes which had been negotiated by the company to the plaintiffs, for the purpose of paying claims, or otherwise, in the course of its business, must be regarded as a note of the character specified in the charter, and the transfer thereof to the plaintiflfs by the com- pany was lawful, and the title of the plaintiffs is indisputable. Wood v. Wellington, 30 N. Y., 218. Where the company has negotiated a premium note in the usual course of business, the title thereto is vested absolutely in the indorsee; and any subsequent arrangement which the company may make with the maker of the note in respect to its payment without the assent or knowledge of the indorsee thereof, will not affect his rights, or the rights of a bona fide holder of the same. Farmer's Bank v. Maxwell, 32 N. Y., 579. Where a premium note in advance for the security of dealers was given to a mutual insurance company, at its outset in business, and was renewed at its maturity, the makers were held liable to the receivers of the company in the same manner as if the occasion for its use had arisen during the currency of the original note. Hone v. Folger, 1 Sandf ., 474. It is exceedingly doubtful whether the directors of the company, or any agent with authority from them, has power to dispense with a compliance, on the part of persons seeking insurance, of the statutory provisions requir- ing the giving of deposit or premium notes. Gibbs v. Richmond Mut. Ins. Co., 9 Daly, 203. § 115. Fire Insurance Corporation. 221 The premium note is part) and parcel of the contract of insurance, and, with the policy, constitutes the whole of the transaction. One part cannot be cancelled and the other remain in full force, without the consent of both parties. Campbell v. Adams, 38 Barb., 132. A note given to the company for premiums in advance is a valid security, and may be transferred to a party who has insured in the company, on account of a claim for a loss. Howland v. Myer, 3 N. Y., 290. A provision in the policy of a marine insurance company that the amount of the premium note and all other debts to the company should be first paid or secured, before anything should be due upon a loss to the insured, was intended primarily for the protection and security of the company; but that it also created the reciprocal obligation that the company should not demand payment of the note until they had paid losses. Osgood v. De Groot, 3G N. Y.. 348. A note is valid by force of the statute authorizing it to be taken and, therefore, that a partial failure of consideration cannot be set up to defoat a recovery of the full amount. Deraismes v. Merchants' Mut. Ins. Co., 1 N. Y., 371. Holders of policies in a mutual fire insurance company, who paid their premiums in cash, occupy similar positions to holders of policies who gave deposit notes for such premiums, and under § 115, providing that the maker of a deposit note shall be only liable for losses occurring during the term of the insurance, a policyholder who has paid the premium in cash is entitled, upon the cancellation of the policy, to the return of a proportion of such cash premium. Raegener v. Willard, 44 App. Div., 41. PREMIUM NOTES; STATUTE OF LIMITATIONS.— A premium note is to be regarded according to its legal import, and not according to its form; the statute of limitations applies to such a note according to its legal import and, if a note is made payable at the end of or within tweh^e months from its date, will commence running at the end of a year from the date thereof. Bell v. Yates, 33 Barb., 627; Sands v. St. Johns, 36 Barb., 628. The fact that an assessment has already been made upon a premium note which still remains unenforced, will not render a second assessment upon the note, embracing the former one, and designed to accomplish the same pur- pose, invalid, where no question arises as to the statute of limitations. Sands v. Sweet, 44 Barb., 108; overruling Campbell v. Adams, 38 Barb., 132. A note given to a mutual insurance company to make up its capital is, in legal effect, payable on demand, i. e., at its date, though by its terms pay- ment was to be made at such times and in such portions as the directors might require; no actual demand is necessary in respect to such a note; tho statute of limitations begins to run against such a note at the time it is given. Howland v. Edmonds, 24 N. Y., 307; Osgood v. Straus, 55 N. Y., 672. On a promissory note given as a contingent guaranty and payable accord- ing to assessments to be made after other assets are exhausted, the statute of limitations does not begin to run until that contingency occurs. Hope Ins. Co. v. Perkins, 2 Abb. Ct. of App., 383. DEFENSE TO PAYMENT OF NOTE.— It is no defense to an action on a note that the losses, to the payment of which the money may be applied when collected, have occurred after the expiration of the period for which the 222 The Insurance Law. § 116. maker of the note waa insured, or that no assessment was made in respect to such losses upon other notes given to the company. White v. Haight, 16 N. Y., 310, Where a stock subscription note, payable to the order of a mutual insurance company, is indorsed by its president and negotiated, and before its maturity is taken by a third person in good faith, and for full value in the usual course of business, and it appears that this is a common mode of negotiating its notes, such holder acquires a good title. Merchants' Bank v. McColl, 6 Bosw., 473. Where, in an action by a foreign insiu-ance corporation upon a note, it only appears that it was created to effect insurance upon lives, and that the note was executed to it for the premium on a policy of insurance issued by it, it will be presumed that the insurance was such as the company was authorized to make and that the note was legal, until the contrary appears. Mut. Benefit L. Ins. Co. v. Davis, 12 N. Y., 569. § 116. Assessments in mutual corporations. The directors shall, as often as they deem necessary, after re- ceiving notice of any loss or damage by fire sustained by any mem- ber, and ascertaining the same, or after the rendition of any judg- ment against the corporation for loss or damage, settle and detei^ mine the sums to be paid by the several members thereof as their respective portion of such loss, and publish the same in such man- ner as they shall see fit or as the by-laws shall have prescribed. The sam to be paid by each member shall always be in proportion to the original amount of his note or notes, and shall be paid to the officers of the corporation within thirty days next after the publi- cation of such notice. If any member shall, for the space of thirty days after such publication and after personal demand for payment shall have been made, neglect or refuse to pay the sum so assessed upon him, the directors may sue for and recover the whole amount of his note or notes, with costs of suit, but execution shall only issue for assessments and costs as they accrue, and every such execution shall be accompanied by a list of the losses for which the assessment is made. If the whole amount of notes shall be insufficient to pay the loss occasioned by any fire or fires, in such case the sufferers insured by the corporation shall receive, toward making good tlieir respective losses, a proportional share of the whole amount of such notes ac- cording to the sums by them respectively insured. No member shall ever be required to pay for any loss occasioned by fire or in- land navigation more than the whole amount of his note. Any § 116. Fire Insurance Corporation. 223 such corporation may receive from any person applying for insur- ance, in lieu of a deposit note, the whole amount in cash for the premium therefor, ^^'ithout subjecting such person to any other or additional liability, or in any way impairing or changing the obli- gation of the corporation oi affecting the rights of any person in terested therein. Source. — Former § 116; originally revised from L. 1853, chap. 466, § 13, as amended by L. 1854, chap. 369; L. 1890, chap. 302. OBLIGATION OF MEMBER.— The obligation imposed by the statute upon a member is merely that he shall pay his pro rata share of any losses, and he does not indemnify the insured against a deficiency arising out of the insolvency of a member, nor does he incur any obligation to pay the proportion of any other member who has become insolvent, or who is, from any cause, unable to pay his proportionate share of the loss. Pratt v Dwelling House Mut. Co., 7 App. Div., 544. A member of a mutual company is liable upon his deposit note for losses in the proportion which the amount of his note bears to the aggregate of deposit notes which are collectible and legally subject to assessments for such losses. Bangs v. Gray, 12 N. Y., 477. One insured in a mutual company continues liable to assessment upon his premium note for any losses incurred during the terra specified in his policy, although his property insured be destroyed long previous to its expiration Bangs V. Skidmore, 21 N. Y., 136. Notwithstanding that a policy be regarded as absolutely void by reason of an unauthorized assignment, the assured is not released from the obli gations of his deposit or premium note until all assessments are paid Hyatt V. Wait, 37 Barb., 29. Besides his indebtedness for the amount of an assessment already made, the maker of a premium note is also liable to pay his just proportion of the losses of the company occurring while his policy is in force, for which no assessment has yet been made. Sands v. Hill, 42 Barb., 651. ASSESSMENT. — The fact that an assessment made upon a premium note includes ten per cent for expenses, besides losses, does not render the assess- ment irregular and void. Hyatt v. Esmond, 37 Barb., 601. The assessment of a premium note is but the performance of a ministerial duty, and is therefore not final; the fact that an assessment has already been made upon a premium note, which still remains unenforced, will not render a second assessment upon the note, embracing the former one, and designed to accomplish the same purpose, invalid. Sands v. Sweet, 44 Barb., 108. The power of the receiver of a mutual fire insurance company to levy an assessment upon the makers of capital stock notes, to meet the company's liabilities, is not judicial in its n.ature, and can be exercised only where thfc circumstances render it necessary and proper. Kaegener v. Willard, 44 App. Div., 41. 224 The Insueance Law. § 116. The directors of a mutual insurance company do not act judicially in making assessments upon premium notes; the directors have no right to take into consideration the length of time any person has been a member, in determining the amount of his assessment, or whether he shall be assessed at all. Herkimer Co. Mut. Ins. Co. v. Fuller, 14 Barb., 373; 7 How. Pr., 210. An assessment is a necessary condition to the maintenance of an action by the receiver of a mutual insurance company upon a premium note, where the charter and by-laws do not otherwise provide. Savage v. Medbury, 19 N. Y., 32. A general assessment, and notice that each premium note of every class is assessed for the full amount thereof, is sufficient where the losses in the class to which the note belonged exceed the amount of all the notes received upon that class of risks, and the losses of the company exceed what is col- lectible on all the notes of all classes and dates; it is unnecessary that the Assessment should state the particulars of the assets and debts upon which it is founded. Sands v. Sanders, 26 N. Y., 239. NON- ASSESSABLE POLICY.— A mutual company may issue a non- assessable policy for cash and the insured may recover thereon against a per- manent receiver of the company for a loss which occui'red after the appointment of a temporary receiver. People v. Highland Mut. Co., 26 Misc., 205. All parties insured are members of the corporation and entitled to share in its profits of its business; the contingent benefit thus secured by taking out a policy for a cash premium is sufficient to constitute the insured an insurer to the extent of his interest, and to bring the transaction within the principle of mutuality. Mygatt v. N. Y. Prot. Ins. Co., 21 N. Y., 52. Holders of policies in a mutual fire insurance company, who have paid a certain definite sum of money in full for insurance therein, in lieu and in place of a premium note therefor, are as fully and eflFectively insured as those who have given a premium note for insurance, and are members of the com- pany and entitled to vote at any election of its directors equally with note policyholders. Matter of Mut. Fire Ins. Co., 164 N. Y., 10. INSUFFICIENT NOTICE.— Where the notice of assessment specified dif- ferent rates of assessment for " small notes " and " large notes," without showing in any manner how a given note was distinguishable as belonging to one or the other class, and there was no evidence of any rule on the subject contained in the charter or by-laws, the notice was held inoperative for uncertainty. Bangs v. Duckinfield, 18 N. Y., 592. The notice of assessment should state the amount which each member is to pay; otherwise it will be insufficient and defective, and will not oblige the members to pay, or subject them to a suit upon the premium note. Bangs V. Mcintosh, 23 Barb., 691. Where the by-laws of the company require a notice of the assessment to be published, unless such publication is shown a failure to pay an assess- ment is unavailable as a defense to an action on a policy. Bodle v. Chenango Co. Mut. Ins. Co., 2 N. Y., 63. § 116. Fire Insurance Coepoeation. 225 The publication in the absence of by-laws is to be made according to the discretion of the directors; but where by-laws prescribe the method of publi- cation their directions must be followed, and a defect therein is not aided by proof of a personal demand. Sands v. Shoemaker, 4 Abb. Ct. of App., 149; 2 Keyes, 268. The publishing of the notic? is not merely directory, and personal notice to a party assessed is not equivalent to, nor does it dispense with publica- tion. Sands v. Groves, 58 N. Y., 94. COUNTERCLAIM. — A member of a mutual marine insurance company cannot, upon its insolvency, set off against his indebtedness for premiums due upon policies a loss sustained by him, adjusted and payable by the company. Laurence v. Nelson, 21 N. Y., 158. ACTION ON NOTE. — In an action upon a premium note is it unnecessary to show the particular loss for the payment of which the assessment is made. Jackson v. Roberts, 31 N. Y., 304. The premium notes given to and held by a mutual insurance company are liable to pay losses arising under cash policies issued by the company. White V. Havens, 20 How. Pr., 177. DISCRIMINATION. — In making an assessment no discrimination is to be made between notes given when higher rates of insurance existed and those under reduced rates. Shaughnessy v. Rensselaer Ins. Co., 21 Barb., 605. RECEIVER. — A receiver, in making an assessment upon premium notes held by the company, is the actor, and his authority depends, not upon the order of the court, but upon the existence of facts rendering an assessment necessary and proper. Thomas v. Whallon, 31 Barb., 172. INTEREST.— A personal demand of the amount assessed upon a premium note must be made before an action can be brought against the maker; upon a recovery on such a note, for the non-payment of assessments, the plaintiff is entitled to interest from the time when the assessments became payable. Sands v. Annesley, 66 Barb., 598. In an action to recover an assessment on a premium note given on effecting an insurance, the plaintiff is not entitled to interest on the amount of the note. Bangs v. Bailey, 37 Barb., 630. REVIVAL OF POLICY. — In an action on a policy issued by a mutual com- pany it appeared that the company, with full knowledge that the policy had become void by an alienation of the property insured, assessed the plaintiff's premium note on account of losses which occurred after the aliena- tion, and collected the assessment; held, that this did not revive the policy, but was consistent with the right of the company to treat it as void. Neely v. Onondaga Co. Mut. Ins. Co., 7 Hill, 49. When a policy has become void by reason of an unlawful assignment it will not be revived because the company, with full knowledge, assessed the assured for losses. Smith v. Saratoga Co. Mut. Fire Ins. Co., 3 Hill, 508. FORCE OF ADJUSTMENT.— The amount to be paid by the insured, if anything, toward previous losses on a surrender of a deposit note is a subject 226 The Insubance Law. § IIY. of adjustment between him and the company, and when the adjustment is made and the policy and note are surrendered the settlement is binding un- less impeached on the ground of fraud or mistake. Hyde v. Lynde, 4 N. Y., 387. TERMINATION OF CHARTER.— The fact that a charter of an insurance company expires, by its own limitation, within the period during which a policy is by its terms to continue will not avoid the policy, and discharge the insured from his liability upon his premium note; the policy is valid for the unexpired term of the charter. Huntley v. Beecher, 30 Barb., 580. EXECUTION. — In an action on a premium note a recovery may be had for its full amount although that exceeds the assessment levied against it, but execution can only issue for the amount due thereon. Taylor v. Port Jefferson Mill. Co., 84 Hun, 610; 32 N. Y. Supp., 307; 65 St. Rep., 542. § 117. How surplus profits to be estimated. In estimating the surplus profits of a fire insurance corporation for the purpose of making any dividend upon its capital stock, there shall be reserved from such profits a sum equal to the amount of all unearned premiums on unexpired risks and policies, and all sums due the corporation on bonds and mortgages, bonds, stocks and book accounts, of which no part of the principal or in- terest thereon has been paid during the last year, and for which foreclosure or suit has not been commenced for collection or which, after judgment obtained thereon, shall have remained more than two years unsatisfied, and on which interest skall not have been paid, and all interest due or accrued and remaining unpaid. But no corporation may declare dividends exceeding ten per centum on its capital stock in any one year unless, in addition to the amount of its capital stock such dividend, all outstanding liabilities and the amount of all unearned premiums on unexpired risks and policies as aforesaid, it shall have and be in possession of surplus profits to an amount equalling thirty per centum of its unearned premiums. Any dividend made contrary to the provisions of this section shall work a forfeiture of the charter of the corporation, and each stockholder receiving any such dividend shall be liable to the cred- itors of the corporation to the extent of the dividend received in addition to the other penalties and punishments prescribed by law. This section shall not apply to the declaration of scrip dividends by participating corporations. No siich scrip dividends shall be paid except from the surplus profits, after reserving all sums as abovo § 118. Fire Insurance Corporation. 227 provided, including the whole amount of unearned premiums on unexpired risks. And whenever any fire insurance corporation shall have accumulated and be in possession of a fund in addition to the amount of its capital stock, and all actual outstanding liabilities in excess of one-half of the amount of all premiums on risks not not terminated such corporation may increase its capital stock from such fund ; and distribute such increase pro rata to the stockhold- ers of such corporation, provided, always, that such increase shall be equal to at least twenty-five ])er centum of the original capital stock of said corporation and shall have been approved by the su- perintendent of the insurance department and authorized by at least three-fourths of the board of directors of such corporation, and provided, also, that any such corporation may hereafter make and declare a dividend as provided by this chapter. Source. — Former § 117, as amended by L. 1905, chap. 251; originally revised from L. 1853, chap. 466, § 12, as amended by L. 1867, chap. 91. See § 28, Stock Corporation Law, chap. 61 of 1909. Liability of directors for making unauthorized dividends See § 664, Penal Law. Misconduct of directors in making dividend except from surplus profits. DIVIDENDS. — Dividends upon the capital stock of a fire insurance cor- poration can only be paid from surplus earnings. Attorney-General Rep.. 1894, page 212. Section 117 of the Insurance Law does not prohibit all insurance companies from declaring dividends exceeding ten per centum. Attorney-General Rep., 1901, page 148. Where the capital of a fire insurance company is impaired, all dividends paid stockholders, except those declared from surplus profits, must be returned by the directors. Attorney-General Rep., June 25, 1895. The provision of this section declaring, in effect, that moneys received for premiums upon unexpired fire insurance policies shall not be deemed sinrplus profits, but shall be considered as " unearned premiums " in making dividends, does not affect the status of such receipts, as property, for the purposes of taxation, and in no way interferes with or aflfects the statute in relation to taxation. People ex rel. M. F. Ins. Co. v. Commissioners, 76 N. Y., 64. § 118. Allowance of assets and estimation of liabilities upon examinations. When an examination is made by the authority of the superin- tendent of insurance into the affairs of any fire insurance cor- poration doing business in this state, or when such corporation 228 The Insukance Law. § 119. renders a statement to the insurance department, there shall not be allowed as assets any investments which are not held as pre- scribed by law at the date of such examination or rendering such statement; but unpaid premiums on policies written within three months shall be admitted as available resources. In estimating its liabilities, there shall be charged, in addition to the capital stock and all outstanding claims, a sum equal to the total unearned pre- miums on the policies in force, calculated on the gross sum with- out any deduction on any account, charged to the policyholder on each respective risk from the date of the issue of the policy. In the case of an examination into the condition of any mutual fire insurance corporation with capital stock notes, the value of such notes shall be ascertained and the responsibility of the makers thereof certified to in the same manner as is required by section one hundred and eleven of this chapter. Source. — Former § 118, as amended by L. 1898, chap. 465 j originally revised from L. 1880, chap. 110, § 1. See § 130, post. Guaranty and special reserve funds. VALUATION OF POLICIES.— The superintendent of insurance, in making a valuation of the policies of a foreign fire insurance company, should value only such policies as are issued by said company and are outstanding and in force in this country. Attorney-General Rep., 1893, page 417. CONTESrUANC-E IN BUSINESS.— The question as to the continuance in business of a mutual insurance company is to be determined by the super- intendent under § 43 of the Insurance Law, and § 118 applies only in part to a mutual insurance company. People ex rel. Long Island Mut. v. Payn, 26 App. Div., 584; 50 N. Y. Supp., 334. ,/ § 119. Liability of directors and corporators. The directors and corporators of any corporation organized under this article, and those entitled to a participation of the profits of such corporation, shall be jointly and severally liable for all debts or liabilities of such corporation, until the whole amount of the capital of the corporation shall have been paid in in cash, and a certificate has been issued to it by the superintendent authorizing it to do business in this state. Source.— Former § 119; originally revised from L. 1853, chap. 466, § 17. DIRECTOR. — It seems that a director of a fire insurance company has no right to approve of his own application. Pratt v, D. H. M. F. Ins. Co., 130 N. Y., 206. §§ 120, 121. FiKE Insurance Corporation. 229 CORPORATIONS. — Corporators, as used in this section, does not include stockholders; corporators are the associates engaged in organizing the com- pany, whose functions cease with its organization, then stockholders come in; after their functions thus cease the corporators cannot be further held liable; where a corporator is liable under this section the cause of action, upon his death, survives against his estate. Chase v. Lord, 77 N. Y., 1. § 120. What to appear on face of policy. Every domestic mutual fire insurance corporation shall embody the word " mutual " in its title, which shall appear on the first page of every policy and renewal receipt. Every fire insurance corporation doing business as a cash stock corporation shall upon the face of its policy in some suitable manner express that such policy is a policy in a stock corporation. Source. — Former § 120; originally revised from L. 1853, chap. 466, § 15. § 121. Standard fire insurance policy to be prescribed and used. The printed blank form of a contract or policy of fire insurance, with such provisions, agreements or conditions as may be indorsed thereon or added thereto and form a part of such contract or policy, heretofore filed in the office of the secretary of state by the super- intendent of insurance or by the New York board of fire under- writers pursuant to the provisions of chapter four hundred and eighty-eight of the laws of eighteen hundred and eighty-six shall be transferred by the secretary of state to the office of the superin- tendent of insurance and, together with such provisions, agree- ments or conditions as may be filed by the 'New York board of fire underwriters in the office of the superintendent of insur- ance and approved by him, which provisions, agreements or condi- tions shall be void if they are inconsistent with the standard fire insurance policy heretofore filed in the office of the secretary of state, shall be known and designated as the " standard fire insurance policy of the state of New York." No fire insurance corporation, its officers or agents, shall make, issue, or deliver for use, any fire insurance policy or the renewal of any such policy on property in this state, other than such as shall conform in all particulars as to blanks, size of type, context, provisions, agreements and conditions with such printed blank form of contract or policy; and no other 230 The Insurance Law. § 121. or different provision, agreement, condition or clause shall be in any manner made a part of such contract or policy or indorsed thereon or delivered therewith, except as follows, to wit : First. The name of the corporation, its location and place of business, date of its incorporation or organization, whether it is a stock or mutual corporation, the names of its officers, the number and date of the policy, and if issued through a manager or agent the words " this policy shall not be valid until countersigned by the duly authorized manager or agent of the corporation at " Second. Printed or written forms of description and specifica- tion, or schedules of the property covered by any particular policy, and any other matter necessary to clearly express all tlie facts and conditions of insurance on any particular risk not inconsistent with or a waiver of any of the conditions or provisions of the standard policy herein provided for. Third. With the approval of the superintendent of insurance, if the same is not already included in such standard form, any pro- vision which any such corporation is required by law to insert in its policies, not in conflict with the provisions of such standard form. Such provisions shall be printed apart from the other provisions, agreements or conditions of the policy under a separate title as follows : " Provisions required by law to be stated in this policy." After the first day of January, 1911, such policy or contract may be printed, written or typewritten with any size of type or on any size or shape of paper which shall have the written approval of the superintendent of insurance. The name, with the word '^ agent " or ^' agents," and place of business, of any insurance agent or agents, either by writing, print- ing, stampirg or otherwise, may be indorsed on the outside of such policies. Two or more fire insurance corporations, authorized to transact business in this state, may issue a combination standard fonrt of policy, using a distinctive title therefor, which title shall appear at the head of such policy followed by the titles of the several corporations obligated thereupon, and which policy shall be exe- cuted by the ofiicers of each of such corporations; provided, that § 151. Fire Insurance Corporation. 231 before such corporation shall issue such combination policy, they shall have received the express permission of the superintendent of insurance to issue the same, and the title of such proposed policy and the terms of the additional provisions thereof, hereby author- ized, shall have been approved by him, which terms, in addition to the provisions of the standard policy and not inconsistent there- with, shall provide substantially under a separate title therein, to be known as " Provisions specially applicable to this combination policy,'' as follows: (a) That each corporation executing such policy shall be liable for the full amount of any loss or damage, according to the terms of the policy, or a specific percentage thereof ; (b) that service of process, or of any notices required by the said policy, upon any of the corporations executing the same shall be deemed to be service upon all ; and provided, further, that the unearned premium liability on each policy so issued shall be maintained bj each of such corporations on the basis of the liability of each to the insured thereunder. Source.— Former § 121, as amended by L. 1901, chap. 513; L. 1903, chap. 106; originally revised from L. 1886, chap. 488, §§ 1, 2, 4, as amended by L. 1887, chap. 429. Amended by L. 1909, chap. 240; L. 1910, chaps. 168, 638 and 668, and L. 1913, chap. 181. In effect June 30, 1913. Note. — The purpose of the amendment of section 121 and addition of sec- tion 121-a by chapter 191 of 1913 was to require after June 30, 1913, every fire insurance policy to have a notice attached to it providing for appeal, and also to allow the New York Board of Fire Underwriters to submit to the superintendent new riders w'hich if approved can be used in connection with the standard fire policy. — Ed. Note. — The Lloyds bill — chap. 638 of 1910 — ^and the combination standard fire policy bill — chap. 668 of 1910 — both amend § 121. The amendment, as found in the latter bill, is the more comprehensive and is in accordance with the Department's desires. The Lloyds bill was signed June 24th, and the com- bination standard fire policy bill June 25th. Though both statutes go into effect on the same day, the intent of the legislature and the Executive will doubtless be determined by these dates. The section is here printed as amended by chap. 668 of 1910.— Editor. Laws 1903, chapter 106, section 1, by its terms purported to amend section 190 of Laws 1892, chapter 690. This was an error, as there was no section 190 in the latter act. The substance of the amending act shows clearly that it was intended to amend section 121. See § 1193, Penal Law. Fire insurance corporations to use standard policy only. 232 The Insurance Law. § 121. VERBAL CONTRACT. — Where a local agent of a fire insurance company, after a conversation with an applicant for fire insurance in which the sum for which the property was to be insured, the premium and the period of insurance were discussed and fixed, stated to the applicant that " You are insured from noon of the 30th day of December, 1893, to noon of December 30, 1894," a complete and binding contract for insurance for the period stated is created, and the law reads into the contract the standard fire insurance policy of the state of New York, whether it was referred to in terms or not. Hicks V. British Am. Assur. Co., 162 N. Y., 284. CONTRACTUAL LIMITATION.— The contractual limitation is a part of the standard form of insurance policies issued in this state pursuant to statute, and unless the defendant has waived the limitation or it is estopped from asserting the same it is a complete defense to an action; an insurance company may waive the limitation or estop itself from asserting it. McArdle V. German All. Ins. Co., 98 App. Div., 594. INDORSEMENT. — The standard form cannot properly contain or bear upou its face an indorsement in the form of an agreement signed by the agent undertaking to relieve the assured from any and all assessments which may be made by the company against the assured under said policy. In re Mutual Fire Ins. Co., Attorney-General Rep., 1902, page 234. The indorsement upon or delivery with a standard fire insurance policy of a notice to the effect that unless the premium is paid on or before a specified date, the company will exercise its rights of cancellation as pro Tided by the policy, is not a violation of the provisions of § 121 of the Insurance Law or of § 57 7d of the Penal Code. In re Clinton, Attorney General Rep., 1902, page 241. DEPOSIT OF PROOFS.— Depositing proofs of loss by fire in the post-oflace sixty days after the fire, which proofs are not received by the compan}' until the sixty- second day, is not a compliance with the conditions of a policy requiring that the insured shall render a statement to the attorneys of underwriters within sixty days. Peabody v. Satterlee, 166 N. Y., 174. There is a suflBcient compliance with the provisions of a fire insurance policy requiring the insured to give the insure- " immediate " notice of a loss if the insured, using due diligence, serves the notice within a time which is reason- able under the circumstances; the question of due diligence under the circum- stances of the case is for the jury. Will & Baumer Co. v. Rochester German Insurance Co., 140 App. Div., 691. CHANGE OF INTEREST.— Where a policy contained a condition declar ing it void in case of any change of interest, title or possession, whether by legal process or voluntary act, the issuing of an execution and a levy thereunder does not work a change of interest within the meaning of the policy. Walradt v. Phoenix Ins. Co., 136 N. Y., 375. NON- OCCUPANCY. — Permit for non-occupancy limiting company's lia bility to two-thirds of the amount insured in the policy, etc., not " incon- sistent with " nor " a waiver of any of the conditions or provisions of the standard policy." Attorney-General Rep., 1903, page 281. COLD STORAGE RIDERS.— § 121 prohibits the making of a policj which would insure against indirect loss or consequential damages ; " cold storage" riders are not permissible. Attorney-General Rep., 1902, page 351. § 121. Fire Insurance Corporation. 233 A rider attached to a policy of insurance, stating that it is issued upon the understanding and warranty by the insured that another certain company has a policy in force insuring the identical property in identically the same proportions and at no higher rate of premium is within the second exception of section 121; where the policy referred to in the rider was in fact written at a higher rate of premium and the proportions were not identical, the policy to which the rider is attacihed is void for the breach of the warranty; an insurance broker, procuring the policy to which the rider it attached, is liable to the insured where its invalidity arose from his negligence. Scharles V. N. Hubbard, Jr. & Co., 74 Misc., 72. BINDING SLIP. — Where defendant, in order to provide temporary insur- ance pending an inquiry as to the character of the risk, delivered to plain tiff a " binding slip," containing none of the conditions found in the policies, the plaintiff was not entitled to recover when the loss occurred two hours after plaintiff had been notified that defendant would not accept the riskj the contract evidenced by the " binding slip " was one subject to the con- ditions contained in an ordinary policy, and the notice terminated the con- tract pursuant to such a condition in the policy. Lipman v. N. F. Ins. Co.. 121 N. Y., 454. When a fire insurance company signs and delivers to an insurance broker employed to procure insurance what is known as a " binding slip," agreeing to make the insurance, the slip to be binding until a regular policy is made out and delivered, the contract evidenced by the slip is the ordinary policy issued by the company. Karelsen v. Sun Fire Off., 122 N. Y., 545. It is proper to issue a binder for temporary insurance pending an inquiry by the company as to the character of the risk or during any delay in issuing the policy. In re N. Y. Fire Ins. Exchange, Attorney -General Rep., 1904, page 416. SURRENDKR OF CERTIFICATE.— It is not a violation of the provisions of § 121 to issue a policy that the applicant has insurance " Loss, if any, in conformity with the conditions of said policy to be adjusted on presenta- tion and surrender of this certificate." Attorney-General Rep., 1904, page 430. MORTGAGED PREMISES.— When, by a policy of fire insurance issued to the owner of mortgaged premises, loss, if any, is made payable to the mort- gagee, as his interest may appear, the undertaking so to pay is collateral and dependent upon the principal undertaking, and if there is a breach of conditions in the policy by the assured, which by its terms renders it void, ».his defeats a recovery thereon by the mortgagee. Moore v. H. F. Ins. Co., 141 N. Y., 219. Adding to mortgagee clause the words "guarantors of the mortgagee," immediately after the name of beneficiary, is allowable under § 121 of the Insurance Law. Attorney-General Rep., 1903, page 331. The insertion of the words " or any of its assigns "' in the mortgagee clause of a standard fire insurance policy after the name of the mortgagee is a violation of the provisions of § 121 of the Insurance Law. Attorney - General Rep., 1902, page 272. 234 The Insueance Law. § 121-a. GASOLINE. — Certain permits for the use and storage of gasoline may be inserted in the standard policy but it should not be changed so as to place limitations on the company's liability. In re Nat. Bd. of Fire Underwriters, Attorney-General Kep., 1902, page 315. PRESUMPTION. — The court will not presume that a policy of insurance which covers property in the state of Missouri is a New York standard policy. Loomis v. Lewis, 62 App. Div., 433. A provision in the standard form of fire insurance that the insured shall not be liable for a greater proportion of any loss than the amount insured shall bear to the whole insurance covering the property, etc., does not permit the insurer to figure its proportion of liability upon other insurance held under a floating policy which provided that it did not cover merchandise on which "there was any specific insurance except on the excess of value above such specific insurance when it was exhausted." Klotz Tailoring Co. v. Eastern Fire Ins. Co., 116 App. Div., 723. SAFE DEPOSIT.— The provisions of section 121 of the Insurance Law prohibit not only the issuance of a policy insuring against loss by fire of coupon bonds and other negotiable securities, but also the issuance of a policy covering the liability of a safe deposit and storage company for loss thereof by fire. Attorney-General Rep., February 8, 1912. INSPECTION.— The words " within sixty days after the fire " as used in the standard fire insurance policy means within sixty days after the fire has terminated or abated to such an extent that an inspection of the damaged property may be had; the ommission of the venue from a proof of loss may be supplied by amendment. Slocum v. Saratoga & Washington Fire Ins. Co., 149 App. Div., 867. An addition to the authorized, mortgagee clause which makes the interest of the mortgagee "subject to no plea in bar of its right to recover * * * except loss by means of invasion, etc.," is inconsistent with the provisions of the standard policy as its effect would be to make the policy incontestable for any cause even for willful concealment, etc. Attorney-General Rep., April 10, 1903. § 121-a. Appointment of umpire by court. When, in the event of any loss or damage to property in this state described in any policy of fire insurance and covered thereby, the ascertainment of the amount of any such loss or damage is, as provided in the policy, to be determined by appraisers, one selected by the company, the other by the insured, and the two so chosen shall have failed or neglected, for a space of ten days after both have been chosen, to agree upon and select an umpire, it shall be lawful for either the insured or the company to apply to any court of record in the county in which the property is or was located, on five days' notice in writing, to the other party of his or its intention so to do, to appoint a competent and disinter- ested umpire. Any such notice in writing, when served by the insured, may be served upon any local agent of the company; § 122. Fire Insurance Corporation, 235 and the said court shall, on proof by affidavit of the failure or neglect of the said appraisers to agree upon and select an umpire within the time aforesaid, and of the service of notice aforesaid, forthwith appoint a competent and disinterested person to act as umpire in the ascertainment of the amount of said loss or damage ; and the acts of the umpire so appointed shall be binding upon the insured and the company to the same extent as if such umpire had been selected in the manner provided for in said policy of insurance. iSTo policy of fire insurance shall be hereafter issued on property located in this state, unless the foregoing provisions of this section shall be printed on or attached thereto under the following title: " Provisions required by law to be stated in this policy." Added by L. 1913, chap. 181. In effect June 30, 1913. Note. — For purpose of addition of this section see note to § 121, ante. § 122. Payment of return premiums on cancellation of policy. Any corporation, person, company or association transacting the business of fire insurance in this state shall cancel any policy oi insurance upon the request of the insured or his legal ropreseiit^i- tivee, and shall return to him or to such representative the amount af premium paid, less the customary short rate premium for the expired time of the full term of which the policy has been issued or renewed, notwithstanding anything in the policy to the contrary. Where the laws of any state permit corporations organized under its laws to cancel policies of insurance upon different terms than herein set forth, corporations organized under the laws of this state may cancel policies upon risks in any such state upon the same terms as are provided for corporations organized under its laws. Source.— Former § 122; originally revised from L. 1880, chap. 110, § 3 as amended by L. 1886, diap. 612. Where the charter and by-laws of a mutual insurance corporation excludt from membership persons who effect insurance with it upon a cash basis, a receive: may properly levy an assessment upon capital stock notes in order to pay back unearned premiums upon cash policies which have been duly canceled under the Insurance Law, as the holders of such policies sustain no relation to the corporation other than that of mere contractors with it. Regener v. Phillips, 26 Misc., 311. An insurance company, when cancelling a policy before maturity, has no right to deduct anything from the unearned premium beyond what is admissible under the short-rate system; and a further deduction, through which it seeks to get back what it has paid brokers to place the risk, is 236 The Insueance Law. §§ 123, 124. wholly unauthorized and may be recovered of the company by an assignee of the insured. McKenna v. Fireman's Ins. Co., 30 Misc., 727. The withdrawal of a policy before it becomes operative is not a cancellation within the meaning of the Insurance Law so as to require notice to the insured. Walrath v. Hanover Fire Insurance Co., 139 App. Div., 407. § 123. Cancellation of policies by receiver and issue of cer- tificates of indebtedness. Toe receiver of any domestic fire insurance corporation, on the receipt by him of any policy of the corporation in force, and upon the written request of the policy holder, shall cancel such policy and issue in lieu thereof, a certificate of indebtedness as such re- ceiver to the policy holder for the amount of the premium paid less the proportion of premium for the expired time of the full term for which the policy had been issued or renewed, and upon the receipt of such certificate by the policy holder, the policy shal] become null and void, notwithstanding anything in ttie policy tc the contrary. The receiver, in his report of the liabilities of the corporation to the insurance department, shall state the total amount of such outstanding certificates of indebtedness not can- celed at the date of the report Source.— Former § 123; originally revised from L. 1880, chap. 110, § 4. § 124. Extension of joint-stock corporations. Any existing domestic joint^stock fire insurance corporation and any corporation organized under this article, having a capital of at least two hundred thousand dollars may, without increasing its capital, at any time within two years previous to the termination of its charter, after giving notice at least once a week for six weeks successively in a newspaper published in the county where such corporation is located of such intention, and with a declaration under its corporate seal, signed by the president and two-thirds of its directors, of their desire for such extension, extend the term of its original charter for a period of thirty years, by altering and amending the same so as to accord with the provisions of this ar- ticle, and filing a copy of such amended charter with sucli declara- tion in the office of the superintendent of insurance; whereupon the same proceedings shall be had as are required upon the incor- poration of a corporation under this article. Source. — Former § 124; originally revised from L. 1853, chap. 466, § 18, as amended by L. 1862, chap. 367. See S 37, General Corporation Law, chap. 28 of 1909. Extension of cor- porate existence. § 125. Fire Insurance Corporation. 237 A fire insurance company may extend its corporate existence when under section 124 or under section 32, General Corporation Law. Attorney-General's Opinion, February 1, 1909. § 125. Mutual may become stock corporations. Any domestic mutual fire insurance corporation having surplus assets aside from premium and capital stock notes sufficient to re- insure all its outstanding risks, may, providing the superinten- dent of insurance give his consent thereto, and the president and directors thereof, by three-fourths vote decide to so do, so amend the charter thereof as to convert the same into a stock corpora- tion. Such amended charter shall specify the name by which the corporation has been known, and also the name by which it desires to be known in the future, the location of its principal office; the amount of its capital stock, and the number of shares into w^hich the same shall be divided, and the par value of each; but the amount of its capital stock shall not be less than two hundred thou- sand dollars. Directors and officers of such corporation shall hold their said positions respectively until the expiration of the terms for which they were elected. Their successors shall be elected as if said corporation had been originally incorporated as a stock corporation in accordance with the provisions of this chapter. When any change shall have been decided upon by three-fourths of the directors, and the consent of the superintendent shall have been given thereto, then the directors shall open books of subscrip- tion to the capital stock, and give notice of the change and that said books have been opened, and that the members of such cor- poration on the day when such changed charter or article? were made and filed, and the consent of the superintendent thereto granted, shall be entitled to priority in subscribing to the capi- tal stock of such corporation as hereinafter specified, by publica- tion once a week for six successive weeks in a newspaper published in the county where said corporation shall have its principal office and also in the state paper at Albany. If three-fourths of the directors of such corporation shall not give their consent thereto, such corporation, after having given notice once a week for six weeks, of its intention to do so, and of the meeting hereinafter provided for, in the state paper and in a newspaper published in the county where such corporation is located, may, with the consent 238 The Insurance Law. § 125. of two-thirds of the members present at any regular annual meet- ing, or at any special meeting duly called for the purpose, or with the consent in writing of two-thirds of the members of such cor- poration, imless otherwise provided in its charter, become a joint stock corporation by conforming its charter to and otherwise pro- ceeding in accordance witli this chapter. Every member of such corporation on the day of such annual or special meeting, or the date of such written consent, or the date of the filing of the amended articles of incorporation and of the consent of the super- intendent thereto, shall be entitled to priority in subscribing to the capital stock of such corporation for one month after the open- ing of the books of subscription, in proportion to the amount of cash premiums paid in by such member on unexpired risks in force on the day of such annual or special meeting, or the date of such written consent, or the date of the filing of such amended char- ter or articles and of the consent of the superintendent thereto, at the expiration of such month, then the board of directors shall sell and dispose of the capital stock which shall not have been taken by the members aforesaid, to such persons as may subscribe to the same ; and when the capital stock shall have been fully subscribed to and paid in, the directors shall notify the superintedent of that fact, and thereupon the superintendent shall make or cause to be made an examination of the affairs of the said company, and if he shall find that the proceedings for the change thereof from a do- mestic mutual fire insurance corporation to an insurance stock cor- poration, have been regularly taken in conformity with this section, and that the capital stock shall have been fully subscribed for, and the amount thereof paid in, in cash, or in such securities as stock insurance corporations are entitled to hold under the provisions of this chapter for capital investments, then the superintendent shall certify that such examination has been made, and that the proceed- ings have been regularly taken, the capital stock paid in and the said corporation recognized as an insurance stock corporation, and thereupon said corporation shall come under the provisions of this chapter in the same manner as if it had been incorporated thereunder. Source. — Former § 125, as amended by L. 189fi, ohap. 850; originally revised from L. 1853, chap. 466, § 18, as amended by L. 1862, chap. 367. § 126. Fire Insurance Corporation. 239 INTEREST. — Right of the joint stock corporation, out of the assets of the mutual company, to pay receipts bearing ten per cent interest issued by it. Manhattan Fire Ins. Co. v. Fox, 74 App. Div., 271. CONSENT. — Since the amendment of this section by chap. 850 of the Laws of 189fi, it is no longer necessary to obtain the consent of two-thirds of the members to change a mutual company to a stock corporation; the change made by this amendment does not violate the constitutional rights of the members or policyholders in such a company. Grobe v. Erie Co. Mut. Ins. Co., 39 App.' Div., 183. RIGHT TO SUBSCRIBE. — Where a mutual fire Insurance company pro- poses to convert itself into a stock corporation, the right to subscribe is dependent upon the amount of cash paid in premiums on policies outstanding. The terra " unexpired risks in force," applies to policies outstanding and not to property insured. Attorney- General's Rep., July 2, 1913. Upon conversion of a mutual fire insurance corporation into a stock cor- poration, the rigiht of a member to subscribe to the capital stock is determined by the amount of cash premiums paid in by him upon policies in force at that time. Attorney-General Rep., 1914, page 75. § 126. Extension of term of charter of mutual corporations. Every domestic mutual fire insurance corporation, having a capi- tal in premium notes of an amount required of such corporation in- corporated under this article, may at any time within two years previous to the termination of its charter, after giving notice once a week for six weeks successively in a newspaper published in the county where such corporation is located of such intention, and with a declaration, under its corporate seal, signed by its president and two-thirds of its directors, of their desire for such extension, extend tlie term of its original charter for a period of tliirty years, by altering and amending the same so as to accord with the pro- visions of this chapter, and filing a copy of such amended charter nnd declaration in the office of the superintendent of insurance; whereupon the same proceedings shall be had as are required upon the formation of a corporation under this article, except as to itj- capital, which shall be certified to be in accordance with the pro- visions of this section. Every corporation so extended shall come under the provisions of this chapter in the same manner as if it had been int?orporated originally tliereunder. Every fire insurance corporation which has heretofore changed from a mutual to a joint- stock corporation, pursuant to the provisions of law, shall be deemed and be held by such change to have continued and extended its ohnrtor for the period named therein, not exceeding thirty years from the time of such change. 240 The Insurance Law. § 127. Source.— Former § 126; originally revised from L. 1853, chap. 466, § 18, as amended by L. 1862, chap. 367; L. 1882, chap. 243. See § 37, General Corporation Law, chap. 28 of 1909. Extension of cor- porate existence. § 127. Existing corporations may reincorporate. Any domestic fire insurance corporation may change its name, increase the amount of its capital, or avail itself of any powers con- ferred by the provisions of this chapter upon filing with the super- intendent of insurance proof of publication of a notice of its inten- tion to do so once a week for six successive weeks in the state paper and in a newspaper published in the county where its office is lo- cated, and if a stock corporation, the written consent of three- fourths in amount of its stockholders ; or, if a mutual corporation, the unanimous consent of its directors unless otherwise provided in its charter; and a declaration under its corporate seal, signed by its president and directors, of its desire to do so, and upon obtain- ing and filing with the superintendent his consent thereto. It shall thereupon file with the superintendent and in the office of the clerk of the county where its office is located a copy of its charter so al- tered or amended, and upon the same proceedings being thereafter had as are required by this chapter upon the formation and organ- ization of an insurance corporation under this article, it shall be deemed and be held to be incorporated under the provisions of this article. Source. — Former § 127 j originally revised from L. 1853, chap. 466, § 19, as amended by L. 1875, ohap. 208. See § 37, ante. Corporations heretofore formed brought within the pro- visions of the Insurance Law. See § 106, Statutory Construction Law, dhap. 27 of 1909, as to effect of repeal and re-enactment of prior statutes. See § 60 et seq., General Corporation Law. Proceedings to change the name of a corporation. Section 43 of the Stock Corporation Law regulates the time within which capital stock shall be paid in, but the certificate filed according to said law is evidence of authority to increase or reduce such capital stock. Attorney- General Rep., Jan. 21, 1896. Where there are provisions affecting proceedings to increase capital stock in both the Stock Corporation Law and the Insurance Law, tlhe latter must be considered as additional where not in conflict; the consent of the superin- tendent to the proposed increase could not be properly given in advance to filing with him proof of other steps required by tlie statute; proof of con- sent of Sitoekholdcrs to the increase must be shown by affidavit of the secretary. Attorney-General Rep., June 13, 1903. §§ 128, 129. FiEE Insueance Corporation. 241 § 128. Duration of charter. Every fire insurance corporation incorporated or extended under this chapter shall continue in existence for the temi specified in its charter, not exceeding thirty years. Source. — Former § 128; originally revised from L. 1853, diap. 466, § 19, aa amended by L. 1875, chap. 208. See § 124, ante. Extension of charter of joint stock corporation. See § 126, ante. Extension of term of charter of mutual corporation. See § 37, General Corporation Law, chap. 28 of 1909. Extension of cor- porate existence. CHARTER EXPIRED.— The fact that the charter of an insurance com- pany expires, by its own limitation, within the period during which a policy by its terms is to continue, will not avoid the policy and discharge the insured from his liability upon his premium note; the policy is valid for the unexpired term of the charter. Huntley v. Beecher, 30 Barb., 580; Huntley v Merrill, 32 Barb., 626. § 129. Merger or consolidation of fire insurance cor- porations. Any two fire insurance corporations org^anized under any law of this state may merge or consolidate such corporations into one corporation under the name of one or more of the corporations. The corporations may enter into and make an agreement for such mer- ger or consolidation under their respective corporate seals, prescril>- ing its terms and conditions; the amount of its capital, whicli shall not be larger in amount than the aggregate amount of capital of the merged or consolidated corporations and the number of shares into which it is to be divided. Such agreement must be assentod to by a vote of the majority of the number of directors of each cor- poration prescribed in its charter and must be approved by the votes of stockholders owning at least two-thirds of the stock of each corporation represented and voted upon in person or by proxy at a meeting, called separately for that pur|x>se, upon a notice stating the time, place and object of the meeting served at least tliirty days previously upon each personally or mailed to him at his last known post office address and also published at least once a week for four weeks successively in some newspaper printed in the state, town or county where such corporation has its principal office and there shall be endorsed upon the agreement the certificate of the secre- taries of the respective corporations under the seals thereof to the effect that the same has been assented to by such votes of the di- 242 The Insueance Law. § 129. rectors and approved by such votes of the stockholders. The agree- ment shall contain a copy of the charter under which the business is to be conducted, which shall conform to the provisions of either one or more of the charters of the merging or consolidating corpo- rations; and/ the continuation of said charter shall be for the time therein stated, not exceeding the longest unexpired time of the charter of one of the merging or consolidating corporations. Every such agreement must have the approval of the superintendent of insurance. Upon filing such agreement, with such certificate of the secretaries and approval of the superintendent of insurance endorsed thereon in the office of the superintendent of insurance and a duplicate or certified copy thereof in the office of the clerk of the county where the office of the contracting corporation is located, the details of such agreement may be carried into effect as provided therein. The corporation may require the return of the original certificates of stock held by each stockholder in eacli of the corporations to be merged or consolidated, and issue in lieu thereof new certificates for such number of shares of its o^vn stock as such stockholders may be entitled to receive. Upon such merger or consolidation all the rights, franchises and interests of the cor- porations so merging or consolidating in and to every species of property and things in action belonging to them, or either of them, shall be deemed to be transferred to and vested in the new cor- poration, without any other deed or transfer, and the new corpora- tion shall hold and enjoy the same to the same extent as if tlie old corporations, or either of them, should have continued to retain their titles and transact business. The new corporation shall succeed to all the obligations and liabilities of the old corporations, or any of them, and shall be held liable to pay and discharge all such debts and liabilities in the same manner as if they had been incurred or contracted by it The stockholders of the old corpo ration shall continue subject to all the liabilities, claims and demands existing against them, or either of them, at or before such merger or consolidation. No action or proceeding pending at the time of the consolidation in which any or all of the old corpora- tions, may be a party, shall abate or discontinue by reason of tlie merger or consolidation, but tlie same may be prosecuted to final judgment in the same manner as if the merger or consolidation § 130. Fire Insurance Corporation. 243 had not taken place, or the new corporation may be substituted in place of any corporation so merged or consolidated by order of the court in which the action or proceeding may be pending. So far as they may be applicable, the provisions of this section shall apply to all corporations heretofore merged or consolidated. Source. — Former § 129, as amended by L. 1899, chap. 165; originally revised from L. 1878, diap. 98. See § 42, General Corporation Law, chap. 28 of 1909 Stoclcholder may waive notice. See § 180, Tax Law, chap. 62 of 1909. Consolidating corporation to pay organization tax upon amount of capital in excess of tb»-! aggT-egate capital of the consolidating companies. APPLICATION OF SECTION.— This section ha^ no application to a change from a mutual to a stock corporation. Manhattan Fire Ins. Co. v. Fox, 74 App. Div., 271. § 130. Guaranty and special reserve funds. Any domestic fire insurance corporation may create a guaranty surplus fund and a special reserve fund upon the adoption of a resolution by its board of directors at a regular meeting, and upon filing with the superintendent of insurance a copy thereof, declaring their desire and intention to create such funds and to do business under this and the two following sections. The super- intendent shall thereupon make or cause to be made an examina- tion of such corporation, and he shall make a certificate of the result thereof, which shall particularly set forth the amount of surplus funds held oj it at the date of the examination, which, under the provisions of this section may be equally divided be- tween and set apart to constitute guaranty surplus and special re- serve funds, which certificate shall be recorded in the insurance department Thereafter all policies and renewals of policies issued by sudi corporation shall have printed thereon by it a notice that they are issued under and in pursuance of this and the two following sections of this chapter referring to the same by the numbers of sections, and all such policies and renewals shall be subject to the provisions of such sections. After the passage and filing of such resolution, the corporation shall not make, declare or pay in any form any dividend upon its capital stock exceeding seven Y>eT centum per annum thereon, and upon the suq)]us funds to be formed 244 The Insukance Law. § 130. tliercuiulcr, until after its guaranty surplus fund and its special reserve fund shall have together accumulated to an amount equal to its capital stock; and until such funds shall together amount to a sum equal to its capital stock, the entire surplus pr '^t^ of the corporation above such annual dividend of seven per centum shall be equally divided betv^een and be set apart to constitute such guaranty surplus and sj>ecial reserve funds, which funds shall be held and used as hereinafter provided and not otherwise. Any such corporation which shall declare or pay any dividend contrary to the provisions herein contained, shall be deemed to have forfeited ita charter. In estimating the profits of any such corporation for the purpose of making a division thereof between tJie guaranty surplus fund and the special reserve fund, until such funds shall together amount to a sum equal to its capital stock, there shall be deducted from the gross assets of the corporation, including for this purpose the amount of the special reserve fund, the sum of the following items: 1. The amount of all outstanding claims. 2. An amount sufficient to meet the liability of the corporation for the unearned premiums upon its unexpired policies, which shall be at least equal to the xmearned premiums on policies having one year or less to run, and a pro rata proportion of the premiums received on the policies having more than one year to run, and shall be known as the reinsurance liability. 3. The amount of its guaranty surplus fund and its special reserve fund. 4. The amount of its capital. 5. Interest at the rate of seven per centum per annum upon the amount of its capital and of such funds for \vhatever time shall have elapsed since the last preceding cash dividend. The balance shall constitute the net surplus of the corporation subject to the equal division between the funds as herein provided. When the corporation shall notify the superintendent of insurance that it has fulfilled the requirements of this section, and that its guaranty surplus fund and its special reserve fund, taken together, equal its capital stock, he shall make an examination of the corpo- § 131. Fire Insueance Coepoeation. 246 ration and make a certificate of the result thereof; and thereafter such corporation may continue, out of any subsequent profits of its business, to add to such funds, either the whole or only a part thereof, but when any addition is made to the special reserve fund, an equal sum shall be carried to the guaranty surplus fund. Pro- vided, however, that no such corporation shall establish such guaranty surplus fund and special reserve fund after June first, nineteen hundred and fifteen. Source.— Former § 130; originally revised from L. 1874, chap. 189, §§ 1-3, § 6, as amended by L. 1878, chap. 282. Amended by L. 1915, chap. 369. In effect May 1, 1915. Note. — TJie amendment by L. 1915, chap. 369, in relation to guarantee surplus and special reserve fund, prohibited the establishing of S'Uch funds by foreign insurance corporations after June 1, 1915. It adds new section 132a, providing that companies which have heretofore established a guarantee surplus and special reserve fund may discontinue such funds and thereafter cease doing business under sections 130, 131 and 132. — Ed. See § 118, ante. Allowances of assets and estimation of liabilities upon examination. Guarantee surplus fund and special reserve funds are to be regarded as a liability only in the sense that surplus is a liability. Attorney-General Rep., 1904, page 413. INVESTMENT. — The second sentence of § 16 applies to investment of the special reserve fund, as provided for by § 130, in excess of one-half of its capital stock. Attorney-General Rep., 1901, page 240. REDUCTION OF FUND. — An insurance company retiring from business may reduce its " guaranty and special reserve fund " with the superintendent of insurance by withdrawals and exchanges to an amount sufficiently large to secure its outstanding liabilities. In re Standard Fire Insurance Com- pany, Attorney-General Rep., 1893, page 392. WITHDRAWAL OF FUNDS.— Funds cannot be withdrawn from the special reserve fund when the guaranty surplus fimd is impaired. In re American Fire Ins. Co., Attorney-General Rep., 1896, page 25. § 131. Funds; how invested. Such guaranty surplus fund shall be held and invested by such corporation in the same manner as its capital stock and surplus accumulations, and shall be liable and applicable in the same manner as the capital of the corporation to the payment generally of its losses. Such special reserve fund, until it shall amount to a sum equal to one-half of the capital stock, shall be invested in the same manner as the capital of the corporation, and any addi- tional sum added to such fund shall be invested in any securities in which the corporation is by law authorized to invest its capital or its surplus accumulations, and shall be deposited from time to 246 The Insurance Law. § 132. time, as the same shall accumulate and be invested, with the superintendent of insurance. Such special reserve fund shall be deemed a fund contributed by the stockliolders to protect such corporation and its policy holders otlier tlian claimants for losses already existing or then occui-red, in case of any extraordinary conflagration or conflagrations as hereinafter mentioned, and shall not be regarded as any part or portion of the assets of the corporation so as to be liable for any claim for loss by fire or otherwise, except as herein provided. Source. — ^Former § 131; originally revised from L. 1874, chap. 189, § 4, § 5, as amended by L. 1878, chap. 282. SSee § 16, ante. Investment of capital and surplus. FUNDS. — The guaranty surplus fund and the special reserve fund con- stitute liabilities of the corporation and must be so regarded in any state- ment purporting to show the true financial condition of the company; the special reserve fund cannot be said to be depleted as it remains intact in the vaults of the insurance department; policyholders holding policies under §§ 130, 131 and 132 have the special reserve fund as a special trust for their protection until it is used as capital stock because the latter is depleted; the extinguishment of the guaranty surplus fund does not limit the right of the company to do business. Attorney-General Rep., 1904, page 262. INVESTMENT. — Until the special reserve fund amounts to one-half the capital stock it should be invested as provided by § 13; when in excess of such amount it is to be invested as provided by § 16. Attorney-General Rep., 1901, page 240. EXCHANGE OF SECURITIES.— The deposit for a special reserve fund is intended to protect policyholders from future losses in the event of extraordinary conflagrations; in the exchange of securities of such fund they should only be accepted at their par value, or of equal par and market value with those exchanged for. In re Continental Ins. Co., Attorney-General Rep., 1896, page 279. § 132. Proceedings in case of extensive conflagrations. ^Vhen any extensive conflagration or conflagrations shall occur whereby the claims upon the corporation shall exceed the amount of its capital stock and of the guaranty surplus fund hereinbefore provided, the corporation shall notify the superintendent of insurance of the fact, who shall then make or cause to be made, an examination of the corporation, and shall issue his certificate in duplicate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and all other assets. One of such certificates shall be given the corporation, and the other shall be recorded in the insurance department. Such special § 132. FiKE Insurance 'Corporation. 247 reserve fund shall be immediately held to protect all policy holders of the corporation other than such as are claimants upon it at the time, or such as become claimants in consequence of such con- flagration or conflagrations. The amount of such special reserve fund, and an amount equal to the unearned premiums of such corporation, to be ascertained as hereinbefore provided, shall constitute the capital and assets of such corporation for the protection of policy holders other than such claimants, and for the further conduct of its business. Such certificate of the superintendent shall be binding and conclusive upon all parties interested in the corporation, whether stockholders, creditors or policy holders. Upon the payment to the claimants for losses or otherwise, existing at the time of or caused by such general conflagration or conflagrations, of an amount to which they are respectively entitled in proportion to their several claims, of the full sum of the capital of the corporation and of its guaranty surplus fund, and of its assets, except only such special reserve fund and an amount of its assets equal to the liability of the cor- poration for unearned premiums, as so certified by the superin- tendent, such corporation shall be forever discharged from any and all further liability to such claimants and to each of them. The superintendent shall, after issuing such certificate, upon the demand of the corporation, transfer to it all such securities as shall have been deposited with him by it as such special reserve fund. If the amount of such special reserve fund shall be less than fifty per centum of the full amount of the capital of the corporation, a re(]uisition shall be issued by the superintendent upon the stock- holders to make up the capital to that proportion of its full amount, in the manner now provided by law in the case of a corporation with impaired capital. Any capital so impaired shall be so made up to at least the sum of two hundred thousand dollars. If the corporation, after such requisition, shall fail to make up its capital to at least such amount as herein directed such special reserve fund shall be held as security and liable for all losses occurring upon policies of such corporation after such conflagration or conflagra- tions. If any amount greater than a sum equal to one-half of its capital stock shall by such corporation, under the provisions of the two preceding sections, have been deposited with such superin- 248 The Insurance Law. § 132. tendent, he shall retain of such securities a sum equal to one-half of the amount lie sha.l so hold thereof in excess of such one-half of the capital stock, and transfer the balance thereof to the corpora- tion as herein provided. The amount so transferred to the corporation shall, from the time of such transfer, if not less than two hundred thousand dollars, constitute the capital stock of the corporation for the further conduct of its business as hereinbefore provided. The sum so retained by the superintendent shall thenceforth constitute the special reserve fund of the corporation, to which additions may be made as herein provided, and shall be held in the same manner, for the same purposes and under the same conditions as the original special reserve fund of the cor- poration was held. The corporation shall in its annual statement to the insurance department set forth the amount of such special reserve fund and of its guaranty surplus fund. If in consequence of the payment of losses by fires, or of the expenses of the business, or of the interest payable under the provisions of this chapter to stockholders, or from any cause, the guaranty surplus fund shall bt reduced in amount below the amount of the special reserve fund., the directors of the corporation shall have the right, at their option, at the time of making any division of the net profits as herein provided, to carry a larger sum to the guaranty surplus fund than to the special reserve fund; but this privilege shall cease when the tAvo funds are made equal in amount. The policy registers, insurance maps, books of record and other books in actual use by the corporation in its business, are not to be considered as assets, but shall be held by it for its use in the pro- tection of its policyholders not claimants for losses at the time of such general conflagration. If after the accumulation of such special reserve fund, it shall appear upon examination by the superintendent that the capital of the corporation has, in the absence of any such extensive conflagration, become impaired, he shall order a call upon the stockholders to make up such impair- ment, and the board of directors may either comply with such order and require the necessary payments of the stocldiolders, or, at their option, they may apply for that purpose so much of such special reserve fund as will make such impairment good. 'No cor- poration doing business under this and the two preceding sections § 132-a. Fire Insurance Corporation. 249 sliall insure any larger amount upon any single risk than is per- mitted by law to a corporation possessing the same amount of capital irrespective of the funds hereinbefore provided for. Source. — Former § 132; originally revised from L. 1874, chap. 189, §§ 7, 8, as amended by L. 1878, ohap. 282. WITHDRAWAL OF FUNDS.— Funds cannot be withdrawn from the special reserve fund when the guaranty surplus fund is impaired. In re American Fire Ins. Co., Attorney-General Rep., 1896, page 25. Special reserve fund should not be withdrawn where the surplus fund is impaired. In re Amer. Fire Ins. Co., Attorney-General Rep., 1896, page 237. The statute does not contemplate the maintenance of the so-called guaranty surplus fund at a parity with the special reserve fund, but the provisions of section 132 indicate that the legislature expressly contemplated that the guar- anty surplus fund might fall below the special reserve fund. Attomey-Gen- eral's opinion, December 3, 1908. § 132-a. Discontinuance of special reserve and guaranty surplus funds. Any domestic fire insurance corporation which has hereto- fore established a guaranty surplus fund and special reserve fund may, at a regular meeting of its board of directors, adopt a resolution declaring its desire and intention to discontinue such funds and to cease to do business under and in pursuance of sections one hundred and thirty, one hundred and thirty-one and one hundred and thirty-two of this chapter, and file a certified copy of such resolution with the superintendent of insurance. Upon the adoption and filing of such resolution, all rights of such corporation to withhold such special reserve fund from its general creditors shall be terminated and the corporation shall discontinue printing upon its policies or renewals the notice pro- vided for in section one hundred and thirty of this chapter, and thereafter the provisions of said sections one hundred and thirty, one hundred and thirty-one and one hundred and thirty-two shall cease to apply to such corporation; provided that the special reserve fund of such corporation shall continue at the amount prescribed by said sections at the date of the making and filing of such resolution and the guaranty surplus fund shall continue at a like amount, but such funds need not be increased on account of any increase in capital of any such corporation after the adoption and filing of such resolution and shall be held and in- vested as provided in said sections, but only for the purpose of 250 The Insurance Law. § 133. assuring to the holders of policies at the time such resolution is filed with the superintendent of insurance such rights and privi- leges as maj inure to them under said sections. At the expiration of five years after the adoption and filing of such resolution hj] any such corporation, the special reserve fund shall be reduced to an amount equal to the unearned premium upon and all losses incurred and unpaid under any remaining policies which were outstanding at the time of the adoption and filing of such resolution ; and the excess of the special fund above such amount shall bo returned by the superintendent of insurance to such corporation ; and when all policies which were outstanding at the time of the adoption and filing of such resolution shall have terminated by expiration or by cancellation, the entire balance of such special reserve fund shall be returned to such corporation. Added by L. 1915, chap. 369. In effect May 1, 1915. See note after § 130. § 133. Payment of tax by agents of foreign fire insurance corporations to fire departments. Except in the cities of l^ew York and Buffalo there shall be paid to the treasurer of the fire department of every city or village of this state, whether incorporated or unincorporated, having a fire department, company or organization, for the use and benefit of such department, or to the treasurer of such fire department within the fire limits, as established by law, of an unincorporated village, and when no treasurer of a fire department exists, then to the treasurer or other fiscal officer of such city or village, or in case of an unincorporated village to the supervisor of the town in which such village is situated who, for the purpose of this chapter, shall have the same powers as the treasurers of fire departments, on the first day of February of each year, by every person who shall act as agent for or on behalf of any foreign fire insurance corporation, association or individuals which insure property against loss or injury by fire, the sum of two dollars upon the hundred doUai^s, and at that rate, upon the amount of all premiums which during the year or part of a year ending on the last preceding thirty-first day of December shall have been received by such agent or person, or received by any other person for him, for any insurance effected or procured by him as such agent or broker against loss or injury § 183. Fire Iistsueance Coepoeation. 251 by fire upon property situate within the corporate limits of such eity or village, or within the fire limits of such unincorporated village. Every city, except the city of New York, village, fire department, fire, hose or hook and ladder company, fire district, or fire district association, firemen's benevolent associations, exempt or veteran firemen's associations, and every officer, board of officers and associations receiving any portion of the tax directed to be paid by this section or any similar provision of law shall within ten days after the receipt of the same, pay to the treasurer of the firemen's association of the state of New York, ten per centum of the amount so received by it or him, for the support or maintenance of the Volunteer Firemen's Home at Hudson, New York. On or before the first day of April in each year every such city, village, fire department, fire, hose or hook and ladder company, fire district, or fire district association, firemen's benevolent associations, exempt or veteran firemen's associations, officer, board of officers and association, shall, by its chief fiscal officer, treasurer, or other officer whose duty it may be to receive such funds, deliver to the treasurer of the Firemen's association of the state of New York a statement showing the name of each person or corporation from whom any such tax shall have been received and the amount paid by each, which statement shall be verified by the officer making the same to the effect that the same is correct and true and that such statement correctly shows the amount of such tax received by such city, village, fire department, fire, hose, or hook and ladder company, fire district, or fire district association, firemen's benevolent associations, exempt or veteran firemen's associations, officer, board of officers and association since the first day of April in the preceding year. Any such city, village, fire department, fire, hose or hook and ladder company, fire district, or fire district association, firemen's benevolent associa- tions, exempt or veteran firemen's associations, officer, board of officers and association receiving any portion of such tax and failing to make and deliver such verified statement as herein pro- vided or omitting to pay ten per centum thereof to the treasurer of the Firemen's association of the state of New York as provided herein within the time above allowed shall forfeit tlie sum of fifty dollars in addition to the amount of such tax to be recovered in an 252 The Insueance Law. § 134. action which may be maintained by said Firemen's association of the state of New York in any of the courts of this state. Source. — Former § 133, as amended by L. 1901, chap. 726; originally revised from R. S., pt. 1, chap. 20, tit. 21, § 3, as amended by L. 1837, chap. 30; L. 1849, chap. 178, § 1; L. 1875, chap. 465, § 1, as amended by L. 1890, chap. 406; L. 1886, chap. 604, § 5, as amended by L. 1887, c^ap. 520. FIRST ULAJM, — Section 133, in regard to the percentage tax collected from foreign fire insurance companies in cities, seems to provide that the first claim upon such monies is for the relief of exempt or veteran volunteer fire- men, administered through organized firemen's relief or benevolent societies having requisite authority. Exempt Firemen's Assn. v. City of Little Falls, 148 App. Div., 440. CONDITIONS. — A state may prohibit a foreign corporation from trans- acting business in this state, or may impose conditions, on compliance of which it may come. People v. Fire Assn. of Philadelphia, 92 N. Y., 311. § 523 of the New York Consolidation Act, requiring every person who shall act in the county and city of New York as agent for any association of individuals, not incorporated by the laws of this state, in effecting insur- ance against loss or injury by fire in that county and city, to pay annually to the city fire department two per cent of the amount of premiums received by him, extends to the agent of domestic or resident non-incorporated asso- ciations of individual underwriters. Fire Department v. Stanton, 159 N. Y., 229. APPORTIONiMENT. — Moneys paid by agents of foreign fire insurance com- panies, pursuant to requirements of § 133, should be apportioned among the several companies which have been recognized by the common council of the city of Oneida as members of the fire department of said city. Volunteer companies have no preference under the statute over paid companies. Cary V. City of Oneida, 158 App. Div., 773. § 134. Undertaking of agent. No person shall, as agent for any such foreign insurance corpo- ration, association or individuals, effect any insurance upon any property situate in any city or village of this state upon which the pums specified in the preceding section are required to be paid, or as such agent procure such insurance to be effected, until he shall have executed and delivered to the officer to whom such account is to be rendered and such payments to be made, a bond to such fire department in the penal sum of five hundred dollars, with such sureties as such treasurer, supervisor or other fiscal officer shall approve, with a condition that he will annually render to such treasurer, supervisor or other fiscal officer, on the first day of February in each year a just and true account, verified by his oath that the same is true, of all premiums which, during the year ending on the thirty-first day of December preceding such report, shall have been received by him or any other person for him, for any insurance against loss or injury by fire upon property situ- § 134. Fire Insurance Corporation. ^53 ated in such city or village, which shall have been effected or procured by him to have been effected by any such corporation, association or individuals, and that he will annually, on the first day of February in each year, pay to such treasurer or supervisor or other fiscal officer two dollars upon every hundred dollars, and at that rate upon the amount of such premiums. If any such agent shall desire to transact business in more than one city, town or village, he may, instead of executing and delivering a separate bond for each such city, town or village, as required by this section, execute and file with the superintendent of insur- ance a bond in the penal sum of fifteen hundred dollars, with such sureties as the superintendent shall approve, conditioned that he will make his account and pay the sums so required to be paid in each city, town or village in which he shall effect insurance. Any such corporation, association or individual, hav- ing authority to transact business in this state, on filing a bond in the penal sum of two thousand five hundred dollars with the superintendent of insurance that it will make its account and pay the sums so required to be paid, may effect such insurance in any city, toT\Ti or village wherein it has no agent. Source. — Former § 134; originally revised from R. S., pt. 1, chap. 20, tit. 21, § 4; L. 1849, chap. 178, §§ 2-3; L. 1875, chap. 465, § 2, as amended by L. 1890, chap. 406. Amended by L. 1913, chap. 304. Note. — The purpose of the amendment of this section by chapter 305 of 1913 was to relieve agents of foreign fire insurance companies, who wish to do business in several different towns or cities, from executing and delivering a separate bond for each such city or town by executing and filing with the superintendent a bond in the penal sum of one thousand five hundred dollars with such sureties as the superintendent shall approve, conditioned that he 8ha.ll make his account and pay the sums so required to be paid in each city, town or village in which he shall effect insurance. — Ed. The provisions of this section are not limited in their application to local resident agents but apply to all agents of insurance companies writing con- tracts of insurance within the State. Fire Dept. of East Rochester v. Bar- ley, 73 Misc., 628. The requirement of filing a bond to secure the payment of taxes on insur- ance premiums may be complied with by the filing of one such bond for each agent notwithstanding the fact of his representing several foreign com- panies. Attorney-General Rep., 1914, page 78. SEPARATE BOND.— It is not necessary that a sepnrate bond should be filed for each company represented by an agent, for the single bond will furnish adequate security for the payment of the tax in section 133. Attor- ney-General's Rep., October 30, 1913. 264 The Insurance Law. §§ 135, 136. § 135. Penalty for refusal to pay. Every such person who shall effect any such insurance without having executed and delivered such bond, shall for each offense, for- feit two hundred dollars, for the use and benefit of the fire depart- ment of such city or village, to be collected by and in the name of the fire department, treasurer or chief fiscal officer of the city or village in which the property insured is situated. The treasurer or chief fiscal officer of any city or village having no incorporated firemen's relief or benevolent society receiving any money under the laws of this state, shall, on or before the fifteenth day of February in each year, apportion and pay over all such moneys so received to the treasurers of such of the several fire companies as are duly recognized by the common council, trustees or supervisors of such city or village. If he shall neglect or refuse to perform any or all of the duties required by this section, he shall forfeit the sum of two hur^dred dollars for every such neglect or refusal for the use and benefit of the fire department of such city or village, and the foreman of any fire company may sue for and maintain an action in the name of and for the benefit of such company for its proportion of the penalties prescribed by this section. Source. — Former § 135; originally revised from L. 1875, chap. 465, § 3, as amended by L. 1886, chap. 604. ACTION FOR PENALTY.— A person seeking to maintain an action for a statutory penalty must state every fact required to enable the court to judge whether he has a cause of action under the statute; a penalty under S 135 of the Insurance Law does not relate to an act done outside of the «tate of New York. Ithaca Fire Dept. v. Rice. 108 App. Div.. 100. § 136. Penalty for refusal to exhibit foreign fire policies. Every person whose property shall be insured in violation of section 135 of this chapter, and every person having the care or charge of property so insured, or of policies of insurance placed in violation of such section, as agent or trustee for another, who shall refuse or neglect to exhibit to the ofiicer, entitled by section 134 of this chapter to receive the per centum of premium in such section provided, all policies so placed upon such property, or shall neglect or refuse to give such officer full information as to when, by whom, and in what corporation or corporations such property sliall be ho insured, and the name of the agent, broker or other person con- § 137. Fire Insurance Corporation. 256 nee ted with the effecting of such insurance, upon demand being duly made by such officer shall become liable to an action by and in the name of the fire department, organization or company of which such officer shall be the treasurer, for the sum of one hundred dollars for each such neglect or refusal. All persons acting as brokers between any such agent or any such corporation and the assured, shall, within ten days after effecting any insurance specified in section 135, notify the officer entitled to receive the tax upon the premium upon such insurance of the fact of such insurance, together with the precise location of the property, the name of the insurer and the amount of the premium to be paid by the assured. Any broker willfully neglecting or refusing to comply with the provisions of this section, shall be liable to a like action and like penalty brought in the like manner hereinbefore provided. Actions brought under this section must be tried in the county in which the property alleged to be so insured is situated. All moneys received pursuant to this section shall be appor- tioned and paid over in the same manner as provided in the preceding section of this chapter for the apportionment and pay- ment of moneys received pursuant to such section and under a like penalty. Source.— Former § 136; originally revised from L. 1886, chap. 60, § 4. § 137. License to agents in excepted cases. The superintendent of insurance, in consideration of the yearly payment of two hundred dollars, except in counties having less than one hundred thousand inhabitants, in which case the fee shall not exceed twenty-five dollars, may issue to citizens, firms or cor- porations having places of business in this state, not exceeding two hundred in number, a license revocable at any time, permitting the party named in such license to act as agent to procure policies of fire insurance from corporations, persons, partnerships and associa- tions which are not otherwise authorized to do business in this state. When any policies of fire insurance shall be procured under or by virtue of said license, there shall be executed by the licensed agent and by the party desiring an insurance, an affidavit in duplicate, one of which shall 256 The Insueance Law. § 137. be filed in the insurance department and the other in the clerk's office of the county in which the property pro- posed to bo insured is located, within thirty days after the pro- curing of such insurance. Such affidavits shall set forth that the party desiring insurance is, after diligent effort, unable to procure the amount required to protect the property owned or controlled by him from the insurance corporations duly authorized to transact business in this state. The agent procuring policies in such unau- thorized corporations or with persons, partnerships and associa- tions, shall keep a separate account thereof, open at all times to the inspection of the superintendent, showing, first, the exact amount of such insurance placed for any party ; second, the gross premiums charged thereon ; third, in what corporation, or with what persons, partnerships or associations; fourth, the date of the policy; fifth, the term thereof, and sixth, the cities and villages within this state in which the insured property is located. Each party re- ceiving such license shall, before transacting business thereunder, execute and deliver to the superintendent a bond to the people of the state, in the penal sum of two thousand dollars, with such sureties as the superintendent shall approve, conditioned that the said agent will faithfully comply w^ith all the requirements of this chapter, and will pay to the treasurer of the Firemen's Association of the state of New York, to be expended for the use and support of the Firemen's Home, located at Hudson, Columbia county, New York, for the uses and purposes of said association, or, where such policies cover risks in cities of over one million inhabitants, having a fire patrol or salvage corps, to the treasurer of such fire patrol or salvage corps, in January and July of each year, a sum equal to three per cent, upon the amount of the gross premiums charged to policy holders less the amount of the gross premiums returned to the insured upon all policies procured by him during the preceding six months, pursuant to this article; and in default of payment to the treasurer of any fire patrol or salvage corps of any sum to which it may be entitled pursuant to the pro- visions of this section, or the treasurer of the said Firemen's Association of the sum due them, the treasurer of said fire patrol, salvage corps or association may sue for the same in any coni't oi record in this state. All fire insurance policies issued to residents § 13T. Fire Insurance Corporation. 257 of this state on property located herein by companies that have not complied with the requirements of the general insurance laws of the state shall be void, except as shall have been procured as herein set forth. Source. — Former § 137, as amended by L. 1894, chap. 611; originally revised from L. 1884, Torth river, or structures thereon. Attor- ney-General Rep., May 6, 1911. §§ 151, 152. Mat^tne Tn^surance roin'ORATioNS. 285 QUORUM. — A quorum of directors must be a majority of all the directors, unless otherwise lirovided in charter or special law. By-laws cannot change this rule. In re New Amsterdam Cas. Co., Attorney-General Rep., 1900, page 253. § 161. Subscription to stock. After the publication of such notice and the filing of such declaration and charter, the corporation may open books for sub- scription to its capital stock and keep the same open until the full amount specified in the charter is subscribed ; or, if its busi- ness is to be conducted on the plan of mutual insurance, it may open books to receive propositions and enter into agreements for insurance in the manner and to the extent hereinafter specified Source. — Former § 151; originally revised from L. 1849, chap. 308, § 4. See § 53, Stock Corporation T^aw, chap. 61 of 1909. Subscription to capital stock. See § 660, Penal Law. Frauds in organization of corporations. See § 662 et seq.. Penal Law. Fraudulent issue of stock. § 152. Restrictions as to capital stocl< and premium notes. ISiO such corporation shall be organized in the county of New York, or in the county of Kings, with a smaller capital than fifty thousand dollars, nor shall any such corporation formed for the ]nirpose of doing business on the plan of mutual insurance, com- mence business if located in the county of New York, or county of Kings, until agreements have been entered into for insurance with at least one hundred applicants, the premiums on which shall amount to at least three hundred thousand dollars, and notes have been received in advance for the premiums on such risks, payable at the end of or within twelve months from the date thereof, wliich notes shall be considered as a part of its capital, and shall be known as capital stock notes and shall be valid, negotiable and collectible for the purpose of paying any losses which may occur or otherwise. No such mutual insurance corporation shall in any other county of the state commence business until such agreements have bebu entered into, the premiums on which shall amount to one huridre(] thousand dollars and notes receiv^ed therefor, which notes shj^ll be payable and shall be liable for and used as above specific^. 286 The Insurance Law. §§ 153, 154. Any such mutual insurance corporation heretofore or hereafter organized may issue policies providing that the assured in such policies shall not participate in the profits of the corporation, and that in lieu of scrip the corporation may stipulate for and take a net premium, or may make a cash deduction from the premiums paid on such non-participating policies, though such mode of doing business may not be declared in its charter. Source. — Former § 152; originally revised from L. 1849, chap. 308, § 5 and § 10, as amended by L. 1867, chap. 574. See § 12, ante. Minimum capital stock of marine insurance corporatioi.8. The subscription agreement must, under the statute, amount to something more than an underwriting agreement to fumisih so much capital to, or to acquire so much business for, the company; it must be upon specific automo- biles. Attorney-General Rep., April 6, 1016. § 153. Increase of capital by mutual corporations. Any domestic mutual marine insurance corporation liaving its principal office in the city of New York may increase its capital or fund on the amount of accumulated net profits, which it is permitted to retain for the benefit and security of its policyholders, to any amount which shall be deemed expedient by its board of directors, but if there is in the charter of such corporation any limitation of its capital or fund, or the amount of net profits which it has the power to accumulate and retain, such increase shall not be made unless a written consent thereto under the seal of the corporation, by a resolution of the board of directors, certified by the secretary, shall first be filed in the office of the superinteudoTst of insurance, and the privilege of retaining profits over one million dollars shall not be exercised by any corporation availing itself of the provisions of this section, until a sufficient sum shall be applied by such corporation according to the provisions of its charter, towards the redemption of all certificates or premiums hen^tofore issued and now outstanding. Source.— Former § 153; originally revised from L. 1849, chap. 308, § 22, as added by L. 1855, chap. 292. § 154. Cash capital of mutual corporations. Any domestic mutual marine insurance corporation may create or unite with its existing corporate funds, if it has any such funds, a cash capital of not less than three hundred thousand dollars, to be divided into shares of one hundred dollars each, to be issued to § 155. Marine Insuiiance Cokporations. 287 such persons as shall subscribe and pay for the same, which shall be transferable only on the books of the corporation, subject to such regulations as the directors shall from time to time prescribe. The profits of the business of such corporation, after setting apart a sufficient sum to pay six per cent per annum upon the cash capital and the interest accruing upon any outstanding scrip or certificates, shall be divided between the stockholders and others entitled by its charter or articles of association to participate in its profits in the following manner, viz. : One-third thereof, or such other proportion not exceeding that rate as may be deter- mined and agreed upon at the time when the subscriptions to the cash capital thereof are made, to the stockholders in cash, and the remainder thereof to the persons entitled by its charter or articles of association to participate in its profits, to whom scrip certificates therefor shall be issued as provided in such charter or articles. The corporation may exclude from the computation of premiums entitled to participate in such profits, premiums or risks on which loss shall have happened. The fund represented by the scrip shall constitute a surplus or reserve for the security and payment of losses, and be liable for any excess of losses and expenses above the earned premiums of any year. Each later annual issue of scrip shall be first reduced and wholly canceled before any previous annual issue is at all reduced, and all issues of scrip shall be liable to reduction and cancellation before the capital stock shall be encroached upon. The provisions of this section and of the two following sections shall not be considered to extend the original charter of any cor- poration created by a special act of the legislature, or to apply to or revive any charter under which any corporation is not actually transacting business. Source. — Former § 154; originally revised from L. 1849, chap. 308, § 21, as amended by L. 1857, chap. 38; L. 1857, chap. 28, §§ 1, 2, 7. § 155. Rights and liabilities of holders of cash capital. The holders of the cash capital paid in shall be entitled to one vote either in person or by proxy at all elections of the corporation for each share of stock held by them respectively. No person shall be entitled to vote at any election by reason of being the holder of a policy issued after such cash capital is paid in, or of 288 The Insurance L.^w, § 150. being the holder of any scrip or certificate of profits of such cor- poration issued after that time, unless otherwise provided for in the articles of subscription to such cash capital. Each subscriber to the cash capital shall be individually liable to the extent of his subscription for the debts of the corporation until the shares of stxxjk subscribed for by him shall have been paid in cash to the corporation. Source. — ^Former § 155; originally revised from L. 1849, chap. 308, § 19; L. 1857, chap. 28, §§ 4, 6; L. 1884, chap. 95, § 2. See § 25 et eeq., Stock Corporation Law, chap. 564 of 1890. Directors and officers and their election. See § 56 et seq., Stock Corporation Law, chap. 61 of 1909. Liability of stockholders and the limitation of their liability. § 156. Certificates convertible into stock. Whenever the cash stock paid in, as provided in section one hun- dred and fifty-four, shall amount to three hundred thousand dollars or more, the directors may, by a vote of three-fourths of the whole number, convert the certificates of profits, in whole or in part, into cash stock ; commencing, if in part, with the certificates of the year of earliest issue outstanding, and so on in succession, upon applica- tion therefor being made to the corporation by the holders thereof, within such period of time and at such a price not exceeding its par value, and under such conditions and regulations as the trustees may prescribe for that purpose. Whenever the cash stock shall amount to five hundred thousand dollars or more, the directors may, by a like vote, call in and redeem and cancel the outstanding certificates of profits and make the corporation wholly a cash stock corporation, dividing all its profits to the cash stock- holders; and the directors shall have power to make all necessary by-laws and regulations to conform to such changes in the business of the corporation. Such corporation shall not apply any of its funds or profits to the redemption or payment of any certificate of profits, if by such payment the aggregate of its cash capital and its accumulated profits together shall be reduced below tlie amount which shall bo fixed by its by-laws or articles of association, and such aggregate amount shall not be fixed below the sum of one million dollars, in addition to the amount of cash stock thereof. Source. — Former § 156; originally revised ffom L. 1857, chap. 28, §§ 3, 5. §§ 157, 158. Marine Insurance Corporations. 289 § 157. Amendment of charter. Any domestic marine insurance corporation may amend its charter so as to enable it to transact all such business as can be transacted by marine insurance corporations under the laws of the state, by filing in the office of tlie superintendent of insurance a copy of its charter as amended, with the written consent thereto of three-fourths in amount of its stockholders, if a stock corpora- tion, or, if a mutual corporation, of two-thirds of its directors. Thereupon such proceedings shall be had as are required by law to be taken upon the filing of an original declaration and charter, and such corporation shall not transact any business under such amended charter until it shall have obtained the certificate of authority required by law from the superintendent of insurance. Source.— Former § 157; originally revised from L. 1880, chap. 222, § 1. See § 37, ante. Corporations heretofore formed brought within the pro- visions of the Insurance Law. See § 100, Statutory Construction Law, chap. 27 jf 1909, as to eflFect of repeal and re-enactment of prior statutes. § 158. Extension of charter. Any domestic marine insurance corporation may at any time have its original charter extended for a period not exceeding thirty years, by filing in the office of the superintendent of insurance a copy of such charter as amended and a consent thereto signed by all of its directors or by two-thirds of them, and not less than thir- teen in number. It shall not be authorized to transact any busi- ness under its extended charter until tlie same proceedings have been taken as are required by law upon the filing of an original declaration and charter, and until the certificate of the superin- tendent required by law shall have been obtained authorizing it to transact business thereunder. Any corporation whose charter has been so amended and which has obtained the authority of the superintendent to transact busi- ness thereunder may continue its business upon the same plan, and without any interruption of its business or distribution of its assets, as fully and with like effect as if it had been originally incorporated for the extended period. Source. — Former § 158; originally revised fropi L. 1849, chap. 308, § 14, as amended by L. 1889, chap. 424; L. 1867, chap. 442, § 2, as amended by L. 1868, chap. 731. 290 The Insueance Law. § 159. See § 37, General Corporation Law, chap. 28 of 1909. Extension of cor- porate existence. A company, incorporated by special act before the passage of the first general insurance law in 1849, may extend its charter in accordance with sec- tion 158 of the Insurance Law and continue to operate under its original charter, subject to the limitations contained in section 37 of the Insurance Law. Attorney-General Rep., March 21, 1912. § 159. Change in plan of insurance. Any domestic mutual marine insurance corporation may, by conforming its charter and otherwise proceeding in accordance with the laws of the state, with the consent of three-fourths of the whole number of its directors and with the written consent of three-fourths of the whole amount of the outstanding scrip, after giving notice once a week for six weeks of its intention in two newspapers, to be designated by the superintendent of insurance, change the plan of its business from that oi a mutual insurance corporation to that of a capital stock corporation, by converting the outstanding certificates of profits of those so consenting into capital stock in shares of not less than fifty dollars each, in such period of time and at such price not exceeding its par value and under such conditions and regulations as such directors may fix and establish for that purpose; and, may, upon application therefor being made to the corporation by the holders thereof, convert the remaining outstanding certificates of profits in whole or in part into capital stock, or, at the option of the holders, redeem the same at the market price or value thereof, to be determined by a dis- interested person appointed by a judge of a court of record of this state. The capital stock thus created shall in no case exceed the cash value of tlie assets of the corporation, which shall not be less than two hundred and fifty thousand dollars. No such corporation shall change the plan of its business to that of a capital stock corporation until the superintendent of insurance shall first have examined into the cash value of its assets and shall have issued his certificate that the corporation has complied with the provisions of this section and is in a safe and proper condition to continue the business of marine insurance, a copy of which cer- tificate shall be recorded in the ofiice of tlie superintendent and in the clerk's office of tlie county where its principal office is located. Source. — Former § 159; originally revised from L. 1884, chap. 95, § 1. § 160. ]\1aki.\k L\sri:AA(i: Coin-ou-ATiONS. 291 § 160. Charges for insurance upon canals of the state. ISTo marine insurance corporation doing business in this state shall demand or receive upon any policy of insurance issued by it upon property in transit upon the canals of the state, for the pre- mium on such policy, any sum of money as compensation, whicli shall include in any case over fifteen per cent thereof, as a price or remuneration of agents of the corporation for the business of ob- taining such insurance on a salary or commission, or in any capac- ity whatever. 'No such corporation shall pay beyond the amount of fifteen per centum of the premiums so received on account of any such policy as the commission or remuneration of the agent or agents obtaining the insurance, and no part of the eighty-five per centum of the premium retained by the corporation shall be paid to any one except to the regular officers of the corporation for its benefit, and no shipper or middleman or other person shall either directly or indirectly be paid or receive any portion of such premium. An agent of any such corporation, or other person, shall not charge or receive, directly or indirectly, from any person or persons for insurance of such property, any more than the regular rates of premium fixed by the corporation for the insurance of such proph erty, or charge or receive any other or greater simi for such insur- ance than the amounts payable to the corporation and its agents as provided in this section. In all reports to the superintendent of in- surance required by law every such corporation shall verify under oath to such superintendent in such form as he may prescribe, that the corporation has performed and fully carried out the provisions of this section. Any agent, shipper or other person who shall violate any of the provisions of this section shall forfeit to the people of the state the sum of one hundred dollars, one-half of which shall be paid to the person injured, if he shall complain; the other half, or the whole thereof when any other than the injured person shall complain, shall be paid to the treasury of the county in which the offense was committed, for the benefit of the poor of the city or town in which such offense was committed. Any corporation violating the pro- visions of this section shall be deemed to have forfeited its charter, 292 The Insurance Law. §§ 161, 162. and the attorney-general, upon information from the superintend- ent of insurance, or upon the complaint of any individual who shall give security, to be approved by the superintendent, for the pay- ment of any costs or expenses on the part of the state, shall proceed against any such corporation so violating the provisions of this section to enforce the forfeiture of its charter. The court in which any such suit or proceeding may be instituted may, upon final judg- ment instead of decreeing the dissolution of the corporation, require it to pay such sum as a penalty for such violation not less than five hundred dollars, nor more than five thousand dollars, as the court may in its discretion impose, and direct in the judgment that in case such penalty is not paid within a time therein specified the corporation shall be dissolved. Source. — Former § 160; originally revised from L. 1881, chap. 471, as amended by L. 1883, chap. 455. § 161. Agencies beyond the United States. Any domestic marine insurance corporation may establish and maintain one or more agencies beyond the United States for the transaction of its lawful business upon such terms and conditions as it may prescribe, and may omit from its annual report the transactions at any such agency in Asia or Europe for five montlis previous to the time when the report is made, but such omitted transactions shall be included in the next annual report. Source.— Former § 161 ; originally revised from L. 1852, chap. 123. § 162. Lloyds or individual underwriters. Source. — Former § 102, as amended by L. 1905, chap. 566. Repealed by L. 1910, chap 638 (in effect Jan. 1, 1911). § 170. Title and Credit Guakanty Cokpokations. 293 AKTICLE V. Title and Credit Guaranty Corporations. Section 170. Incorporation. 171. Subscriptions to capital stock. 172. By-laws. 173. Certificate of superintendent. 174. Certificate of payment of capital stock. 175. Directors. 176. Investment of capital and funds of a title guarantee corporation. 177. Conditions requisite to commencing business of a credit guaranty corporation. 178. Powers of credit guarantee corporations. 179. Merger. 180. Additional powers of certain title guaranty companies. 181. May execute bonds and undertakings. 182. Issuance of certificate of solvency by superintendent of in- surance. 183. Supreme court may require statement to be tiled. Section 170. Incorporation. Five or more persons may form a corporation for one of the following purposes : 1. To examine titles to real property and chattels real, to pro- cure and furnish information in relation thereto, make and guar- antee the correctness of searches for all instruments, liens or charges affecting the same, guarantee or insure the payment of bonds and mortgages, or notes of individuals or partnerships secured by mortgages upon real property situated in this or any other state, and bonds, notes, debentures and other evidences of indebted- ness of solvent corporations secured by deed of trust or mortgage upon real property situated in this or any other state, invest in, purchase and sell, with such guarantee or with guarantee only against loss by reason of defective title or incumbrances, bonds and mortgages, and notes of individuals or partnerships secured by mortgages upon improved and unincumbered real property situated in this or any other state worth fifty per centum more than the amount loaned thereon, and bonds, notes, debentures and other evidences of indebtedness of solvent corporations se- cured by deed of trust or mortgages upon improved and unin- cumbered real property situated in this state or outside of this 294 The Insurance Law. § 170. state worth fifty per centum more than the amount loaned thereon, and guarantee and insure the owners of real property and chattels real and others interested therein against the loss by reason of defective titles thereto and other incumbrances thereon which shall be known as a title guaranty corporation ; or 1-a. To guarantee the validity and legality of bonds or other evidences of indebtedness issued by any state or by any city, county, tov^n, village, school district, municipality or other civil division of any state, or by any private or public corporation; to act as registrar or transfer agent, but not fiscal of any such corpo- ration, and to transfer and countersign its certificates of stocks, ^onds or other evidences of indebtedness. Such corporation shall be known as a securities guaranty corporation and shall be gov- erned by and subject to the provisions of law applicable to a title guaranty corporation organized under this article; or 2. To guarantee and indemnify merchants, traders and those engaged in business and giving credit from loss and damage by reason of giving and extending credit to their customers, and those dealing with them, which shall be known as a credit guaranty cor- poration, by making, acknowledging and filing a certificate stating : 1. The name of the proposed corporation. 2. The kind of corporation to be formed and its purposes. 3. The amount and description of the capital stock. 4. The location of its office. 5. The duration of the corporation, not exceeding fifty years. No credit guaranty corporation or securities guaranty corpora- tion shall be formed for the transaction of business in this itate, with a smaller capital than two hundred and fifty thousand dollars. IN^o title guaranty corporation shall be formed with a smaller capital than one hundred and fifty thousand dollars, which shall be divided into shares of one hundred dollars each. Such certificate shall be filed in the office of the superintendent of in- surance, who shall thereupon issue a license to the persons making such certificate, empowering them as commissioners to open books of subscription to the capital stock of the corporation at such times and places as they may determine. Any corporation heretofore organized under subdivision one of this section shall have all the powers conferred by such sub- division as amended hereby. § 170. Title and Ckedit Guakanty Cokpokations. 295 Source.— Former § 170, as amended by L. 1900, eliap. 266; L. 1901, chap. 677; L. 1904, ohap. 543; originally revised from L. 1885, chap. 538, §§ 1, 3, 4, 10, 28; L. 1886, chap. 611, §§ 1, 2, 3, 5, 14. Amended by L. 1909, chap. 302; L. 1911, dhap. 525; L. 1913, chaps. 81 and 215. Note. — This section was amended by chaptersi 81 and 215 of 1913. The amendment by chapter 81 went into effect March 15, 1913, and consisted of adding the words " or securities guaranty corporation " in subdivision 5, in- creased the capital from $150,000 to $250,000 and in the same subdivision struck out the words " or with a larger capital than $10,000,000." The amend- ment by chapter 215 of 1913 went into effect April 4, 1913, and amended sub- division 1 by permitting insurance on notes secured by mortgages, made the same changes in subdivision 5 as were made by chapter 81 and added the last paragraph. — Ed. See § 6, ante. Fees to superintendent for filing declaration. See § 9, ante. Certificate of authorization of superintendent. See § 10, ante. Certificate of attorney-general; corporate names. See § 11, ante. Examination by superintendent as to capital. See § 13, ante. Deposit of securities with superintendent. See § 174, post. Certificate of payment of capital stock. See § 177, post. Conditions requisite to commencing business. See chap. 733 of 1900. Reincorporation of foreign moneyed corporations. A corporation may not be organized under the Business Corporations Law to engage in the business of examining and certifying the titles to real prop- erty. Attorney-General Rep., 1912, page 345. TITLES. — A corporation organized for the purpose of examining and guaranteeing titles to real estate, which, in all matters relating to convey- ancing and searching titles assumes to discharge the same duties as an individual conveyancer or attorney, is subject to the same responsibilities, and its duty to its employer is governed by the principles applicable to attorney and client. Ehmer v. Title G. & T. Co., 156 N. Y., 10. A policy of insurance issued by a title guarantee corporation containing a provision " that defects and incumbrances arising after the date of this policy, or created or suffered by the insured, and assessments not confirmed at the date of this policy, are not to be deemed covered by it," covers a confirmed assessment existing at the date of the policy, although the con- firmation took place after the grantee took possession under his deed. Trenton Co. v. Title Guarantee Co., 50 App. Div., 490. A corporation organized under the business corporation law for the pur- pose of conducting the business of a mercantile reporting company is entitled to amend its certificate of incorporation so as to assume a responsibility to its clients for the accuracy of its reports and such amendment does not contemplate an insurance business within the meaning of subdivision 2 of § 170. People ex rel. Daily Credit Service Corp. v. May, 162 App. Div., 215. A company " to guarantee and indemnify banks from loss and damage by reason of their having given an extended credit to customers in the regular course of business," is authorized under this section. Attorney-General Rep., 1906, page 554. A title company, organized to do business specified in § 170, subd. 1, cannot accept deposits of money from individuals and issue in exchange therefor cer- 296 Tjie Insurance Law. »§ 171. tificates of indebtedness, which will provide that the moneys received shall be merged with the general funds and invested in mortgage loans, the holders of the certificate to receive 4 per cent interest and the company to have the option to give the holder at any time a guaranteed mortgage at 5l^ per cent equal tc the amount of such deposit, or a certificate giving the holder an inter- est in a larger guaranteed mortgage at the same rate, which interest shall be equal to the amount of such deposit. Attorney-General Rep., Dec. 6, 1910. CERTIFICATE. — The superintendent of the insurance department may, in his discretion, issue to a foreign credit guarantee insurance company a certificate authorizing it to transact business in this state. Attorney- General Rep., 1892, page 375. INCORPORATION. — Two-thirds of the persons executing a certificate of incorporation of a credit guarantee company must be citizens of the United States, and a majority of them residents of this state. In re Com. Credit Guar. Co., Attorney-General Rep., 1893, page 139. BUSINESS. — A foreign company should not be allowed to do business, both as provided by art. V and by § 70, subd. 4 of the Insurance Law. In re Ocean Ace. & Guar. Co., Attorney-General Rep., 1897, page 230. A proposed mortgage insurance company, licensed by the superintendent of insurance to open stock subscription books, cannot organize on a smaller capital than that specified in the license. Reduction of capital stock can be effected only in the manner specified in §§ 45 and 46 of the Stock Corpora- tion Law. In re N. Y. Mortgage Ins. Co., Attorney -General Rep., 1893, page 84. CREDIT COMPANY. — Credit guaranty companies are moneyed corpora- tions, and cannot be formed under the provisions of the Business Corporation Law. In re Com. Guar. Co., Attorney -General Rep., 1893, page 308. TITLE COMPANY. — A foreign title-searching company is a moneyed cor- poration, and cannot be authorized by the secretary of state to do business in this state. In re New Jersey Title, etc., Co., Attorney-General Rep., 1893, page 92. BONDS. — Bonds of a real es.tate title and mortgage guarantee corporation secured by niurt;^'ages deposited with a trustee under an agreeuieiit permitting substitution of mortgages is lawful. Attorney-General Rep., May 1, 1915. § 171. Subscriptions to capital stock. Such commissioners shall open hooks for suhscription to the capital stock of the corporation. No subscription shall be received unless at the time of making it, the person so subscribing shall pay to the commissioneiri ten per cent of the par value of the stock subscribed for in cash. When one-third of the capital stock has been subscribed the commissioners shall call a meeting of the subscribers to adopt by- laws for the corporation and elect directors thereof. Notice of § 1725. Title and (Credit Guaranty Corporations. 2i97 such meeting shall be given to every subscriber by depositing in the post-office properly addressed to him at his last known place of residence and postage i)i'c'[)aid, at least five days before tlie I hue fixed, a written or printed notice stating the time, place and object of the meeting. Source. — Former § 171; originally revised from L. 1885, chap. 538, § 5; L. 1886, chap. 611, § 6. See § 23, General Corporation Law, chap. 563 of 1890. Qualifications of voters. See § 53, Stock Corporation Law, chap. 61 of 1909. Subscriptions to capital atock. See § 660, Penal Law. Frauds in the organization of corporations. See § 662 et seq. Fraudulent issue of stock. CAPITAL. — A proposed mortgage insurance company, licensed by the superintendent of insurance to open stock subscription books, cannot organize on a smaller capital than that specified in the license. In re New York Mortgage Insurance Co., Attorney-General Rep., 1893, page 84. § 172. By-laws. The by-laws of every corporation created under the provisions of this article shall be deemed and taken to be its law, and shall provide : 1. The number of its directors. 2. Their terms of office, so arranged that at least one-fourth in number of all the directors shall be elected annually. 3. The manner of filling vacancies among directors and officers. 4. The time and place of the annual meeting. 5. The manner of calling and holding special meetings of stockholders. 6. The number of stockholders who shall attend either in person or by proxy at every meeting to constitute a quorum. 7. The officers of the corporation and manner of their election by the directors, and their powers and duties. Such officers shall always include a president, secretary, treasurer, and a general man- ager. The president must be elected from among the directors. 8. The manner of electing or appointing inspectors of election. 9. The manner of amending or repealing the by-laws. Source. — Former § 172, as amended by L. 1903, chap. 135; originally revised from L. 1885, chap. 538, § 6. 298 The Insurance Law. §§ 173, 174. Amended by L. 1913, chap. 49. Note. — The purpose of the amendment of this section by chapter 49 of 1913 was to require title, credit and securities guaranty corporations to elect their directors in such a manner that at least one-fourth of all such directors shall be elected annually. — Ed. See § 175, post. Directors, number, quorum, etc. See § 11, subd. 6, General Corporation Law, chap. 563 of 1890. By-la wb to control action of directors. § 173. Certificate of superintendent. Within ten days after such meeting the commissioners shall file in the office of the superintendent of insurance a verified rec- ord of the proceedings thereof, containing a copy of the subscrip- tion list, a copy of the by-laws adopted, and the names of the directors chosen. Thereupon the superintendent shall issue to such directors the certificate required by this chapter, which shall in- clude a copy of the original certificate provided in section 170, the date and place of the subscribers' meeting the names of the directors elected and a statement that all the provisions of this article have been fully observed in the organization of the corporation. Upon every amendment of the by-laws of such corporation, a copy of the amended by-laws, duly certified under the seal of the corporation, shall be filed in the office of the superintendent of in- surance and of such county clerk, and shall not take effect until so filed. Unless such corporation shall be fully organized as provided in this section within one year after the issuing of the license to the commissioners to open books, such license shall be deemed to be revoked and all proceedings thereunder shall be void. Source.— Former § 173; originally revised from L. 1885, chap. 538, §§ 7, 8. § 174. Certificate of payment of capital stock. The capital stock of every corporation organized under this article shall be paid in, one-third thereof within one year and the other two-thirds thereof within two years from its incorporation, or such corporation shall be dissolved. The directors of every such corporation, within thirty days after the payment of the last installment of the capital stock, shall make a certificate stating the amount of the capital so paid in, which shall be signed and sworn to by the president and a majority of the directors, and shall be recorded in the office of the superintendent of insurance §§ 1T5, 176. Title and Credit -Guaranty Corporations. 299 and of the clerk of the county in which the principal office of the corporation is situated. Source. — Former § 174; originally revised from L. 1885, chap. 538, § 24. CAPITAL. — The capital stock of foreign credit guarantee companies must be paid in in cash, one-third thereof within one year, and the other two- thirds thereof within two years from their incorporation. Attorney-General Rep., 1893, page 164. § 175. Directors. Every director of any such corporation shall be a stockholder to the extent of at least five shares of stx3ck. The corporation shall have such offices as shall be prescribed in its by-laws. There shall not be less than five nor more than twenty directors, and the num- ber originally fixed by the by-laws of the corporation mav bo changed at a special meeting of the owners of a majority of the whole amount of the capital stock of the corporation, called pur- suant to notice specifying the purpose of the meeting, which shall be served in the manner prescribed in section one hundred and seventy-one. The vote of a majority of the stockholders in person or by attorney duly authorized for that purpose shall be necessary to such change. A majority of the whole number of directors shall be necessary to constitute a quorum. The secretary shall record all the votes of the corporation and the minutes of its transactions and of the board of directors, in a book to be kept for that purpose. The treasurer shall give bonds in such sum and with such sureties as are required by the by-laws for the faithful discharge of his duties. Source.— Former § 175, us amended by L. 1903, chap. 135; originally revised from L. 1885, chap. 538, § 3; L. 1886, dhap. 611, § 9, as amended hy L. 1891, chap. 80. See § 34, General Corporation Law, chap. 28 of 1909. Quorum of directors and powers of majority. See §§ 25-31, Stock Corporation Law, chap. 61 of 1909. Directors and offi- cers, their election and powers. § 176. Investment of capital and funds of a title guaranty corporation. The capital and funds accumulated in the course of its business of every such title guaranty corporation shall be invested in the same kind of securities as the capital and stock of insurance cor- porations are required by this chapter to be invested. Every such corporation shall set apart a sum not less than two-thirds of the 300 The Insurance Law. § 176. amount of its capital stock as a guaranty fund, and shall invest the same in the kinds of securities in which it is permitted to invest its capital. No such corporation shall issue any guaranty or policy of insur- ance upon bonds and mortgages or to owners of real property and others interested therein against loss by reason of defective titles and other incumbrances, until such sum has been so set apart and invested. Such fund shall be kept and applied for the security and pay- ment of losses and expenses which may be incurred by reason of the guaranty or insurance made as aforesaid, and shall not be sub- ject to other liabilities of the corporation to the extent of and so long as any such guaranty or insurance is outstanding. If an in- crease of its capital stock is made by any such corporation, two- thirds of such increase shall be set apart and added to the guar- anty fund thereof and kept and invested as above provided. When, on account of losses or otherwise, the amount of the guaranty fund of any such corporation shall fall below such sum as was required to be set apart and invested by this section, no further guaranty or insurance shall be issued until the deficiency below the amount 80 required has been supplied. Every corporation organized un- der the provisions of subdivision one of section one hundred and seventy of this chapter shall make and file with the superin- tendent of insurance on or before the thirty-first day of January of each year, a report in writing, setting forth the aggregate amount of the bonds and mortgages outstanding on the thirty-first day of the preceding December the payment of the principal and interest of which has been guaranteed by such corporation. Source. — Former § 176, as amended by L. 1904, chap. 543; originally revised from L. 1886, chap. 611, § 11. See § 16, ante. Investment of capital and surplus. CAPITAL. — A sum of money used in acquiring a plant, consisting of abstract of title, documents, copies from records and other property necessary to the transaction of the business of the title guaranty company is in accordance with the provisions of the Insurance Law. Matter of Long Island Title Guaranty Company, Attorney-General Rep., 1897, page 210; February 14, 1896. The requirement in relation to setting aside a part of the capital stock as a guarantee fund will not be satisfied if, pending final payment of its entire authorizwl capital, the corporation seta apart two-thirds of its actual paid-up capital as a guarantee fund; such corporation must set a^part a sum not ]ess than two-thirds of its capital stock. Attorney-General Rep., April 29, 1893. §§ ITY, 178. Title and Credit Guaranty Corpoiiations. 301 § 177. Conditions requisite to commencing business of a credit guaranty corporation. 'No credit guaranty corporation shall commence business before twenty-five per centum of its capital shall be paid in, nor until it shall have deposited with the superintendent of insurance the sum of one hundred thousand dollars as security for its policy holders. Source, — Former § 177; originally revised from L. 1886, chap. 611, § 11. See § 13. Deposit of securities with superintendent before commencing business. DEPOSIT. — A foreign credit guaranty company, in order to do business in this state, must keep on deposit with a fiscal officer of the state in which it is incorporated the same amount of securities as a like domestic corpora- tion is required to deposit with the superintendent of this state. Attorney- General Rep., 1893, page 75. A deposit made pursuant to section 177 is for the protection only of policy- holders as defined, and not for other creditors of the depositing corporation. Attorney-General Rep., Dec. 6, 1894. § 178. Powers of credit guaranty corporations. Any such credit guaranty corporation shall have the right, power and authority to guaranty from loss, and to agree to pay to mer- chants, manufacturers, dealers and persons engaged in business and giving credit, the debts owing to them, and to indemnify them from loss, and to charge or receive therefor such a sum or percentum as the consideration for such agreement, guaranty and indemnity as shall be agreed upon between such corporation and the persons guaranteed, and to buy, hold, own and take an assign- ment of any and all claims, accounts and demands so guaranteed, and to hold, own and collect the same, and to enforce the collection thereof by action the same as the original holder and owner thereof might or could do; also to insure the payment of money for per- sonal services under contract of hiring. No corporation transact- ing credit guaranty business in this state shall advertise any assets or capitalization which are not held at the sole and exclusive risk of such business. Any such corporation may use its capital stock or its funds accumulated in the course of its business to purchase or pay for any claim or demand, the payment of which it hac guar- anteed or does guarantee ; and such of its capital stock or funds as may not be so used shall be invested in the securities in which the capital and funds of insurance corporations are required by the pro- visions of this chapter to be invested. When an examination is 302 The Insurance Law. . § 179. made by the autbority of the superintendent of insurance into the affairs of any credit guaranty corporation doing business in this state, or when such corporation renders a statement to the insurance department, there shall not be allowed as assets any investments which are not held as prescribed by law at the date of such exami- nation or rendering such statement ; but unpaid premiums on poli- cies written within three months shall be admitted as available re- Bources. In estimating its liabilities, there shall be charged, in addition to the capital stock and all outstanding claims, a sum equal to the total unearned premiums on the policies in force, cal- culated on the gross sum without any deduction on any account, charged to the policy holders on each respective risk from the date of the issue of the policy. Source. — Former § 178, as amended by L. 1S97, chap. 387, and L. 1898, chap. 140; originally revised from L. 1886, chap. 611, §§ 4, 7. See § 70, subd. 4, ante. Corporations may be incorporated under this ■ection to guarantee fidelity of persons, etc. CAPITAL. — The Insurance Law does not authorize the issuing of stock as " paid up " where such stock is exchanged for copyrights, plans, forms, blanks and statistical tables upon which the company operates and con- ducts its business. In re National Credit Company, Attorney-General Rep., 1893, page 164. § 179. Merger. Any two or more corporations organized under subdivision one of section one hundred and seventy of this chapter, or organized under the laws of this state for the purposes or either of them mentioned in subdivision one of section one hundred and seventy of this chapter; or any one or more corporations organized under subdivision one of section one hundred and seventy of this chapter, or organized under the laws of this state for the purposes or either of them mentioned in subdivision one of sec- tion one hundred and seventy of this chapter, and any one or more corporations organized under article five of the banking law or under the laws of this state for the purposes or either of them men- tioned in article five of the banking law; or any one or more corporations organized under s-ubdivision one of section one hundred * 207. Visitation by superintendent; proceedings to restrain corpora- tion from doing business. 208. Hearing thereon. 209. Corporations subject to this article; annual meetings; examina- tions; transfers of risk; reinsurance. 210. Payment of maximum amount of policy; agreements for benefits; notice of assessment. 211. Change of beneficiary. 212. Exemption from execution. 213. Penalties. 214. Exemption of certain societies and of subordinate lodges, of Odd Fellows and Masons, from the provisions of this article. 215. Corporations may deposit securities . with tJ)e superintendent of insurance. 216. Quorum. 217. Reincorporation 218. Admission •> minors. 219. Policy to indicate assessment plan. 220. Forms of policies or certificates must be filed and approved. Section 200. Incorporation. TvTine or more persons may become a corporation for the purpose nf transacting the business of life or casualty insurance, or both, upon the co-operative or assessment plan, fraternal or non -frater- nal, by filing in the office of the superintendent of insurance a dec- laration signed by each of tiiem and duly acknowledged, setting forth their intention to form a corporation for the transaction of life or casualty insurance, or both, upon the co-operative or assess- ment plan, the name of the proposed corporation, the place where its principnl office shall be located within the state, the mode in which its corporate powers are to be exercised and of electing directors or other persons, by whatsoever name or title designated. 318 The Insurance Law. § 200. who are to have aud exercise the general control and management of its affairs and of its funds, which election shall be in such manner as shall be prescribed bj its by-laws, or in case of fraternal socie- ties, by representatives chosen by subordinate lodges, councils or bodies, who shall be members of such societies and a majority of them citizens of this state. Such declaration shall have endorsed thereon or annexed thereto and as a part thereof, the sworn state- ment of tliree of such persons that at least two hundred persona eligible under the proposed laws of the corporation to membership therein have in good faith made applications in writing for membership. If all the requirements of tliis chapter have been complied with, the superintendent shall file such declaration and record it with tiie certificate of the attorney-general, in a book to be kept for that pur- pose, and deliver to the corporation a certified copy of the papers so filed and recorded, with his license in writing to the corporation t<. engage in the business proposed in tlie declaration, which certified copy and license shall be filed in the office of the clerk of the county where the office of the corporation is to be located. Such corpora- tion shall not commence the business of insurance until at least two hundred persons have subscribed in writing to be insured therein in the aggregate amount of at least four hundred thousand dollars, and have each paid in two per centum on the amount of the insurance severally subscribed for in cash, and the same is deposited in bank to the credit of the mortuary fund to be held in trust for the benefit of the beneficiaries, and the superintendent of insurance shall have further certified that it has complied with the provisions of this chapter, and is authorized to transact biisiiioss. Provided, however, that no such corporation other than a frater nal corporation shall be formed nor any such license or certificate be granted or issued by the superintendent of insurance after June first, nineteen hundred and six. Source.— Former § 200, as amended by L. 1906, chap. 326; originally revised from L. 1883, chap. 175, §§ 1, 2, and § 3, as amended by L. 1887, ohap. 285. 8ee § 6. Fees to superintendent for filing declaration. See S 9. Certificate of authorization of superintendent. See S 10, ante. Certificate of attorney -general; corporate names; number of directors. See S 60, General Corporation Law. Proceedings to change name of cor- poration. § 201. Life or Casualty Insurance Corporations. 319 See § 1197, Penal Law. Failure of officer to designate persons upon whom process may be made, a misdemeanor. INFANTS. — A corporation organized under this section has no power to receive, as members, infants of such tender years that they are unable to exercise any choice in becoming members, or to exercise the powers with which members are invested under the act. Matter of G. M. B. Assn., 135 N. Y., 280. Co-operative insurance companies cannot insure the lives of infants. Attor- ney-General Rep., 1892, page 366. CONTRACT. — The contract between a member of a corporation organized under this section and the corporation is contained in its constitution and by-laws, and they should be considered together, the corporation has the right to change the amount allowed to sick members, even after a. member has become sick. Poultney v. Bachman, 31 Him, 52. Companies organized as co-operative insurance companies have no authority to contract with merchants, newspapers or periodicals for the delivery of coupons to purchasers entitling the holder, under certain conditions, to an indemnity insurance. Attorney -General Rep., 1893, page 200. A quorum of directors must be a majority of all the directors, unless otherwise provided in charter or special law. By-laws cannot change this rule. Attorney-General Rep., 1900, page 253. By-laws are not a part of the policies issued unless expressly referred to and incorporated therein. Kingsley v. N. E. Mut. Life Ins. Co., 8 Gushing, 393. An insurance company and a savings and loan company cannot issue a joint certificate to a proposed policyholder, Attorney-General Rep., 1893, page 259. Discrimination between members of a co-operative insurance company is not permissible. Attorney-General Rep., 1892, page 303. § 201. What corporations to be subject to this article. Any corporation, association or society which issues any certificate, policy or other evidence of interest to, or makes any promise or agreement with its members, whereby, upon the decease of a member any money or other benefit, charity, relief or aid it to be paid, provided or rendered by such corporation, association or society to his legal representatives, or to the beneficiary designated by him, which money, benefit, charity, relief or aid is derived from volun- tary donations or from admission fees, dues or assessments, or any of them, collected or to be collected from the members thereof, or members of a class therein, or interest, or accretions thereon, or ac- cumulations thereof, or rebates from amounts payable to benefi- ciaries or heirs; and wherein the money or other benefit, charity, relief or aid, so realized, is applied to or accumulated for the uses and purposes herein specified, or of such corporation, association or 320 The Insurance Law. § 201. society, and the expenses of the management and prosecution of its business, shall be deemed to be engaged in the business of life in- surance upon the co-operative or assessment plan, and shall be sub- ject to the provisions of this article. Any such corporation, association or society, which issues any certificate, policy or other evidence of interest to, or makes any promise or agreement with, its members, whereby, upon the sick- ness or other physical disability of a member, and not by reason of having attained a certain age, any money or other benefit, charity, relief or aid is to be paid, provided or rendered by such corporation, association or society to such member or beneficiary designated by him, which money, benefit, charity, relief or aid is derived from voluntary donations or assessments or admission fees, dues or as- sessments, or any of them, collected or to be collected from the mem- bers thereof, or members of a class therein, and interest and accre- tions thereon ; and wherein the money or other benefit, charity, re- lief or aid is applied to or accumulated for the uses and purposes herein specified or of such corporation, association or society, and the expenses of the management and prosecution of its business, shall be deemed to be engaged in the business of casualty insurance upon the co-operative or assessment plan and shall be subject to the provisions of this article. .Notwithstanding anything to the con- trary contained in the charter or certificate of incorporation of any corporation, association or society subject to the provisions of this section, such corporation, association or society may, by its by-laws, determine and designate the class or classes of persons who may be named and designated by a member as beneficiary in any certificate of membership to be issued to him and to whom the moneys payable under such certificate upon the death of such member shall be payable. Any corporation, association or society subject to the provisions of this section, notwithstanding anything in its charter or certificate of incorporation to the contrary, may, by its by-laws in force at the time of the death of a member, designate and determine the class or classes of persons to whom, and in what order, shall be paid, any moneys payable under any certificate of membership issued by said corporation, association or society, upon the death of a member in good standing, in default of a designation made by such member and in force at § 202. Life ok Casualty Insurance Corporations. 321 the time of his death. A member of such corporation, associa- tion or society may designate or name as his beneficiary or beneficiaries any one or more of the persons within such desig- nated class. iN^othing herein contained shall be construed to limit the right of such member to change the designation of an} beneficiary named by him as at present provided by law. Source. — Former § 201, as amended by L. 1907, chap. 273; originally revised from L. 1883, chap. 175, §§ 5, 6. BURIALS. — Corporations issuing contracts to furnish burials for contract holders upon payment of stipulated sum at execution of contract, and a like sum upon death of the contract holder, are " transacting the business of insurance." In re Barrett Company, Attorney-General Rep., 1903, page 258. By sections 201 and 209 co-operative life and casualty companies are made subject to the provisions of Article 6, herein. Opinion of Attorney -General, August 29, 1907. Where a company was incorporated under the provisions of chap. 175 of 1883 for the transaction of life insurance only, it cannot transact the busi- ne^'S of casualty or sick benefit insurance. Attorney-General Rep., Nov. 22, 1904. § 202. Annua! report. Every sucli corporation, association or society doing a life or casualty insurance business, or botli, upon the co-operative or as- sessment plan, as herein defined, shall, on or before the first day of March in each year, make and file with the superintendent of insurance a report of its affairs and its operations during the year ending on the thirty-first day of December immediately preceding, which report shall be in lieu of all other reports required by this chapter. Such reports shall be verified by such of the officers of the corporation, association or society a3 the superintendent may require and shall contain answers to the following questions: 1. Number of certificates or policies issued during the year or members admitted. 2. iVmount of indemnity effected thereby. 3. Number of death losses. 4. Number of death losses paid. 5. The amount received from each assessment in each class for the year. 6. Total amount paid policy-holders, beneficiaries, legal repre- sentatives or heirs. 322 The Insurance Law. § 202. 7. E^umber of deatli claims for which assessments have been made. 8. ^N^umber of death claims compromised or resisted, and brief statement of reason. 9. Does society charge annual dues ? 10. Plow much on each one thousand dollars annually or per capita, as tlie case may be ? 11. Total amount received and the disposition thereof. 12. Does 'society use moneys received for payment of death claims to pay expenses of society, in whole or in part, and if so, state the amount so used ? 13. State total amount of salaries paid to officers. 14. Does society guarantee fixed amount to be paid, regardless of amount realized from assessments, dues, admission fees and donations ? 15. If so, state amount guaranteed and the security of such guar- anty. 16. Has the society a reserve fund? 17. If so, how is it created, and for what purpose, the amount thereof and how invested. 18. Has the society more than one class? 19. If so, how many, and the amount of mdenmity in eacn 20. Number of members in each class. 21. If organized under the laws of this state, state under what law and at what time. 22. If organized under the laws of any other state, state such fact and the date of organization. 23. Number of policies of membership lapsed during tlie year. 24. Number in force at beginning and end of year in each class, if more than one class. 25. Aggregate maximum, minimuTii and average age of member- ship in each class in the society. 26. The assets applicablr io life or casualty insurance other than pesen'e fund, and how invested. 27. Amount received from all sources for life or casualty insur- ance and the disposition thereof. g 203. Life ok Casualty Insurance Corporations. 323 No deposit of securities with the superintendent shall be required from such corjwration, association or society. Any corporation, association or society refusing or neglecting to make such report, or to make i)ayment of any of the foes required by law, may, upon the suit of tlie superintendent, be enjoined by the supreme court from carrying on any business until such report and payment shall bt^ made and until the costs of such action be paid. Source.— Former § 202; originally revised from L. 1883, chap. 175, §§ 7, 8. TAXATION. — Co-operative, life, and casualty insurance companies organ- ized under chap. 175 of the Laws of 1885, are not deprived of the exemption« from taxation, etc., provided for by that act, by reincorporating under chap. 690 of Laws of 1892. Attorney-General Rep., 1892, page 425. § 203. Designation of principal office and of person upon whom process may be served. Every such corporation doing business within this state, except such as have already made such designation, and every such cor- poration hereafter formed under this article, shall, before doing any business in this state, designate some place Avithin the state as the principal office in this state of such coi*poration, and some person residing in the same city, village or town where such office is located as a person upon whom service of legal process and papers may be made as upon such corporation. Such designation shall be made by an instrument under the hand of the president and secretary or other duly authorized officers of the corporation, and shall be filed in the office of the superintendent of insurance, ii the person so designated shall die or remove from such place an- other person shall be appointed in his place within thirty days; and such attorney or location of principal office may, at the option of the corporation, be changed at any time. iN'otice of such change or of a new designation of a person upon whom service may be made as herein provided, under the hand of such president and secretary or other officer, shall be filed with the superintendent within thirty days after such change or new designation is made. Upon failure to comply with any of the provisions of this section within thirty days after written notice by the superintendent of such default and requiring such compliance, the corporation shall cease to do business in the state until it has complied therewith. 324 The Insueance Law. § 204. Source.— Former § 203; originally revised from L. 1883, chap. 175, § 9. PROCESS. — A certificate filed by an association in attempted compliance with section 16, General Corporation Law, which does not designate the place where the service can be made, and is not accompanied by the consent of the person designated, nor filed in the secretary of state's office, is fatally defective. McClure v. Supreme Lodge, 41 App. Div., 131. § 204. Foreign corporations. No such corporation, association or society organized under the laws of any other state or territory of the United States or District of Columbia, or foreign countries, except such secret fraternal societies having subordinate lodges or councils as are now author- ized to transact business within this state with the consent of the mperintendent, shall transact business herein until its has received from the superintendent of insurance a certificate of authority to do business in this state, a duplicate of which shall be filed in his office. The superintendent shall annually issue to such foreign corporation, association or society renewal certificates of authority to continue its business, if its annual report is satisfactory to him, which certificate shall be filed in the office of the clerk of the county where its principal office is located within this state, within sixty days after filing such annual report, and no such foreign corpo- ration, associations or society, except secret fraternal societies above specified, shall be authorized to continue such business after the expiratior> of such sixty days unless such certificate shall have been so receivea and filed. The superintendent shall refuse a cer- tificate of authority or a renewal of the same to any such foreign corporation, association or society, except such secret fraternal so- cieties, when, in his judgment, such refusal will best promote the public 'Uterests, or when by the laws of the state or territory under which the same is organized, the corporations, associations or societies of this state doing a life or casualty business upon the co-operative or assessment plan are not permitted to transact such business in such other state or territory. Provided, however, that except in the case of fraternal organizations, and except in the case of corporations complying witili the conditions required of domestic corporations in prooiirlii!;- certificate's for foreign sintc-, as provided in section two hundred and fonr-a of this act, no cer- tificate of authority to do 'bu.siness in this stato oxfO])t I'onowal § 204-a. Life or Casualty Insurance Corporations. 325 certificates of aufchority to sucli corporations, associations or socie- ties as were on April twentj-sixth, nineteen hundred and six, authorized to transiact business within the state, shall be issued by the superintendent of insurance after June first, nineteen hundred and six. When any other state or territory shall impose any obligation upon such corporation, association or society of this state, or their agents transacting business in such other state or territory, the like obligations are hereby imposed upon similar corporations, associa- tions or societies of such other state or territory and their agents or representatives transacting business in this state, and such corpo- ration, association or society of such other state or territory, and their agents and representatives shall pay all licenses, fees ol* pen- alties to, and make deposits with, the state treasurer imposed by the laws of such other state or territory upon any such corporation, association or society of this state doing business therein; and in case of failure to pay the same, the superintendent shall refuse the certificate of authority herein provided for, or cancel such certifi- cate in case one shall have previously been issued. Source.— Former § 204, as amended by L. 1906, chap. 326; originally revised from L. 1883, chap. 175, § 10. Amended by L. 1916, chap. 590. In effect :\Iay 18, 1916. A company organized as a mutual life insurance company should not be allowed to do business in this state whose by-laws restrict the exercise of its corporate powers to its incorporators and such persons only as they may permit to share therein, to the exclusion of the membership generally. In such case it seema that the co-operation or mutual principle is eliminated, and is contrary to the Insurance Law. In re Boston Mutual Life Assn., Attorney- General Hep., 1897, page 133. § 204-a. Reciprocal certificate. Whenever the laws or public officers of any foreign state or territory shall require as a condition of or as a prerequisite to the entry of any domestic corporation now doing business under article six of this chapter, into suc^h foreign state or territory, or to the issuance to it of a license to do business therein, that such corporation shall file with any official or department of such foreign state or territory, a certificate in substance or to the effect that corporations of such foreign state or territory conducting a similar business therein, may, upon proper application to the superintendent of insurance of this state and upon complying with 326 The Insurance Law. § :30 t-a. the laws of this state in respect thereto, be permitted to enter and carry on business herein, siiibject to the laws of this state, the superintendent of insurance, upon the application of such domestic corporation shall issue to it one or more such certificates, pro- vided, however, that it shall establish to tlie satisfaction of the superintendent of insurance that it has had an experience of at least forty years ; that its membership is confined and limited to members of one fraternity ; that its actual expenses of management shall be limited in any one year to twenty per centum of the cash income actually received by it from premiums, assessments and membership fees; that it is possessed of assets held for the /benefit of policy or certificate holders only, either in cash or invested as required in the case of life insurance companies by the laws of this state, or both, at least equal to the aggregate amount of its accrued liabilities and contingent reserve liability, whereof there shall be deposited with the superintendent of in- surance the sum of one hundred thousand dollars in. the stocks or bonds of the United States or of this state not estimated above their current market value, or in tbe bonds of a county or incor- porated city in tiiis state authorized to be issued by the legis- lature, not estimated above their par value nor their current mar- ket value, or in bonds and inortgages on improved, unincumbered real property in this state, worth fifty per centum more than the amount loaned thereon. The accrued liabilities and contingent reserve liability to be determined as follows : 1. The amount of all reported death, or other benefit claims then remaining unpaid, including unpaid installments on claims payable in installments; 2. The amount of all accrued liabilities, including assessments or premiums paid in advance for any period beyond that covered by " three" hereunder ; 3. An amount equal to the expected claims by the American experience table of mortality to the next succeeding date when a regular assessment or premium payment falls due, the nonpay- ment of which would cause the insurance under outstanding cer- tificates or policies to cease and determine ; 4. In event that the corporation has outstianding any certificate's or policies under which anyl pa^yment, other than a disability benefit, is promised either actually or contingently to bo mnde to a living certificate or policy holder, or under whi<^h tlic icnii of § 201-a. Life or Casualty Insurance Corporations. 327 preiiiiuin paid is, actually or contiiig'ently, less than the entire possible temi of the insurance protection, an amount equal to the required reserve for all the benefits promised by such certificates or policies, computed on the net premium 'basis according to the American expenence table of mortality with interest at four per cemtum per annum ; 5. An amount equal to the sinigle year term premium at at- tained age upon each and every outstanding certificate or policy, not covered by subdivision four, deteiinined by the American ex- perience table of mortality with interest at four per centum per annum, less a credit of the amount of the stipulated or stated net mortuary payment to be made, subject to the laws governing said corporation, during said year by or on account of each such certifi- cate or policy, which credit shall, however, in no event exceed the said single year term premium charged against the individual cer- tificate or policy on -account of which such credit is taken ; 6. Every sudh insurance corporation incorporated under the laws of any other state of the United States, and doing business in this state, sball keep on deposit with the superintendent of insurance of this state or with the auditor, comptroller or gen- eral fiscal officer of the state by whose laws iti is incorporated the same amount and character of securities which are required for deposit in this state of a domestic corporation. The super- intendent of insurance shall be furnished with the certificate of such auditor, comptroller or general fiscal officer, under his hand and official seal, that he, as such auditor, comptroller or general fiscal officer of such state, holds in trust and on deposit for the benefit of the policy or certificate holders of the corporation such stocks and securities. Such certificate siliall embrace the items of the securities so beld and shall state that the officer making it is satisfied that the securities are worth the amount required by law. Any foreign corporation permitted or seeking to do busi- ness in this state of tlie character herein described which invests its funds in accordance with the laws of the state in which it is incorporated siliall be held to meet tbe requirements of this article for the investment of funds. Added by L. 1916, chap. 590. In effect May 18. 1916. Note. — This section was added by L. 1916, chap. 590, and under its pro- visions the Superintendient of Insurance can issue to a domestic corporation a^pplying for a license in a foreign state a reciprocal certificate to the effect that a like corporation will be permitted to do business here, which has had 328 The Insukance Law. § 205. forty years' experience, whose, luemibersliip is limited to persons' who are members of one fraternity and whose expense of managment in any one year does not exceed twenty per centum of its "premium" income; also, the corporation must have a deposit in securities of one hundred thousand dollars and maintain certain reserves. — Ed. § 205. Reserve or emergency fund. Every such corporation, association or society, except casualty associations or societies, shall accumulate and maintain at all times a reserve or emergency fund of an amount not less than the proceeds of one deatli or disability assessment, or periodical call on all policy or certificate holders thereof, and at least equal to the amount of its maximum certificate or policy, and also at least equal to the cost of insurance for all policies in accordance with the American experience table of mortality until the next call or assessment is due and payable over and above all liabilities, includ- ing existing death claims. Such fund shall be held for the benefit or protection of its members, their legal representatives or bene- ficiaries. If such fund is in excess of the reserve or emergency fund required by this section, the excess, or any portion thereof, may be used in reduction of assessments or premium calls upon policy or certificate holders ; and if in excess of double such reserve or emergenc;^' fund and not less than the sum of one hundred thou- sand dollars, the pro rata excess on any policy or certificate ter- minated by death or surrender may be refunded to the holder or beneficiary provided that nothing contained in this article shall be construed to permit any contract promising any fixed cash pay- ment to any living certificate or policy holder, and provided fur- ther that any reserve provided for by the articles of association, constitution or by-laws or by any contract with members shall not be used in violation thereof and shall be treated as a liability. Every such casualty association or society shall maintain a reserve or emergency fund of at least eight thousand dollars, if the maximum policy issued by such association or society be for five thousand dollars or more or a reserve or emergency fund of two dollars for each five tliousand dollars of insurance in force, if the maximum policy issued by such association or society be for less than five thousand dollars, and thereafter five per cent of t\w amount realized on each periodical call shall be set apart and added § 205. Life ok Casualty Insurance Corpokations. 329 thereunto, unless the same be already accumulated, until such fund shall be equal to two dollars on each five thousand dollars of insur- ance in force. In case such reserve or emergency fund or any portion thereof shall have been used by any such corporation or society for the purpose for which the same was created or main- tained, the amount so used shall be made up and restored to said fund within six months thereafter. Such fund may be held in cash, or invested in the same class of securities required for the investment of funds by domestic life insurance corporations. 'No foreign corporation, association or society shall be author- ized to transact any business authorized by this article w^ithin this state unless it furnishes evidence satisfactory to the superintendent of insurance that it has accumulated a fund equal in amount to that required by this section, and that such accumulation is per- mitted by the laws of the state or country where it is incorporated and that it is held for the benefit of policy or certificate holders only and invested as required by such laws. If any such corpora- tion, association or society is authorized by the law under which it is incorporated to issue contracts of insurance not authorized by this article, it may be permitted to transact in this state the kind of business authorized by this article upon complying in all other respects with the requirements of this chapter and filing with the superintendent of insurance an agreement duly executed by its proper ofiicers that such corporation, association or society will not enter into or issue within the state of E"ew York any contract of insurance, policy or agreement not authorized by this article Upon a breach of said agreement by any such corporation, associa- tion or society, the superintendent of insurance shall forthwith revoke and cancel its authority to transact business in this state. The annual report to the superintendent of insurance required in section 202 of this article shall be in lieu of all other reports required by law. Source. — Former § 205. as amended by L. 1906, chap, 326: ne^- ACCUMULATION OF RESERVE FUND.— This section, authorizing the creation of a reserve fund to be used for the payment of death losses, is not to be construed so as to permit such associations to accumulate a reserve fund wholly from the contributions of one class of members and then devote it to the payment of death losses of another class who in no way contributed to it. People ex rel. Atty.-Gen. v. L. R. Assn.. 150 N. Y., 94. 330 The Insurance Law. § 205. USE OF RESERVE FUND.— Where the reserve fund was to be invested and could not be used to pay death or indemnity claims of holders of certifi- cates, except an increase thereof over $100,000, which might be credited to the mortuary fund for the payment and adjustment of claims, such fund, although not distributable while under $100,000 to the beneficiary of an insured in a department of the insurance business of the company, which, at the time of his death, was continued in its business, was yet available as regards the amount payable under a certificate issued to a member in a department of the business which had subsequently been discontinued, and from which some members had been transferred to another department, where such certificate holder, without notice of any change in the business, had continued thereafter to pay his monthly assessments and the company to receive them. Bird v. Mutual Union Assn., 30 App. Div., 346. The rights and liabilities of the parties to a death claim upon the funds of an insolvent mutual aid association in the hands of a receiver are meas- ured by the contract created by the constitution, by-laws and certificate of membership, provided the same were authorized by law. People v. Grand Lodge, 156 N. Y., 533. USE OF RESERVE FUND.— Where the constitution of the company per- mitted its board of trustees in their discretion to use securities forming the reserve fund " to meet any want or necessity of the association which may hereafter arise by reason of unforeseen emergencies," it was held that this only applied while the company was alive and in the hands of its board of trustees, and so had no effect upon the disposition of its funds after its dissolution. Matter of E., R. & F. L. Assn., 131 N. Y., 354. The reserve fund of an assessment life insurance company should be dis- tributed by the receiver to the policyholders. Farmers' Loan & Trust Co. V. Aberle, 19 App. Div., 79. The reserve fund of a mutual benefit society should not be used by the directors for the payment of its notes. McClure v. Levy, 147 N. Y., 215. SPECIFIC PERFORMANCE.— An action for the specific performance of an insurance contract to divide a reserve fund cannot be maintained by a policyholder; the action lies against the officers and not the corporation. Swan V. Mut. Res. Fund Life Assn., 20 App. Div., 255. EXTRA ASSESSMENTS. — The provisions relating to extra assessments expressed in the certificate of insurance in terms should be free from ambigu- ity. Matter of New York Casualty Company, Attorney-General Rep., 1897, page 118. Co-operative life and casualty insurance companies cannot issue policies with cash surrender value. The management of such companies cannot be confided to a portion of the membership to the exclusion of any other portion thereof. Conn. Indem. Assn., Attorney-General Rep., 1893, page 114. The certificate of an industrial benefit association must provide for assess- ments sufficient to meet the maximum amount in a single policy. Attorney- General Re,p., May 5, 1893. An industrial benefit association may not evade the law prohibiting the payment of fixed cash payments by provi'linir in policies for the return of a "portion of the premiums actually paid in cash." Attorney-General Rep., Oct. 29, 1895. § 20'6. Life or Casualty Insueance Corporations. 331 Waiver of all rights to the provisions of §§ 205-210 is not in accordance with the provisions of article VI of the Insurance Law. In re Ind. Benefit Assn., Attorney-General Rep., 1892, page 427. By the terms of a certificate for $2,000, issued in 1884 by a relief associa- tion to one H, as a member of Class A, the beneficiary was entitled to have an assessment imposed upon members of ^hat class and to receive the proceeds not to exceed $2,000. Two years thereafter said class wrs consolidated with two others and under the by-laws, as amended, the beneficiary became entitled to have an assessment made upon all members of the association and to receive the proceeds not to exceed $2,000. A further amendment to the by-laws in 1892, provided that no rates, terms or conditions should be changed upon policies in force November, 1892. In 1893 the by-laws, by amendment, pro- vided that the amount to be paid to beneficiaries under policies in force Sep- tember 30, 1892, should be ascertained in accordance with the by-laws of 1892. In an action to recover upon the certificate held, that the beneficiary was only entitled to receive the amount of an assessment upon all the members of the association at the death of H. at the rates provided by the by-laws of 1884 and not the sum of $2,000. Heath v. New York Safety Reserve Fund, 69 Misc., 452. RESERVE. — The fund referred to and required under § 206 is the reserve or emergency fund specified in § 205. Attorney-General Rep., 1902, page 201. § 206. Reincorporation of existing societies. Any existing domestic corporation, transacting the business of life or casualty insurance, or both, upon the co-operative or assess- ment plan, may reincorporate under the provisions of this article, under its existing corporate name, by filing with the superin- tendent the declaration, required by this article, signed and duly acknowledged by a majority of its board of directors, with a state- ment in like manner signed and acknowledged by them, that such corporation has accumulated the fund required by this article of corporations formed thereunder, and that the same is deposited In bank or trust company, to be held and maintained for the payment of losses by death, sickness, physical disability or other purposes for which such fund must be held, and the certificate of the attor- ney-general of the state, whereupon the superintendent shall record, and deliver to such corporation, a certified copy of such declaration and of such certificate, together with his license to transact busi- ness, and upon filing the same in the office of the clerk of the county wherein its principal office is located, the same shall there- upon be deemed to be incorporated under the provisions of this p.rticle. It shall not be obligatory upon any such existing corpora- tion, to reincorporate hereunder, and any such domestic corporation 332 The Insueance Law- § 207. may continue to exercise all the rights, powers and privileges not inconsistent with this article, pursuant to its articles of association or incorporation, the same as if reincorporated under this article. Source. — Former § 206; originally revised from L. 1883, chap. 175, '§ 12, as amended by L. 1887, chap. 285. ALTERATION OF CHARTER.— A company formed for the purpose of transacting the business of assessment life insurance cannot alter its charter to include casualty insurance if thereby the acquired rights and liabilities of existing policyholders are altered. In re Chenango Mut. Relief Society, Attorney-General Rep., 1892, page 293. When a co-operative insurance association, incorporated under chap. 175 of 1883, reincorporates under section 206, its corporate entity is not changed, but it merely becomes entitled to the benefits and privileges of the latter act. Matter of Empire State Supreme Lodge, 118 App. Div., 616. Under § 209, the policyholders have the sole power to adopt by-laws gov- erning the number of directors and fixing their term of office; the executive committee of a co-operative assessment insurance corporation reincorporated under § 206 of the Insurance Law cannot adopt by-laws fixing the number and terms of office of directors without due notice to the policyholders, and directors elected pursuant to such by-laws are not entitled to office. The validity of such an election may be tested in a proceeding taken under § 27 of the General Corporation Law. Matter of Empire State Supreme Lodge, 118 App. Div., 616; affi'g 53 Misc., 344. A corporation formed under chap. 175 of 1883, and desiring to reincorporate under the provisions of § 206 of the Insurance Law, must file with the superintendent the declaration required, namely, that such corporation has accumulated the fund required by this article of corporations formed under that article. In re Chenango Mut. Relief, Attorney-General Rep., 1893, page 93. The fund referred to and required under § 206 is the reserve or emergency fund specified in § 205. Attorney-General Rep., 1902, page 201. § 207. Visitation by superintendent; proceedings to restrain corporation from doing business. All corporations, associations and societies to which this article is applicable, with their books, papers and vouchers, shall be sub- ject to visitation and inspection by the superintendent of insurance or such person as he may designate. The superintendent may address any inquiries to any such corporation, association or society in relation to its doings or condition, or any other matter connected with its transactions relative to the business contem- plated by this article. All officers of such corporation, association or society shall promptly reply in writing to all such inquiries, § 207. Life or Casualty Insurance Corporations. 833 under the oath of its president or secretary or other officers, if required. Whenever it shall appear to the superintendent of in- surance on investigation or examination tliat the actual expenses of management of any corporation, association or society to wliicli this article is applicable, whether heretofore or hereafter author- ized or permitted to do business within this state, for the year pre- ceding the year in which such investigation or examination is made, were more than thirty-five per centum of the cash income actually received by it from premiums, assessments and member- ship fees, the authority or renewal of authority, if it be a foreign corporation, association or society, shall be revoked and the super- intendent shall cause notice of such revocation to be published for four weeks in the state newspaper published in the county of Al- bany, and no new insurance shall thereafter be written by such corporation, association or society within this state ; and if it be a domestic corporation, association or society, it shall be the duty of the superintendent of insurance to cause to be served on the presi- dent or other officer of such corporation, association or society, a notice in Avriting to immediately cease the transaction of new busi- ness and, in the event of their failure so to do, he shall report the facts of such investigation and examination and his proceedings thereunder, which shall be prima facie evidence of the facts therein stated, to the attorney-general, who if he approves of the same upvon investigation by him after notice to such corporation, associ- ation or society, is hereby authorized thereon to institute in the same manner and to prosecute any and all like proceedings as are now authorized or permitted against an insolvent corporation in- cluding the appointment of a temporary and permanent receiver or receivers of such corporation, association or society and the dis- tribution of the assets of the same, and powers and jurisdiction to ^ grant like remedies are hereby conferred upon the supreme court of this state upon his application. When the superintendent, on investigation, shall be satisfied that any corporation organized un- der the laws of this state, doing business in this state of the char- acter defined in this article is insolvent because of matured death claims or other obligations due and unpaid exceeding its assets and death or disabilitv assessments or periodical calls made or in process of collection at the date of such investigation, or has ex- a34 The Insurance Law. § 208. ceeded its powers, failed to comply with any provision of law, or is conducting business fraudulently, he shall report the facts to the attorney-general, who, if he shall be of the opinion that tlie facts require such action, must thereupon apply to the supreme court, at a special term thereof, within the judicial district in which the principal office of such corporation, association or society within this state is located, for an order requiring the officers of such cor- poration, association or society to show cause, at a reasonable time and place within such district, why such corporation, association or society should not be restrained from continuing to transact business, with power to the court to adjourn the hearing thereon from time to time, not exceeding sixty days in all. Source. — Former § 207, as amended by L. 1905, dhap. 569; originally revised from L. 1883, chap. 175, § 13, as amended by L. 1887, chap. 285, § 14. See § 1197, Penal Law. Neglect of officers to make a report or to make a false report, a misdemeanor. The limitation imposed by this section applies to companies which unite both life and casualty insiu-ance in the same policy. Opinion of Attorney-Gen- eral, August 29, 1907. The right of action, if any, against the directors of a co-operative and assessment life insurance association, arising out of their diversion and mis- application of its safety fund, inheres in the receiver of the association appointed in an action for its dissolution. Gifford v. Clapp, 44 App. Div., 192. § 208. Hearing thereon. Such corporation, association or society, in case it is alleged to be insolvent, to have exceeded its powers, failed to comply with any other provision of law, or is conducting its business fraudu- lently, as specified in the last paragraph of the preceding section, shall be entitled to be heard, and to a trial by jury of the facta stated in the report, if the same shall be traversed, and to examine papers and witness imder oath in the usual mode of trials of ac- tions. If the trial is by jury the court shall submit to the jury specific requests to find covering the matter in issue sepa- rately, and the jury shall return a special verdict upon each ques- tion submitted, and if by such verdict it shall be found that the corporation, association or society is insolvent because of matured death claims or other obligations due and unpaid exceeding its assets as hereinbefore provided, or has been conducting business fraudulently, the court may render judgment that it and each offi- § 208. Life or Casualty Insurance Corporations. 335 cer thereof be perpetually enjoined from exercising any corporate rit>-hts, privileges or franchises, and that it be dissolved and that R receiver be appointed, an account taken, and an equitable distri bution of its property among its creditors and members be made. If no charge of insolvency is made in such report, or, if made, is not established by the verdict of the jury, but it shall be found by such verdict tliat the corporation, association or society has exceeded its corporate powers or failed to comply with any provision of this article or has conducted its business unlawfully, the court may make and enter judgment enjoining and restraining it from the commission of such acts or such of them as the court may deter- mine, and in case of failure to desist therefrom Avithin the time to be s{>ecified in such judgment that the corporation be dissolved. Pending the trial of the facts stated in such report, the court may, upon motion of the attorney-general and upon notice to the corporation, association or society, gTant an injunction restrain- ing it and its directors and other officers from collecting any debt or demand and from paying out or in any way transferring or de- livering to any person any money, property or effects during the pendency of the proceedings except by direction of the court, and may apjx^int one or more temporary receivers of its property, with all tlie powers of temporary receivers in such cases. Neither this nor the preceding section shall in any way apply to or abridge any of the rights or privileges of fraternal beneficiary societies, orders or associations, as defined and provided for by article seven of this chapter, or to the casualty department of any casualty insurance corporation, association or society upon the co-operative or assessment plan as defined and provided for by this article, or to any co-operative assessment corporation, associa- tion or society lawfully transacting industrial or health insurance exclusively or both exclusively but whose maximum policies there- for do not in any case exceed the sum of two hundred dollars. Source. — Former § 208, as amended by L. 1905, chap. 569; L. 1906, chap. 326. Last paragraph from § 3, L. 1905, chap. 5G9; originally revised from L. 1883, chap. 175, § 13, as amended by L. 1887, chap. 285. DEATH CLAIMS. — Holders of death cteiims must have their status defined as of the date of the commencement of the proceedings. Matter ol E. R. F. L. Assn., 131 N. Y., 354. 336 TrrE Insurance I.aw. § 209. § 209. Corporations subject to this article: annual meet- ings; examinations; transfers of risk; reinsurance. Every corporation, company, societ}^, organization or associa- tion of this or any other state or country transacting the husiness of life or casualty insurance upon the co-operative or assessment plan, as defined in this article, including those heretofore organized with a capital stock and transacting such husiness, hut not including anj that shall hereafter be organized with a capital stock, shall be sub- ject to all the provisions of this article, and not to the provisions of article two, and every such corporation, company^ society, organize tion or association of this state, shall hold within the county iu which its principal office is located in this state, a stated annual meeting of their members or policy holders or representatives of local boards of subordinate bodies, in such manner and subject to such regulations, restrictions and provisions as the constitution and by-laws of the same may provide. Tn cases of secret or fraternal societies having a grand or supreme body, such meeting of the supreme or grand body may be at such time and place as may be designated by it. At such meeting a full and specific report of all receipts and expenditures of the preceding year or since the last meeting, as the case may be, shall be submitted. Not less than ^Ye days' notice of each meeting shall be given to each director and to each member and policy holder, who shall have been such for thirty days, in such manner as the by-laws may direct, except that in lieu thereof such notice may be given to the subordinate body of a society having a grand or supreme body, or to a local board subordinate to the association. Every such association, corporation or society, other than secret fraternal societies now authorized to do busi- ness in this state, must hereafter, before the adoption of any by-law or amendment thereto, cause the same to be mailed to the members and directors of such association, society or corporation, together with a notice of the time and place when the same shall be consid- ered, which notice shall be the same as hereinbefore required for stated meetings. All associations, societies, companies, corpora- tions or organizations now transacting or hereafter desiring to trans- act the business of life or casualty insurance in this state upon any other plan than that defined in and by this article, shall comply § 209. Life or Casualty Insurance CoRroRATiONS. 337 with all tlie provisions of the general life and health insurance laws. No such corporation organized under the laws of this state shall transfer its risks to or reinsure them in any other corporation un- less the contract or transfer or reinsurance is first submitted to and approved by a two-thirds vote of a meeting of the insured called to consider the same, of which meeting a written or printed notice shall be mailed to each member, certificate holder or policy holder at least thirty days before the day fixed for such meeting. If such transfer or reinsurance shall be approved, every member, certificate holder or policy holder of the corporation who shall file with tbp secretary thereof within ten days after the meeting a written notice of his preference to be transferred to some other corporation than that named in the contract, shall be accorde.d all the rights and priv- ileges, if any, in aid of such transfer as would have been accorded under the terms of such contract had he been transferred to the cor- poration named therein. No such corporation, association or so- ciety organized under the laws of this state shall transfer its risks or assets or any part thereof to, or reinsure its risks or any pan thereof in any insurance corporation or association of any other state or country which is not at the time of such transfer or rein- surance authorized to do insurance business in this state under the laws thereof. No corporation, company or association, possessed of a capital stock, as specified in this section, shall advertise such capital stock in or on any printed matter, advertisement, policy or certificate issued or circulated, or to be issued or circulated in this state; nor shall any agent or broker or solicitor advertise it as a stock company, or as possessed of a capital stock, but its total as- sets may be advertised as assets. Source.— Former § 209, as amended by L. 1894, chap. 271; originally revised from L. 1883, chap. 175, § 10, as amended by L. 1889, chap. 184. See § 1196, Penal Law. Officer transferring insurance to company not authorized to do business in this state, a misdemeanor. See § 28 et seq.. General Corporation Law, chap. 28 of 1909. Election of directors, annual meetings. The management of such companies cannot be confided to a portion of the membership to the exclusion of any other portion thereof. Attorney-General Rep., 1893, page 114. Under § 209, the policyholders have the sole power to adopt by-laws gov erning the number of directors and fixing their term of office; the executive 338 The Insurance Law. § 210. committee of a co-operative assessment insurance corporation reincorporated under § 206 of the Insurance Law cannot adopt by-laws fixing the number and terras of oflBce of directors without due notice to the policyholders, and directors elected pursuant to such by-laws are not entitled to office. The validity of such an election may be tested in a proceeding taken under § 27 of the General Corporation Law; where a co-operative insurance company originally incorporated under chap. 175 of 1883, reincorporated under § 200 of the Insurance Law, its corporate entity i? not changed, but it merely becomes entitled to the benefits of said Insurance Law. Matter of Empire State Supreme Lodge, 118 App. Div., 616; aff'g 53 Misc., 344. Every insurance corporation other than secret fraternal societies, must, before the adoption of by-laws cause the same to be mailed to the members and directors with a notice of the time and place when the same shall be considered. Matter of Empire State Supreme Lodge, 118 App. Div., 616. By sections 201 and 209, co-operative life and casualty companies are made subject to the provisions of Article 6 herein. Opinion of Attorney- General, August 29, 1907. § 210. Payment of maximum amount of policy; agreements for benefits; notice of assessment. Every policy or certificate hereafter issued by any corporation doing business under tbis article, and promising a payment to be made upon a contingency of death, sickness or accident, shall specify the sum of money which it promises to pay u]xyn each con- tingency insured against, and the number of days after receipt of proof of the happening of such contingency on which such pay- ment shall be made. Upon the occun-ence of such contingency, unless the contract shall have been avoided by fraud, or by breach of its conditions, the corporation shall be obligated to the beneficiary for such payment at the time and to the maximum amount specified in the policy or certificate. If the superintendent of insurance shall be satisfied upon investigation that any such corporation has refused or failed to make such payment for thirty days after it be- came due, and after proper demand, he shall notify the corporation to issue no new policies or certificates until such indebtedness ia fully paid ; and no ofiicer or agent of the corporation shall make, sign or issue any policy or certificate of insurance while such notice is in force. No corporation organized or transacting the business of life or casualty insurance under the provisions of this article shall here- after make any promise or agreement with its policy or certi- § 210. Life OR Casualty Insurance Corporations. 339 ficate holders or members for the payment of money upon the ex- piration of a fixed period unless on acount of death or disability; and no foreign corporation, association or society authorized to transact the business of life or casualty insurance under the pro- visions of this article, which shall hereafter make any such con- tract, shall receive a license or the renewal of its license to transact the business of life or casualty insurance under the pro- visions of this article, provided that nothing in this section con- tained shall modify or in any way limit subdivision seven of section one hundred and seven of this chapter. Each notice of assessment, premium or periodical call made by any such corporation, association or society, upon its members or any of them, shall truly state the cause and the purpose of the same, and if the amount j)aid on the last death claim paid has not been paid in full at its maximuiu face vnlvK\ llio 11:11110 of \\\v (!(^c'o:is(mI member, and the maximum face value of the certificate or policy, and the reason why not paid in full. An afiidavit iiiado by the (•iiiccr, [> )•>'-'.(':'■-■ •■ < •■ .;''("•'• •■.'' :•■ \- <\]i ■ corporation, association or society, having charge of the mailing of such notice, that such notice was mailed, stating the date of mail- ing, shall be presumptive evidence thereof. Source. — Former § 210., as amended by L. 1906, chap. 326; originally revised from L. 1883, chap. 175, § 17, as amended by L. 1887, chap. 285. Amended by L. 1911, chap. 636. Waiver of ail rights to the provisions of §§ 205-210 is not in accordance with the provisions of article VI of the Insurance Law. In re Ind. Benefit Assn., Attorney-General Rep., 1892, page 427. MORTALITY ASSESSMENTS.— The provision of chap. 321 of 1877 (now contained in § 92) providing that before a forfeiture of a life policy can be declared for non-payment of premiums or interest, notice must be mailed to the holder, stating that unless the premium or interest due was paid within thirty days, the policy would be forfeited, does not apply to mortality assessments. Merriman v. K. M. B. Assn., 138 N. Y., 116. Irregularities on the part of the association does not relieve members of the payment of assessments. Ins. Co. v. Belknap, 12 Chish. (Mass.), 140. ULTRA VIRES. — An association is not bound to accept a candidate for membership, and if, in so doing, it imposes conditi(ms beyond the constitu- tional powers given it by its constitution, but not illegal, and these condi tions are repudiated by the other party to the contract, there is no acceptance thereof. Palmer v. Commercial Assn., 53 Hun, 601; 25 St. Rep., 243; 6 N. Y. Supp., 870. 340 The Insurance Law. § 210. UNAUTHORIZED POLICIES.— Co-operative life and casualty insurance companies cannot issue policies with cash surrender value. Attorney-Ceneral Kep., 1893, page 114. Assessment insurance companies cannot issue policies, the premiums of which are fixed and definite and payable at certain times. In re Chenango Mutual Relief, Attorney-General Rep., 1892, page 416. Insurance policies written by co-operative companies must be for a fixed sum. Preferred Masonic Mutual Accident Assn., Attorney General Rep., 1892, page 400. Insurance policies written by co-operative companies must be for a fixed sum, which the companies and their members are bound to pay. In re Mer- chants' Life Assn., Attorney-General Rep., 1893, page 118; In re National Life Assn., id., 104; In re Ind. Ben. Assn., id., 194. Assessment corporations may not issue policies providing for the payment of fixed annual or monthly dues, or dues for any period, at least, without adding the further condition that extra dues must be paid, if necessary, sufficient to meet the maximum amount in a single policy. Attorney-General Rep., Oct. 20, 1892. A certificate of a mutual relief society cannot provide for conditions, which may not produce enough to meet the maximum amount in a single policy. Attorney-General Rep., Dec. 13, 1892. Policies or certificates of insurance issued by foreign co-operative insurance companies should contain an expressed provision authorizing additional assess- ments and providing for additional payments in case the sums provided for in the certificate contract become inadequate to immediate losses by death or otherwise as they may accrue. In re Springfield Mut. Life Assn., Attorney- General Rep., 1896, page 161. CONSTRUCTION OF POLICY.— Policies of insurance are ehoseS in action, and are governed by the same principles applicable to other agieements involving pecuniary obligations. St. John v. Am. Mut. Ins. Co., 13 N. Y., 31; Olmstead v. Keyes, 85 N. Y., 593. The rule that an insurance contract is to be construed most strongly against the insurer is to be resorted to only where the language or some of thn terms of the contract, after the use of such helps as are proper, remain of doubtful import. Foot x. Aetna L. Ins. Co., 61 N. Y., 575. The contract between a member and the corporation is contained in the constitution and the by-laws, and they should be considered together. Poult- ney v. Bachman, 31 Hun, 49. The constitution, by-laws and the context of the certificate of membersliip in a mutual benefit association, taken together, form the contract between it and the members, and by it the rights of the latter must be determined Farmers' Loan & T. Co. v. Aberle, 18 Misc., 257; afl'd 19 App. Div., 79. The rights and liabilities of the parties to a death chiim upon the funds of an insolvent mutual aid association in the hands of a receiver are measured by the contract created by the constitution, by-laws and certificate of membership, provided the same were authorized by law. People v. Grand Lodge, 156 N. Y., 533; aflf'g 88 Hun, 621. Provisions of the constitution and by-laws of a benevolent society, allowin-j benefits "in case of sickness," and providing that "when any member takes lick," he shall be entitled to such benefits " if it be so that he is not able to § 210. Life ok Casualty Insurance Cokporations. 341 attend to his daily labor," do not extend to a case of a permanent bodily injury which does not affect the general health of the person injured. Kelly V. Ancient Order of Hibernians, 9 Daly, 289. Where the constitution provided that " a total and permanent disability to perform or direct any kind of labor or business, or upon reaching the age of seventy years, shall entitle a member holding a certificate of endowment so disabled or aged to the payment of one-half of the endowment to which he would be entitled at death," a member, who accidentally lost all the fingers of one hand, could not recover the one-half as it was not a total disability within the constitution. Hutchinson v. Supreme Tent, 68 Hun, 355; 52 St. Kep., 199; 22 N. Y. Supp., 801. A provision in a certificate of membership in a mutual life association, evidently contemplating a mortuary assessment to meet each death loss, wiM prevail over a clause of the by-laws of the association tending to limit th^ number and amount of the assessments to be levied, inconsistent therewith, thougih the application stipulates that the by-laws shall be part of the con- tract; it not appearing that the applicant's attention had been called to the clause. Fitzgerald v. Equit. R. F. L. Assn., 3 N. Y. Supp., 214; 18 St. Rep., 914. STATUTE OF LIMITATIONS.— A stipulation creating a short statute of limitations in favor of the insured, within which* period the insurer must test, if ever, the validity of the policy, is not void as against public policy. Wright V. Mut. Ben. Assn., 43 Hun, 61; aff'd 118 N. Y., 237. BENEFICIARY. — In case the insured failed to designate his beneficiary, che amount payable by the certificate is payable to the legal representatives of the member, to be distributed according to the terms of the contract; the insured has a vested interest in the certificate of which no one can divest him. Simon v. O'Brien, 87 Hun, 160; 33 N. Y. Supp., 815; 67 St. Rep., 460. Under a policy on the Ufe of a member, his family was designated as the beneficiary thereof. The family consisted of the wife and one daughter. The daughter afterwards married and died. Held, that the wife and daughter were the beneficiaries, because they constituted the family of the deceased when the contract was consummated, and when the daughter died the mother became entitled to the benefit of the appointment and the proceeds of the policy. Brooklvn Masonic M. R. Assn. v. Hanson, 53 Ilun, 149. The act of incorporation of an association after declaring that one of its objects was to assist the families of deceased members, authorized it to accumulate a fund to be paid over to the families, heirs or representatives of deceased memoers, or to such person or persons as such deceased members may, while living, have directed, and the by-laws provided that in case of failure of or imperfect designation, then the amount should be paid to the legal heirs of the deceased member, where the beneficiary died before the member, it was held that the wife of the member was included in the words " legal heirs." Walsh v. Walsh, 66 Hun, 297. The words " legal representatives " ordinarily mean executors or adminis- trators, and that meaning will be given them in any instance unless there be facts existing showing that the words were not used in their ordinary sense. Sulz v. M. R. F. L. Assn., 145 X. Y., 5G3; rev'g 83 Hun. 139. ^Vhere the charter of the insurer or the statute under which it was insured does not forbid the insured to make the policy payable to whomever 342 The Insurance Law. § 210. he may appoint, and there is no evidence tending to impeach the good faith of the transaction, a policy on the life of the insured made payable in case of death to another, though not having an insurable interest, must be paid by the insurer. Freeman v. Nat. Ben. Soc, 5 St. Rep., 82; Fulmer v. Union Mut. Assn., 12 St. Rep., 347. In a certificate of membership taken our, by a H. M. Case, the beneficiary was named as " Mrs. H. M. Case or lawful heirs." Subsequently the wife of the member dies leaving him surviving a daughter and the said H. M. Case was remarried. Held, that the daughter, and not the second wife, was .:?ntitled to the benefits. Day v. Case, 43 Hun, 179. Where the wife, under an agreement of separation, had acquired the benefit certificate issued to her husband upon her promise to pay future assessments, which she paid with the knowledge of the husband, she acquired thereby a vested interest in the certificate of which her husband could not deprive her. Conselyea v. Supreme Council, 3 App. Div., 464. Where the right of a member of a benefit society to designate a beneficiary is unrestricted at the time when a certificate of insurance was issued to him, it cannot be affected, so as to defeat a recovery upon the certificate, by by-laws subsequently enacted by th^ supreme lodge of the order declaring, geneially, that the beneficiary must be a member or members of his family or must be one related to him by blood or a person who shall be dependent upon him. Spencer v. Grand Lodge, 22 Misc., 147. Where the member designated as beneficiaries " my legal heirs/ it was held that the word " heirs," as it is generally understood, means and includes only next of kin or relations by blood, and excludes the widow, yet it may include otner than blood relations where the intention that it should is shown. Kaiser v. Kaiser, 13 Daly, 522; I St. Rep., 2.58. Where the company agreed to pay upon the death of a member the sum specified in his certificate to the beneficiary named, and to the surviving members of the class to which he belonged, " share and share alike," a separate action was maintainable against the company, by one of the surviving mem- bers of the class, to recover his proportionate share of the sum. Emmeluth V. H. B Assn., 122 N. Y., 130. The certificate holder has the right to name a beneficiary and is not restricted to any particular class or relationship, and where there is nothing in the by-laws of the insurer, or in the certificate, expressly restricting such .•ight, the insurer had the power to issue it, and it is valid although the oeneficiary is not related to the member. Eckert v. Mut. Relief Soc, 2 N. Y. Supp., 612; 17 St. Rep., 877. LIABILITY OF COMPANY.— The relations between the company and its members are those of contractors, the contract being the policy, by which the liabilities of the company are to be determined. Hencken v. V. S. Life Ins. Co., 11 Daly, 289; aff'd'98 N. Y., 627. Upon the compliance by the applicant with the requirements of the rules and regulations of the society they are called upon to cause an assessment to be made and collected, and to pay to the party entitled thereto the money due; the applicant is under no obligation, in the first place, to compel an aasessment. O'Brien v. Home Ben. Soc, 61 Hun, 495; 21 St. Rep., 640; 4 N. Y. Supp., 275. § 210. Life ok Casualty Insurance Corpobations. 343 A policy wliieli dot-s Jiot contain a .provision obligating the association to pay or the nieinbeis to contribute towards paying the niaxiaium amount of the policy, or agrees that in the event that the amounts are insufficient, the sum raised shall be divided pro rata among the holders, may not be issued by an assessment association. Attorney-General Rep., Jan. 25, 1893. Under Article VI, a policy must state a specific sum to be paid and an obligation to pay the maximum amount so specified, and an endorsement on the back of the policy which provides that in case the reserve fund is impaired it shall be ad'justed by at assessment in addition to the regular mortuary call, does not constitute an agreement on the part of the parties that an assessment shall be made sufficient to meet all contract obligations. Attor- ney-€!eneral Rep., Feb. 3, 1893. The certificate of an industrial benefit association must provide for assess- ments sufficient to meet the maximum amount in a single policy. Attorney- General Rep., May 5, 1893. A policy should authorize extra assessments by clear expression; a provision in the by-laws or charter for an emergency fund and its restoration within six months after it has been used is not sufficient. Attorney-General Rep., March 26, 1897. An action may be maintained on a policy by which the company has under- taken to pay a fixed sum from the " death fund," or from moneys realized to such fund from mortuary assessments on all the members, though no such assessment has been made. The omission of the company to make it, where it is shown that there is a sufficient number of members to yield an assessment sufficient to pay the claim, creates an obligation, the same as if the fund were on hand from which to pay the amount of the policy, as, in the absence of proof to the contrary, it will be presumed that the assess- ment would have realized the full amount. Fitzgerald v. Equit. R. F. L. Assn., 5 N. Y Supi"., 837. The failure of an insurance association to assess its members when it is bound to do so renders it liable; the member's remedy is not limited to an action in equity to compel the performance of that duty. Darrow v. Family Fund Soc, 116 N. Y., 537. By a certificate issued by the defendant, the conditions attached thereto, and its by-laws, it agreed, upon the death of the member holding the certifi- cate to make an assessment upon its members and pay over the proceeds, not exceeding $2,000. In an action upon the certificate, held, that upon refusal to make an assessment, an action at law was maintainable for breach of the contract; that, while it seems an equity action is maintainable to compel defendant to make and collect an assessment and pay over the amount stipulated, plaintiff was not limited to that remedy. O'Brien v Home Benefit Soc, 117 N. Y., 310. A mutual assessment company, which contracts to pay death claims from assessments among its members, and to make such assessments upon the occurrence of a death, cannot lie by and omit to put in operation the means possessed by it to obtain the fund, and omit payment because of its own neglect of duty; this would be to take advantage of its own wrong, and it would operate as a fraud on the beneficiary under the certificate. Fitzgerald V. Equitable Res. Fund Assoc, 15 Daly, 229; 24 St. Rep., 493; 5 N. Y^ Supp., 873. 344 The Insueance Law. § 210. Where the association has in its hands moneys of a member illegally exacted, the defense of forfeiture for non-payment was not available to such association. Knight v. Supreme Council, 24 St. Kep., 845. BY-LAWS. — Where a mutual benefit insurance company makes a by-la\» changing the contingency on which a specified payment is to be made so that it affects a vested right of the members, such by-law is unreasonable; and the company has no power to make it. Weiler v. Equitable Aid Union 92 Hun, 277; 36 N. Y. Supp., 734; 71 St. Rep., 842. LIABILITY OF MEMBER.— The liability of a member of an assessment insurance company to pay a call issued by the receiver of such a company must be determined by the contract between the member and the company Attorney -General Rep., 1897, page 93. Members are liable to but one assessment to pay each death claim; it is immaterial as to whether enough was realized on the assessment made to pay the claim. People ex rel. Myers v. M. G. & B. Assn., 126 N. Y., 615. The neglect of a member to pay an assessment for thirty days after notice thereof determines the membership of the delinquent; the member is liable for the amount of all assessments previously made, and also for all losses happening prior to the time when he ceased to be a member, though no assessment therefor had been made. McDonald v. Ross-Lewin, 29 Hun, 87. Where the by-laws of an assessment accident insurance association pro- vide : " Members of this association may at any time resign, thereby relin- quishing their claims upon, or privileges under, said association; provided however, that all dues and assessments shall have been paid to the dat< of the resignation." A member of the association who terminates his mem- bership, whether by resignation or otherwise, and who pays all premiums and assessments levied upon him up to that time, is not liable for the amount of an assessment subsequently levied by a receiver of the associa- tion, pursuant to an order of the court, to pay claims against the association which accrued during his membership. Gray v. Daly, 40 App. Div., 41. SUICIDE OF MEMBER.— The suicide of a member of a mutual benefit association does not come within the meaning of the provision contained in a certificate that it should be void if the assured should die " in the violation of, or attempt to violate, any criminal law." Darrow v. Family Fund Soc, 116 N. Y., 537; Freeman v. Nat. Benefit Soc, 42 Hun, 252. FRAUDULENT REPRESENTATION.— In an action brought to recover an amount alleged to be due under a mutual benefit assurance certificate, the insurance company may show that the member made false representations upon procuring the certificate, which representations were a part of the contract. Mayer v. Equit. L. Assn., 42 Hun, 237. In an application for membership the applicant stated his age to be sixty years, and that any untrue statement therein would forfeit the applicant's right to any benefits. In an action upon the certificate, it appeared that it was the custom of the order not to accept as member one over sixty, and that the applicant was at least sixty-one. Held, that the false statement was material, and that the action was not maintainable. Preuster v. Supreme Council, 136 N. Y., 417. § 210. Life or Casualty Insukance Cokpokations. 3+5 EVIDENCE. — Where the question of membership is in issue any evidenct tending to show that deceased was not a member is admissible. Cramer v. Masonic Life Assn., 30 St. Kep., 609; 9 N. Y. Supp., 356. BURDEN OF PKOOF. — The issue to a person by an assessment life insur- ance association of a certificate of membership therein establishes prima facit the fact of membership, and throws upon the association the burden ol proving that the person by some act had lost such standing; such a certiticat« is assignable after a refusal by the association to pay the loss. Meagher v. The Life Union, 65 Hun, 354. Where the policy bound the company to maintain a death fund, which, il depleted, must be supplied by assessments, to be levied by the company, the member was not bound, as a condition of recovery, to show that defendant had in the death fund money sufficient to pay his claim, nor that an assess ment, if levied, would have produced the required amount. Cushman v. Family Fund Soc, 36 St. Rep., 856; 13 N. Y. Supp., 428. If there is an absolute agreement to pay assessments in a member's con- tract or the iby-laws, a receiver may collect assessments for losses susitained before the association was placed in charge of a receiver; contra, if no such agreement exists, but member forfeits all rights, Attorney-'General Rep., Jan. 19, 1897. A foreign mutual life association can only be permitted to transact in this state such kind of business as a like domestic corporation is authorized to do and may not issue policies which provide for payment in advance of specific amounts, but do not contain a provision requiring additional assessment if the exigencies of the company should require. Attorney-General Rep., May 21, 1896. A scheme by which the purchaser of a grave stone is to pay for the same in weekly instalments until the amount agreed upon is paid, but the title of the stone is not vested in the purchaser's estate until his death, and if d-eath occurs prior to the last payment, stone shall vest in his estate, clearly falls within the definition of insurance. Attorney-General Rep., Oct. 17, 1903. Where an action was brought on a certificate issued by the defendant bj which it agreed to pay to the beneficiary "all the amount realized from one assessment, not exceeding $2,000," the burden of proving that the amount which would be raised by one assessment exceeded $2,000 rested on the plaintiff, and that, in the absence of evidence to that effect, there was no presumption that it would equal that amoimt. O'Brien v. Home Ben, Soc., 46 Hun, 426. NOTICE NOT GIVEN. — The suspension of a member of a benevolent society under a provision of its constitution providing for the suspension of a member failing to pay an assessment levied by the society within forty days after the date of the notice of the assessment, is illegal, where the notice has not been served upon the member. People ex rel. Crowley v. Supreme Council, 23 Abb. N. C, 323. Where the constitution of a mutual benefit association provides that when an assessment is made the secretary shall at once notify the members, and each member shall pay the same within thirty days from the date of the notice, under penalty of forfeiture, the omission to pay an assessment levied thirty-four days before the member's death is no cause for forfeiture when 346 The Insukance Law. § 210. the notice was not given until thirteen days after levy of the assessment. Knight V. Supreme Council, 6 N. Y. Supp., 427. Under a by-law providing for the dropping of a member in case of a neglect to pay dues for a certain time after receiving notice oi his indebted- ness, the society has no right to drop a member, unless he has received such notice; mere proof that such notice was mailed to him properly addressed is not sufficient to authorize such action, especially where it is shown that he was absent from home at the time. People ex rel. McQuien v. Theatrical A8sn., 29 St. Kep., 405; 8 N. Y. Supp., 675. A failure to conform to the statutory provision with regard to notice will prevent an association from declaring a forfeiture of a policy for non-payment of assessments. Warner v. Association, 100 Mich., 157. INSUFFICIENT NOTICE.— Where one of the rules of a company provides that " a notice shall be sent announcing each assessment and the number thereof to the last post-office address given to the association by each mem- ber," a forfeiture cannot be based upon a notice which omits the number of the assessment. Greenwald v. United Life Ins. Co., 18 Misc., 91. WAIVER OF PROOFS.— Refusal of an insurance society to furnish blanks for proof of death, upon application therefor by the beneficiary, upon the ground that the deceased had forfeited his membership by failure to pay an assessment, is a waiver of proof and notice of death. Payn v. Mut. Relief Soc, 17 Abb. N. C. 53. Where a corporation, after verbal notice of an injury to the insured, sent one of its medical directors to examine the condition of the wound, it must be deemed to have waived a condition of the certificate requiring written notice to it of such injury. Martin v. Equit. Ace. Assn., 61 Hun, 167; 41 St. Rep., 77; 16 N. Y. Supp., 279. WAIVER OF FORFEITURE.— In the absence of any agreement, a waiver of forfeiture of a policy of life insurance results only from negotiations or transactions with the insured, by which the insurer after knowledge of the forfeiture recognizes the continued existence of the policy, or does some acts based thereon, or requires the insured by virtue thereof to do some act or inciu" some expense or trouble. Ronald v. M. R. F. L. Assn., 132 N. Y., 378. A forfeiture cannot be based upon an assessment or mortuary premium call, of which notice is sent before, but which is not payable until after the death of the insured; a forfeiture for non-payment is waived by the making of subsequent mortuary calls upon the person so in default. Elmer v. Mut. Ben. Assn., 47 N. Y. St. Rep., 35; 19 N. Y. Supp., 289. The secretary of a benevolent society, although not authorized by its con- stitution or by-laws to accept payment of dues from members, habitually received such dues, which he paid over to the society. Held, that the society was thereby estopped to deny his authority to accept dues tendered by ^ member, but refused by him on the ground of want of authority; and that such tender was legally equivalent to payment, so as to render the society liable for the benefit payable on the death of such member, as a membei " clear on the books " under its by-laws, he having died before any subse- quent meeting of the society or its directors at which the dues might prop- erly have been paid. Reeding v. Sons of Moses, 16 Daly, 417; 7 St. Rep., 13; 11 N. Y. Supp., 750. § 210. Life or Casualty Insukance (Corporations. 347 Any agreement, declaration or course of action on the part of the insur- ance company which leads the party insured honestly to believe that by conforming to it a forfeiture of Ins policy will not be incurred, followed by due conformity upon his part, will estop the insurance company from insist- ing upon the forfeiture, although such forfeiture might be claimed under the express letter of the contract. Van Bokkelen v. Mass. Ben. Assn., 9U Hun, 330. Where an assessment company received assessments from a member after the same were due, and by a course of such dealing established in the mind of the member a belief that it would continue to receive his assessments in this manner, his claim will not be cut off absolutely by the fact that he is in arrears, under a strict construction of the by-laws, at the time of his death. King v. Masonic L. Assn., 87 Hun, 591; 34 N. Y. Supp., 563; 68 St. Kep., 520. A certificate of benefit insurance, which has lapsed by default in payment of dues, is not reinstated by the payment of the dues to a receipting clerk who has no power to make a fresh contract, and who delivers a receipt expressed to be on condition that the insured is in good health, as originally, etc., this not being the fact, even though the person making the payment does not read the receipt; the fact that the association asked for proofs of death, and gave instruction in connection therewith, is not a waiver ol the forfeiture. Ronald v. Mut Res. F. Assn., 23 Abb. N. C, 271. Upon the trial of an action, brought to recover the amount of two life insurance policies issued by a mutual benefit association, it was shown that the insurer did not intend to terminate the policies by reason of the failure of the insured to pay a certain assessment levied thereon, provided such assessment was subsequently paid, and the insurer, by a notice to the insured, stated that the policies might be renewed " by immediate payment, if the risk is approved by the association upon receipt of said payment at the home office." Immediate payment was made at the home office, the risk was approved by the insurer and the policies were renewed by it. Held, that the insurer expressly waived its right to insist that the policies were forfeited and was estopped from asserting that they were not in full force at the time of the death of the insured. Sieburg v. Mass. Ben. Assn., 87 Hun, 199. If a promise is made by the wife of the financial secretary, who is acting for him, to extend the time for payment of an assessment, the certificate will not lapse if the financial secretary was authorized to extend the time of payment. Teckmeyer v. Supreme Council, 4 App. Div., 537. The provisions of a policy requiring a prompt payment of the stipulated periodical payments is a condition precedent, but such prompt payment may be waived by the insurer, and in such case the contract remains in full force. Baker v. N. Y. Mut. Ben. Asso., 27 Wk. Dig., 91; aff'd 112 N. Y., 672. Evidence that during a period of a year from the time of the organization of a subordinate lodge of an assessment insurance association twenty-three assessments had been levied on the lodge, which, with three or four excep- tions, had been paid after they became overdue, without complaint on the part of the supreme lodge, is sufficient to justify a jury in finding that the officers of the supreme lodge waived prompt payment, and that they were estopped from summarily suspending the subordinate lodge, in pursuance of a by-law of the association, for failing to pay the twenty-fourth assessment 348 The Insurance Law. § 210. until seven days after it became due. McClure v. Supreme Lodge, 41 App. Div., 131. While the unconditional receipt by a mutual benefit association of an assessment from one of its members after the time had expired for its payment, may constitute a waiver of the default of such member and operate to reinstate him in its membership, the receipt thereof by an officer of such association with qualified power will not, in the face of a provision in its constitution that he should not receive such assessment, except where it is tendered in an open meeting of the association, have that eflFect, unless the payment to him is in some manner ratified by the association. McGowan v. Cath. Mut. Ben. Assn., 76 Hun, 534. FORFEITURE NOT WAIVED.— If the certificate of membership has lapsed through the member's default, it is not revived by the conditional acceptance of dues, unless the condition be performed. May v. N. Y. Safety Fund Soc, 13 N. Y. St. Rep., 66. After the death of a person to whom a policy of life insurance had been issued, proofs of death were furnished to the insurance company, and the latter advised the administrator that upon the facts as they then appeared the proofs were approved and the claim would be paid on a specified day, a mortuary call was made by the insurer, assessing its members for approved claims, among which was the claim upon the policy of decedent, and the money was collected, but the corporation did not pay the amount of the policy in accordance with its notice, and notified the administrator of revo- cation of approval of the claim. Held, that a defense to the action brought on the policy, based upon facts unknown to the insurer at the time of such notice and assessment, had not been waived by it. Stuart v. Mut. Res. Fund Assn., 78 Hun, 191. The certificate of a benefit society provided that a failure to pay dues over four weeks would avoid the policy, and also that collectors were not authorized to waive forfeiture on receive payment beyond such time. At the time of the death of the insured the dues on the certificate were four weeks in arrears, and thereafter plaintiff paid them to a collector, but the company refused to receive them. Held, that the failure within the time limited caused a lapse or forfeiture of the certificate, and that the payment to the collector did not revive it. Jackson v. Royal Benefit Soc, 15 Misc., 481; 37 N. Y. Supp., 28; 72 N. Y. St. Rep., 179. Relator, who was a member of the defendant association, failed to pay his annual dues at the time fixed therefor, although he had been given two months' notice thereof. Subsequently, in response to an inquiry as to whether the moneys had been sent and notice that if not a reinstatement would be necessary, he sent a check for the amount, which was deposited in the suspense account. About the same time he received a mortuary call, which stated that neither such notice or the acceptance of the money would be held to waive any forfeiture by reason of non-payment of any previous sum when due. The amount of this call was sent and placed in the suspense account. Relator subsequently refused to sign an application for reinstate- ment, and the association tendered back the moneys so received by it. Held, that there was no waiver of the forfeiture on the part of the association. IVople v. Mut, Res. Assn., 15 Misc., 333; .37 N. Y. Supp., 617. § 211. Life ok (Lysualty Insii.'a.nm i. ( 'oi.m'okations. 849 REINSTATEMENT. — A certificate contained a clause which required the members to pay an assessment withiin thirty days after notice, and pro- viding that if not paid within such time the policy would lapse, but that he may be reinstated for valid reasons. The member was stricken with apoplexy shortly after the termiination of a thirty-day notice, ^rom which >?troke he subsequently died, keld, that the question whether it was a zalid reason should have been submitted to the jury. Dennis v. Mass, Ben, Assn,, 47 Hun, 338, An insane person cannot be deemed to be in good health within the mean- ing of an insurance policy, where a member after paying the assessments levied upon him for a period of twenty- two years becomes insane, and while IT) that condition, which continues until his death, omits to pay an assess- ment, notice of which is served upon him by mail, and the beneficiary of the certificate, some six months thereafter, immediately upon learning of the 'i.^fault in the payment of the assessment, notifies the association of the riomber's condition and offers to pay the assessment, the beneficiary is entitled to recover upon the certificate, although the company has declined to rem state the insured, stating as the ground therefor that he was over fifty-five years of age. McNeil v. Southern T. M. R. Assn., 40 App. Div., 581. EXCUSE FOR NON -PERFORMANCE.— The non-payment of the premium secured to be paid by a life policy on the day on which it falls due will avoid the policy if by the terms of the policy it is so agreed; neither sudden illness nor insanity will excuse the performance of the exact requirements of the contract. Ingram v. Supreme Council, 14 N. Y. St. Rep., 600. FORFEITURE. — The forfeiture of a policy of insurance by a mutual insurance company does not discharge the party whose property was thereby insured from his liability to pay the assessments already made upon his pre- mium note, executed to the company in consideration of such policy. The Iowa State Ins. Co. v. Prossee, 11 Iowa, 115. The member is not necessarily released from liability to assessment by for- feiture of rights under the policy. Korn v. Ins. Co., 6 Crauch, 192; Ins. Co. v. Underwood, 3 Gray (Mass.), 210. § 211. Change of beneficiary. Membership in any such corporation, association or society shall give to any member thereof the right, at any time, with the consent of such corporation, association, or society, to make a change in his payee or payees or beneficiary or beneficiaries without requiring the consent of such payee or beneficiaries. Source. — Former § 211; originally revised from L. 1883, chap. 175, § 18. RIGHT TO CHANGE BENEFICIARY.— A member of a mutual benefit insurance association has the right at any time to change the beneficiary named in his certificate, by complj'ing with the rules and by-laws of the association. Fleeman v. Fleeman, 39 N. Y. St. Rep., 307; 15 N. Y. Supp., 838. A recital in an indorsement made by the secretary on a certificate that, at the written request of the holder of the certificate, the beneficiary was changed from his brother to his wife, is sufficient evidence of a compliance with the by-laws of the association which provide that a change of bene- 350 The Insurance Law. § 211. ficiary may be made on the written order of the holder of the certificate; signed in the presence of two witnesses. Gladding v. Gladding, 29 N. Y. St. Rep., 485; 8 N. Y. Supp., 880. The consent of the company to a change of beneficiaries is indispensably necessary. Newman v. John Hancock M. L. Ins. Co., 45 Misc., 320. A certificate issued to a member, then unmarried, was made payable to his daughter. The member was subsequently married and inserted in the certificate the name of his wife after the name of his daughter. The inser- tion was made without the knowledge of the company. It was held that there was no valid change in the beneficiary named in the application and that the daughter was entitled to the entire fund. Thomas v. Thomas, 13 1 N. Y., 205. When the certificate of membership and the rules and regulations of a membership life insurance association provide that a member may change his beneficiary "as often as desired, consent of the existing beneficiaries not being required," etc., a beneficiary first named, and who refuses to surrender the policy intrusted to her, acquires no vested rights which prevent a cliange of beneficiary by the member on his complying with the provisions of the association in that respect. Martha Stronge v. The Supreme Lodge, Knights of Pythias, 111 App. Div., 87. When one insured in a membership corporation having under the by-laws a right to change his beneficiary by designating the change desired, which shall be " duly recorded and endorsed " on his certificate, has duly requested, after the death of his wife, the first beneficiary, that the beneficiary should be " as provided in my will," which change was endorsed on the certificate by the company and recorded in its books, the trustee of the residuary estate of the insured is entitled to recover the amount due. The Brooklyn Trust Co. V. Seventh Hegiment Veteran and Active League, 113 App. Div., 717. The beneficiary under a policy issued by a casualty company, doing business under article 2 of the Insurance Law, and which contains no provision permit- ting the insured to change the beneficiary named, has a vested interest in the policy and not a mere expectancy or inchoate right. Dunn v. Amsterdam Casualty Co., 67 Misc., 109. INTEREST OF BENEFICIARY.— The beneficiary named in a certificate has an assignable interest therein, though the insured has power to change, the beneficiary; in an action against a life associatfon to recover the amount of a policy assigned by a beneficiary to plaintiflf the assignor is not a necessary party merely because the assignment was made to secure a loaii from the assignee to the insured of a less sum than the amount of the policy. Lawler v. Nat. L. Assn., 83 Hun, 393; 31 N. Y. Supp., 875; 64 N. Y. St. Rep., 785. Where the designation of the beneficiary is voluntary in the nature of a gift, the courts will require strict compli.ince with the rules as to change of beneficiary; not so, however, where there is a consideration for the transfer and a vested interest in the fund. Tidd v. Mclntyre, 116 App. Div., 602. A person designated as beneficiary of a policy issued by a benefit society, who voluntarily and gratuitously pays the assessments thereon, and not under any contract with the insured, acquires no vested interest therein as against a person afterwards named beneficiary by the insured. Nix v. Donovan, 46 N. Y. St. Rep., 21; 18 N. Y. Supp., 435. § 212. Life or Casualty Insurance Corporations. 351 Plaintiff was designated by her son as beneficiary of a certificate issued by the defendant, a mutual benefit association, to such son. Thereafter, without plaintiff's knowledge, her son surrendered the certificate to defendant, and received in place of it another certificate designating his wife as the beneficiary. Held, that defendant was not bound to pay to plaintiff the sum mentioned in the certificate, and that the certificate was not operative as a contract and that the power to designate was not lost by one designa- tion. Deady v. Bank Clerks' Assn., 17 J. & S., 246. A beneficiary who has neglected to obtain the consent of the insurance company to his substitution as the beneficiary under a policy, cannot main-^ tain an action against the insurance company to recover the amount thereof. Newman v. John Hancock Mut. L. Ins. Co., 45 Misc., 320. A. by-law of a mutual benefit insurance society, providing that the bene- ficiary named in a certificate of membership shall only be changed upon the return of the original certificate, is intended only for the convenience of the society and may be waived by it; the original beneficiary is entitled t.f repayment out of the fund realized on the certificate at the death of the insured of assessments paid by her in ignorance of the fact that a new beneficiary had been designated. Southern T. M. R. Assn. v. Laudenbach, 5 N. Y. Supp., 901. Where a wife who was named as beneficiary died before the insured, and be subsequently married again, on his death the widow is entitled to the fundc where there was no subsequent designation. Matter of Rock, 49 Misc., 286. CAPACITY. — In an action to set aside an instrument revoking the appoint- ment of plaintiff as beneficiary under a life insurance policy and appointing defendant instead, on the ground of deceased's mental incapacity to make the same, where the attending physician testified against her capacity, and two old acquaintances testified that deceased was unable at the time to recognize them, the question of capacity was for the jury, and it was error to direct a verdict for defendant. Henken v. Monaghan, 49 N. Y. St. Rep., 358; 21 N. Y. Bupp., 235. SURRENDER OF CERTIFICATE.— Where the first certificate has not beer received until after the member's death the society has no right to issue a new certificate, as the attempted surrender was incomplete and no rights were conferred thereby. Luhrs v. Luhrs, 6 N. Y. Supp., 51. The " immediate family " of a member is to be determined at his death, and not at the beginning of his membership. Davin v. Davin, 114 App. Div., 396. Where a widow is entitled to the death benefit, provided she did not for any reason live separated from the deceased member, and provided she took care of him during his last illness, the widow's action to recover should be dismissed where evidence shows that she had been separated from her husband for years, and was at the time of his death. Zajic v. Elian, 50 Misc., 289. § 212. Exemption from execution. The money or other benefit, charity, relief or aid, paid or to be paid, provided or rendered by any such corporation, association or 352 The Insitkance Law. § 213. society shall not be liable to be seized, taken or appropriated by any legal or equitable process, to pay any debt or liability of a mem- ber, or any debt or liability of the widow of a deceased member of such corporation designated as the beneficiary thereof, which was incurred before such money was paid to her or such benefit, charity, relief or aid was provided or rendered. Source. — Former § 212, as amended by L. 1897, chap. 345; originally revised ^rom L. 1883, chap. 175, § 19; L. 1884, chap. 16. LBGIStLATIVE INTENT.— The legislative intent in the enactment of §§ 212 and 238 of the Insurance Law, to place co-operative and as'sessment insurance in a class by itself, was to relieve such insurance from the opera- tion of § 52 of the Domestic Relations Law, making insurance money realized by a wife on the life of lier husband subject to his debts, where the annual premium paid out of his property exceeds $500. Dominick v. Stern, 79 Alisc, 271. EXECUTION.— The provisions of § 212 of the Insurance Law apply to all corporations, whether incorporated under article VI of the Insurance Law or not, and moneys cannot be reached by a judgment-debtor of a widow receiving such moneys as beneficiary. People's Bank of Buffalo v. Cushman, 109 App. Div., 349. § ^13. Penalties. Any officer or agent of any such corporation, association or so- ciety, subject to any of the provisions of this chapter, who shall neglect or refuse to comply with any such provision, or who shall make in any report or statement any intentionally false or fraudu- lent statement ; or shall refuse to permit the superintendent of in- surance or any examiner duly authorized by him for the purpose, to make an examination of its conditions and business, books, papers and vouchers; and any person who shall act within this state as agent, solicitor or collector for any such corporation, as- sociation or society, which shall have failed, neglected or refused to comply with or violated any of the provisions of this chapter, or shall have failed or neglected to procure from the superintendent the certificate of authority to transact business in this state re- quired by law, shall forfeit to the people of the state the sum of one hundred dollars for every such offense. If an examination of the condition and business of any such corporation, association or society transacting business in this state shall be prevented by such refusal, the superintendent of insurance shall revoke the cer- tificate of authority issued to such corporation, association or § 214. Life ob Casualty Insurance Corporations. 353 society ; and it shall thereafter be unlawful for it to do business in this state until it shall have submitted to an examination, and the superintendent shall have issued to it a new certificate of author- ity authorizing it to continue business in this state. . Source.-HFormer § 213; originally revised from L. 1883, chap. 175, § 20, as amended by L. 1889, chap. 184. See § 1197, 'Penal Law. Failure to file report with superintendent a misdemeanor. § 214. Exemption of certain societies and subordinate lodges of Odd Fellows and Masons from the provisions of this article. 'No society or subordinate lodge or body of any secret, fraternal or industrial society now organized in this state paying only sick benefits, not exceeding two hundred and fifty dollars in the aggre- gate to any one person in any one year, or a funeral benefit or relief to those dependent on a member not exceeding three hundred and fifty dollars, shail be required to make any report thereof under tliis article. Subordinate lodges or councils or other bodies by whatsoever name known, of fraternal, secret or industrial societies shall not be required to make an annual report to the superintend- ent of insurance, when the money, charity, relief or aid is payable by the grand or supreme body of the same, and is derived from assessments upon such subordinates or their members, but such report shall be made and filed by such grand or supreme body. This article shall not prevent the creation of a reserve fund by any corporation, association or society transacting the business of life or casualty insurance, or both, upon the cooperative or assessment plan, where its funds or its accretions, or both are to be used for the payment of assessments or death losses, or for benefits in case of physical disability only. This article shall not apply to the grand or subordinate lodges of the Independent Order of Odd Fellows as they now exist, or to any grand or subordinate lodge of Free and Accepted Masons, nor to any association or organization of the vet- eran firemen of any city of the state having a population of ^ve hundred thousand or more. The voluntary unincorporated asso- ciations known as the New York Stock Exchange and the Con- solidated Stock and Petroleum Exchange of New York, and the 354 The Insurance Law. §§ 215-217. Booksellers and Stationers' Provident Association of the United States are exempted from the provisions of this article. This article shall not prevent any corporation, association or society authorized to do business hereunder from crediting on assess- ments of its certificate holders or members such ratable sums out of surplus accumulations or reserve funds as they may become entitled to under the terms of their policy or certificate contracts, provided, however, that the amount so credited in any policy year shall not exceed one annual premium on such Dolicy or certificate contract. Source.— Former § 214, as amended by L. 1894, chap. 399, and L. 1906, chap. 326; originally revised from L. 1883, chap. 175, § 21, as amended by L. 1887, chap. 285; L. 1887, (?hap. 285, § 7, as amended by L. 1889, chap. 566. Amended by L. 1911, chap. 636. An industrial benefit association maj^ not evade the law prohibiting pay- ment of fixed cash payments by providing in policies for the return of a " portion of the premiums actually paid in cash." Attorney-General Rep., Oct. 29, 1895. § 215. Corporations may deposit securities witli the super- intendent of insurance. Repealed by L. 1911, ohap. 536. § 216. Quorum. At the stated meeting for the election of officers, trustees, direct- ors or managers of any such corporation, association or society, a majority of the persons entitled to vote at such meeting shall not he necessary to a quorum. Source. — Former § 216; originally revised from L. 1883, chap. 175, § 23. § 217. Reincorporation. Any corporation incorporated under chapter one hundred and seventy-five of the laws of eighteen hundred and eighty-three and transacting business under this article is hereby authorized to rein- corporate as a stock corporation under its existing corporate name, upon compliance with the provisions of article two of this chapter. Before the superintendent of insurance shall be required to file and record a certificate of such reincorporation, he shall be satis- fied tbat the same has been approved by a majority vote of the members of the company present and voting at a meeting of tlie insured called to consider the same, of which meeting a written or §§ 218, 219. Life oh Casualty Insurance Cokpokations. 355 printed notice shall have been mailed to each member who shall have been such for tliirty days directed to his address appearing on the company's books, at least thirty days before the day fixed for such meeting. Upon such reincorporation said company shall he entitled to the assets and shall be subject to the existing liabili- ties of the present company, including all contracts, policies or cer- tificates with its members and agreements between such members and the subscribers to any guaranty or reserve fund heretofore made or approved at an annual meeting of the members or which may be ratified at the meeting called to consider such reincorporation. Source.— L. 1893, chap. 690, §§ 1, 2, 3. Section 36 of tlie General Corporation Law, relating to forfeiture of corporate powers, does not refer to a change of form or reincorporation as provided by this section. Attorney-General Rep., March 29, 1916. § 218. Admission of minors. A corporation, association, organization or society transacting the business of life or casualty insurance, or both, upon the co-operative or assessment plan, and incorporated under or subject to this article, may provide by its by-laws for the admission of minors, over eighteen years of age to membership in such cor- poration, association, organization or society and may by sucli by-laws prescribe the conditions of such admission and the right* and obligations of minors as members; and no such minor shall by reason only of minority be deemed incompetent to become such member, to contract for insurance provided for by the certifi- cate of membership, or other instrument showing such member- ship or fixing his privileges, to surrender such insurance or to give a valid discharge for any benefit accruing or for any money pay- able under the contract of insurance. Added by L. 1911, chap. 176. § 219. Policy to indicate assessment plan. Every policy or certificate hereafter issued by any corporation, company, society, organization or association transacting business under this article shall have conspicuously printed on the face of such policy or certificate and at the top thereof in capital letters not smaller than great primer roman condensed capitals, the words " assessment system," 356 The Insukance Law. § 220. Added by L. 1913, chap. 28. Note. — ^The purpose of the amendment of this section by chapter 28 of 1913 was to protect the public by requiring assessment associations in this vState to more clearly indicate in their contracts the precise scope and character ol such contracts. — Ed. § 220. Forms of policies or certificates must be filed and approved. On and after the first daj of January, nineteen hundred and fourteen, no policy or certificate of insurance against loss or dam- age from the sickness, or the bodily injury or death of the in- sured by accident, shall be issued or delivered in this state by any corporation authorized under this article, until copies of the form thereof have been filed with the superintendent of insurance and formally approved by him. On or before the first day of October, nineteen hundred and thirteen, the superintendent shall make and announce rules and regulations concerning the terms and provisions of such forms of policies and certificates, the man- ner in which they shall be printed, and the practice to be followed in their submission and approval. The superintendent may, in his discretion, permit any such corporation to continue to use in this state after the first day of January, nineteen hundred and fourteen, any form of policy or certificate, which, prior to October first, nineteen hundred and thirteen, has been duly approved for such corporation under section one hundred and seven of this chapter. Added by L. 1913, chap. 51. In effect October 1, 1913. Note. — The purpose of the addition of this section by chapter 51 of 1913 was to require that all policies or certificates issued by health and accident corporations operating upon the co-operative or assessment plan shall be passed upon and approved by the insurance department and that the superin- tendent must on or before October 1, 1913, make and announce rules and regulations concerning the terms and provisions of such forms of policies and certificates. — Ed. § 230. Fkaternal Benefit Societies. 357 AKTICLE VII. Fraternal Benefit Societies. Section 230. Definitions and scope of article. 231. Benefits, beneficiaries and membership. 232. Certificates. 233. Funds. 234. Incorporation. 235. Existing corporations and reincorporation. 236. Mergers. 237. Foreign societies. 238. Place of meeting and liability of officers. 239. Limitation upon j ower to waive provisions of the society's laws. 240. Exemption from execution. 241. Amendments to constitution and laws. 242. Reports and valuations. 243. Examinations. 244. Revocation of license. 245. Exemption of certain societies. 246. Taxation 247. Penalties. 248. Application of o^her sections of this flhapter. 249. Review. § 230. Definitions and scope of article. 1. Any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for tlie mutual benefit of its members and their beneficiaries, but 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 two hundred and thirty-one hereof, is hereby declared to be a fraternal benefit society. 2. Any society having a supreme governing or legislative body and subordinate lodges or branches, by whatever name known, into which members shall be elected, initiated and admitted in accordance with its constitution, laws, rules, regulations and prescribed ritualistic ceremonies, which subordinate lodges or branches shall be required by the laws of such society to hold regular or stated meetings at least once in each month, shall be deemed to be operating on the lodge system. 358 The Insurance Law. § 231. 3. 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 chosen directly or indirectly 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 I'^ss than the votes required to amend its constitution and laws; and provided, further, that the meetings of the supreme or governing body and the election of officers, representatives or delegates shall be held as often as once in four years. The members, officers, representatives or delegates of a fraternal benefit society shall not vote by proxy. 4. Except as herein otherwise provided, such societies shall be governed by this article and shall be exempt from all other pro- visions of the insurance laws of this state, not only in govern- mental relations with the state, but for every other purpose, and no addition thereto hereafter enacted shall apply to them unless they be expressly designated therein. Added by L. 1911, chap. 198. The grand lodge of a society cannot legally be removed from the state; public policy requires that corporations organized under our laws he and at all times remain within the jurisdiction of our courts. Attorney-General Rep., April 15, 1903. The superintendent may examine a company before granting a certificate to ascertain whether the proposed organization has or has not complied with the law; the insurance department has jurisdiction of all matters relating to the organization of this class of corporations and of the companies when organized. Attorney-General Eep., Jan. 11, 1893. § 231. Benefits, beneficiaries and membership. 1. Every society transacting business under this article shall provide for th-e paym'ent of death benefits, and may provide for the payment of benefits in case of temporary or permanent physical disability as the result either of disease, accident or old age, provided that 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 also may provide for monuments or tombstones to the memory of its deceased members, and for § 231. Fraternal Benefit Societies. 359 the payment of funeral benefits. Such society shall have the power to give a member when permanently disabled or upon attaining the age of seventy years all or such portion of the face value of his certificate as the laws of the society may specify; "provided that nothing in this article contained shall be so con- strued as to prevent the issuing of benefit certificates for a terra of years less than the whole of life, which shall be payable upon the death or disability of the member occurring mthin the term for which the benefit certificate has been issued, or so as to permit any such society hereafter to make any promise or agree- ment for the payment of money upon the expiration of a fixed period, except as provided in subdivision (b) of subsection one of this section. (a) Such society shall, upon written application of the member, have the power to accept a part of the periodical contributions in cash and to charge the remainder, not exceeding oue-half of the periodical contribution, against the certificate, with Interest pay- able or compounded annually at a rate not lower than four per centum per annum; provided that this privilege shall not be granted except to societies which have readjusted or may here- after readjust their rates of contributions and to contracts affectrd by such readjustment. (b) Any society which shall show, by the annual valuation hereinafter provided for, that it is accumulating and maintaiuino- the full reserve required by a table of mortality not lower than the American Experience table and four per centum interest may grant to its members extended and paid-up protection or such withdrawal equities as its constitution and laws may permit: provided that such grants shall in no case exceed in value the portion of the reserve to the credit of the members to whom they are made. 2. Such death benefit shall in certificates hereafter issued be payable only to wife, husband, relative to the fourth degree of consanguinity, 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 certificate, the 3i6'0 The Insukance Law. § 232. member shall become dependent upon an incorporated charitable institution, he shall, with the consent of the society, have the privilege of making such institution his beneficiary. Within the above restrictions each member shall have the right to designate his beneficiary and, from time to time, may 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 beneficiaries within the above classes. 'No contract under this article shall be valid which shall be conditioned upon an agreement or understanding that the person to whom the death benefit is made payable shall pay the periodical or other contribution of the member. 3. A 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 such society; provided that any beneficiary member of the society who shall apply for a certificate providing for disability benefits need not be required to pass an additional medical examination therefor. I^Tothing herein contained shall prevent such society from accepting general or social members. Added by L. 1911, chap. 198. A fraternal mutual benefit association cannot by an amendment to its constitution or by-laws destroy or diminish benefits which it contracted to give its members when they became such, even though a general power to amend be expressly reserved; the above rule is not changed by section 232, Insurance Law (as added by chap 198 of 1911). Stewart v. Thorburn, 171 App. Div., 258. § 232. Certificates. Every certificate issued by any such society shall specify the amount of benefit provided thereby, and shall provide that the certificate, the charter or articles of incorporation — or, if a voluntary association, the articles of association — the constitu- tion and laws of the society and the application for membership and medical examination, signed by the applicant, with all amend- ments to each thereof, shall constitute the agreement between the § 233. Fratekjs'al Benefit Societies. 361 society and the member; and copies of the same, certified by the secretary of the society or corresponding officer, shall be received in evidence as to the terms and conditions thereof. Any changes, additions or amendments to said charter or articles of incorpora- tion — or, if a voluntary association, articles of association — constitution or laws duly made or enacted subsequent to the issu- ance of the benefit certificate, shall bind the member and his beneficiaries, and shall govern and control the agreement in all respects the same as though such changes, additions or amend- ments had been made prior to and were in force at the time of the application for membership. Added by L. 1911, chap. 198. Section 232 of the Insurance Law, as enacted in 1911, does not require the issuance of certificates of membership by fraternal benefit societies. Attor- ney-General Rep., April 19, 1912. This section as enacted in 1911 does not require the issuance of certificatea of membership by fraternal benefit societies. Attorney-General Rep., 1912, page 220. § 233. Funds- 1. A society may create, maintain, invest, disburse and apply an emergency, surplus or other similar fund, in accordance Avith its laws. Such funds shall be held, invested and disbursed for the use and benefit of the society, and no member or beneficiar\ shall have or acquire individual rights therein, or become entitled to any apportionment or the surrender of any part thereof, except as provided in subdivision (b) of subsection one of sectioi. two hun- dred and thirty-one of this article. The funds from which benefits shall be paid and from which the expenses of the society shall be defra^'cd shall be derived from periodical or other payments by the members or subordinate bodies of the society, together with accretions of such funds; provided that no society, domestic or foreign, shall hereafter be incorporated 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 x^ational Fraternal Congress table of mortality as adopted by the iNTational Fraternal Congress, August twenty-third, eighteen hundred and ninety-nine, or any higher standard, with interest assumption not 362 The Insurance Law. § 233. more tlian four per centum per annum, nor to write or accept members for temporary or permanent disability benefits, except upon tables based upon reliable experience, with an interest assumption not higher than four per centum per annum. ' 2. Deferred payments of installmcmts of claims shall be con- sidered as &Ked liabilities on the happening of the contingency upon which such payments or installments are thereafter to be paid. Such liability shall be the present value of such future payments or 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, regardless of proposed future collections to meet any such liabilities. 3. A society shall invest its funds only in securities permitted by the laws of this state for the investment of the assets of life insurance companies; provided that any foreign society permitted or seeking to do business in this §tate, which invests its funds in accordance with the laws of the state in which it is incorporated, shall be held to meet the requirements of this article for the investment of funds. 4. Every provision of the laws of a society for payment by its members, 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 disability purposes, or the net accretions of either or any of said funds, shall be used for expenses. Added by L. 1911, chap. 198. Amendments to the constitution or by-laws of a mutual benefit association, which nullify or cut down benefits to which a beneficiary has become entitled under ^his contract, are void and of no effect even wihere the right to amend has been expressly reserved. Wright v. Knights of Maccabees, 196 N. Y., 391. A mutual benefit association cannot change a constitutional provision that a beneficiary shall be assessed according to age when admitted, without his consent. Dowdall v. Cath. Mut. Ben, Assn , 196 N. Y., 405. A fraternal benefit society, having classes "A" and " B," cannot transfer funds contributed by certificate holders in class " B " to other classes without the consent of all the members remaining in Class " B." Attorney-General Rep., Nov. 28, 1911. A member and ttie society cannot, by any agreement, in which all members of the cash dividend class do not join, take out of the benefit fund any sum M the equitable share of a member. Attorney-General Rep., Feb. 8, 1912. § 234. Fraternal Benefit Societies. 363 The exchanging of a member, from one class to another, does not permit the transfer of the amount, to which he would be equitably entitled in the benefit fund of his class, to the other class, without the consent of all mem- bers interested in the fund. Attorney -General Rep., March 22, 1912. Section 36, prohibiting a director from being pecuniarily interested as a member in any loan from a corporation, applies to fraternal beneficiary societies or orders under Article VII. Attorney-General Rep., Feb. G, 1909. § 234. Incorporation. 1. Seven or more persons, citizens of the United States and a majority of whom are citizens of this state, who desire to form a fraternal benefit society, as defined by this article, 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: (a) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company already transacting business in this state as to mislead the public or lead to confusion. (b) The purpose for which it is formed — which shall not include more liberal powers than are granted by this article, provided that any lawful social, intellectual, educational, chari- table, 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. (c) The place where its principal office shall be located within the state. (d) 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. 2. Such articles of incorporation, with duly certified copies of the constitution and laws, rules and regulations, and copies of all proposed forms of benefit certificates, applications therefor and circulars to be issued bv such society, together with a bond in 364 The Insurance Law. § 234. the sum of five thousand dollars, with sureties approved by the superintendent of insurance, conditioned upon the return to applicants of the advanced payments, as provided in this section, if the organization is not completed within one year, shall be filed with the superintendent of insurance, who may require such further information as he deems necessary; and, if the purposes of the society conform to the requirements of this article and all provisions of law have been complied with, such superintendent of insurance shall so certify, retain and file the articles of incor- poration, and furnish the incorporators a preliminary certificate authorizing said society to solicit members, as hereinafter provided. 3. Upon receipt of said certificate from the superintendent of insurance, the society may solicit members for the purpose of completing its organization, and shall collect from each applicant the amount of not less than one regular monthly payment, in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. But no society shall incur any liability other than for such advanced payments, nor issue any benefit certificate, nor pay or allow, nor offer or promise to pay or allow, to any person any death or disability benefit until actual, bona fide applications for death benefit certificates have been secured upon at least five hundred lives for -at least one thousand dollars each, and all such applicants for death benefits shall have been regularly examined by legally qualified practicing physicians, and certificates of such examinations have been duly filed and approved by the chief medical examiner of such society; nor until there shall be established ten subordinate lodges or branches, into which said ^Ye hundred. applicants have been initiated; nor until there has been submitted to the superintendent of insur- ance, under oath of the president and the secretary or corr<^- sponding officers of such society, a list of such applicants, giving their names, addresses, date examined, date approved, date initi- ated, name and number of the subor din-ate branch of which each applicant is a member, amount of benefits to be granted, rate of stated periodical contributions — which sh,all be sufficient to pro- vide for meeting the mortuary obligation contracted, when valued § 234. Fraternal Benefit Societies. 365 for death benefits upon the basis of the National Fraternal Con- gress table of mortality, as adopted by the National Fraternal Congress August twenty-third, eighteen hundred and ninety-nine, or any higher standard at the option of the society, and for dis- ability benefits, by tables based upon reliable experience, and for combined d^ath and permanent total disability benefits by tables based upon reliable experience, with an interest assumption not higher than four per centum per annum; nor until it shall be shown to the superintendent of insurance, by the sworn statement of the treasurer or corresponding officer of such society, that at least five hundred applicants have each paid in cash not less than one regular monthly payment, as herein provided, per one thou- sand 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 mortuary or disability fund on account of such applicants, and no part of which may be used for expensesL 4. Such 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. 5. The superintendent of insurance may make such examine tion and require such further information as he deems advisable, and, upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to such society a certificate to that effect. Such certifiate shall be prima facie evidence of the existence of such society at the date thereof. The superintendent of insurance shall cause a record of such cer- tificate to be made, and a certified copy of such record may be given in evidence with like effect as the original certificate. 6. No preliminary certificate granted under the provisions of this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the superintendent of insurance, upon cause shown, unless the five hundred applicants herein required have been secured and the organization has been completed as herein provided; and the articles of incorporation and all proceedings thereunder shall 366 The Insurance Law. .^ifg 234. 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 completed its organization and commenced business as herein provided. 7. Every such society shall have the power to make a consti- tution and by-laws for the government thereof, 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 chance, alter, add to or amend such constitution and by-laws, and shall have such other powers as are necessary and incidental to the carrying into effect of the objects and purposes of tbe society. Added by L. 1911, chap. 198. See § 6, ante. Fees of superintendent for filing papers. See § 10, ante. Certificate of attorney-general. See § 11, ante. Examination by superintendent as to payment of capital, •te. See § 4, General Corporation La,w, chap. 28 of 1909, as to qualifications of incorporators. See chap. 733 of 1900. Reincorporation of foreign moneyed corporations. A fraternal beneficiary society incorporated under the laws of a foreign state and conducting a life insurance business on the co-operative or assessment plan, and requiring by its constitution and by-laws applicants for membership to pass a medical examination upon the result of which admission depends, is a life insurance company or association within the meaning of the question " Have you ever been rejected by any life insurance company or association ? " and where an applicant for admission to one division or tent of such society, who had previously been rejected by another division or tent of the same society upon medical examination, which objection was known to him, answered " no " to such question, the answer is untruthful and fraudulent and avoids the certificate of insurance issued to such applicant, where he stipulated in his application therefor that any untruthful or fraudulent answers should vitiate the certificate and forfeit all payments made thereon. Alden v. Knights of Maccabees, 178 N. Y., 635. A corporation organized under this section has no power to receive, as members, infants of such tender years that they are unable to exercise any choice in becoming members or to exercise the powers with which members are invested. Matter of G. M. B. Assn., 135 N*. Y., 280. An insurance corporation organized under any article may properly change its name by a compliance with Title X of Chapter XVTT of the Code of Civil Procedure. Attorney-General Rep., Aug. G, 1903. A fraternal beneficiary society upon reinsurance of its risks and loss of all its members is not dissolved, and may either apply for leave to renew its § 235. Fraternal Benefit Societies. 367 business or transfer its franchise to others; a corporation is an artificial creature created by the state, and only the state can destroy it. Attorney- General Rep., Nov. 4, 1910. The certificate of the fraternal beneficiary society providing that the member himself may withdraw a certain sum in case of the death of his wife is double insurance; the intendment of the statute is to limit cases of sickness, etc., in which there may be payment of benefits to cases of either disability or death of the member. Attorney-iGeneral Rep., Nov. 10, 1903. Collections for beneficiary claims, arising from sickness, disability or deatli, cannot be used for expenses. Notice of assessment may include both, but must divide the sums so applied. Attorney-General Rep., Aug. 3, 1896. Section 58 of the Insurance Law, requiring policies of insurance to contain the entire contract, does not apply to fraternal beneificiary orders, operating under Article VII. Such societies do not issue " policies," but " membership certifico/tes." Attorney-General Rep., Feb. 13, 1908. An assessment fraternal beneficiary society has no power to make a by-law agreeing to lend money or to otherwise pay a benefit to a member except in the event of sickness, disability or death. Attorney-General Rep., April 23, 1908. Fraternal beneficiary societies are not required to issue certificates of mem- bership to those persons who join. Attorney-General Rep., May 28, 1908. § 235. Existing corporations and reincorporation. Any such society now engaged in transacting business in tliis state may exercise, after the adoption of this article, all of the rights conferred thereby, including the powers specified in sub- section seven of section two hundred and thirty-four of this chapter and all of the rights, powers and privileges now exercised or possessed by it under its charter or articles of incorporation — if incorporated — not inconsistent with this article; or, if it be a voluntary association, it may incorporate hereunder. But no society already organized shall be required to reincorporate here- under, and any such society may amend its articles of incorpora- tion from time to time, in the manner provided therein or in its |constitution and laws, and .all such amendments shall be filed ith the superintendent of insurance and shall become operative ^jpon such filing, unless a later time be provided in such amend- Iments or in its articles of incorporation, constitution or laws. Added by L. 1911, chap. 198. See § 37, ante. Effect of Insurance Law on corporations previously -.incorporated. 868 The Insurance Law. § 236. See § 52, ante. Reorganization of existing corporations and amendments of certificates. See § 100, Statutory Construction Law, chap. 27 of 1909, as to effect or repeal and re-enactment of existing statutes. Section 232 of the Insurance Law, as enacted in 1911, does not require the issuance of certificates of membership by fraternal benefit societies. Attor- ney-General Rep., April 19, 1912. § 236. Mergers. No domestic society shall merge with or accept, by contract of reinsurance or otherwise, the transfer of substantially the entire membership or funds of -any other society, unless such merger, reinsurance or transfer is evidenced by a contract in writing, setting out in full the terms and conditions of the same, and filed with the superintendent of insurance of this state, together with a sworn statement of the financial condition of each of said socie- ties, made by the respective presidents and secretaries, or corre- sponding officers together with a certificate of such officers, duly verified under oath, that such merger, reinsurance or transfer has been approved by a vote of two-thirds of the members of the supreme legislative or governing body of each of said societies. Upon the submission of said contract, financial statements and certificates, the superintendent of insurance 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, reinsurance or transfer is just and equitable to the members of each of said societies, he shall approve the same, issue his certificate to that effect and, thereupon, the said contract of merger, reinsurance or transfer shall be of full force and effect; provided that no such merger, reinsurance or transfer proposed by two societies not incorporated in the same state shall go into effect until it is approved by the insurance commissioner, or corresponding officer, of each state incorporating the societies involved in the proposed transaction, and their joint certificate of approval of the contract therefor is issued. Added by L. 1911, chap. 198. I § 237. Feateknal Benefit Societies. 369 § 237. Foreign Societies. 1. Foreign societies which are now authorized to transact business in this state may continue such business until the first day of April next succeeding the adoption of this article, and the authority of such societies may thereafter be renewed annually, to terminate in all cases on the first day of the succeeding April; provided, however, that the license shall continue in full force and effect until the new license shall be issued or be specifically refused. A duly certified copy or duplicate of such license shall be prima facie evidence that the licensee is a fraternal benefit society, within the meaning of this article. 2. 'No foreign society now transacting business, organized prior to the adoption of this article, which is not now authorized to transact business in this state, shall transact any business? herein without a license from the superintendent of insurance. Any such society may be licensed to transact business within this state, upon filing with such superintendent a duly certified copy of its charter or articles of association, a copy of its constitution and laws, certified by its secretary or corresponding ofiicer, a power of attorney to such superintendent as hereinafter provided, a statement of its business, under oath of its president and secre- tary or corresponding ofiicers, in the form required by the super- intendent, and duly verified by an examination made by the supervising insurance ofiicial of its home state or any other state satisfactory to the superintendent of insurance of this state, a certificate from the proper ofiicial in its home state, province or country that the society is legally organized, a copy of its con- tract — which must show that benefits- are provided for by peri- odical or other payments by persons holding similar contracts — and upon furnishing the superintendent such other information as he m,ay deem necessary to a proper exhibit of its business and plan of working. Upon compliance with these requirements, such foreign society s-hall, subject to the provisions of section nine of this chapter, be entitled 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 article, be renewed an- riually, to terminate in all cases on the first day of the succeeding 370 The Insueance Law. § 237. April; provided however, that such license shall continue in full force and effect until the new license shall be issued or be specific- ally refused. Any foreign society desiring admission to this state must have the qualifications required of domestic societies organized under this article, and have its assets invested as required by the laws of the state, territory, district , country or province wherein it is organized. When the superintendent re- fuses to license any society, or revokes its authority to do business in this state, he shall reduce his ruling, order or decision to writ- ing and file the same in his office, and shall, upon request, furnish a copy thereof, together with a statement of his reasons, to the officers of the society, and such action of the superintendent shall be reviewable by proper proceedings in any court of competent jurisdiction within the state; provided, however, that nothing contained in this or the preceding paragraph shall be taken or construed as preventing any such society from. continuing in good faith all contracts made in this state during the time the society was legally authorized to transact business herein. 3. Every foreign society now transacting business in this state shall, within thirty days after the adoption of this article, and every such society hereafter applying for admission shall, before being licensed, appoint in writing the superintendent of insurance to be its true and lawful attorney, upon whom all legal process in any action or proceeding against it shall be served, and in such writing shdl agree that any lawful process against it which is served upon such attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by said super- intendent of insurance, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as would the original. Such service may be made upon such attorney, or, in his absence, upon the person in charge of his office, and shall be deemed sufficient service upon such society ; provided, however, that no such service shall be valid or binding against any such society when it is required thereunder to file its answer, pleading or defense in less than twenty days from the date of such service of such process. , When legal process against any such §§ 238, 239. Fkateknal Benefit Societies. 371 society is served upon said superintendent of insurance, he shall forthwith forward by registered mail one of the duplicate copies thereof, prepaid, directed to its secretary or corresponding officer. Added by L. 1911, chap. 198. Amended by L. 1914, chap. 106. In effect April 3, 1914. The purpose of the amendment of this section by chap. 106 of 1914 was to add the last part of the next to the last sentence, " provided, however, that no such service * * * of such service of suc'h process." Ed. The superintendicnt of insurance may examine a company before granting a certificate to ascertain wh&ther the proposed organization has or has not complied with the law; the insurance department has jurisdiction of all matters relating to the organization of this class of corporations and of the companies when organized. Attorney-General Rep., Jan. 11, 1893. § 238. Place of meeting and liability of officers. 1. Any domestic society may provide that the meetings of its legislative or governing body may be held in any state, district, province or territory wherein such society has subordinate branches and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state. But its principal office shall be located in this state. 2. Officers and members of the supreme, grand or any sub- ordinate body of any such incorporated society shall not be in- dividually liable for the payment of any disability or death bene- fit provided for in the laws land 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. The legislative intent in the enactment of §§ 212 and 238 of the Insurance Law, to place co-operative and assessment insurance in a class by itself, was to relieve such insurance from the operation of § 52 of the Domestic Relations Law making insurance money realized by a wife on the life of her husband subject to his debts, where the annual premium paid out of his property exceeds $500. Dominick v. Stern, 79 Misc., 271. Added by L. 1911, chap. 198. § 239. Limitation upon power to waive provisions of the society's laws. The constitution and laws of the society may provide tliat no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions thereof, and the same shall be binding upon the society and each and every member thereof and on all beneficiaries of members. Added by L. 1911, chap. 198. 372 The Insukance Law. §§ 240-242. § 240. Exemption from execution. No money or other benefit, charity, relief or aid to be paid, provided or rendered by any such society shall be liable to attach- ment, garnishment or other process, or to be seized, taken, appro- priated 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. Added by L. 1911, chap. 198 § 241. Amendments to constitution and laws. Every society transacting business under this article shall file with the superintendent of insurance 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, certi- fied by the secretary or corresponding officer of the society, shal] be prima facie evidence of the legal ladoption thereof. Added by L. 1911, chap. 198. § 242. Reports and valuations. 1. Every society transacting business in this state shall, annually, on or before the first day of March, file with the super- intendent of insurance, in such form as he may require, a state- ment under oath of its president and secretary, or corresponding officers, of its condition and standing on the thirty-first day of December last preceding, and of its transactions for the year end- ing on that date, and shall also furnish such other information as the superintendent may deem necessiary to a proper exhibit of its business and plan of working. Such superintendent may at other times require any further statement he may deem neces- sary to be made relating to such society. 2. In addition to the annual report herein required, each society shall report, annually, to the superintendent a valuation of its certificates in force on December thirty-first last preceding, ex- cluding those issued within the year for which the report is filed, in cases where the contributions for the first year, in whoV or in § 242. Fraternal Benefit Societies. 37'3 part, are used for current mortaUty and expenses; provided the first report of valuation shall be made as of December thirty-first, nineteen hundred and twelve. Such report of valuation shall show, as contingent liabilities, the present midyear value of the promised benefits provided in the constitution and laws of such society under certificates then subject to valuation; and, as con- tingent assets, the present midyear value of the future net con- tributions provided in the constitution and laws as the same are in practice actually collected, not including therein any value for the right to make extra assessments. Provided that any excess of the present value of future contributions over the present value of promised benefits under certificates providing for disability benefits (other than total permanent disability in combination with death benefits) shall not be allowed in reduction of the lia- bility under other forms of certificates. At the option of any society, in lieu of the above, the valuation may show the net value of the certificates subject to valuation, hereinbefore provided, and said net value, when computed in case of monthly contribu- tions, may be the mean of the terminal values for the end of the preceding and of the current insurance years. 3. Such valuation shall be certified by a competent accountant or actuary, or, at the request and expense of the society, verified by the actuary of the department of insurance of the home state of the society, and shall be filed with the superintendent within ninety days after the submission of the last preceding an- nual report. The legal minimum standard of valuation for all certificates, except those for disability benefits, shall be the National Fraternal Congress table of mortality, as adopted by the National Fraternal Congress, August twenty-third, eighteen hun- dred and ninety-nine, or, at the option of the society, any higher table, or it may use a table based upon the society's own experi- ence of at least twenty years and covering not less than one hun- dred thousand lives, with interest assumption not more than four per centum per annum. Each such valuation report shall set forth clearly and fully the mortality and interest basis and the method of valuation. Any society providing for disability bene- fits shall keep the net contributions for such benefits in a fund 374 The Insurance Law. § 24,2. 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 land permanent total disability benefits, the valuation shall be according to tables of reliable experience, and, in such case, a separation of the funds shall not be required. The valuation herein provided for shall not be considered or regarded as a test of the financial solvency of the society, except as provided in sub- section five of this section, but each society shall be held to be legally solvent so long as the funds in its possession are equal to or in excess of its matured liabilities. 4. Beginning with the year nineteen hundred and fourteen, a report of such valuation and an explanation of the facts concern- ing the condition of the society thereby disclosed shall bo printed and mailed to each beneficiary member thereof not later than June first of each year, or, in lieu thereof, such report of valua- tion and showing of the society's condition as thereby disclosed may be published in the society's ofiicial paper and the issue con- taining the same be mailed to each such beneficiary member. The laws of such society shall provide that, if the stated periodical contributions of the members are insufiicient 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, or found necessary otherwise, additional contributions, or 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 a member his cer- tificate may be charged with its proportion of any deficiency dis- closed by valuation, with interest not exceeding five per centum per annum. 5. If the valuation of the certificates, as hereinbefore provided, on December thirty-first, nineteen hundred and seventeen, shall show that the present value of future net contributions, together with the admitted assets, is less than the present value of the promised benefits and accrued liabilities, such society shall there- after maintain said financial condition at each succeeding triennial valuation in respect of the degree of deficiency as shown in the § 242. Fratei^nal Hi ^kfit Societies. 37*5 valuation as of December thirty-first, nineteen hundred and seven- teen. If, at any succeeding triennial valuation, such society does not show at least the same condition the superintendent 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 said condition required herein, the super- intendent may, in the absence of good cause shown for such failure, institute proceedings for the liquidation and dissolution of such society, in accordance with the pro- visions of section sixty-three of this chapter, or, in the case of a foreign society, he may cancel its license to transact business in this state; provided that nothing contained in section sixty-three of this chapter shall be construed to authorize, prior to December thirty-first, nineteen hundred and seventeen, any application for the possession or liquidation of any society organized or transact- ing business pursuant to the provisions of this article by reason of the fact that the condition of such society is found, after examina- tion, to be such that it could not meet the requirements for incor- poration and authorization specified in this article. 6, Any such society shown by any triennial valuation, subse- quent to December thirty-first, nineteen hundred and seventeen, not to have maintained the condition herein required shall, within two years thereafter, make such improvement as to show a percent- age of deficiency not greater than as of December thirty-first, nine- teen hundred and seventeen, or, thereafter, as to all new members admitted, be subject, so far as stated rates of contribution are con- cerned, to the provisions of section two hundred and thirty-four of this article applicable to the organization of new societies; pro- vided that the net mortuary and 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, in respect to contributions and funds, as an independent society. 7. In lieu of the foregoing requirements, any society may accept in its laws the following provisions and may value its certificates on a basis, herein designated "accumulation basis," by crediting each member with the net amount contributed for 37G The Insurance Law. § 242. each year and with interest at approximately the net rate earned, and by charging him with his share of the losses for each year, herein designated '^ cost of insurance," and carrying the balance, if any, to his credit. The charge for the cost of insurance may be according to the actual experience of the society applied to a table of mortality recognized 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 or laws or contracts no charge shall be carried forward from the first valuation here- under against any member for any past share of losses exceeding the contributions and credit. If, after the first valuation, any member's share of losses for any year exceeds his credit, including the contribution for the year, the contribution shall be increased 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 contribu- tions 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 providing for adequate rates with adequate reserves to mature such certifi- cates upon assumptions for mortality and interest recognized by the law of this state may be valued on such basis, herein desig- nated the " Tabular basis ; " provided that if on the first valua- tion 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 in- surance provided for any year shall be insufiicient to meet the actual death and disability 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 assessments applied to the so- ciety 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 cla&s of members may be carried sepa- J § 243. Fkatkkaal Benefit Socities. 3'77 rately for such class as if in an independent society, and re- quired reserve 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 tabu- lar reserve required on the whole life or other plan of insurance specified in the contract, 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 first of each year. In lieu of the aforesaid statement there may be furnished to 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 bookkeeping accounts for each member shall not be required and all calculations may be made by actuarial methods. E'othing herein contained shall prevent the maintenance of such surplus over and above the credits on the accumulation basis and the reserves on the tabular basis as any society may provide by or pursuant to its laws; nor be construed as giving to the indi- vidual member any right or claim to any such reserve or credit other than the manner as expressed in the contract and its laws ; nor as making any such reserve or credits a liability in determin- ing the legal solvency of the society. Added by L. 1911, chap. 198. Amended by L. 1913, chap. 410, and L. 1914, chap. 203. In effect April 7, 1914. The purpose of the amendment of subdivision 2 of this section by chapter 203 of 1914, was to provide that any excess of the present vakie of future contributions over the present value of promised benefits under certificates providing for disability benefits (other than total permanent disability in combination with death benefits) should not be allowed in reduction of the liability under other forms of certificates; and to terminate the limitation in the law of 1913, authorizing .the organization of certain voluntary associations. * § 243. Examinations. 1. The superintendent of insurance, or any deputy, examiner or other person whom he shall appoint, shall have the power of 378 The Insurance Law. § 243. 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 so appoint, shall have free access to all the books, papers and documents that relate to the business of the society, and may summon, qualify as witnesses under oath .and examine its officers, agents and employees or other persons in relation to the affairs, transactions and condition of the society. 2. The superintendent of insurance, or any deputy, examiner or other person whom he shall appoint, may examine any foreign society transacting, or .applying for admission to trans-act busi- ness in this state. The said superintendent may employ assist- ants, and he or any person so appointed shall have free access to all the books, papers and documents that relate to the business of the society, and may summon, qualify as witnesses under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and condition of the society. Such superintendent may, in his discretion, accept, in lieu of said examination, the examination of the insurance de- partment of the state, territory, district, province or country wherein such society is organized. 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 its license refused until satisfactory evidence is furnished tlie superintendent as to the condition and affairs of the society, and during such suspension, the society shall not write new business in this state. 3. Except for the purpose of instituting proceedings under sec- tion sixty-three of this chapter, pending, during or after an exam- ination or investigation of any such society, either domestic or foreign, the superintendent of insurance shall make public no financial statement, report or finding, nor shall he permit to be- come public any financial statement, report or finding affecting the status, standing or rights of any such society, until a copy thereof shall have been mailed to such society, at its home office, nor until such society shall have been afforded a reasonable op- §§ 244, 245. Featebnal Bknefit Socities. 37'9 portunity to answer any sucli financial statement, report or find- ing and to make such showing in connection therewith as it may desire. Added by L. 1911, chap. 198 § 244. Revocation of license. When, upon investigation, the superintendent of insurance is satisfied that any foreign society transacting business under this article has exceeded, its powers, or has failed to comply with any provisions of this article, or is conducting business fraudulently or in a way hazardous to its members, creditors or the public, or is not carrying out its contracts in good faith, he shall notify the society of his findings, stating in writing the grounds of his dis- satisfaction, and, after reasonable notice, require said society, on a date named, to show cause why its license should not be re- voked. If, on the date named in said notice, such objections have not been removed to the satisfaction of the said superintendent, or if the society does not present good and suificient reasons why its authority to transact business in this state should not at that time be revoked, he may revoke the authority of the society to continue business in this state. A.dded by L. 1911, chap. 198. § 245. Exemption of certain societies. ISTothing contained in this article shall be so construed as to affect or apply to grand or subordinate lodges of Masons, Odd Fellows, Knights of Pythias (exclusive of the insurance depart- ment of the supreme lodge Knights of Pythias), the l^ew York City Police Endowment Association and the Lieutenants' Benevo- lent Association, or to similar societies, orders or associations now doing business in this state which provide benefits exclusively through local or subordinate lodges, or to (a) Orders, societies or associations which limit their admission to membership to any one hazardous occupation; (b) Domestic societies which limit their membership to the em- ployees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than four hundred dollars or disability benefits of not more than 380 The Insurance Law. § 245. three nundred and fifty dollars to any one person in any one year or both; (c) Domestic societies or associations of a purely religious, charitable and benevolent description, which provide for a death benefit of not more than four hundred dollars or for disability benefits of not more than three hundred and fifty dollars to any one person in any one year, or both. Provided, however, that any such society or association de- scribed in subdivisions b and c, which provides for death or dis- ability benefits for which certificates are issued, and any such so- ciety or association included in subdivision c which has more than one thousand members, shall not be exempted from the provisions of this section or chapter, but shall comply with all the require- ments thereof, and, provided further, that nothing in subdivisions (a) and (b) of subsection one of section two hundred and thirty- one of this chapter, and subsections two, three, four, ^ve, six and seven of section two hundred and forty-two of this chapter shall affect or apply to the Independent Order Free Sons of Israel or to any corporation, society, order or voluntary association, which was, prior to the first day of March, nineteen hundred and eleven, organized and doing business in this state on the lodge system, as provided in subsection two of section two hundred and thirty of this chapter which does not issue death benefit certificates in a sum exceeding five hundred dollars to any one member and whose membership is confined and limited exclusively to persons of one particular faith. ISTo society which, by the provisions of this section, is exempt from the requirements of this article or chapter, except any so- ciety described in subdivision a, shall give or allow, or promise to give or allow, to any person any compensation for procuring new members. The superintendent of insurance may require from any society or association, by examination or otherwise, such information as will enable him to determine whether such society or association is exempt from the provisions of this article or chapter. Any fraternal benefit society heretofore organized and incor- porated and operating within the definitions set forth in section two hundred and thirty of this article providing for benefits in case of death or disability resulting solely from accidents, but which does not obligate itself to pay death or sick benefits, may be licensed under the provisions of this article and shall have all the § 246. Fraternal Benefit Socities. 381 privileges and be subject to all the provisions and regulations of this article, except that the provisions thereof requiring medical examinations^ valuations of benefit certificates, and that the cer- tificates shall specify the amount of benefits, shall not apply to such society. Added by L. 1911, ohap. 198. Amended by L. 1913, oliap. 410; L. 1914, chap. 203, and L. 1915, ehap. 476. In effect May 3, 1915. The amendment of 1915 added " the New York City Police Endowment Association and the Lieutenants' Benevolent Association " in the first paragra.ph. The purpose of the amendment of this section by chapter 203 of 1914 was to provide that any excess of the present value of future contributions over the present value of promised benefits under certificates providing for disa- bility benefits (other then total permanent disability in combination with death benefits) should not be allowed in reduction of the liability under other forms of certificates; and to terminate the limitation in the law of 1913, authorizing the organization of certain voluntary associations. A voluntary association of a benevolent description, having less than five hundred members, organized in this State thirteen years ago and doing busi- ness here at the time chapter 198 of 1911 went into effect, and providing for a death benefit of not more than one hundred dollars and a disability benefit of not more than one ihundred and fifty dollars to any one person in any one year is exempt from the provisions of article VII of the Insurance Law. Attorney-General Rep., Oct. 31, 1911. Membership corporations organized pursuant to the Membership Law and engaged in the business of rendering aid to members limited to the amount specified in subdivision "c " of § 245 of the Insurance Law, are prohibited from advertising the furnishing of insurance benefits generally. Attorney- General Rep., June 2, 1914. They are not presumed to deal with the public generally, but such business is merely incident to the business of the corporations. Such corporations may issue certificates of membership to members in which there appears a description of the benefits promised for the amounts paid. Attorney-General Rep., 1914, page 83. The right of an unauthorized foreign fraternal beneficiary society to do business in this state depends upon the question of whether said society falls within the first provisions of section 245, and that the amount of benefits paid applies only to associations of local lodges of a society now doing busi- ness in the state and to domestic lodges of a purely charitable and benevolent description. Attorney-General Rep., July 31, 1911. § 246. Taxation. Every fraternal benefit society organized or licensed under this article is hereby declared to be a charitable and benevolent in- stitution, and all of its funds shall be exempt from all and every 382 The Insurance Law. § 247. state, county, district, municipal and school tax, other than taxes on real estate and office equipment. Added by L. 1911, chap. 198. § 247. Penalties. 1. Any person, officer, member or examining physician of any society authorized to do business under this article, who shall knowingly or willfully make any false or fraudulent statement or representation in or with reference to any application for mem- bership, or for the purpose of obtaining money from or benefit in any society transacting business under this article, shall be guilty of a misdemeanor .and, upon conviction thereof, shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or imprisonment in the county jail for not less than thirty days nor more than a year, or both, in the discretion of the court; and any person who shall willfully 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 th«^ certificate of such holder, or any person who shall willfully make any false statement in any verified report or declaration under oath, required or authorized by this article, shall be guilty of per- jury and shall be proceeded against and punished as provided by the statutes of this state in relation to the crime of perjury. 2. Any person who shall solicit membership for, or in any man- ner assist in procuring membership in, any fraternal benefit so- ciety not licensed to do business in this state, or who shall solicit membership for, or in any manner .assist in procuring member- ship in, any such society not authorized as herein provided to do business as herein defined in this state, shall be guilty of a mis- demeanor and, upon conviction thereof, shall be punished by a fine of not less than fifty nor more than two hundred dollars. 3. Any society, or any officer, agent or employee thereof, neg- lecting or refusing to comply with or violating any of the pro- visions of this article, the penalty for which neglect, refusal or violation is not specified in this section, shall, upon conviction thereof, be fined not exceeding two hundred dollars. Added by L. 1911, chap. 198. §§ 248, 249. Fraternal Benefit Socities. ^ 38-3 § 248. Application of other sections of this chapter. Sections six, seven, nine, ten, thirty-five, thirty-six, forty-seven and sixty-three of this chapter are hereby made specifically ap- plicable to any corporation, society, order or voluntary associa- tion described in, and transacting or seeking authority to trans- act the business of insurance in this state authorized by, the pro- visions of article seven of this chapter. Added by L. 1911, chap. 198. § 249. Review. All decisions and findings of the superintendent of insurance made under the provisions of this article and all other sections of this chapter made applicable thereto may be reviewed by proper proceedings in any court of competent jurisdiction. Added by L. 1911, chflp. 198. 384 The Insurance Law. § 250. ARTICLE VIIL Corporations for Insurance of Domestic Animals. Section 250. Incorporation. 251. Annual meeting; election of directors. 252. Annual report. 253. Examinations; when corporation may be restrained from doing business. 254. Assessments. Section 250. Incorporation. Nine or more persons may become a corporation for the purpose of insuring the lives of domestic animals, upon the co-operative or assessment plan of insurance, by making, acknowledging and filing in the office of the superintendent of insurance, a declaration stat- ing their intention to form such corporation ; the name by which it shall be known; the place where its office shall be located within this state; its particular business and objects; its duration, not tf; exceed thirty years ; the number of its directors, not less than five nor more than thirteen, who shall manage its affairs, and the names and post-office addresses of the directors for the first year of its existence, with a swora statement by two or more of such per- sons, that at least fifty persons eligible to membership have applied in good faith, in writing, for membership and insurance in such corporation, to the amount of at least ten thousand dollars, and have severally in good faith paid in in cash the regular premiums there for, and admission or membership fees in accordance with the by- laws of such corporation. If the requirements of this chapter have been complied with, the superintendent shall file such declaration, statement and certificate, and cause the same to be recorded in a book to be kept for that purpose, and shall deliver to such corpora- tion a certified copy of the papers so filed and recorded, with hia license to the corporation to engage in the business proposed in such declaration. Upon such certified copy and license being filen in the office of the clerk of the county where the corporation is to be located, such persons and those that may tliereafter be associated § 250. Insurance of Domestic Animals. 385 with them, or their successors, shall be a corporation and authorized to coramence and carry on such business. Provided, however, that no such corporation shall be formed, and no such license shall be issued by the superintendent of insurance after July first, nineteen hundred and ten. Source. — Former § 250; originally revised from L. 1889, chap. 454, §§ 1-3. Amended by chapter 318 of 1910. Section 3 of chapter 318 of 1910 provides: § 3. This act shall take eflFect immediately, provided that at any time after the passage and approval of tliis act, and upon July first, nineteen hundred and ten, the superintendent of insurance may refuse to issue any license under section two hundred and fifty of said chapter, if in his judgment such refusal will promote the interest of the people of the state. See § C, ante. Fees to superintendent for filing papers. See § 9, ante. Certificate of authorization by superintendent. See § 10, ante. Certificate of attorney-general, corporate names, number of directors. See § 11, ante. Examination by superintendent as to payment of capital stock, etc. See § 60 et seq., General Corporation Law. Proceedings to change the name of a corporation. See § 195, Penal Law. Misconduct of agents of corporations to insure domestic animals. See chap. 733 of 1900. Reincorporation of foreign money corporations. DIRECTORS. — A quorum of directors must be a majority of all the directors unless otherwise provided in charter or special law. By-laws cannot change this rule. Attorney-General Rep., 1900, page 253. ACKNOWLEDGMENT.— The certificate of organization of co-operative insurance companies must be acknowledged by nine or more incorporators. Attorney-General Rep., 1892, page 442. TRANSFER OF CORPORATE RIGHTS.— There is no provision in the Insurance Law which warrants the transfer of corporate rights and fran- chises to an individual acting as general agent in another state. Attorney General Rep., 1896, page 276. ANIMALS LOST BY FIRE. — A co-operative live stock insurance company organized under article VIII of the Insurance Law is liable for the death of an animal which results from a fire. O'Grady v. N. Y. Mut. Live Stock Ins. Co., 16 App. Div., 567; 44 N. Y. Supp., 946. DOMESTIC ANIMALS. — A corporation authorized to insure the lives of domestic animals may insure the lives of such animals in transportation over the Atlantic ocean, but has no right to transfer such a policy. Attorney- General Rep., 1897, page 114. Fire insurance companies cannot be incorporated under article VIII, but can under article IX, to insure against loss of domestic animals by fire. Attorney- General Rep., 1893, page 317. 386 The Insueance Law. §§ 251, 252. § 251. Annual meeting; election of directors. Every such corporation shall hold within the county m which its office is located, a stated annual meeting of its members in such majiner and subject to such regulations as its constitution or by-laws may provide. Notice of such meeting of not less than five days shall be given in such manner as the by-laws may direct The di- rectors named in such declaration shall hold their office for one year and until others are elected and qualified, and directors shall be annually elected at such stated meeting. The directors shall choose from tlieir number a president and secretary, and shall appoint sucli otlier officers as their by-laws shall prescribe. At the stated annual meeting, a majority of the persons entitled to vote thereat shall not be necessary to a quorum, and if the meeting shall not be held on die day designated therefor, it may be held on a subsequent «iay, in such manner as may be directed by the by-laws. Source. — Former § 251; originally revised from L. 1889, chap. 454, §§4, 10. See § 11, subd. 5, General Corporation Law, chap. 28 of 1909. Powers of corporation to pass by-laws; election of directors. § 252. Annual report. Kvery sucli corporation shall annually, on or before March first, make and file with the superintendent of insurance a report for the year ending on the thirty-first day of December immedi- ately preceding, verified by the duly authorized officers of such corporation, which shall state the date of its organizatior . the number of certificates or policies issued during the year or mem- bers admitted, the number of losses paid and tlie amount paid on each loss, the amount received from each assessment for th^ year, the number of claims for which assessments have been made, the total amount received for benefit fund and the disposition thereof, the reserve fund, if any, and its amoimt, the number of policies or memberships lapsed during the year, the number in force at the beginning and the end of the year. ItTo other report, and no deposit of securities with the superintendent, shall be required of the corporation. Any corporation refusing or neglecting to make such report, or to make payment of any fees required by law, may, upon the suit of the attorney-general, upon the recommenda- § 253. Insueance of Domestic Animals. 387 tion of the superintendent of insurance, be enjoined by the supreme court from carrying on any business until such report and payment shall be made and the costs of such action be paid. Source.— Former § 252; originally revised from L. 1889, chap. 454, §§ 6, 7. See § 1508 of Penal Law. Failure of officers of companies to insure domestic animals to make report, etc. § 253. Examinations; when corporation may be restrained from doing business. Every such corporation, together with its books, papers and vouchers, shall be subject to visitation and inspection by the super- intendent of insurance, or such person as he may designate. When on investigation, the superintendent shall be satisfied that any such corporation has exceeded its powers, failed to comply with any provision of 'aW; or is conducting business fraudulently, he shall report the facts to the attorney-general ; who, if he shall be of the opinion that the facts require such action, must thereupon apply to the supreme court at a special term thereof within the judicial district within which the office of such corporation is located for an order requiring its officers to show cause at a time and place within the district to be specified in the order why it should not be restrained from continuing to transact business, and the court may adjourn the hearing thereof from time to time not exceeding sixty days in all. Upon the return of such order the corporation may be heard and shall be entitled to a trial by jury of the facts stated in the report, if the same shall be traversed and the corporation shall demand a trial by jury, and to examine papers and witnesses under oath in the usual mode of trials of actions. If the facts thus reported shall be established by the finding of the court or verdict of the jury, the court may thereupon make its order or decree closing the business of the corporation and appointing a receiver for the distribution of its assets among its members, certificate holders, policy holders and creditors, or may make such other order as the interests of the corporation and the public may require. Pending such trial the court may, upon the motion of the attor- ^^y-general, grant an injunction order restraining the corporation 388 The Insurance Law. § 254. and its directors or other officers from collecting any debt or de- mand, and from paying out or in any other way transferring or delivering to any person any money or property of the corporation during the pendency of such proceeding, except by the order of the court; and may appoint one or more temporary receivers of the property of the corporation, with all the powers of such re- ceivers; but no action shall be maintained to restrain or dissolve any such corporation except by the attorney-general, in the name and in behalf of the people. Source. — Former § 253; originally revised from L. 1889, chap. 454, § 8. § 254. Assessments. Each notice of assessment made by any such corporation upon its members, or any of them, shall truly state the cause and pur- poses of such assessment and the amount paid on the last loss claim paid, the maximum face value of the policy or certificate upon which such claim was paid, and if not paid in full, the reason therefor. The manner and mode of making such assess- ments and the cost, expense and collection thereof shall be regu- lated by the by-laws of the corporation. Source. — Former § 254; originally revised from L. 1889, chap. 454, § 11. § 2'60. Co-OPEBATIVE FlliE INSURANCE CORPORATIONS. 389 .iETICLE IX. Co-operative Fire Insurance Corporations. Section 260. Existing corporations continued. 261. Voluntary associations continued and incorporated. 262. Co-operative fire insurance corporations; general provisions. 263. In;'orporation and certificate of authority. 264. By-laws. 265. Policies. 266. General provisions affecting assessment corporations only. 267. General provisions affecting advance premium corporations only. 268. Application of other sections of this chapter. 269. Extension of corporate existence. Section 260. Existing Corporations continued. All corporations formed pursuant to chapter seven hundred and thirty-nine of the laws of eighteen hundred and fifty-seven, chap- ter five hundred and seventy-three of the laws of eighteen hundred and eighty-six or the laws of which the last mentioned chapter wa^ a consolidation, and article nine of chapter six hundred and ninety of the laws of eighteen hundred and ninety-two, and the acts amendatory of any thereof, and all co-operative fire insurance corporations organized under special acts of the legislature which may desire to become subject to the provisions of this article and which have heretofore filed or shall hereafter file with the super- intendent of insurance the papers specified in this section, are hereby continued in existence and made subject to the provisions of this article and not to -any other provisions of this chapter, un- less made specifically applicable thereto. Each such corporation shall, unless it has already filed with the superintendent of insur- ance the papers hereinafter provided, file with the superintendent of insurance, not later than December thirty-first, nineteen hun- dred and eleven, copies of its certificate of incorporation, or if organized under a special act, copies of its incorporating act and by-laws in force at the time of such filing, duly verified by its president and secretary by affidavits to the effect that the same are true copies. When it shall be made to appear to the satisfac- tion of the superintendent of insurance that the certificate of in- corporation of any such corporation has been lost or destroyed 390 The Insurance Law. § 260. and that a copy thereof cannot be filed as hereinabove provided, the superintendent of insurance may permit the filing, in lieu of such certificate of incorporation, of a statement, verified by the oath of its president and secretary, which shall set forth the facts preventing the filing of a copy of such certificate of incorporation and show the character and mode of transacting business employed by such corporation. On the filing of such papers, so verified, the superintendent of insurance, if in his judgment such cor- poration will safely conduct the business of insurance in this state, shall issue to such corporation a certificate authorizing it to continue in the business of insurance in this state of the kind specified in such by-laws and within the territory in which it does business at the time of such filing, provided that such business and territory are not in conflict or inconsistent with the terms of this article; provided, further, that any such corporation which has not yet received a certificate of authority as hereinabove provided is hereby authorized to continue the business previously conducted by it to and until December thirty-first, nineteen hundred and eleven, but no such corporation shall continue such business without such certificate after December thirty-first, nineteen hundred and eleven; and provided further, that the policies of any such corporation issued heretofore or at any time prior to the issue of said certificate shall be as valid and the rights and powers of the ofiicers and members of such corporation shall be the same in all respects as if such corporation had been origi- nally organized under this article. All acts of the superintendent of insurance since the first day of September, nineteen hundred and ten, in issuing certificates of authority to co-operative fire insurance corporations to which the provisions of this article are applicable are hereby validated, legalized and confirmed and all corporations which have received such certificates are hereby made and declared to be legal corporations and subject to the provisions of this article, notwithstanding any irregularity, infor- mality or defect in the certificates of incorporation or other papers filed, upon which such certificates of authority were issued. Added by L. 1910, chap. 328, and amended by L. 1911, chap. 323. A co-operative fire insurance company may not, prior to the issue of the cer« tificate mentioned in § 260, extend its business immediately, upon filing the § 26,1. Co-operative Fiee Insurance Corpoeations. 391 statement mentioned in § 262, as amended by L. 1910, chap. 328. Attorney- General Rep., Nov. 15, 1910. The filing of copies of by-laws alone by corporation or voluntary associa- tions is not sufficient, and there must be filed copies of the original articles of association, duly verified; co-operative companies which are unable to obtain th«ir certificates of incorporation, (a) companies regularly organized under some statute of the state, may not reorganize under section 52 for the purpose of furnishing themselves with a charter of which to make proof to entitle them to a certificate of authority and (b) companies whose officials believe they were incorporated, but are unable to prove they are existing corpora- tions, may not be treated as voluntary associations unless they were such when the act took effect and must furnish verified copies of their original articles of association. Attorney-General Rep., Aug. 25, 1910. If companies organized under chap, 287, L. 1878, chap. 326, L. 1880, and chap. 573, L. 1886, are unable to file either (1) copies of the certificate of intention or (2) copy duly verified of the statement referred to in the law under which incorporated, they may obtain a certificate under section 261 of the Insurance Law oj^ly by satisfying the superintendent that they were voluntary associations which at the time the act took effect were doing busi- ness, etc., and furnishing copies of the original articles of association and by-laws in force at the time of such application, duly verified. Attorney- Genera] Rep., Aug. 19, 1910. § 261. Voluntary associations continued and incorporated. All voluntary associations which were on the first day of July, nineteen hundred, and ten, doing in this state an insurance busi- ness of the kind and on a plan similar to those of the c^^'ix orations specified in section two hundred and sixty of this chapter, and which may desire to become corporations authorized to do the business of insurance in this state of such kind and on such plan and to become subject to the provisions of this article, shall, not later than December thirty-first, nineteen hundred and eleven, file with the superintendent of insurance, on blanks to be furnished by him for that purpose, (a) an application for the certificate hereinafter mentioned, such application to be exe- cuted by the then officers and directors of such association, and (b) copies of the original articles of association and of the by-laws in force on the date of such application, duly verified by its presi- dent and secretary by affidavits to the effect that the same are true copies; and, thereupon, such voluntary association shall become a corporation, having the same officers and directors, and subject to such articles of association and by-laws so far as the same are not in conflict or inconsistent with the terms of this article, on the superintendent of insurance, if in his judgment it will safely con- 3'9i2 The Insurance Law. § 262. duct tbe business of insurance in this state, issuing a certificate authorizing it to continue in the business of insurance in this state of the kind specified in such by-laws and within the territory in which it does business at the time of such application, provided that such business and territory are not in conflict or inconsistent with the terms of this article, to the same effect as if such volun- tary association had been formed as a corporation under section two hundred and sixty-three of this chapter; provided that the policies of any such association issued heretofore or at any time prior to the issue of such certificate shall be as valid and the rights and powers of the officers and members of such association shall be the same in all respects as if it had been originally organ- ized as a corporation under this article. Added by L. 1910, chap. 328, and amended by L. 19ft, obap. 323. § 262. Co-operative fire insurance corporations; general provisions. 1. Classification of corporations. All corporations to whicu certificates of authority shall be issued, pursuant to sections two hundred and sixty and two hundred and sixty-one of this chapter, or which shall hereafter be s;iven certificates on their due incorporation, pursuant to the provisions of this article, shall be known as co-operative fire insurance corporations. Co-operative fire insurance corporations may make insurances (a) on property against loss or damaero by fire, lightning, wind storms, tornadoes or earthquakes, or (b) against loss or damage by larceny or loss or expense in recovering the property stolen or in apprehending the thief. Such corpora- tions shall do business on an advance premium plan or on an assessment plan, but no such corporation shall do business on both such plans. Such corporations as charge or collect in advance the estimated cost of insurance for the full term of the policy shall be deemed to be advance premium corporations. All other co-opera- tive fire insurance corporations shall be deemed to be assessment corporations. Advance premium corporations shall do business in not more than five adjoining counties until the amount of insur- ance in force exceeds one milh'on dollars, whereupon any such corporation may be authorized to do business in any number § 'M2. Co-oPEKATivE Fire Insurance Corporations. 393 of adjoining counties, but such a corporation shall not be authorized or permitted to begin or to do business until or unless it shall have bona fide applications for insurance or insurance in force in the county in which its principal office is located amount- ing to two hundred thousand dollars. Assessment corporations shall be either town corporations, which shall do business hi the town where the principal office is situated and, after the amount of insurance in force exceeds fifty thousand dollars, may be authorized to do business in any or all of the towns of a single county; or county corporations, which shall do business in the county in which the principal office is situated and, after the amount of insurance in force exceeds two hundred thousand dol- lars, may be authorized to do business in not more than five adjoining counties ; except that such corporations as had legally extended their territories to more than five counties prior to the first day of July, nineteen hundred and ten, may continue to transact business in all of such counties; but an assessment cor- poration is authorized to transact business ; (g) the names of the business until or unless it shall have bona fide applications for insurance or insurance in force amounting, if a town corporation, to fifty thousand dollars in the town in w^hich its principal office is located, or, if a county corporation, to two hundred thousand dollars in the county in which its principal office is located. 2. Extension of territorial limits. Any co-operative fire insur- ance corporation organized under the laws of this state and sub- ject to the provisions of this article, may extend its territory within the limits prescribed in this section by filing with the superintendent of insurance a statement, verified by the oath of its president and secretary, which must set forth: (a) the purpose for which such statement is miade; (b) the name of the corpora- tion and the town or county wherein its principal office for the transaction of business is located; (c) a copy of the resolution by the board of directors of the said corporation authorizing the making of application for leave to extend its territory; (d) the amount of insurance in force in the town or county in which it<= principal office is located; (e) the total amount of insurance ir^ force; (f) the names of the towns or counties in which the cor- poration is authorized to transact business; (g) the names of the 394 The Insurance Law. § 262. towns or counties in which the corporation thereafter proposed to transact business. Upon filing such statement, so verified, the superintendent of insurance shall, if compliance with the re- quirements of this section for the extension of territorial limits has been shown thereby, issue a certificate to such corporation authorizing it to transact the business of insurance in the terri- tory therein stated as the territory in which it proposes thereafter to transact business. 3. Change from town to county corporation. Any town cor- poration which may have extended or be entitled to extend its territory to all of the towns of a single county, as provided in this section, and which shall prove to the superintendent of insur- ance by filing the statement herein provided for such extension of territory that it has insurance in force amounting to at least two hundred thousand dollars, shall thereupon receive from the superintendent of insurance a certificate authorizing it to transact business in the county wherein its principal office is located and in not more than five -adjoining counties, and shall thereupon become and be a county corporation and may thereafter exercise all the powers granted to county corporations by this article. 4. Limitation of business. — ISTo corporation, subject to the provisions of this article, shall insure any buildings or property out of the limits of the territory comprised in its certificate of incorporation and the territory to which it may heretofore have been legally extended, or to which it shall hereafter be extended under the provisions of this article, except that when a member of such corporation who owns or occupies premises situate in part without such limits, has buildings or property, or pastures live stock on that part thereof lying beyond such limits, he m.ay insure such property, buildings and their contents and such live stock with such property or buildings as lie within the tentorial limits of the corporation. Co-operative fire insurance cory)orations shall not be formed by persons residing within and shall not do business in any city having more than six hundred thousand inhabitants. Added by chapter 328 of 1910; a8 amended by L. 1911, chap. 323. A co-operative fire insurance company may not, prior to the issue of the cer- tificate mentioned in § 260, extend its business immediately, upon filing the § 2i63. CO-OPEKATIVE FlEE INSURANCE CORPORATIONS. Btatement mentioned in § 262, as amended by L. 1910, chap. 328. Attorney- General Rep., Nov. 15, 1910. § 263. Incorporation and certificate of authority. Thirty or more persons residing in one town or in adjoining towns in any county, if a town corporation, or in one county or adjoining counties not exceeding five, if a county corporation or an advance premium corporation, who shall each own in good faith real estate not less than five hundred dollars in value, and collect- ively own in good faith insurable real estate in such towns or counties, respectively, to the value of fifty thousand dollars or over, may become a corporation, on filing with the superintendent of in- surance a declaration, executed and acknowledged by each of them, stating their intention to form a co-operative fire insurance cor- poration for the purpose of engaging in the business of insurance, pursuant to the provisions of this article, which declaration shall state (a) whether such corporation will do business as a town, a county or an advance premium corporation, (b) the town or towns or county or counties in which it intends to do business and the town or county in which its principal office is to be located, (c) its corporate name, which shall include the word " co-operative," (d) a copy of the by-laws adopted by such persona for the regulation of the business of such corporation, (e) the names and post-office addresses of the officers and directors of such corporation for the first year, and (f ) such other informa- tion as the superintendent of insurance, by general rules or on such blanks as may be furnished by him, shall require; which declaration shall show that such persons own in good faith real estate in the amount hereinbefore specified. At the time of such filing or at any time within one year thereafter, such persons, or those who have been designated as the president and the secre- tary of such corporation, may file with the superintendent of insurance a statement, verified by them, to the effect that appli- cations for insurance in the amounts respectively indicated in the last preceding section as necessary before any such corporation can be authorized to begin business have been in good faith made to such corporation, such statement to give the names and addresses of such applicants and the amount of insurance applied for by each ; provided, however, that, in case such corporation has declared S96 The Insurance Law. § 264. its intention to do business on the advance premium plan, such statement shall show that the premium, specifying the amount, has been paid in full by each such applicant. If all the requirements of law have been complied with and the superintendent is satis- fied, after investigation, that such statement is true, he shall there- upon file such declaration and cause it to be recorded in his ofiioe, with the certificate of the attorney-general, in a book to be kept for that purpose, and isaue to such corporation a certified copy of the papers so recorded, together witb a certificate authorizing such corporation to carry on the business of insurance as indicated in such declaration. Added by chapter 328 of 1910. § 264. By-laws- The by-laws of all corporations to which a certificate of authority shall be issued, pursuant to the provisions of this article, shall include or shall be amended so as to include, substantially, the following provisions : 1. Directors and annual meeting. That the corporate powers of such corporation shall be exercised by a board of directors, who, if of a town corporation, shall not be less than five, and if a county or advance premium corporation, shall not be less than eleven; that such directors shall be divided into classes and a portion only elected each year ; that they shall be elected for a term of not more than four years ; that they shall choose from their num- ber a president, secretary and such other officers as may be deemed necessary ; and that, after the first year, the directors shall be chosen at an annual meeting, to be held on the second Tuesday in January in each year, unless some other day is designated in such by-laws, at which meeting each person insured shall have one vote and shall be entitled to vote by proxy under such rules and ropi- lations as may be prescribed by the by-laws unless prohibited by such by-laws. 2. Kecords. That each euch corporation shall keep proper books (including a policy register) in which the secretary shall enter a complete record of all of the transactions of such corpora- tion and of its board of directors and executive committee, which books shall at all times show fully and truly the condition, affairs ► § 264. Co-operative Fire Insurance Corporations. 397 and business of such corporation, and shall be open for inspection by every person insured each day from nine o'clock in the fore- noon to four o'clock in the afternoon, Sundays and legal holidays excepted. 3. Assessments. That such corporation shall have the power to assess for the purposes specified in sections two hundred and sixtv- six and two hundred and sixty-seven of this chapter. That, in case an assessment is made, the secretary shall, within forty-five days thereafter, notify, by written or printed notice, every person insured that such assessment has been made, specifying the amount due from such person and the time when and to whom such amount must be paid ; provided that such time shall not be less than thirty nor more than sixty days from the service of such notice, which may be either personal or by mail, and, if by mail, shall be deemed complete if such notice is deposited, postage prepaid, in the post-office at the place where the principal office of the corporation is located, directed to the person insured at his last known place of residence or business. That any person insured who neglects or refuses to pay his assess- ment may, for such reason or for any other reason satisfac- tory to the board of directors or its executive committee, be ex- cluded from such corporation and, when thus excluded, the secre- tary shall cancel or withdraw his policy or policies, provided that such person shall remain liable for the payment of his pro-rata share of losses and expenses incurred on or before the date of his exclusion and for the penalty herein provided, in case an action shall be brought against him. If any member of such corporation shall be excluded and the policy issued to him cancelled, the secre- tary shall forthwith enter such cancellation and the date thereof on the records kept in the office of the corporation, and serve notice of such cancellation on the person so excluded, as provided herein for the service of notice of assessments, pro- vided that, in that event, the person who is thus excluded or whose policy is thus cancelled shall be entitled to the repayment of an equitable portion of the unearned paid premium on such policy. That the officers of such a corporation shall pro- ceed to collect all assessments within thirty days after the ex- piration of the notice to pay the same, and that neglect or refusal 398 The Insurance Law. § 265. on their part so to proceed or to perform any of the duties im- posed on them by this article shall render them liable, individually, for the amount lost to any person due to such neglect or refusal, and, to that end, an action may be maintained by such person against such officers to collect such amount. That an action may be brr^niQjht by the corporation against any person insured therein to recover all assessments which he may neglect or refuse to pay, and, if such action is brought, there may be recovered from him both the amount so assessed, with lawful interest thereon, and, as a penalty for such neglect or refusal, fifty per centum of such as- sessment in addition thereto. 4. Withdrawal of members; new members. That any person insured by such corporation may withdraw therefrom at any time by giving ten days' notice in writing to the secretary and paying his share of all claims existing against such corporation and upon Buch withdrawing member surrendering his policy or policies. 5. That persons may be insured who reside or own property within the territory in which the corporation is authorized to do business, upoi^ the same terms and conditions as original mem- bers and such other terms as may be prescribed in the by-laws of the corporation, 6. That nonresidents, who own property within the territory in which such corporation may do business, may be insured therein and shall have all the rights and privileges of the corporation and be accountable as are other persons insured therein, but shall not be eligible to hold office in the corporation. The by-laws of any such corporation may be amended at any time, subject to the writ- ten approval of the superintendent of insurance. Added by chapter 328 of 1910; as amended by L. 1911, chap. 323. § 265. Policies. The policies of insurance issued by any such corporation shall, if against loss or damage by fire or lightning, conform to the standard fire policy prescribed in section one hundred and twenty-one of this chapter, with such modifications therein as shall be approved in writing by the superintendent of insur- ance. Every policy issued by such a corporation shall indicate clearly, in words prominently displayed at the top of the first page § 2G6. Co-operative Fire Insurance Corporations. 399 or across the face thereof, that suoh policy is issued on the co- operative plan, and shall include a provision in the body of the policy to the effect that the acceptance of it by the person insured shall bind such person to pay all assessments which may be levied thereon. Each such policy shall have printed on the back thereof a copy of the by-laws of such corporation in force at the time such policy is issued. Added by chapter 328 of 1910. Where a receiver is appointed of an insolvent mutual fire insurance com- pany, the outstanding policies of said company are thereupon cancelled by operation of law and S'ubsequent losses under such policies are not liabilities which may be enforced against the receiver. Attorney -General Rep., July 23, 1901). § 266. General provisions affecting assessment corpora- tions only. The following provisions shall affect corporations doing busi- ness on the assessment plan, pursuant to the provisions of this article : 1. Such corporations may issue policies of insurance on detached dwelling houses, barns, hop houses, cheese factories, creameries, school buildings and other buildings, and the con- tents of such buildings, on farm produce and other property not more hazardous and on live stock provided that no such policy shall be issued for more than seven thousand dollars on any one risk, or, if such policy is against loss or damage by reason of larceny, to the extent of not more than five hundred dollars on any one risk. 2. Every such corporation may classify the buildings or prop- erty insured therein at the time of the insurance and issue policies under different rates. Every such corporation may collect at the time of the issue of a policy such survey, policy and membership fees, or any of them, not to exceed the sum of two dollars for all of such fees, and such percentage of the amount insured, not to exceed one-tenth of one per centum of the amount insured for each year of the term of insurance, as the by-laws may provide. 3. Every such corporation may borrow, on the credit of the corporation, sufficient to pay any loss, or make an assessment upon all the property insured, pro rata, according to the classifica- 400 The Ixsim-ance Law. § 267. tion or according to the amount insured, as may be provided in the by-laws, sufficient to pay such loss. If it is deemed to be for the best interest of the corporation, such corporation may estimate tlie amount necessary to pay all losses and expenses for the current year and to supply any deficiency in the preceding year, and assess and collect the same from the members of the corporation. Each assessment shall be made pro rata upon all the property at the time insured, according to its classification or according to the amount insured. The expense and cost of collection of assess- ments may be regulated by the by-laws. Added by chapter 328 of 1910; as amended by L. 1911, chap. 303. § 267. General provisions affecting advance premium cor- porations only. The following provisions shall affect corporations doing busi- ness on the advance premium plan, pursuant to the provisions of this article. 1. Such a corporation may issue policies of insurance on dwell- ing houses, stores, school buildings, churches, municipal buildings and all other kinds of buildings and on household furniture and the other contents of such buildings, on farm produce and other property, and on live stock, provided that no such policy shall be issued for more than ^Ye thousand dollars on any one risk, or in excess of fifteen thousand dollars in any one block or square in the business portion of any city or village; and provided that such a corporation shall not issue a policy for more than two thousand dollars on any one risk nor aggregating more than seven thousand dollars in any one block or square in the business por- tion of any city or village without water protection ; and provided, further, that the total amount of insurance written by any such corporation in the business section of any city or village shall not exceed one per centum of the total amount of insurance in force in such corporation. 2. The expense of management of any such corporation shall not exceed in any one calendar year thirty-five per centum of its premium income in such year; provided that any such corpora- tion may expend in such year an additional ^ye per centum ol such income for expenses incurred in the inspection of risks and § ,2 67. Co-OPEKATIVE Fire Insitrance Corporations. 401 the ^adjustment of losses and legal expenses connected therewith: and provided further that any expenses incurred in connectioE with the investment of funds, not to exceed ^Ye per centum ol the income therefrom, may be defraved from such income. 3. Every such corporation shall at all times maintain a re serve equal to eighty per centum of the unearned portion of the premiums charged to its policy holders for all policies in force from their dates of issue; provided, however, that any such cor- poration, which shall or may at any time appear, by any examin- ation made, or by any annual statement filed, subsequent to the first day of January, nineteen hundred and thirteen, not to possess or hold and maintain such reserve, shall reduce any deficiency in such reserve by not less than fifteen per centum of the deficiency on or before the filing of the annual statement required by law to be made as of the thirty-first day of December next following and by further amounts of not less than fifteen per centum of such deficiency on or before the filing of the annual states ments required by law to be made as of the thirty-first day of December in each and every ensuing year, until the required re- serve has been accumulated. If by any examination thereafter made, or by any annual statement thereafter filed, any such cor- poration shall appear not to have made the percentage of improve- ment herein required, the superintendent of insurance may, in the absence of good cause shown why an assessment should not be made, direct such corporation to make good the entire amount of deficiency in reserve by assessment or otherwise within sixty days. 4. Such corporation shall not make any additions to its sur- plus after the same equals one per centum of the amount of insur- ance in force, provided that any such corporation having less than one million dollars of insurance in force may maintain a surplus not exceeding ten thousand dollars. Any surplus may be distributed among the members whose policies shall expire during the ensuing year, proportioned according to the classifica- tion of the risks and the premiums paid thereon, such surplus being paid in cash or applied as a rebate on the premium re- quired to renew the insurance on the same risk; provided that no such distribution shall be made until all sums of money which 402 The Insurance Law. § 267. may kave been adtvanced to tlie corporation pursuant to tbe pro- visions of subdivision seven of tbis article sball bave been repaid. 5. In case any deficiency is found to exist in any sucb corpo- ration, by reason of fire or other losses and expenses due and unpaid, tbe same sball be made good witbin sixty days tbereaf ter, in case tbe superintendent of insurance so directs, and, in case sucb deficiency is not so made good, tbe directors sball proceed to assess tbe members of tbe corporation a sufficient sum to make good sucb deficiency. All assessments sball be made pro rata upon all of the property insured by the corporation at the time sucb assessment is made, according to its classification or according to tbe amount insured; tbe method of computing tbe same to be first approved by tbe superintendent of insurance. 6.» No sucb corporation shall reinsure or assume tbe risks of any other corporation, except that any sucb corporation may, with tbe approval of the superintendent of insurance, reinsure all or any part of tbe outstanding risks of any other advance premium corporation in process of or contemplating liquidation, and, with tbe consent of tbe respective policyholders, may assume all or any part of tbe outstanding policies of any such liquidating corpora- tion. All of the provisions of subdivision three of tbis section with regard to tbe liability of an advance premium co-operative fire insurance corporation for unearned premiums shall apply to any advance premium co-operative fire insurance corporation which shall or may reinsure or assume tbe policy obligations of any liquidating corporation, and the basis upon which sucb unearned premiums sball be calculated shall be the original premiums paid by tbe respective policyholders for the insurance of their property by sucb liquidating corporation. !N^o such corporation sball collect any policy or survey fee, nor pay any commission to an officer or other person whose duty it is to determine tbe character of tbe risk. 7, Any director, officer or member or members of any sucb corporation, or any other person may advance to sucb corporation, any sum or sums of money deemed necessary for the purposes of its business or to enable it to comply with any requirement of the law, which said moneys and sucb interest thereon as may have i §§ 268, 269. Co-oPEEATivE Fire Insurance Corporations. 403 been agreed upon, not to exceed six per centum per annum, shall be repaid only out of the surplus earnings or profits of such cor- poration, and shall not form a part of the legal liabilities of the corporation or of its' members and shall not be subject to repay- ment except as hereinabove provided. Added by chapter 328 of 19ilO; as amended by L. 1911, cbap. 323, aoid L. 1912, chap. 90. § 268. Application of other sections of this chapter. Sections six, seven, nine, ten, eleven, sixteen, twenty, thirty-six, thirty-nine, forty, fo ay-four, forty-five, forty-six, forty-seven, forty-eight, forty-nine, fifty-two, fifty-three, and sixty-three of this chapter are hereby, to the extent that they are now or hereafter may be applicable to corporations authorized to engage in the business of insurance in this state, specified in section one hundred and ten of this chapter, made specifically applicable to any corporation to which a certificate of authority shall be issued, pursuant to the terms of this article. Added by L. 1910, chap. 328. § 269. Extension of corporate existence. Unless otherwise provided in its certificate of incorporation or articles of association, the corporate existence of every corporation to which a certificate of authority shall be issued, pursuajit to the terms of sections two hundred and sixty and two hundred and sixty- one of this chapter, is hereby extended to the end of the twenty- fifth year from and including the year beginning the first day of January, nineteen hundred and eleven. Added by chapter 328 of 1910. 404 The Insurance Law. § 300. AETICLE X. Lloyds and Inteb-insurers. Section 300. Application of article. 301. Application, examination and certificate of authofity. 302. General provisions affecting Lloyds and inter- insurers licensed under the preceding section. 303. Application of other sections of this chapter. 304. General provisions affecting Lloyds and inter-insurance associa- tions organized after July first, nineteen hundred and eleven. 305. Provision for the admission of Lloyds and inter-insurance asso- ciations domiciled in other states. § SCO. Application of article. Notwithstanding the provisions of section fifty-four of this chap- ter, persons, partnerships or associations which, on October first, eighteen hundred and ninety-two, were lawfully and actually en- gaged in the business of insurance as Lloyds or inter-insurers or individual underwriters, may, after January first, nineteen hun- dred and eleven, continue to do the business of insurance in this state, provided that such persons, partnerships or associatioTiii shall comply with the provisions of this article, but not otherwise; and 9udh persons, partnerships and associations as may comply with and be licensed according to sections three hundred and four and three hundred and ^ve of this article may do such insurance business as is therein permitted. Any persons, partnerships or associations which, after January first, nineteen hundred and eleven, shall in this state engage in the business of inpurance as Lloyds or inter-insurers, or represent or advertise that they arr so engaged, without having been authorized so to do in accordance with the provisions of this article, and any agent, subagent, o.r representative of any such persons, partnerships, or assorintion* not so authorized to d^ such business in this state, who shall after January first, nineteen hundred and eleven, in any way represent any such unauthorized persons, partnerships or association?, directly or indirectly, in engaging or attempting to engage in tho § 301. Lloyds and Intek-insukeks. 405 business of in'surance in this state, shall be guilty of a misdemeanor. Added by L. 1910, cliap. 038, and amended by L. 1911, chap. 502. Residents of New York, who have received certificates under § 137 authoriz- ing them to write surplus lines, may place such insurance in foreign or unau- thorizing Lloyds without becoming liable under § 300. Attorney-General Rep., August 26, 1910. § 301. Application, examination and certificate of authority. Not later than August first, nineteen hundred and ten, any per- sons, partnerships or associations claiming that they were law- fully and actually doing the business of insurance in this state as Lloyds or inter-insurers on October first, eighteen hundred and ninety-two, shall file with the superintendent of insurance, on blanks furnished by him for that purpose, (a) an application for a certificate authorizing the continuance of such business after January first, nineteen hundred and eleven, which applica- tion shall specify the kinds of insurance intended to be written after the last mentioned day; (b) a verified statement of the condition of such Lloyds or inter-insurers as of the first day of July, nineteen hundred and ten; (c) an agreement, executed and duly acknowledged by each and every individual under- writer or inter-insurer or his attorney-in-fact duly authorized thereto, providing in substance that personal service of a sum- mons or other legal process in an action against any such Lloyds or inter-insurers, if made upon a person specified in such agree- ment and resident in the state of !N"ew York, shall be equivalent to the personal service within this state of such summons or other process on each and every of such individual underwriters or inter-insurers; and (d) such other matters as the superintendent of insurance may prescribe. Thereafter, and not later than Decem- ber first, nineteen hundred and ten, the financial condition of and the methods of doing business by the persons, partnerships and associations so applying, shall be examined as provided in section thirty-nine of this chapter. Thereafter, the superintend- ent of insurance shall grant to such persons, partnerships and asso- ciations as shall have complied with the provisions of this article a certificate of authority to conduct the business of insurance in 406" The Insurance Law. § 30i2. this state on and after January first, nineteen hundred and eleven, which certificate shall be revocable or subject to suspen- sion, if any of such persons, partnerships or associations fail to comply with any or all of the requirements of this chapter appli- cable thereto, or upon the happening of any event which on Jan- uary first, nineteen hundred and eleven, would prohibit such per- sons, partnerships or associations from transacting business in this state as set forth in section three hundred and two. Such certificate shall indicate the kinds of insurance which may be writ- ten by such persons, partnerships or associations, provided that the same are not other than those now or which may hereafter be specified in sections one hundred and ten and one hundred and fifty of this chapter. Added by L. 1910, chap. 638. § 302. General provisions affecting Lloyds and inter- insurers licensed under the preceding section. No such persons, partnerships or associations who claim that they were lawfully and actually doing the business of insurance in this state as Lloyds or inter-insurers on October first, eighteen hundred and ninety-two, shall, after January first, nineteen hundred and eleven, engage in the business of insurance in this state as Lloyds or inter-insurers, (a) unless there shall be on file in the office of the superintendent of insurance a copy of the original articles of association, copartnership agreement or inter-insurance contract, together with all amendments thereto, accompanied by an affidavit, verified by an attorney-in-fact, to the effect that it is a true copy, and stating where the principal office of such persons, partnerships or associations so doing such business is located, the kinds of insurance in which it is engaged, or in which it lawfully claims the right to engage, the name under which business is done and the names and post-office addresses of all the underwriters, inter-insurers and attorneys-in-fact so doing business as Lloyds or inter-insurers, which affidavit shall be so verified Dot earlier than December fifteenth, nineteen hundred and ten; or (b) which shall change the name under which business is done, without first obtainingi the written approval of the § 302. Lloyds and Inter-insukers. 407 superintendent of insurance ; or (c) whicli shall establish branches under other or different names or titles; or (d) which shall have a name so similar to that of any other Lloyds or insurance corpo- ration as in the opinion of the superintendent of insurance is calculated to deceive, and any existing Lloyds having such a name may be required to change same by the superintendent of insur- ance; or (e) which does not maintain at all times, in addition to all outstanding claims and other liabilities, a sum equal to the total unearned premiums on the policies in force, calculated on the gross sum without any deduction on any account, charged to the policyholder on each respective risk from the date of the policy; or (f ) which shall not have its assets invested as prescribed by sec- tion sixteen of this chapter ; or (g) unless each of the underwriters shall be worth in his own right not less than twenty thousand dol- lars above all liabilities, such fact to be determined by the superin- tendent of insurance, and in determining same he may take the signed reports of commercial agencies having upwards of one hundred thousand subscribers. 'No such persons, partnerships or associations shall change the location of their principal office for the transaction of business without first filing with the superin- tendent of insurance the affidavit of an attorney-in-fact stating where such office is to be located, and in no event shall such office be located outside the state of E'ew York. Every change in the underwriters, inter-insurers or attorneys-in-fact, made after the filing of the affidavit previously mentioned in this article, shall be reported to the superintendent of insurance by a written verified statement of an attorney-in-fact within twenty days after the same has been made, which affidavit shall be accompanied by an agree- ment, executed and duly acknowledged, and binding the new underwriter or underwriters, inter-insurer or inter-insurers to the original agreement between all the underwriters or inter-insurers required to be filed by section three hundred and one of this chapter, with regard to the service of process. The underwriters^ liability shall not be included in the statements or reports of such persons, partnerships or associations either as an asset or a liability and any deposit made by an underwriter with any such persons,, partnerships or associations, if treated as an asset in any statement or report, shall also be charged as a liability. Added by L. 1910, chap. 638, and amended by L. 1911, chap. 502. 408 TiiE Insurance Law. §§ 30'3, 304. § 303. Application of other sections to this chapter. After January first, nineteen hundred and eleven, sections six, seven, nine, sixteen, twenty, twenty-one, twenty-two, thirty-six, thirty-nine, forty, forty-four, forty-five, forty-six, forty-seven, forty-eight, forty-nine, fifty-three, sixty-three, one hundred and eighteen of this chapter are herehy, to the extent that they are now or hereafter may become applicable to corporations authorized to engage in the business of insurance in this state and specified in sections one hundred and ten and one hundred and fifty of this chapter, made specifically applicable to any persons, partnerships or associations to which this article is applicable, provided that, where any of such sections imposes a duty on or prohibits an act by or in any way refers to the officers or directors of any such corporation, such sections, when read in connection with this article, shall be deemed to mean respectively the duly authorized attorney-in-fact or attorneys-in-fact or the executive, underwriting or managing committee of such persons, partnerships or associa- tions, and provided, further, that where any of such sections refers to a corporation, the same, when read in connection with this article, shall be deemed to mean the persons, partnerships or asso- ciations to which this article is applicable. Added by L. 1910, chap. 638. § 304. General provisions affecting Lloyds and inter- insurance associations organized after July first, nineteen hundred and eleven. On and after July first, nineteen hundred and eleven, twenty- five or more persons, partnerships or corporations which have the requisite authority by their charters may engage in the business of such insurance as is specified in sections one hnndr/^d and ten and one hundred and fifty of this chapter as Lloyds or inter-insurers upon receiving a certificate of authority from the superintendent of insurance so to do. The application for such certificate of authority shall be signed by the attorney or attor- neys-in-fact of those persons desiring such certificate and must be accompanied by a declaration which must set forth, (a) the name under which the business is to be conducted, which name shall not § 304. Lloyds and Intek-insureks. 409 be so similar to any existing Lloyds, inter-insurance association or corporation as, in the opinion of the superintendent of insurance, is calculated to deceive; (b) the exact location of the principal office at which the business is to be conducted, which office must be in the state of New York; (c) the kinds of insurance intended to be written, which must be only of those permitted by this section; (d) an exact copy of the articles of association, copartnership agreement or inter-insurance contract made between such under- writers or inter-insurers; (e) the names and addresses of all of the underwriters or inter-insurers so proposing to engage in such busi- ness; (f) the designation and appointment of one or more attor- neys-in-fact who shall be residents of this state, with full names and addresses, upon whom a simimons or other legal process can be served; (g) that a fund of at least two hundred thousand dol- lars has been contributed by the subscribers as a guaranty fund for policy holders and is in the possession of the attorney or attorneys- in-fact for such subscribers and is either in cash or invested in such securities as are specified in section sixteen of this chapter. Such declaration must be signed and sworn to by all of the per- sons, and the proper officers of the corporations so proposing to engage in the business of insurance pursuant to this section. After such documents specified shall be filed, the superintendent of insurance shall cause an examination of such Lloyds or inter- insurance association to be made, and, if he is satisfied that all of the facts alleged in the declaration are true and that the articles of association, copartnership agreement or inter-insurance con- tract is of such a character that the rights of the policyholders will be protected thereunder, he shall issue a certificate of author- ity for such Lloyds or inter-insurance association to do such busi- ness of insurance in this state as is specified in the declaration, which certificate shall be issued to such Lloyds or inter-insurance association, under the name chosen and approved, authorizing the underwriters or inter-insurers thereof to do the business per- mitted. Any such Lloyds and inter-insurance associations as may be thus authorized to do business in this state (1) shall at all times keep and maintain a fund of an amount equal to all outstanding claims and other liabilities, plus the unearned premiums on the policies in force, calculated on the gross sums, without any deduc- 410 The Insukance Law. § 504. tion on any account, charged to the policyholder on each respective risk from the date of the policy, and in addition the sum of two hundred thousand dollars; (2) shall not change the name unxier Which business is done without first obtaining the written approval of the superintendent of insurance; (3) shall not estab- lish branches under other or different names or titles; (4) shall have its assets either in cash or invested as prescribed by section sixteen of this chapter; (5) shall notify the superintendent of in- surance of any change in the location of its principal office for the transaction of business, which office shall always be in the state of i^ew York, which said notice shall be in the form of a declara- tion subscribed and sworn to by its attorney or attorneys-in-fact; (6) shall notify the superintendent of insurance of any change in its underwriters or inter-insurers, which notice shall be in the form of a declaration subscribed and sworn to by its attorney or attor- neys-in-fact; (7) shall not amend or change its articles of associa- tion, copartnership agreement or inter-insurance contract without the approval of the superintendent of insurance, and a true copy of any amendment or change permitted shall be verified by an torney-in-fact of such Lloyds or inter-insurance associations and be filed with the superintendent of insurance; (8) shall notify the superintendent of insurance of any change in its attor- ney or attorneys-in-fact by filing with the superintendent of in- surance an instrument revoking the designation or appointment of any attorney or attorneys-in-fact who are no longer to act for such underwriters or inter-insurers, and designating and appoint- ing one or more attorneys-in-fact, residents of this state, with full names and addresses, who shall thereafter be the attorney or attorneys-in-fact for such underwriters or inter-insurers, such in- strument to be signed and sworn to by each and every of the un- derwriters or inter-insurers who shall then be doing business under such authority. After any Lloyds or inter-insurance association is authorized to do busines in this state, pursuant to this section, it may be joined by other and additional underwriters or inter-in- surers, but in that event such underwriters or inter-insurers who may thereafter join such authorized Lloyds or inter-insurance asso- ciation shall be held to be bound by the documents on file with the superintendent of insurance concerning such Lloydfe or inter- § 305. Lloyds and Intee-insurees. 411 insurance association in the same manner as though they had per- sonally signed the same, and the attorney or attorneys-in-fact then authorized by the underwriters of such Lloyds or inter-insurance association to act for them shall thereafter and subject to the pro- visions of this section be the attorney or attornevs-in-fact for such additional underwriters, and service of a summons or other legal process on an attorney-in-fact for the underwriters of such Lloyds or inter-iusurance association whose appointm'ent is in force and so filed with the superintendent of insurance shall be equivalent to the personal service of such process on each and every of such un- derwriters and interinsurers within this state. The funds re- quired by this section to be held by any Lloyds or inter-insu.rance association and all other undistributed funds held by it shall be liable primarily for the payment of any losses incurred under its policies, and any judgments recovered under any such policies against the underwriters thereon may be satisfied from such funds without regard to the extent of the various underwriters' interests therein, and such funds shall not be subject to the claims of gen- eral creditors of any of the underwriters of such Lloyds or inter- insurance association, other than policyholder creditors whose claims have arisen under their policies, until all policies under which any such underwriter is obligated have been terminated, and in that event the claims of such general creditors shall not be paid from such fund or be a lien upon any part thereof beyond an amount which when paid will leave intact and' ini the possession of such Lloyds or inter-insurance association an amount equal to the full unearned premiums on all policies in force and in addi- tion the sum of two hundred thousand dollars as provided herein. Any clause in any policy issued by any such Lloyds or inter-insur- ance association which shall contain any provision inconsistent with this section shall be void. Added by L. 1911, chap. 502. § 305. Provisions for the admission of Lloyds and inter- insurance associations domiciled in other states. On and after July first, nineteen hundred and eleven, the superintendent of insurance may in his discretion issue a cer- tificate of authority to a Lloyds or inter-insurance association 412 The Insurance Law. § 305. domiciled in another state to do such insurance business in this state, for permission to do which application is made, and as may be authorized by the articles of association, partnership agreement or inter-insurance contract under which such Lloyds or inter-insurance association is operating, providing, however, that in no event shall authority be given to any such Lloyds or inter- insurance association to do other kinds of insurance business than those specified in sections one hundred and ten and one hundred and fifty of this chapter. The application for such certificate shall specify the kinds of business such Lloyds or inter-insurance association desires authority to transact within this state; it must be signed by the attorney or attorneys-in-fact for such Lloyds or inter-insurance association and must be filed with the superintendent of insurance together with, (a) a certificate from the insurance department of its home state that it has and main- tains at all times an amount equal to all outstanding claims and other liabilities, plus the unearned premiums on all policies in force, calculated on the gross sums, without any deduction on any account charged to the policy holder on each respective risk from the date of the policy, and in addition the sum of two hundred thousand dollars; (b) a true copy of the articles of association, partnerhip agreement, or inter-insurance contract of such Lloyds or inter-insurance association, verified by its attorney or attorneys- in-fact; (c) an agreement executed by an attorney or attorneys- in-fact for such Lloyds or inter-insurance association in such form as the superintendent of insurance may prescribe that it will not do any business in this state which a domestic Lloyds or inter- insurance association cannot do; (d) a declaration and agreement duly executed and acknowledged by each of the underwriters of such Lloyds or inter-insurance association, appointing the super- intendent of insurance the true and lawful attorney for such Lloyds or inter-insurance association and the underwriters thereof in and for this state, upon whom all legal process in any action or proceeding against the said Lloyds or inter-insurance associa- tion or the underwriters thereof may be served and that any service upon him shall be equivalent to the personal service within this state of such process on each and every of such underwriters or inter-insurers. If any such Lloyds or inter-insurance associa- § 3-05. Lloyds and Inter-insurers. 41 '> tion is authorized to do business in this state, and, after such authorization, other underwriters or inter-insurers desire to join in issuing policies of insurance in this state with the underwriters or inter-insurers who have filed such declaration and agreement, they are authoiized to so join upon filing similar declarations and agreements with the superintendent of insurance. The certificate of authority of any such Lloyds or inter-insurance association shall be revoked by the superintendent of insurance if at any time it appears that any underwriters or inter-insurers are issuing policies of insurance within this state, under apparent authority of such certificate without filing such declaration and agreement as aforesaid, or if such Lloyds or inter-insurance association does not maintain at all times the funds specified in this section, or has violated its agreement, or the law, or is found to be in such a condition that the further transaction of business by it will bo hazardous to its policyholders or its creditors or to the Dublic. Added by L. 1911, chap. 502. . 414 . The Insurance Law. § 320. ARTICLE lO^A. Mutual Automobile Fire Insurance Corporations. Section 320. Incorporation. 32L Completion of organization. 3^. Directors and officers. 323. Meetings; basis of right to vote. 324. Reserves; suspension, cancellation and reinstatement of cer- tificate; expenses. 325. Dividends. 326. Assessments. 327. Reports to and examinations by superintendent of insurance; filing of policy forms. 328. Authorization of foreign mutual automobile fire insurance corporations. § 320. Incorporation. Twenty -five or more person 9 ma}^ become a corporation for the purpose of making insurances on the mutual plan^ upon auto- mobiles, whether stationary or being operated under their own power, and wheresoever they may be, against all or any of the hazards of fire, explosion, transpoTtation, collision, loss by legal liability for damage to property resulting from the maintenance and use of automobiles, and loss by burglary or theft or both, including all or any of the risks of lake, river, canal, inland and ocean navigation and transportation, but not including insurance against loss by reason of bodily injury to the person. Such cor- poration may reinsure any risks taken by it. Incorporation may be eifected by making and filing in the office of the superintendent of insurance a declaration signed by each of the incoTporators, stating their intention to form a corporation for the purposes named, and setting forth a copy of the charter which they pro- posed to adopt, which shall state the name of the proposed corpora- tion (which name shall include the word ''mutual"), the place where its principal office is to be located, the mode and manner in which its corporate powers are to be exercised, the number of its directors, a majority of whom shall be citizens of this state, the manner of electing its directors and officers, the time of such elections, the manner of filling vacancies, the names and postoffice add'resses of the directors who shall serve until the first annual meeting of such corporation, the period for the comniciiccMiiont and termination of its fiscal year, and such further particulars as shall be necessary to explain and make manifcf^t the objects and purposes of the corporation. Such declaration slinll be |>rovc'd, or acknowledged, and recorded in a book kept for that purpose by § 321. Mutual Automobile Fire Ins. Corporations. 415 the superintendent of insurance, and a certified copj thereof shall be delivered to the persons executing the same. All corporations hereafter organized on the mutual plan for the exclusive purpose of making all or any of the kinds of insurance specified in this section shall be incorporated under this article. Added by L. 1916, chap. 14. In effect Feb. 21, 1916. § 321. Completion of organization. Upon receipt from the superintendent of insurance of a certified copy of the declaration of intention to form a corporation, the persons signing such declaration may open books to receive appli* cations for membership therein. No such corporations shall issue any policies of insurance unless, and until, the persons signing such declaration shall have previously published once a week, for at least two successive weeks, a notice of their intention to form such a corporation in a public newspaper in the county where its principal office is to be located, nor until at least one thousand persons owning not less than fifteen hundred automobiles have agreed to become members of such corporation, and have applied for, and agreed to take insurance therein, covering one or more of the kinds of insurance specified in section three hundred and twenty ; nor unless the annual premium cost of the insurance thus agreed to be taken shall be not less than thirty thousand dollars at the rates charged by the company, nor until the facts specified in this section have been certified under oath to the superintendent of insurance by at least three of the persons signing the original certificate and the superintendent of insurance has issued a cer- tificate of authority to such corporation, authorizing it to begin writing the insurance specified in this article; nor until the superintendent of insurance shall be satisfied by .an examination of the corporation or otherwise that the applications for member- ship are bona fide, which applications shall state that the appli^ cants agree to accept and take the policies of insurance referred to therein within a period of three months from the date of the issuance to the corporation by the superintendent of insurance of a certificate of authority to transact the businesis of insurance specified in this article. If at any time the number of members insured shall fall below one thousand persons, and the number of cars insured falls below fifteen hundred, or if at any time the premium cost of the insurance as above determined, falls below thirty thousand dollars, no further policies shall be issued by the 416 The Insurance Law. § 322. corporation until other persons, wiio, together with existing mem- bers, amount to not less than one thousand persons, insuring not less than fifteen hundred cars, have made bona fide applications for insurance in the corporation, and until the premium cost of the insurance, as above determined shall be not less than thirty thousand dollars. In the event that such applications for insur- ance shall not be obtained within a reasonable time, to be fixed by the superintendent of insurance, such superintendent may take the proceedings for the liquidation of such corporation under section sixty-three of this chapter. The members of the corporation shall be policy-holders therein, and when any member shall cease to be a policy-holder, he shall cease at the same time, to be a member of the corporation. A corporation, partnership, association or joint stock company may become a member of such insurance corporation, and may author- ize any person to represent it in such insurance corporation, and such representative shall have all the rights of any individual member; but neither the representative nor the said corporation, partnership, association or joint stock company shall be subject to any greater liability than as if an individual member. Such corporation may borrow money, or assume liability in a sum sufficient to defray the reasonable expenses of its organization. Added by L. 1916, chap. 14. In effect Feb. 21, 1916. § 322. Directors and officers. Any such corporation shall have not less than thirteen directors, and such officers as shall be provided for in the certificate of incor- poration or in the by-laws. By-laws may be adopted at a meeting of the directors of the corporation held after the receipt from the superintendent of insurance of a certified copy of the certifi- cate of incorporation, and prior to the first annual meeting, pro- vided the said by-laws shall have first been approved by the super- intendent of insurance. Thereafter, by-laws may be made or amended only by the members; provided that such by-laws or amendments shall have first been approved by the superintendent of insurance. The directors shall be elected at the annual meet- ings of members; but at any time after the first annual meeting the directors may be divided by the board into groups, and there- after one group only elected at each annual meeting, in a manner to be pro vi died by the by-laws. AH except four of the directors of the corporation elected after the organization of the corporation I §§ 323-325. Mutual Automobile Fire Ins. Corporations. 417 is completed, and it is authorized to begin to issue insurance policies, must be members of the corporation. All of the officers, excepting assistant secretaries and assistant treasurers and the actuary, must be members of tho board of directors. Added by L. 1916, chap. 14. In effect Feb. 21, 1916. § 323. Meetings; basis of rigiit to vote. At all meetings of the members of the corporation, each mem- ber shall have one vote for each automobile owned and insured by him in the corporation, provided that no member shall have more than three votes. Added by L. 1916, chap. 14. In effect Feb. 21, 1916. § 324. Reserves, suspension; cancellation and reinstate- ment of certificate; expenses. Such corporation shall be required, to maintain the same reserves for the protection of policyholders, and others who may have a right of action directly against such corporation, as are required to be maintained by stock insurance corporations in relation to the same class of insurance. The superintendent of insurance may suspend or cancel the certificate issued by him, authorizing such corporation to transact such insurance business, at any time, when the assets of such corporation are insufficient to insure and secure the payment of its policy and other obliga- tions; and the superintendent of insurance may reinstate, or renew, said certificate whenever, by assessment, or otherwise, said assets have been increased to a sum sufficient to insure and secure the payment of the policy .and other obligations of such corpora- tion. The expenses of management of such corporation shall not exceed in any one calendar year thirty per centum of its premium income in such year, but the expenses of management shall not be held to include expenses incurred in the investigation, adjust- ment and settlement of claims. Added by L. 1916, chap. 14. In effect Feb. 21, 1916. § 325. Dividends. The board of directors m Penal Law, § 1200. § 1200. Any person knowingly receiving any rebate or allow- ance or deduction from any premium, or any valuable thing, special favor or advantage whatever, as an inducement to take any policy of life insurance, not specified in the policy is guilty of a misdemeanor. No person shall be excused from attending and testifying, or producing any books, papers or other documents before any court or magistrate, upon any investigation, proceeding or trial, for a violation of any of the provisions of this section, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or to subject him to a penalty or forfeiture; but no person shall be prosecuted or subjected to any penalty or for- feiture for or on account of any transaction, matter or thing con- cerning which he may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be re- ceived against him upon any criminal investigation or proceeding. FALSE LITERATURE. Penal Law, § 1203 § 1203. Issue or circulation of false literature. Any insurance corporation, or any officer, director or agent thereof who shall issue or circulate or cause or permit to be issued or circulated in this state any illustration, circular or statement indicating that such corporation can transact in this state any busi- Tax Law. 441 ness of a cliaracter other than that which it is authorized to trans- act under the certificate of authority issued to it by the superin- tendent of insurance, shall be guilty of a misdemeanor, and the superintendent of insurance shall revoke the certificate of author- ity of the corporation or agent on a conviction for so offending. Note. — This section takes effect Sept. 1, 1913. PERJUKY. Penal Law, § 1627. § 1627. Contradictory statements under oath. In any prosecution for perjury the falsity of the testimony or statement set forth in the indictment shall be presumptively estab- lished by proof that the defendant has testified, declared, deposed or certified under oath to the contrary thereof in any other written testimony, declaration, deposition, certificate, affidavit or other writing by him subscribed. FEANCHISE TAX ON II^SURAI^CE CORPORATIONS. Tax Law, § 187. § 187. Franchise tax on insurance corporations. An annual state tax for the privilege of exercising corporate franchises or for carrying on business in their corporate or or- ganized capacity within this state equal to one per centum on the gross amount of premiums received during the preceding calendar year for business done at any tina© in this state, which gross amount of premiums shall include all premiums received during such preceding calendar year on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsurance during such preceding calendar year, and all premiums that are received during such preceding calendar year on all policies, certificates, renewals, policies subsequently canceled, insurance and reinsur- ance executed, issued or delivered in all years prior to such pre- ceding calendar year, whether such premiums were in the form of money, notes, credits or any other substitute for money, shall 442 Tax Law. be paid annually into the treasury of the state on or before the first day of June by the following corporations : 1. Every domestic insurance corporation, incorporated, organ- ized or formed under, by or pursuant to a general or special law ; 2. Every insurance corporation, incorporated, organized or formed under, by or pursuant to the laws of any other state of the United States, and doing business in this state, except a cor- poration doing a fire insurance business or a marine insurance business ; 3. Every insurance corporation, incorporated, organized or formed under, by or pursuant to the laws of any state without the United States, or of any foreign country, except such a corpora- tion doing a life, health or casualty insurance business, and doing business in this state; but the tax on gross premiums of a corpo- ration so incorporated, organized or formed and doing a fire or marine insurance business within the state shall be equal to five- tenths of one per centum. This section does not apply to a fra- ternal beneficiary society, order or association, a corporation for the insurance of domestic animals, a town or county co-operative insurance corporation, nor to any corporation subject to the super- vision of or required by or in pursuance of law to report to the superintendent of banks; but this section does apply to an indi- vidual, or partnership, or association of underwriters known as Lloyds in so far as corporations doing the same kind of insurance business are subject to its provisions. The taxes imposed by this section shall be in addition to all other fees, licenses or taxes imposed by this or any other law, except that in assessing taxes under the reciprocal provisions of section thirty-four of the insur- ance law, credit shall be allowed for any taxes paid under this section. The term " insurance corporation " as used in this article, shall include a corporation, association, joint-stock com- pany or association, person, society, aggregation or partnership by whatever name known doing an insurance business in this state. Tax Law. 443 KEPOETS OF COEPOEATIO:NrS. Tax Law, § 192. § 192. Reports of corporations. Corporations liable to pay a tax under this article shall report as follows: ********** 5. Insurance corporations. Every insurance corporation liable to pay a tax under section one hundred and eighty-seven of this chapter, shall, on or before March first in each year, make a written report to the comptroller of its condition at the close of its business on December thirty-first preceding, stating the gross amount of all premiums referred to in section one hundred and eighty-seven of this chapter, received during the preceding calen- dar year on business done thereby in this state during the year ending with such day and at all times prior thereto, whether the premiums were in money or in the form of notes, credits or other substitutes for money. VALUE OF STOCK TO BE APPEAISED. Tax Law, § 193. § 193. Value of stock to be appraised. If the dividend or dividends amount to less than six per cen- tum on the par value of the capital stock, or no dividend is de- clared, the president, treasurer or secretary of the company liable to pay a tax under the provisions of section one hundred and eighty-two of this chapter, shall, under oath, between the first and fifteenth days of ^N'ovember in each year, estimate and appraise the capital stock of such company at its actual value. And shall forward the same to the comptroller with the report provided for in the last section. If the comptroller is not satisfied with the valuation so made and returned he is authorized and em- powered to make a valuation thereof, and settle an account upon the valuation so made by him, and the taxes, penalties and in- terest to be paid the state. 444 Tax Law. FURTHER REQUIREMENTS AS TO REPORT'S OF COR- PORATIONS. Tax Law, § 194. § 194. Further requirements as to reports of co'-porations. Every report required by this article shall have annexed thereto the affidavit of the president, vice-president, secretary or treasurer of the corporation, association or joint-stock company or of the person or one of the persons, or the members of the partnership making the same, to the effect that the statements contained therein are true. Such reports shall contain any other data, information or matter which the comptroller may require to be included therein, and he may prescribe the form in which such reports shall be made and the form of oath thereto. When so prescribed such forms shall be used in making the report. The comptroller may require at any time a further or supplemental report under this article, which shall contain information and data upon such mat- ters as the comptroller may specify. PAYMENT OF TAX AND PENALTY FOR FAILURE. Tax Law, § 197. § 197. Payment of tax and penalty for failure. A tax imposed by section one hundred and eighty-two or one hundred and eighty-six of this chapter shall be due and payable into the state treasury on or before the fifteenth day of January in each year. A tax imposed by section one hundred and eighty- four of this chapter on a transportation or transmission corpora- tion, or by section one hundred and eighty-five, on elevated rail- roads or surface railroads not operated by steam, shall be due and payable into the state treasury on or before the first day of August in each year. A tax imposed by section one hundred and eighty-seven of this chapter on an insurance corporation shall be due and payable into the state treasury on or before the first day of June in each year. A tax imposed by section one hundred and eighty-eight or one hundred and eighty-nine shall be due and pay- able into the state treasury on or before the first day of Septem- Personal Property Law. 445 ber in each year. A tax imposed bj section one hundred and ninety-one of this chapter on a foreign banker shall be due and payable into the state treasury on or before February first in each year. If such tax in any case is not paid within thirty days after the same becomes due, or if the report of any such corpo- ration is not made within the time required by this article, the corporation, association, joint-stock company, person or partner- ship, liable to pay the tax, shall pay into the state treasury, in addition to the amount of such tax, a sum equal to ^ve per cen- tum thereof, and one per centum additional for each month the tax remains unpaid, which sum shall be added to the tax and paid or collected therewith. Every corporation, association, joint- stock company, person or partnership failing to make the annual report required by this article or failing to make any special report required by the comptroller, within any reasonable time to be specified by him, shall forfeit to the people of the state the sum of one hundred dollars for every such failure, and the additional sum of ten dollars for each day that such failure continues. Such tax shall be a lien upon and bind all the real and personal prop- erty of the corporation, joint-stock company or association liable to pay the same from the time when it is payable until the same is paid in full. PEESO^^AL PEOPEETY NOT ALIENABLE IN CEETAIN CASES. Personal Property Law^ § 15. § 15. Personal property not alienable in certain cases. 1. The right of the beneficiary to enforce the performance of a trust to receive the income of personal property, and to apply it to the use of any person, cannot be transferred by assignment or otherwise. But the right and interest of the beneficiary of any other trust in personal property may be transferred. Pro- vided, however, that when the proceeds of a life insurance policy, becoming a claim by death of the insured, are left with the in- surance company under a trust or other agreement, the benefits accruing thereunder after the death of the insured shall not be 446 Legislative Law. transferable, nor subject to commutation or incumbrance, nor to legal process except in an action to recover for necessaries, if the parties to the trust or other agreement so agree. EEGULATIOlSr OF ACTIOK Code Civil Procedure^ § 1761. § 1761. Regulation when action brought by either husband or wife. Whenever the relation of husband and wife ceases by the entry of a judgment dissolving the marriage, the defendant guilty of adultery is not entitled to any interest in any policy of insur- ance on the life of the plaintiff, wherein such defendant is named as a beneficiary, and the plaintiff may apply to the court grant- ing the final decree or to a special term of the supreme court on notice to the defendant, or the attorney who appeared for defend- ant in action for divorce, and to' the insurance company issuing the policy or policies, for an order directing the insurance com- pany issuing the policy or policies to substitute therein such beneficiary as the plaintiff may nominate. In case where it is shown that the defendant has contributed from his or her separate estate toward the payment of the premiums on such policy, the court shall grant such order on such terms as in the discretion of the court shall be equitable. This section shall also apply in like manner when the defendant obtains a decree against the plain- tiff on a counterclaim. Note.— This section takes effect Sept. 1, 1913. LEGISLATIVE APPEARANCES. Legislative Law. § Q6. Every person retained or employed for compensation as counsel or agent by any person, firm, corporation or association to promote or oppose directly or indirectly the passage of bills or resolutions by either house or to promote or oppose executive Legislative Law. 447 approval of such bills or resolutions, shall, in each and every year, before any service is entered upon in promoting or opposing such legislation, file in the oifice of the secretary of state a writing subscribed by such counsel or agent stating the name or names of the person or persons, firm or firms, corporation or corporations, association or associations, by whom or on whose behalf he is retained or employed, together with a brief description of the legislation in reference to which such service is to be rendered. No notice so filed shall be valid for more than thirty days after the adjournment of the session of the legislature held in the year in which the same is filed. It shall be the duty of the secretary of state to provide a docket to be known as the docket of legisla- tive appearances, with' appropriate blanks and indices, and to fortli- with enter therein the names of the counsel and agents so retained or employed and of the persons, firms, corporations or associations retaining or employing them, together with a brief description of the legislation in reference to which the service is to be rendered, which docket shall be open to public inspection. Upon the ter- mination of such employment the fact of such termination, with the date thereof, mav be entered by direction of either such counsel or agent or of the employer. 'No person, firm, corporation or association shall retain or employ any person to promote or oppose legislation for p-ompensation contingent in whole or in part upon the passage or defeat of any legislative measure or measures. No person shall for compensation engage in promoting or opposing legislation except upon appearance entered in accordance with the foregoing provisions of this section. And no person shall accept any such employment or render any such service for compensation contingent upon the passage or defeat of any legislative measure or measures. It shall be the duty of every person, firm, corporation or association within two months after the adjournment of the legis- lature to file in the office of the secretary of state an itemized state- ment verified by the oath of such person, or in case of a firm of a member thereof, or in case of a domestic corporation or association 448 LBGisiiATiVE Law. of an officer thereof, or in case of a foreign corporation or associa- tion of an officer or agent thereof, showing in detail all expenses paid, incurred or promised directly or indirectly in connection with legislation pending at the last previous session, with the names of the payees and the amount paid to each, including all disbursements paid, incurred or promised to counsel or agents, and also specifying the nature of said legislation and the interest of the person, firm, corporation or association therein. The provisions, however, of this section requiring docket entries shall not apply to duly accredited counsel or agents of counties, cities, towns, vil- lages, public boards and public institutions. And the provisions hereof shall not be construed as affecting professional services in • drafting bills or in advising clients and in rendering opinions as to the construction and eifect of proposed or pending legislation where such professional service is not otherwise connected with legislative action. Every person, every member of any firm, and every association or corporation violating any provision of this section and every person causing or participating in a violation thereof shall be guilty of a misdemeanor and, in case of an indi- vidual, shall be punishable by imprisonment in a penitentiary or county jail for not more than one year or by a fine of not more than one thousand dollars or by both, and, in case of an association or corporation, by a fin© of not more than one thousand dollars. And in addition to the penalties hereinbefore imposed any corpora- tion or association failing to file the statement of legislative ex- penses within the time required shall forfeit to the people of the state the sum of one hundred dollars per day for each day after the expiration of the two months within which such statement is required to be filed, to be recovered in an action to be brought by the attorney-general. Independent Statutes. 449 EEINCOEPOEATION — FOREIGN MONEYED CORPORATION. CHAP. 733 OF 1900. AN ACT to provide for the reincorporation under the laws of this state of foreign moneyed corporations. Became a law May 2, 1900, with the approval of the Governor. Passed, three-fifths (being present. The People of the State of New York, represented in Senate a^d Assembly, do enact as follows: Section 1. Any moneyed corporation duly organized by or under the laws of any state of the United States, and having an office or doing business in this state, may file, if a banking cor- poration or authorized to make loans upon pledges or deposits, in the office of the superintendent of the banking department, and if an insurance corporation in the office of the superintendent of the insurance department, the documents described in section two of this act, and such documents shall be recorded as original certificates of incorporation are required by law to be recorded. The fees for filing and recording such documents, together with the tax, if any, required by law to be paid before the incorpora- tion of a domestic company of the same class, must be paid before filing. § 2. The documents to be filed by any such corporation shall include, 1. A copy of its charter, certificate of incorporation, or other document constituting it a body corporate, with such amend- ments, if any, as are desired by the corporation or are required by the laws of New York, authenticated as an original certificate of incorporation is required to be authenticated. 2. A declaration of its desire to become a corporation of this state and of its submission to the laws of this state, duly executed by the authority of the body in which its corporate powers are vested. 450 Independent Statutes. 3. A certificate of the superintendent of that department Id which these papers are filed that the charter, certificate of incor- poration or other constituent document, with its proposed amend- ments, if any, as filed, is in all respects consistent with the laws of this state relating to domestic corporations of the same class; that the corporation applicant has complied with all conditions imposed by its laws upon domestic corporations of the same class beginning business in this state, with the exception of any pro- vision concerning the residence of a majority of the corporators, trustees, or directors of such corporation; that its name is not the same with the name of any domestic corporation nor likely to be confounded with any such name, and that it has paid all fees and taxes due from it to the state, including the tax, if any, imposed by this state upon the original incorporation of a company of the same class. § 3. From the date of filing these documents the corporation shall become and be a corporation of this state, and shall be subject to all the laws of this state applicable to corporations of the same class; but its existence and powers as such corporation shall terminate if it shall fail at any time for one month to maintain an office within the state at which an authorized officer or agent shall be present at all reasonable business hours, pre- pared to exhibit the books of the company to the proper authori- ties of this state and to receive service of process; or if it shall fail within two years to terminate its corporate existence derived from any other state, by surrender of its charter or by dissolution. § 4. This act shall take effect immediately. BAIL — AUTOMOBILES. CHAP. 538 OF 1904. § 6, SUB, 3. Sub. 3. Release from custody, bail, et cetera. In case the owner of a motor vehicle shall be taken into custody because of a violation of any provision of this act, he shall be forth- with taken before an accessible captain or a sergeant or acting ser- Independent Statutes. 451 geant of police in any city or village, or any justice of the peace or magistrate, and be entitled to an immediate hearing; and if such hearing cannot then be had be released from custody on giving a bond or undertaking executed by a fidelity or surety company or- ganized under the laws of this state and having a deposit of at least two hundred thousand dollars with the superintendent of insurance of this state, said bond or undertaking to be in an amount not exceeding the maximum fine for the offence with which the owner is charged and to be conditioned for the owner's appearance in answer for such violation, at such time and place as shall then be indicated; or on giving his personal undertaking to appear in answer for such violation, at such time and place as shall then bp indicated, secured by the deposit of a sum equal to the maximum fine for the offense with which he is charged, or in lieu thereof, by leaving the motor vehicle, being operated by such person with such officer; or in case such officer is not accessible, be foithwith released from custody on giving his name and address to the officer making such arrest, and depositing with such officer a sum equal to the maximum fine for the offense for which such arrest is made, or in lieu thereof, by leaving the motor vehicle, being: operated by such person, with such officer, provided, that in such case the officer making such arrest shall give a receipt in writing for such sum or vehicle and notify such person to appear beforfi the most accessible magistrate, naming him, on that or the follow- ing day, specifying the place and hour. In case security shall be deposited, as in this subdivision provided, it shall be returned to the person depositing, forthwith on such person giving a bond or undertaking of a fidelity or surety company, as in this section provided, or on such person being admitted to bail as provided in section five hundred and fifty-four of the code of criminal pro- cedure, and the return of any receipt or other voucher given at the time of such deposit. In case such undertaking of a fidelity or surety company be not given, or such personal undertaking with security or such deposit shall not be made by an owner so taken into custody, the provisions of section five hundred and fifty-four of ihe code of criminal procedure, shall apply. GENERAL CORPORATION LAW. CHAPTER 28 OF 1909. ClIAPTEE 23 OF THE CONSOLIDATED LawS. Article 1. Short title; classification; definition (§§1-3). 2. General provisions (§§ 4-44). 3. Change of name (§§ 60-65). 4. Sale of corporate real property (§§ 70-76). 5. Judicial supervision of corporation and of the officers and mem bers thereof (§§ 90-92). 6. Action for sequestration, action for dissolution and action to enforce individual liability of officers and members of corporation (§§ 100-116). 7. Action to annul corporation (§§ 130-136). 8. Action to dissolve moneyed corporation (§§ 150-161). 0. Proceedings for voluntary dissolution of corporation (§§ 170- 10. Dissolution of stock corporation without judicial proceedings (§§ 220, 221). 10a. Provisions applicable to temporary and permanent receivera of corporations (§§ 226, 227). 11. Powers, duties and liabilities of receivera of corporation: (§§ 230-278). 12. Provisions applicable to two or more of th« foregoing proceed- ings or actions (§§ 300-316). 13. Alteration and repeal of charter of corporation (§§ 320, 321). 14. Laws repealed; construction; when to take effect (§§ 330-332). AETICLE 1. Short Title; Classification; Definitions. Section 1. Short title. 2. Classification of corporations, 3. Definitions, General Corporation Law. ARTICLE 2. General Provisions. Section 4. Qualifications of incorporators. 5. Filing and recording certificates of incorporation. 6. Corporate names. 7. Amended and supplemental certificates. 8. Lost or destroyed certificates. 9. Certificate and other papers as evidence; evidence of e< nsoli.i i tion. 10. Limitation of powers; provisions of certificate. 11. Grant of general powers. 12. Enlargement of limitations upon the amount of the property of non-stock corporations. 13. Acquisition of additional real property. 14. Acquisition of property without the state. 15. Certificate of authority of a foreign corporation. 16. Proof to be filed before granting certificate. 17. Reincorporation of foreign moneyed corporations. 18. Papers to be filed upon reincorporation. 19. When reincorporation effective and effect thereof. 20. Acquisition of real property in this state by certain foreign corporations. 21. Acquisition by foreign corporation of real property in this state. 22. Prohibition of banking powers. 23. Qualification of members as voters. 24. Cumulative voting. 25. Voting trust agreements. 28. Proxies. 27. Challenges. 28. Effect of failure to elect directors. 29. Mode of calling special election of directors. 30. Mode of conducting special election of directors. 31. Qualification of voters and canvass of votes at special election. 32. Powers of supreme court respecting elections. 33. Stay of proceedings in actions collusively brought. 34. Quorum of directors and powers of majority. 35. Directors as trustees in case of dissolution. 36. Forfeiture for non-user. 37. Extension of corporate existence. 38. Revival of corporate existence. 39. Approval of certificates of extension or revival; when required 40. Extension when stock is owned by another corporation, 41. Effect of extension. 42. When notice of lapse of time unnecessary. 43. As to acts of directors. 44. Political contributions prohibited; penalty. §§ 1, 2, 3. General Corporation Law. § 1. Short title. This chapter shall be known as the " General Corporation Law." § 2. Classification of corporations. A corporation shall be either, 1. A municipal corporation, 2. A stock corporation, or 3. A non-stock corporation. A stock corporation shall be either 1. A moneyed corporation, 2. A railroad or other transportation corporation, or 3. A business corporation. . A non-stock corporation shall be either, 1. A religious corporation, 2. A membership corporation, or 3. Any corporation other than a stock corporation. A reference in a general law to a class of corporations described in accordance with this classification shall include all oorporationB theretofore formed belonging to such class. § 3. Definitions. 1. A " municipal corporation " includes a county, town, school district, village and city and any other territorial division of the state established by law with powers of local government. 2. A " stock corporation " is a corporation having a capital stock divided into shares, and which is authorized by law to dis- tribute to the holders thereof dividends or shares of the surplus profits of the corporation. A corporation is not a stock corpora- tion because of having issued certificates called certificates of stock, but which are in fact merely certificates of membership, and which is not authorized by law to distribute to its members any divi- dends or share of profits arising from the operations of the corporation. 3. The term " non-stock corporation " includes every corpora- tion other than a stock corporation. General Coepoeation Law. § 3. 4. A " moneyed corporation '' is a corporation formed under or subject to the banking or the insurance law. 5. A " domestic corporation " is a corporation incorporated by or under the laws of the state or colony of ITew York. Every cor- poration which is not a domestic coi-poration is a foreign corpo- ration, except as provided by the code of civil procedure for the purpose of construing such code. 6. The term " directors," when used in relation to corporations, shall include trustees or other persons, by whatever name known, duly appointed or designated to manage the affairs of the corporation. 7. The term " certificate of incorporation " shall include ar- ticles of association or any other written instruments required by law to be filed, to effect the incorporation of a corporation, includ- ing a certified copy of an original certificate of incorporation filed for such purpose in pursuance of law. 8. The term " member of a corporation " shall include every person having a right to vote at a meeting of the corporation for the election of directors, other than a person having a right to vote only upon a proxy. 9. The term " ofiice of a coi'poration " means its principal office within the state, or principal place of business within the state if it has no principal office therein. 10. The term " business of a corporation," when used with ref- erence to a non-stock corporation, includes the operations for the conduct of which it is incorporated. 11. The term *^ corporate law" or "laws," when used in any law forming a part of the consolidation of the general laws of the state of which this chapter is a part, means the general statutes of this state relating to corj>orations included in such consolidation. 12. The existence of an easement in real property acquired or reserved by a municipal corporation, a railroad corporation or other transportation corporation, shall not be deemed an encum- brance upon such real property under any law relating to invest- ments in mortgages upon real property by corporations, trustees, executors, administrators, guardians or other persons holding trust 4, 5. Genebal Cobpoeation Law. funds, but the effect of such an easement upon the real property which it affects, shall be taken into consideration in determining the value thereof. Amended by L. 1914, chap. 128. In eflFect April 6, 1914. Chap. 128 of L. 1914, adds subd. 12. § 4. Qualifications of incorporators. A certificate of incorporation must be executed by natural per- sons, who must be of full age, and at least two-thirds of them must be citizens of the United States and one of them a resident of this state. This section shall not apply to a corporation formed by the reincoi-poration or consolidation of existing corporations, or to the reorganization of a corporation upon the sale of the property and franchises of a previously existing corporation or otherwise. § 5. Filing and recording certificates of incorporation. 1. Every certificate of incorporation and every amended or supplemental certificate, and every certificate which alters the provisions of any certificate of incorporation or any amended or supplemental certificate hereafter ex- ecuted, shall be in the English language, and except as otherwise provided by law, shall be filed in the office of the secretary of state, and shall be by him duly recorded and in- dexed 111 books specially provided therefor, and a certified copy of such certificate or amended or supplemental certificate with a certificate of the secretary of state of such filing and record, or a duplicatiC original of such certificate or amended or supplemental certificate shall be filed and similarly recorded and indexed in the office of the clerk of the county in which the office of the corporation is to be located, or, if it be a non-stock corporation, and such county be not determined upon at the time of executing the certificate of incorporation, in such county clerk's office as the judge approving the certificate shall direct. Nothing herein con- tained, however, shall be deemed to prohibit a corporation from having and using a corporate name or title in a language other than the English language if the same be in English letters or characters. All taxes required by law to be paid before or upon incorporation and the fees for filing and recording such certificate must be paid before filing. No corporation shall exercise any cor- General Coeporation Law. § 6. porate powers or privileges until such taxes and fees have been paid. 2. Whenever under any law now or heretofore in force the cer- tificate of incorporation of any corporation other than a stock cor- poration was or is required to be filed in more than one public ofiice, a certified copy of such certificate so filed in any one of such public offices may be filed in such other office with the like effect as if the original had been duly filed therein, provided, how- ever, that no rights accrued prior to the filing of such copy shall be impaired or affected thereby, provided also, that such filing of a copy shall not cause a duplication or similarity of corporate names in violation of the next succeeding section. Amended by L. 1913, dhap. 479. § 6. Corporate names. 1. IsTo certificate of incorporation of a proposed corporation having the same name as a corporation authorized to do business under the laws of this state, or a name so nearly resembling it as to be calculated to deceive, shall be filed or recorded in any office for the purpose of effecting its incorporation, or of authorizing it to do business in this state; nor shall any corporation except a religious, charitable or benevolent corporation or bar asso- ciation be authorized to do business in this state unless its name has such word or words, abbreviation, affix or prefix, therein or thereto, as will clearly indicate that it is a corporation as distinguished from a natural person, firm, or copartnership; or unless such corporation uses with its corporate name, in this state, such an affix or prefix. A corporation formed by the reincorporation, reorganization or consolidation of other corporations or upon the sale of the property or franchises of a corporation, or a corporation acquii^ ing or becoming possessed of all the estate, property, rights, privileges and franchises of any other corporation or corporations by merger, may have the same name as the corporation or one of the corporations to whose franchises it has succeeded. No corporation shall be hereafter organized under the laws of this state, with the word " trust," " bank," " banking," " insurance," " assurance," " indemnity," " guarantee," " guaranty," " title," " casualty," '' surety," " fidelity," " savings," " investment," "loan" or "benefit" as part of its name, except a corporation formed under the banking law or the insurance law. §§ 7, S. Generat. Cokpokation Law. 2. No corporation, society or association, whether now existing or hereafter organized under or by virtue of the laws of this state, shall ever employ the words " Lucretia Mott " to designate, de- scribe or name any hospital, infirmary or dispensary, or any part thereof, or any similar institution. Amended by L. 1911, chap. 638; Lu 1912, chap. 2; L. 1913, chap. 24, and L. 1916, chap. 22. In effect April 17, 1916. § 7. Amended and supplemental certificates. If in the original or amended certificate of incorporation of any corporation, or if in a supplemental certificate of any corporation any informality exist, or if any such certificate contain any matter not authorized by law to be stated therein, or if the proof or acknowledgment thereof shall be defective, the corporators or di- rectors of the corporation may make and file an amended certificate correcting such informality or defect or striking out such unau- thorized matter; and the certificate amended shall ber deemed to be amended accordingly as of the date such amended certificate was filed, and upon the filing of such an amended certificate of incor- poration, the corporation shall then for all purposes be deemed to be a corporation from the time of filing the original certificate. The supreme court may, upon due cause shown, and proof made, and upon notice to the attorney-general, and to such other persons as the court may direct, and upon such terms and con- ditions as it may impose, amend any certificate of incorporation which fails to ex])ress the true object and purpose of the cor- poration, so as to truly set forth such object and purpose. When an amended or supplemental certificate is filed, an entry shall be made upon the margin of the index and record of the original certificate of the date and place of record of every such amended certificate. The amendment of a certificate under this section shall be with- out prejudice to any pending action or proceeding, or to any rights previously accrued. § 8. Lost or destroyed certificates. If either of the certificates of incorporation ehall be lost or de- stroyed after filing, a certified copy of the other certificate may be filed in the place of the one so lost or destroyed and as of the date of its original filing, and such certified copy shall have the same force and effect as the original certificate had when filed. General Corpoeation Law. § 9. § 9. Certificate and other papers as evidence; evidence of consolidation. 1. The certificate of incorporation of any corporation duly filed shall be presumptive evidence of its incorporation, and any amended certificate or other paper duly filed or recorded relating to the incorporation of any corporation or its existence or manage- ment, and containing facts required or authorized by law to be stated therein, shall be presumptive evidence of the existence of such facts. , 2. Whenever, by the laws of any other state or territory, or the dominion of Canada, a copy of the certificate of organization or incorporation or any other certificate, "Certified or exemplified by any officer or officers in such state or territory or dominion, is or shall be prima facie evidence of the due formation, creation, existence, organization or capacity of any corporation or joint- stock company, created, organized or located in such state, terri- tory or dominion, or claiming so to be, such certificate or cer- tificates, duly exemplified, or a duly exemplified copy thereof, shall be received in all actions and proceedings in this state, in or before all courts and officers, with the same force and effect in all respects as prima facie evidence as aforesaid, as in such other state, territory or dominion. 3. Where two or more corporations have been or shall here- after be consolidated and merged into a new corporation, a cer- tificate of the secretary of state under his official seal concisely stating the names of the respective corporations consolidated, the dates of the filing of the certificates respectively of the incorpora- tion of such corporations in his office, the object for which they were formed, including the nature and locality of their business as set forth in their respective incorporation papers on file in his office, the date of the filing of the consolidation agreement and other- proceedings in his office, the name of the new corporation formed by such consolidation and merger, the term of its corporate existence, the place where its principal office is situated and the amount of its capital stock, shall be presumptive and prima facie evidence in all actions and special proceedings for all purposes of §§ 10, 11. General Corpoeation Law. the incorporation of the corporations so consolidated, the incor- poration of the new corporation by such consolidation and merger from the date of filing of said consolidation agreement and pro- (jeedings, and of the other facts so certified by him. § 10. Limitation of powers; provisions of certificate. 1. No corporation shall possess or exercise any corporate powers not given by law, or not necessary to the exercise of the powers so given. 2. The certificate of incorporation of any corporation may eon- tain any provision for the regulation of the business and the con- duct of the affairs of the corporation, and any limitation uj>on its powers, or upon the powers of its directors and stockholders, which does not exempt them from the performance of any obligation or the performance of any duty imposed by law. § 11. Grant of general powers. Every corporation as such has power, though not specified in the law^ under which it is incorporated: 1. To have succession for the period specified in its certificate of incorporation or by la^v, and perpetually when no period is specified. 2. To have a common seal, and alter the same at pleasure. 3. To acquire by grant, gift, purchase, devise or bequest, to hold and to dispose of such property as the purposes of the cor- poration shall require, subject to such limitations as may be pre- scribed by law. 4. To apfK)int such officers and agents as its business shall require, and to fix their compensation, and 5. To make by-laws, not inconsistent with any existing law, for the management of its property, the regulation of its affairs, and the transfer of its stock, if it has any, and the calling of meetings of its members. Such by-laws may also fix the amount of stock, which must be represented at meetings of the stock- holders in order to constitute a quorum, unless otherwise pro- vided by law. By-laAvs duly adopted at a meeting of the mem- General Coepokation Law. §§ 12, lo, 14. bers of tlie oorporations shsdl control the action of its directors. JSIo by-law adopted by the board of directors regulating the elec- tion of directors or officers shall be valid unless published for at least once a week for two successive weeks in a newspaper in the county where the election is to be held, and at least thirty days before such election. Subdivisions four and five of this section shall not apply to municipal corporations. § 12. Enlargement of limitations upon the amount of the property of non-stock corporations. If any general or special law heretofore passed, or any certifi- cate of incorporation, shall limit the amount of property a corpo- ration other than a stock corporation may take or hold, such corporation may take and hold property of the value of ten million dollars or less, or the yearly income derived from which shall be one million dollars or less, notwithstanding any such limitations. In computing the value of such property, no in- crease in value arising otherwise than from improvements made thereon shall be taken into account. Amended by L. 1909, chap. 276, and L. 1911, chap. 581. § 13. Acquisition of additional real property. When any corporation, except a life insurance corporation, shall have sold or conveyed any part of its real property, the supreme court m^y. notwithstanding any restriction of a general or special law, authorize it to purchase and hold from time to time other real property, upon satisfactory proof that the value of the property so purchased does not exceed the value of the property so sold and conveyed within the three years next preceding the application. § 14. Acquisition of property without the state. Any domestic corporation transacting business in other states or foreign countries may acquire and dispose of such property a3 shall be requisite for such corporation in the convenient trans- action of its business. Any domestic corporation establishing or maintaining a charitable, philanthropic or educational institution within this state may also carry on its work and establish or main- § 15. General Cokpobation Law. tain one or more branches of such institution or an additional institution or additional institutions in any other state, the Dis- trict of Columbia or in any part of the territories or dependencies of the United States of America or in any foreign country and for either of said purposes may take by devise or bequest, hold, pur- chase, mortgage, sell and convey or otherwise dispose of such real and personal property without this state as may be requisite there- for. But nothing in this section contained shall be construed n- exempting from taxation property to any additional amount than is now allowed to such corporation under existing laws. § 15. Certificate of authority of a foreign corporation. No foreign stock corporation other than a moneyed corporation, shall do business in this state without having first procured from the secretary of state a certificate that it has complied with all the requirements of law to authorize it to do business in this state, and that the business of the corporation to be carried on in this state is such as may be lawfully carried on by a corpora- tion incorporated imder the laws of this state for such or similar business, or if more than one kind of business, by two or more corporations so incorporated for such kinds of business respect- ively. The secretary of state shall deliver such certificate to every such corporation so complying with the requirements of law. 1^0 foreign stock corporation doing business in this state shall maintain any action in this state upon any contract made by it in this state, unless prior to the making of such contract it shall have procured such certificate. This prohibition shall also apply to any assignee of such foreign stock corporation and to any person claiming under such assignee or such foreign stock corporation or under either of them. I^o certificate of authority shall be granted to any foreign corporation having the same name as an existing domestic corporation, or a name so nearly resembling it as to be calculated to deceive, nor to any foreign corporation, other than a moneyed or insurance corpora- tion, with the word " trust," " bank," " banking," " insurance," " assurance," " indemnity," " guarantee," " guaranty," " sav- ings," " investment," " loan " or " benefit," as a part of its name. General 'Corporation Law. § 16. § 16. Proof to be filed before granting certificate. Before granting such oertificate tha secretary of state shall re- quire every such foreign corporation to file in his office a sworn copy in the English language of its charter or certificate of in- corporation and a statement under its corporate seal, and the sig- nature of its president, vice-president or other acting head, particu- larly setting forth the business or objects of the corporation which it is engaged in carrying on or which it proposes to carry on within the state, and a place within the state which is to be its principal place of business, and designating a person upon whom process against the corporation may be served within the state. The person so designated must have an office or place of business at the place where such corporation is to have its principal place of business within the state and such designation must specify such office or place of business of the said person so designated, and if it is within a city the street and street number if any, or other suitable designation of the particular locality. Such designation shall be accompanied with the written consent of the person designated and shall continue in force until revoked by an instrument in writing designating in like manner some other person upon whom process against the corporation may be served in this state or until the filing in the same office of a written revocation of said consent executed by the person so designated. If the person so designated dies or removes from the place where the corporation has its prin- cipal place of business within the state, or files such revocation of his consent, and the corporation does not within thirty days after such death or removal or revocatioii of consent designate in like manner another person upon whom process against it may be served within the state, the secretary of state may revoke the authority of the corporation to do business within the state, and process against the corporation in an action upon any liability incurred within this state before such revocation, may, after such death or removal, or revocation of consent, and before another designation is made, be served upon the secretary of state. At the time of such service the plaintiff shall pay to the secretary of state two dollars, to be included in his taxable costs and disbursements, and the secretary of state shall forthwith mail a copy of such notice to such corpora- §§ 17, 18. General Corporation Law. tion if its address, or the address of any officer thereof, is known to him. The secretary of state may require the execution of any such designation, revocation or consent, to be authenticated as he deems proper and lie may refuse to file it without such authentication. § 17. Reincorporation of foreign moneyed corporations. Any moneyed corporation duly organized by or under the laws of any state of the United States, and having an office or doing business in this state, may file, if a banking corporation or authorized to make loans upon pledges or deposits, in the office of the superintendent of banks, and if an insurance corporation in the office of the superintendent of insurance, the documents de- scribed in section eighteen of this chapter, and such documents shall be recorded as original certificates of incorporation are re- quired by law to be recorded. The fees for filing and recording such documents, together with the tax, if any, required by law to be paid before the incorporation of a domestic company of the same class, must be paid before filing. § 18- Papers to be filed upon reincorporation. The documents to be filed by any such corporation shall include, 1. A copy of its charter, certificate of incorporation, or other document constituting it a body corporate, with such amend- ments, if any, as are desired by the corporation or are required by the laws of ITew York, authenticated as an original certificate of incorporation is required to be authenticated ; 2. A declaration of its desire to become a corporation of this state and of its submission to the laws of this state, duly executed by the authority of the body in which its corporate powers are vested. 3. A certificate of the superintendent of that department in which these papers are filed that the charter, certificate of incor- poration or other constituent document, with its proposed amend- ments, if any, as filed, is in all respects consistent with the laws of this state relating to domestic corporations of the same class; that the corporation applicant has complied with all oonditiona General Corporation Law. §§ 19, 20. imposed by its laws upon domestic corporations of the same claafl beginning business in this state, with the exception of any pro- visions concerning the residence of a majority of the corporators, trustees, or directors of such corporation ; that its name is not the same with the name of any domestic corporation, nor likely to be confounded with any such name, and that it has paid all fees and taxes due from it to the state, including the tax, if any, imposed by this state upon the original incorporation of a company of the same class. § 19. When reincorporation effected and effect thereof. From the date of filing these documents the corporation shall become and be a corporation of this state, and shall be subject to all the laws of this state applicable to corporations of the same class ; but its existence and powers as such corporation shall termi- nate if it shall fail at any time for one month to maintain an ofiice within the state at which an authorized officer or agent shall be present at all reasonable business hours, prepared to exhibit the books of the company to the proper authorities of this state and to receive service of process; or if it shall fail within two years to terminate its corporate existence derived from any other state, by surrender of its charter or by dissolution. § 20. Acquisition of real property in this state by certain foreign corporations. Any foreign corporation doing business in this state and created under the laws of the United States, or of any state or territory thereof, or of any foreign state or nation which borders the United States of America and which by its laws confers similar privileges on corporations created by the laws of the state of New York, may acquire and hold such real property in this state as may be necessary for its corporate purposes in the transaction of its business in this state, and convey the same by deed or otherwise in the same manner as a domestic corporation. Amended by chap. 68 of 1910. §§ 21, 22, 23. General Corporation Law. § 21. Acquisition by foreign corporation of real property in this state. Any foreign corporation may pirrcliase at a sale upon the fore- closure of any mortgage held by it, or, upon any judgment or de- cree for debts due it, or, upon any settlement to secure such debts, any real property within this state covered by or subject to such mortgage, judgment, decree or settlement, and may take by de- vise any real property situated within this state and hold the same for not exceeding five years from the date of such purchase, or from the time when the right to the possession thereof vests in such devisee, and convey it by deed or otherwise in the same maimer as a domestic corporation. § 22. Prohibition of banking powers. N'o corporation, domestic or foreign, other than a corporation formed under or subject to the banking laws of this state or of the United States, except as permitted by such laws, shall by any implication or construction be deemed to possess the power of carrying on the business of discounting bills, notes or other evidences of debt, of receiving deposits, of buying and selling bills of exchange, or of issuing bills, notes or other evidences of debt for circulation as money, or of engaging in any other form of banking; nor shall any such corporation, except an express company having contracts with railroad companies for the opera- tion of an express service upon the lines of such railroad com- panies, or a transatlantic steamship company, or a telegraph company, or a corporation incorporated prior to the year eighteen hundred and fifty, to promote the welfare of emigrants, possess the power of receiving money for transmission or of transmitting the same, by draft, traveler's check, money order or otherwise. Amended by I>. 1911, chap. 771. § 23. Qualification of members as voters. Unless otherwise provided in the certificate of incorporation, every stockholder of record of a stock corporation shall be entitled at every meeting of the corporation to one vote for every share of stock standing in his name on the books of the corporation; and at every meeting of a non-stock corporation, every member, unless disqualified by the by-laws, shall be entitled to one vote. The stock- holders of a stock corporation, by a by-law adopted by a vote at any General Coepokation Law. §§ 24, 25. annual meeting, or at any special meeting duly called for sucli purpose, may prescribe a period, not exceeding forty days prior tx) meetings of the stockliolders, during which no transfer of stock on tlie books of the corporation may be made. Except in cases of express trust, or in which other provision shall have been made by written agreement between the parties, the record holder of stock \A hich shall be held by him as security, or which shall actually belong to another, upon demand therefor and payment of neces- sary expenses thereof, shall issue to such pledgor or to such actual owner of such stock, a proxy to vote thereon. 'No member oi a corporation shall sell his vote or issue a proxy to vote to any person for any sum of money or any thing of value. The books and papers containing the record of membership of the corpora- tion shall be produced at any meeting of its members upon the request of any member. If the right to vote at any such meeting shall be challenged, the inspectors of election, or other persons presiding thereat, shall require such books, if they can be had, to bo produced as evidence of the right of the person challenged to vote at such meeting, and all persons who may appear from such books to be members of the corporation may vote at such meeting in person or by proxy, subject to the provisions of this chapter. § 24. Cumulative voting. The certificate of incorporation of any stock corporation may provide that at all elections of directors of such corporation, each stockholder shall be entitled to as many votes as shall equal the number of his shares of stock multiplied by the number of directors to be elected, and that he may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them as he may see fit, which right, when exercised, shall be termed cumulative voting. The stockholders of a corporation heretofore formed, who, by the provisions of laws existing on April thirtieth, eighteen hundred and ninety-one, were entitled to the exercise of such right, may hereafter exercise such right according to the provision of this section. § 25. Voting trust agreements. A stockholder may, by agreement in writing, transfer his stock to aay person or persons for the purpose of vesting in him or them the right to vote thereon for a time not exceeding five years upon terms and conditions stated, pursuant to which such person or §§ 26, 27. General Coepokation Law. persons shall act; every other stockholder, upon his request there- for, may, by a like agreement in writing, also transfer his stock to the same person or persons and thereupon may participate in the terms, conditions and privileges of such agreement; the certifi- cates of stock so transferred shall be surrendered and canceled and certificates therefor issued to such transferee or transferees in which it shall appear that they are issued pursuant to such ngroement and in the entry of such transferee or transferees as owners of such stock in the proper books of said corporation that fact shall also be noted and thereupon he or they may vote upon the stock so transferred during the time in such agreement speci- fied ; a duplicate of every such agreement shall be filed in the office of the corporation where its principal business is transacted and be open to the inspection of any stockholder, daily, during business hours. § 26. Proxies. Every member of a corporation, except a religious corporation, entitled to vote at any meeting thereof may so vote by proxy. iSTo ofEcer, clerk, teller or bookkeeper of a corporation formed under or subject to the banking law shall act as proxy for any stockholder at any meeting of any such corporation. Every proxy must be executed in writing by the member him- self, or by his duly authorized attorney. 'No proxy hereafter made shall be valid after the expiration of eleven months from the date y{ its execution unless the member executing it shall have speci- fied therein the length of time it is to continue in force, which shall be for some liraited period. Every proxy shall be revocable at the pleasure of the person executing it ; but a corporation having no capital stock may prescribe in its by-laws the persons who may act as proxies for members, and the length of time for which proxies may be executed. § 27. Challenges. Every member of a corporation oflFering to vote at any election or meeting of the corporation shall, if required by an inspector of election or other officer presiding at such election or meeting, or by any other member present, take and subscribe the following oath : ^' I do solemnly swear that in voting at tliis election E have not, either directly, indirectly or impliedly received any promise Geneeal Corporation Law. §§ 28, 29. or any sum of money or any thing of value to influence the giving of my vote or votes at this meeting or as a consideration therefor.'' Any person offering to vote as proxy for any other person shall present his proxy and, if so required, take and subscribe the fol- lowing oath ; " I do solemnly swear that I have not, either directly^ indirectly or impliedly, given any promise or any sum of money or any thing of value to induce the giving of a proxy to me to vote at this election, or received any promise or any sum of money or any thing of value to influence the giving of my vote at this meeting, or as a consideration therefor." The inspectors or per- sons presiding at the election may administer such oath, and all such oaths and proxies shall be filed in the office of the corporation. § 28. Effect of failure to elect directors. If the directors shall not be elected on the day designated in the by-laws, or by law, the corporation shall not for that reason be dis- solved; but every director shall continue to hold his office and discharge his duties until his successor has been elected. § 29. Mode of calling special election of directors. If the election has not been held on the day so designated, the directors shall forthwith call a meeting of the members of the cor- poration for the purpose of electing directors, of which meeting notice shall be given in the same manner as of the annual meeting for the election of directors. If such meeting shall not be so called within one month, or, if held, shall result in a failure to elect directors, any member of the corporation may call a meeting for the purpose of electing directors by publishing a notice of the time and place of holding such meeting at least once in each week for two successive weeks immediately preceding the election, in a newspaper published in the county where the election is to be held and in such other man- ner as may be prescribed in the by-laws for the publication of notice of the annual meeting, and by serving upon each member, either personally or by mail, directed to him at his last known post-office address, a copy of such notice at least two weeks before the meeting. §§ 30, 31, 32. General Corporation Law. § 30. Mode of conducting special election of directors. Such meeting shall be held at the office of the corporation, or if it has none, at the place in this state where its principal business has been transacted, or if access to such office or place is denied or can not be had, at some other place in the city, village or town where such office or place is or was located. At such meeting the members attending shall constitute a quo- rum. They may elect inspectors of election and directors and adopt by-laws providing for future annual meetings and election of directors, if the corporation has no such by-laws, and transact any other business which may be transacted at an annual meeting of the members of the corporation. § 31. Qualification of voters and canvass of votes at special election. In the absence at such meeting of the books of the corporation showing who are members thereof, each person, before voting, shall present his sworn statement setting forth that he is a member of the corporation; and if a stock corporation, the number of shares of stock owned by him and standing in his name on the books of the corporation, and, if known to him, the whole number of shares of stock of the corporation outstanding. On filing such statement, he may vote as a member of the corporation ; and if a stock corpo- ration, he may vote on the shares of stock appearing in such state- ment to be owned by him and standing in his name on the books of the corporation. The inspectors shall return and file such statements, with a certificate of the result of the election, verified by them, in the office of the clerk of the county in which such election is held, and the persons so elected shall be the directors of the corporation. § 32. Powers of supreme court respecting elections. The supreme court shall, upon the application of any persori or corporation aggrieved by or complaining of any election of any corporation or any proceeding, act or matter touching the same, upon notice thereof to the adverse party, or to those to be affected thereby, forthwith and in a summary way hear the affidavits, General Cobporation Law. §§ 33, 34. proofs and allegations of the parties, or otherwise inquire into the matters or causes of complaint, and establish the election or order a new election, or make such order and give such relief as right and justice may require. § 33. Stay of proceedings in actions collusively brought. If an action is brought against a corporation by tbe procure- ment or default of its directors, or any of them, to enforce any claim or obligation declared void by law, or to which the cor- poration has a valid defense, and such action is in the interest or for the benefit of any director, and the corporation has by his connivance made default in such action, or consented to the valid- ity of such claim or obligation, any member of the corporation may apply to the supreme court, upon affidavit, setting forth the facts, for a stay of proceedings in such action, and on proof of the facts in such further manner and upon such notice as the court may direct, it may stay such proceedings or set aside and vacate the same, or grant such other relief as may seem proper, and which will not injuriously affect an innocent party, who, without notice of such wrongdoing and for a valuable consideration, haa acquired rights under such proceedings. § 34. Quorum of directors and powers of majority. The affairs of every corporation shall be managed by its board of directors, at least one of whom shall be a resident of this state. Unless otherwise provided a majority of the board of directors of a corporation at a meeting duly assembled shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. The members of a corporation may in by-laws ^ the number of directors necessary to constitute a quorum at a number less than a majority of the board, but at least equal to one-third of its number. Subject to the by-laws, if any, adopted by members of a corporation, the directors may make necessary by-laws of the corporation. §§ 35, 36, 37. General Cokporation Law. § 35. Directors as trustees in case of dissolution. Upon the dissolution of any corporation, its directors, unless other persons shall be appointed bj the legislature, or by some court of competent jurisdiction, shall be the trustees of its cred- itors, stockholders or members, and shall have full power to settle its affairs, collect and pay outstanding debts, and divide among the persons entitled thereto the money and other property remain- ing after payment of debts and necesssary expenses. Such trustees shall have authority to sue for and recover the debts and property of the corporation, by their name as such trustees, and shall jointly and severally be personally liable to its creditors, stockholders or members, to the extent of its property and effects that shall come into their hands. § 36. Forfeiture for non-user. If any corporation, except a railroad, turnpike, plank-road or bridge corporation, shall not organize and commence the transac- tion of its business or undertake the discharge of its corporate duties within two years from the date of its incorporation, its corporate powders shall cease. § 37. Extension of corporate existence. Any domestic corporation at any time before the expiration thereof, may extend the term of its existence beyond the time specified in its original certificate of incorporation, or by law, or in any certificate of extension of corporate existence, by the consent of the stockholders owning two-thirds in amount of its capital stock, or if not a stock corporation, by the consent of two-thirds of its members, which consent shall be given either in writing or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation ; and a certificate under the seal of the corporation that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed and acknowledged by the president or a vice-president, and by the secretary or an assistant secretary of the corporation, and if a corporation formed under or subject to the banking law shall be General Corporation Law. § 38. filed in the office of the superintendent of banks, if an insurance corporation, in the office of the superintendent of insurance, and otherwise in the office of the secretary of state, and shall by such officer be duly recorded and indexed in a book specially provided therefor, and a certified copy of such certificate, with a certificate of such officer of such filing and record, or a duplicate original of such certificate, shall be filed and similarly recorded and in- dexed in the office of the clerk of the county wherein the corpora- tion has its principal place of business, and shall be noted in the margin of the record of the original certificates of such corporation, if any, in such offices, and thereafter the term of the existence of such corporation shall be extended as designated in such certificate. The certificate of incorporation of any corporation whose dura- tion is limited by such certificate or by law, may require that the consent of the stockholders owning a greater percentage than two- tliirds of the stock, if a stock corporation, or of more than two- thirds of the members, if a non-stock corporation, shall be requisite to effect an extension of corporate existence as authorized by this section. Amended by L. 1913, ch. 306. § 38- Revival of corporate existence. If the term of existence of any domestic corporation shall have expired and it shall be made satisfactorily to appear to the supreme court that such corporation was legally organized pursuant to any law of this state, and that it shall have issued its bonds payable at a date beyond the date fixed in its charter or certificate of incorpora- tion for the expiration of its corporate existence, and such bonds shall be unmatured and unpaid, or, if a bank, incorporated under a general law of this state, that shall have issued any other obliga- tions or shall have incurred any other indebtedness which at the date of the application shall be unsatisfied or unpaid, the supreme court may, upon the application of any person interested and upon such notice to such other parties as the court may require, by order, authorize the filing and recording of a certificate re- viving the existence of such corporation, upon such condition?! and with such limitations as such order shall specify, and ex- tending such corporate existence for a term not exceedirsr thp term for which it was originally incorporated. Upon filing and §§ 39, 40. General Corpoeation Law. recording such certificate in the same manner as certificates of extension of corporate existence duly issued before the expira- tion of the existence of a domestic corporation are authorized by law to be filed and recorded, such corporate existence shall be revived and extended in pursuance of the terms of such order, but such revival and extension shall not affect any litigation com- menced after such expiration and pending at the time of such revival. Amended by L. 1911, chap. 63. § 39. Approval of certificates of extension or revival; when required. In the case of a corporation formed under or subject to the bank- ing law, no certificate of extension or revival shall be filed or re- corded unless it shall have indorsed thereon the written approval of the superintendent of banks; or, if an insurance corporation, unless it shall have indorsed thereon the written approval of the superintendent of insurance ; and, if a turnpike or bridge corpora- tion, it shall not be filed unless it shall have indorsed thereon or annexed thereto a certified copy of a resolution of the board of supervisors of each county in which such turnpike or bridge is located, approving of and authorizing such extension. § 40- Extension wnen stock Is owned by another cor- poration. If all the stock of a corporation other than a corporation formed under or subject to the banking law, or an insurance corporation, or a turnpike, plank-road or bridge corporation shall be lawfully owned by another stock corporation entitled by law to take a surrender and merger thereof, the corporate existence of such corporation whose stock is so owned may be extended at any time for the term of the corporate existence of the possessor corpo- ration, by filing in the office or offices in which the original certifi- cate or certificates of incorporation of the first-mentioned corpora- tion were filed a certificate of such extension executed by its president and secretary and by such corporation owning all the shares of its capital stock. General Coepobation Law. §§ 41, 42, 43. § 41. Effect of extension. Every corporation extending its corporate existence under this chapter or under any general law of the state shall thereafter be subject to the provisions of this chapter and of such general law, notwithstanding any special provisions in its charter, and shall thereafter be deemed to be incorporated under the general laws of the state relating to the incorporation of a corporation for the purpose of carrying on the business in which it is engaged, and shall be subject to the provisions of such law. § 42. When notice of lapse of time unnecessary. Whenever under the provisions of any of the corporate laws a corporation is authorized to take any action after notice to its members or after the lapvse of a prescribed period of time, such action may be taken without notice and without the lapse of any period of time, if such action be authorized or approved, and such requirements be waived in writing by every member of such cor- poration, or by his attorney thereunto authorized. § 43- As to acts of directors. Whenever, under the provisions of any of the corporate laws, a corporation is authorized to take any action by the agreement or action of its directors, managers or trustees, such agreement or action may be taken by such directors, regularly convened as a board, and acting by a majority of a quorum, except when other- wise^ expressly required by law or the by-laws of the corporation and any such agreement shall be executed in behalf of the corpora- tion by such officers as shall be designated by the board of directors, managers or trustees. At any meeting at which every member of the board of directors shall be present, though held without notice, any business may be transacted which might have been transacted if the meeting had been duly called. Except when otherwise re- quired by law or the by-laws of the corporation, special meeting? of the members of the corporation may be called in the same man- ner as the annual meeting thereof. § 44. General Corpokation Law. § 44. Political contributions prohibited; penalty. No corporation or joint-stock association doing business in this state, except a corporation or association organized or main- tained for political purposes only, shall directly or indirectly pay or use or offer, consent or agree to pay or use any money or prop- erty for or in aid of any political party, committee or organization, or for, or in aid of, any corporation, joint-stock or other associa- tion organized or maintained for political purposes, or for, or in aid of, any candidate for political office or for nomination for such office, or for any political purpose whatever, or for the reimbursement or indemnification of any person for moneys or property so used. Any officer, director, stockholder, attorney or agent of any corporation or joint-stock association which violates any of the provisions of this section, who participates in, aids, abets or advises or consents to any such violation, and any person who solicits or knowingly receives any money or property in violation of this section, shall be guilty of a misdemeanor and punishable by imprisonment in a penitentiary or county jail for not more than one year and a fine of not more than one thousand dollars. E^o person shall be excused from attending and testifying, or producing any books, papers or other docu- ments before any court or magistrate, upon any investigation, proceeding or trial, for a violation of any of the provisions of this section, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to convict him of a crime or to subject him to a penalty or for- feiture; but no person shall be prosecuted or subjected to any penalty or forfeiture for oi on account of any transaction, matter or thing concerning which he may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal investigation oi proceeding. General Corporation Law. §§ 60, 61. AKTICLE 3. Change of Name. ■ 8e(jtion 60. Petition by corporation to change name. 01. G)ntents of petition. 62. Notice of presentation of petition. 63. Order authorizing change. 64. When change to take effect. 65. Substitution of new name in pending action or proceeding. § 60. Petition by corporation to change name. A petition to assume another corporate name may be made by a domestic corporation, whether incorporated by a general or special law, to the supreme court at a special term thereof, held in the judicial district in which its principal business office shall be situated, or, if it be other than a stock corporation, at a special term held in the judicial district in which its certificate of incor- poration is filed or recorded, or in which its principal property is situated, or in which its principal operations are or theretofore have been conducted. If it be a banking, insurance or railroad corporation, the petition must be authorized by a resolution of the directors of the corporation, and approved if a banking corpora- tion, by the superintendent of banks ; if an insurance corporation by the superintendent of insurance, and if a railroad corporation, by the public service commission. The petition to change the name of any other corporation must have annexed thereto a certificate of the secretary of state, that the name which such corporation proposes to assume is not the name of any other domestic cor- poration or a name which he deems so nearly resembling it, as to be calculated to deceive. Amended by chap. 296 of 1910. § 61. Contents of petition. The petition must be in writing, signed by the petitioner and verified in like nianner as a pleading in a court of record, and must specify the grounds of the application, its present name, and the name it proposes to assume, which must not be the name of any otlier corporation, or a name so nearly resembling it as to be § 62. General Corpokation Law. calculated to deceive; and if it be a railroad corporation, a corpo- ration having banking po\\^rs or the power to make loans upon pledges or deposits, or to make insura^-.ces, that the petition has been duly authorized by a resolution of the directors of the corpo- ration and approved by the proper officer. § 62. Notice of presentation of petition. If the petition be made by a corporation located elsewhere than in the city and county of New York, notice of the presentation thereof shall be published once in each week for three successive weeks in a newspaper of every county in which such corporation shall have a business office, or if it has no business office, of the county in which its principal corporate property is situated, or in which its operations are or theretofore have been principally con- ducted, which newspaper, if it be a banking corporation, shall be designated by the superintendent of banks, if an insurance corpora- tion, by the superintendent of insurance, or of a railroad cor- poration, by the public service commission. In the city and county of New York such notice shall be published once in each week for three successive weeks in two daily newspapers published in such county. If the petition be made by a domestic corpora- tion organized under or subject to the religious or membership corporations law the court may dispense with the publication of the notice of the presentation of such petition or require notice of such presentation to be given to such person and in such man- ner as the court thinks proper. A copy of the petition and notice of motion shall be filed with the secretary of state, and the proposed name shall thereupon be reserved for snid corporation until three weeks after the date of such motion, and until three weeks after the date of any adjourn- ment of such motion if notice of such adjournment shall be filed with the secretary of state, and no certificate of incorporation of a proposed corporation, having the same name as the name pro- posed in such petition, or a name so nearly resembling it as to be calculated to deceive, shall be filed in any office for the purpose of effecting its incorporation, and no corporation formed without the state of [N'ew York having the same name or a name so nearly resembling it as to be calculated to deceive shall be given authority to do business in this state. Amended by chap. 296 of 1910. General Corporation Law. §§ 63, 64. § 63. Order authorizing change. If the court to which the petition is presented is satisfied thereby, v>r bj the affidavit and certificate presented therewith, that the peti- tion is true, and that there is no reasonable objection to the change of name proposed and that the petition has been duly authorized and that notice of the presentation of the petition, if required by law, has been made, the court shall make an order authorizing the petitioner to assume the name proposed on a day specified therein, not less than thirty days after the entry of the order. The order shall be directed to be entered and the papers on which it was granted to be filed within ten days thereafter in the office of the clerk of the county in which its certificate of incorporation, if any, shall be filed, or if there be none filed, in which its principal office shall be located, or if it has no business office in the coimty in which its principal property is situated, or in which its operations are or theretofore have been principally conducted, or in the office of the clerk ot the county in which the special term grafting the order is held; and that a certified copy of such order shall, within ten days after the entry thereof, be filed in the office of the secretary of state; and also, if it be a banking corporation, in the office of the superintendent of banks, or if it be an insurance corporation, in the office of the superintendent of insurance, or if it be a rail- road corporation, in the offices of the public service commissions. Such order shall also direct the publication, within ten days after the entry thereof of a copy thereof, in a designated newspaper, in the county in which the order is directed to be entered, once in each week for four successive weeks. The court may dispense with the publication of a copy of such order and require notice to be given to such persons and in such manner as it thinks proper if the petition be made by a domestic corporation organized under or subject to the religious or membership corporations law^ Amended by chap. 2d6 of 1910. § 64. When change to take effect. If the order shall be fully complied \vith, and within forty days after the making of the order, an affidavit of the publication thereof shall be filed and recorded in the office in which the order is en- § 65. General Corporation Law. tered, and in each office in which certified copies thereof are re- quired to be filed, if any, the petitioner shall, on and after the day specified for that purpose in the order, be known by the name which is thereby authorized to be assumed, and by i;io other name- No proceedings had prior to April fourth, eighteen hundred and ninety-four, under sections two thousand four hundred and four- teen and two thousand four hundred and fifteen of the code of civil procedure for the change of the name of a corporation, shall be invalid by reason of the non-filing of an affidavit of the publication of the order changing such name within twenty days from the date thereof. And no proceedings heretofore had under the provisions of article three, chapter twenty-three, consolidated laws, for the change of the name of a corporation, shall be invalid by reason of the non-filing and recording of such affidavit of the publication of the order changing such name within forty days from the making of such order. Amended by L. 1913, chap. 721. In effect May 24, 1913. § 65. Substitution of new name in pending action or pro- ceeding. An action or special proceeding, civil or criminal, commenced by or against a corporation whose name is so changed shall not abate, nor shall any relief, recovery or other proceeding therein be pre- vented, impeded or impaired in consequence of such change of name. The plaintiff in the action or the party instituting the special proceeding, or the people, as the case requires, may at any time, obtain an order amondiuG: any of the papers or proceedings therein, by the substitution of the new name, without costs and \' Ilhout prejudice to tlio action or proceeding. General Corporation Law^ §§ 70, 71. AKTICLE 4. Sale of Corporate Real Property. , ' Section 70. Application of this article. 71. Petition. 72. Hearing on application. 73. Order to sell, mortgage or lease. 74. Insolvent corporation. 75. Service of notices. 76. Practice in cases not herein provided for. § 70. Application of this article. Whenever any corporation is required by law to make applica- tion to the court for leave to mortgage, lea^e or sell its real estate, the proceeding therefor shall be had pursuant to the provisions of this article. § 71. Petition. The proceeding shall be instituted by the presentation to the supreme court of the district or the county court of the county where the real property, or some part of it, is situated, by the corporation applicant, of a petition setting forth the following facts: 1. The name of the corporation and of its directors, trustees or managers, and of its principal officers, and their places of residence. 2. The business of the corporation or the object or purpose of its incorporation and a reference to the statute under which it was incorporated. 3. A description of the real property to be sold, mortgaged or leased, by metes and bounds, with reasonable certainty. 4. That the interests of the corporation will be promoted by the sale, mortgage or lease, of the real property specified, and a con- cise statement of the reasons therefor. 5. That such sale, mortgage or lease has been authorized, by a vote of at least two-thirds of the directors, trustees or managers of the corporation at a meeting thereof, duly called and held, and a copy of the resolution granting such authority. §§ 72, 73. General Corporation Law. 6. The market value of the remaining real property of the cor- poration a'nd the cash value of its personal assets, and the total amount of its debts and liabilities, and how secured, if at all. 7. The application proposed to be made of the moneys realized from such sale, mortgage or lease. 8. Where the consent of the shareholders, stockholders or mem- bers of the corporation is required by law to be first obtained, a statement that such consent has been given, and a copy of the con- sent, or a certified transcript of the record of the meeting at which it was given, shall be annexed to the petition. 9. A demand for leave to mortgage, lease or sell the real estate described. The petition shall be verified in the same manner as a verified pleading in an action in a court of record. § 72. Hearing on application. Upon presentation of the petition, the court may immediately proceed to hear the application, or it may, in its discretion, direct that notice of the application shall be given to any person inter- ested therein, as a member, stockholder, officer or creditor of the corporation or otherwise, in which case the application shall be heard at the time and place specified in such notice, and the court may in any case appoint a referee to take the proofs and report the same to tlie court, with his opinion thereon. Any person, whose interests may be affected by the proceeding, may appear upon the hearing and show^ cause why the application should not be granted. § 73. Order to sell, mortgage or lease. Upon the hearing of the application, if it shall appear, to the satisfaction of the court, that the interests of the corporation wull be promoted thereby, an order may be granted authorizing it to sell, mortgage or lease the real property described in the petition, or any part thereof, for such sum, and upon such terms as the court may prescribe, and directing what disposition shall be made of the proceeds of such sale, mortgage or lease. General Cokpokation Law. §§ Y4, 75, 76, 90. § 74. Insolvent corporation. If the corporation is insolvent, or its property and assets are insufficient to fully liquidate its debts and liabilities, the applica- tion shall not be granted, unless all the creditors of the corporation have been served with a notice of the time and place at which the application will be heard. § 75. Service of notices. Service of notices, provided for in this article, may be made either personally or, in case of absence, by leaving the same at the place of residence of the person to be served, with some person of mature age and discretion, at least eight days before the hearing of the application, or by mailing the same, duly enveloped and addressed and postage paid, at least sixteen days before such hearing. § 76. Practice in cases not herein provided for. In all applications made under this article, where the mode or manner of conducting any or all of the proceedings thereon is not expressly provided for, the court before whom such application may be pending, shall have the power to make all the necessary orders and give the proper directions to carry into effect the object and intent of this article, or of any act authorizing the sale of cor- porate real property, and the practice in such cases shall conform, as near as may be, to the ordinary practice in such court ARTICLE 5. Judicial Supervision of Corporation and of the Officers and Members Thereof. JSkction 90. Action against officers of corporation for misconduct. 91. Who may bring such an action. 91-a. Actions against officers by corporation, or receiver or trustee. 92. Visitatorial power over corporation not affected by this article. !i 90. Action against officers of corporation for misconduct. An action may be maintained against one or more trustees, directors, managers, or other officers of a corporation, to procure § 90. General Coepokation Law. a judgment for the following purposes, or so much thereof as the case requires: 1. Compelling the defendants to account for their official con- duct, including any neglect of or failure to perform their duties, in the management and disposition of the funds and property, committed to their charge. 2. Compelling them to pay to the corporation, which they rep- resent, or to its creditors, any money, and the value of any prop- erty, which they have acquired to themselves, or transferred to others, or lost, or wasted, by or through any neglect of or failure to perform or by other violation of their duties. 3. Suspending a defendant from exercising his office, where it appears that he has abused his trust. 4. Removing a defendant from his office, upon proof or con- nction of misconduct, and directing a new election to be held by the body or board duly authorized to hold the same, in order to supply the vacancy created by the removal; or, where there is no such body or board, or where all the members thereof are removed, directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies. 6. Setting aside an alienation of property, made by one or more trustees, directors, managers or other officers of a corporation, contrary to a provision of law, or for a purpose foreign to the lawful business and objects of the corporation, where the alienee knew the purpose of the alienation. 6. Restraining and preventing such an alienation, where it is threatened, or where there is good reason to apprehend that it will be made. 7. The court must, upon the application of either party, make an order directing the trial by a jury of the issue of neglect or failure of defendants to perform their duties; and for that pur- pose the questions to be tried must be prepared and settled as pre- scribed in section nine hundred and seventy of the code of civil procedure. As to any litigation pending prior to September one, nineteen hundred and seven, the provisions of this section as they exiated prior to that date shall apply. General Corporation Law. §§ 91, 91-a, 92. §91. Who may bring such an action. An action may be brought, as prescribed in the last section, by the attorney-general in behalf of the people of the state, or, except where the action is brought for the purpose specified in subdivision third or fourth of that section, by a creditor of the corporation, or by a trustee, director, manager, or other officer of the corporation, having a general superintendence of its concerns. § 91a. Actions against officers by corporation, or receiver or trustee. The supreme court shall also have and exercise jurisdic- tion in equity, at the suit of a corporation, or of a receiver, or trustee in bankruptcy thereof, to compel one or more trustees, directors, managers or other officers of the corporation to account for injury to or losses of the funds, assets or property of the cor- poration, caused by or through any neglect or failure of the de- fendants to perform, or for violation of, their duties. The court must, upon the application of either party, make an order direct- ing the trial by jury of the issue of negligence, and for that pur- pose the questions to be tried must be prepared and settled as prescribed in section nine hundred and seventy of the code of civil procedure. Added by L. 1913, chap. 633. § 92. Visitatorial power over corporation not affected by this article. This article does not divest or impair any visitatorial power over a corporation, which is vested by statute in a corporate body, or a public officer. §§ 100, 101. General Corporation Law. AKTICLE 6. Action for S±:questbation, Action for Dissolution and Ac- tion TO Enforce Individual Liability of Officer and Member of Corporation. Section 100. Action by judgment creditor for sequestration. 101. Action to dissolve a corporation. 102. Who may bring action to dissolve a corporation. 103. Temporary injunction in action authorized by this article. 104. Temporary receiver. 105. Additional powers and duties of temporary receiver. 106. Permanent receiver. 107. Additional duties and liabilities of permanent receiver. 108. Application for appointment of receiver. 109. Officers and stockholders may be made parties in action brought by creditor. 110. Separate action may be brought against officers and stock- holders. 111. Proceedings in such actions. 112. Distribution of property of corporation by judgment in actions under this article. 113. Recovery of stock subscriptions. 114. Liability of directors and stockholders. 115. Effect of this article. 116. Entry of judgment and filing copies thereof. § 100. Action by judgment creditor for sequestration. Where final judgment for a sum of money has been rendered against a corporation created by or under the laws of the state, and an execution issued thereupon to the sheriff of the county, where the corporation transacts its general business, or where its principal office is located, has been returned wholly or partly un- satisfied, the judgment creditor may maintain an action to procure a judgment sequestrating the property of the corporation, and providing for a distribution thereof, as prescribed in section one hundred and twelve of this chapter. § 101. Action to dissolve a corporation. In either of the following cases, an action to procure a judgment, dissolving a corporation, created by or under the laws of the state, General Corporation Law. §§ 102, 103. and forfeiting its corporate rights, privileges and franchises, may be maintained, as prescribed in the next section : 1. Where the corporation has remained insolvent for at least one year. 2. Where it has neglected or refused, for at least one year, to pay and discharge its notes or other evidences of debt 8. AVliere it has suspended its ordinary and lawful business for at least one year. 4. If it has baulking powers, or power to make loans on pledges or deposits, or to make insurances, where it becomes insolvent or unable to pay its debts, or has violated any provision of the act, by or under which it was incorporated, or of any other act binding upon it § 102. Who may bring action to dissolve a corporation. An action specified in the last section, may be maintained by the attorney-general, in the name and in behalf of the people. And whenever a creditor or stockliolder of any corporation submits to the attorney-general a written statement of facts, verified by oath, showing grounds for an action under the provisions of the last section, and the attorney-general omits, for sixty days after this submission, to commence an action specified in the last section, then, and not otherwise, such creditor or stockholder may apply to the proper court for leave to commence such an action, and on obtaining leave may maintain the same accordingly ; and if there be no person in existence upon whom service of the summons can be made under the provisions of section four hundred and thirty- one of the cpde of civil procedure, service of the summons in such action may be made in such manner as the court upon application by petition may direct. Amended by L. 1912, chap. 204. § 103. Temporary injunction in action authorized by this article. In an action, brought as prescribed in this article, the court may, upon proof of the facts authorizing the action to be main- §§ 104, 105. General Coepokation Law. tallied, grant an injunction order, restraining the corporation, and its trustees, directors, managers and other officers, from collecting or receiving any debt or demand, and from paying out, or in any way transferring or delivering, to any person, any money, property, or effects of the corporation, during the pendency of the action; except by express j>ermission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, man- agers and other officers, from exercising any of its corporate rights, privileges, or franchises, during the pendency of the action; except by express permission of the court. The provisions of title second of chapter seventh of the code of civil procedure, relating to the granting, vacating or modifying of an injunction order, apply to an injunction order, granted as prescribed in this section; except that it can be granted only by the court. § 104- Temporary receiver. In such an action, the court may also, at any stage thereof, ap- point one or more receivers of the property of the corporation. A receiver, so appointed, before final judgment is a temporary receiver, until final judgment is entered. A temporary receiver has power to collect and receive the debts, demands, and other property of the corporation; to preserve the property, and the proceeds of the debts and demands collected ; to sell or otherwise dispose of the property as directed by the court ; to collect, receive and preserve the proceeds thereof; and to maintain any action or special proceeding, for either of those purposes. He must qualify as prescribed by law for the qualification of a permanent receiver. Unless additional powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section, and those which are incidental to the exercise thereof. § 105. Additional powers and duties of temporary receiver. A temporary receiver, appointed as prescribed in the last section, is, in all respects, subject to the control of the court. In addition Geneeal Coepokation Law. §§ 106, 107. to the powers conferred upon him, by the provisions of the last section, the court may, by the order or interlocutory judgment appointing him, or by an order subsequently made in the action, or by the final judgment, confer upon bim the powers and author- ity, and subject him to the duties and liabilities, of a permanent receiver, or so much thereof as it thinks proper; except that he shall not make any distribution among the creditors or stockholders, before final judgment, unless he is specially directed so to do by the court. § 1 06. Permanent receiver. A receiver appointed by or pursuant to a final judgment in the action, or a temporary receiver who is continued by the final judg- ment, is a permanent receiver, and has all the powers and authority conferred, and is subject to all the duties and liabilities imposed upon a receiver in article eleven of this chapter. Am»d by L. 1909, ch. 240. § 107. Additional duties and liabilities of permanent receiver. A permanent receiver shall keep an account of all moneys re- ceived by him, and on the first days of January, April, July and October, in each and every year make and file a written statement, verified by his oath that such statement is correct and true, show- ing the amount of money received by such receiver, his agents or attorneys, the amount he has a right to retain and the items for which he claims to retain the same, and the distributive share due each person interested therein. He shall pay such distributive share to the person or persons entitled thereto, on demand, at any time after such statement. Such account, statement, and all the books and papers of the corporation in the hands of such receiver, shall at all reasonable times be open for the inspection of all per- sons having an interest therein. And in case of neglect or refusal to comply with either of the above requirements, or any duty im- posed upon him, the supreme court, at either an appellate division §§ 108, 109, 110. Geneeal Cokpokation Law. or special term, shall, on the application of the party aggrieved, unless such neglect or refusal shall be satisfactorily explained to the court, forthwith remove such receiver, and appoint some suit- able person as receiver in his place. Such removal shall not vitiate or annul any legal proceedings had by such receiver; but such proceedings shall be continued by such successor as if no removal had been made. Such receiver shall also be liable to pay to the party interested, interest at the rate of ten per centum per annum on all moneys due to such party and retained by him more than one day after such demand made as aforesaid. § 108. Application for appointment of receiver. Applications made by the attorney-general for the appointment of a receiver of a corporation shall be made in the judicial district in which the action in which the appointment is sought is triable. § 109. Officers and stockholders may be made parties in action brought by creditor. Whew the action is brought by a creditor of a corporation, and the stockholders, directors, trustees, or other officers, or any of them, are made liable by law, in any event or contingency, for the payment of his debt, the persons, so made liable, may be made parties defendant, by the original or by a supplemental complaint ; and their liability may be declared and enforced by the judgment in the action. § 110. Separate action may be brought against officers and stockholders. Where the stockholders, directors, trustees, or other officers of a corporation, who are made liable, in any event or contingency, for the payment of a debt, are not made parties defendant, as pre- scribed in the last section, the plaintiff in the action may maintain a separate action against them, to procure a judgment, declaring, apportioning and enforcing their liability. General Coepoeation Law. §§ 111-114. §111. Proceedings in such actions. In an action brought as prescribed in either of the last two sec- tions, the court must, when it is necessary, cause an account to be taken of the property and of the debts of the corporation, and thereupon the defendant's liability must be apportioned accord* ingly; but, if it affirmatively appears, that the corporation is in- solvent, and has no property to satisfy its creditors, the court may, without taking such an account, ascertain and determiuv^ the amount of each defendant's liability, aixd enforce the same accordingly. § 112. Distribution of property of corporation by judgment in actions under this article. A final judgment in an action, brought against a corporation, as prescribed in this article, either separately or in conjunction with its stockholders, directors, trustees, or other officers, must provide for a just and fair distribution of the property of the corporation, and of the proceeds thereof, among its fair and honest creditors, in the order and in the proportions prescribed by law, in case of the voluntary dissolution of a corporation. §113. Recovery of stock subscriptions. Where the stocldiolders of the corporation are parties to the action, if the property of tlie corporation is not sufficient to dis- charge its debts, tlie interlocutory or final judgment, as the case requires, must adjudge that each stockholder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation. § 114. Liability of directors and stockholders. If it appears, that the property of the corporation, and the sums collected or *collectable from the stockholders, upon their stock subscriptions, are or will be insufficient to pay the debts of the cor- poration, the court must ascertain the several sums, for which the *So in original §§ 115, 110. Genekal Cokpokation Law. Hi rectors, trustees, or other officers, or the stockholders of the cor- poration, being parties to the action, are liable; and must adjudge that the same be paid into court, to be applied, in such proportions and in such order as justice requires, to the payment of the debts of the corporation. § 115. Effect of this article. This article does not repeal or affect anj special provision of law, prescribing that a particular kind of corporation shall cease to exist, or shall be dissolved, in a case or in a manner, not prescribed in this article; or any special provision of law, prescribing the mode of enforcing the liability of the stockholders of a particular kind of corporation. § 116. Entry of judgment and filing certified copies thereof. The final judgment in an action brought as prescribed' in this article shall be entered' in the office of the clerk of the county in which the principal business office, or the principal place of business of the corporation is located, and if it is adjudged that such corporation be dissolved, a certified copy of such judgment shall, if a banking corporation, be filed in the office of the superin- tendent of banks ; if an insurance corporation, in the office of the superintendent of insurance; and if a business, transportation, railroad or membership coi'poration, in the office of the secretary of state. Added by L. 1916, chap. 163. In effect April 7, 1916. General Corporation Law. §§ 130, 131. AETICLE 7. Action to Annul a Corporation. Skctioh 130. Action by attorney-general to annul corporation when legisla- ture directs. 131. Action by attorney -general to annul corporation by leave of court. 132. Notice of application for leave to commence action to amiul corporation. 133. Jury trial. 134. Injunction and receiver in final judgment. 135. Temporary injunction. 136. Filing and publishing judgment. § 130- Action by attorney-general to annul corporation when legislature directs. The attorney-general, whenever he is so directed by the legisla- ture, must bring an action against a corporation created by or un- der the laws of the state, to procure a judgment, vacating or an- nulling the act of incorporation, or any act renewing the corpora- tion, or continuing its corporate existence, upon the ground that the act was procured upon a fraudulent suggestion, or the conceal- ment of a material fact, made by or with the knowledge and consent of any of the persons incorporated. § 131. Action by attorney-general to annul corporation by leave of court. Upon leave being granted, as prescribed in the next section, the attorney-general may bring an action against a corporation created by or under the laws of the state, to procure a judgment, vacating the charter or annulling the existence of the corporation, upon the ground that it has, either 1. Offended against any provision of an act, by or under which it was created, altered or renewed, or an aot amending the same, and applicable to the corporation ; or, 2. Violated any provision of law, whereby it has forfeited ita charter, or become liable to be dissolved, by the abuse of its powers; or, General Cokpokation Law. 3. Forfeited its privileges or francliises, by a failure to exer- cise its powers; or, 4. Done or omitted any act, which amounts to a surrender of its corporate rights, privileges, and franchises; or, 6. Exercised a privilege or franchise, not conferred upon it by law. § 132. Notice of application for leave to commence action to annul corporation. Before granting leave, the court may, in its discretion, require such previous notice of the application as it thinks proper, to be gi\ en to the corporation, or any officer thereof, and may hear the corporation in opposition thereto. § 133. Jury trial. A.n action, brought as prescribed in this article, is triable, of course and of right, by a jury, as if it was an action specified in section nine hundred and sixty-eight of the code of civil procedure and without procuring an order, as prescribed in section nine hun- dred and seventy of the code of civil procedure. § 134. Injunction and receiver in final judgment. Where any of the matters, specified in section one hundred and thirty or section one hundred and thirty-one of this article, are established in an action, brought as prescribed in either of those sections, the court may render final judgment that the corporation, and each officer thereof, be perpetually enjoined from exercising any of its corporate rights, privileges, and franchises; and that it be dissolved. The judgment must also provide for the appoint- ment of a receiver, the taking of an account, and the distribution of the property of the corporation, among its creditors and stock- holders, as where a corporation is dissolved upon its voluntary application, as prescribed in article nine of this chapter. § 135. Temporary injunction. In an action, brought as prescribed in this article, an injunction order may be granted, at any stage of the action, restraining the General Cokpokation Law. § 13(3. corporation, and any or all of its directors, trustees and otdier officers, from exercising any of its corporate rights, privileges, or franchises; or from exercising certain of its corporate rights, privileges, or franchises, specified in the injunction order; or from exercising any franchise, liberty, or privilege, or transacting any business, not allowed by law. Such an injunction is deemed one of those specified in section six hundred and three of the code of civil procedure, and all the provisions of title second of chapter seventh of the code of civil procedure applicable to an injunction specified in that section, apply to an injunction granted as pre- scribed in this section, except that it can be granted only by the court. § 136. Filing and publishing judgment. Where final judgment is rendered against a corporation, in an action, brought as prescribed in this article, the attorney-general must cause a copy of the judgment-roll to be forthwith filed in the office of the secretary of state ; who must cause a notice of the sub- stance and effect of the judgment, to be published, for four weeks, in a newspaper printed in the county, wherein the principal place of business of the corporation was located. §§ 150, 151. General Corporation Law. ARTICLE 8. Action to Dissolve Moneyed Corporation. Section 150. Temporary injunction and receiver in action against moneyed corporation. 151. Order to show cause why injunction apd receiver should not be permanent. 152. Inventory and appraisal by receiver. 153. Conversion of assets into cash by receiver. 154. Employment of counsel by receiver. 155. Notice to creditors by receiver. 156. Allowance, rejection and adjustment of claims by receiver. 157. Final settlement and distribution by receiver. 158. Notice of account and accounting by receiver. 160. Proceedings upon accounting. 160. Claims barred after distribution of assets by receiver. 161. Application of article. § 150. Temporary injunction and receiver in action against moneyed corporation. Whenever the attorney-general shall commenoe an action against a moneyed corporation upon the information of either the superin- tendent of insurance, or the superintendent of banks, for the dis- solution or sequestration of the property or annulment of the char- ter 0"^ a corporation formed under or subject to the banking or insurance law, and shall be satisfied that it is unsafe and inexpedi- ent for such corporation to continue doing business, the supreme oourt may, on his application, in a case provided by law, appoint a receiver thereof, and may on such appointment grant an injunction restraining such corporation from carrying on its business until the further order of the court. The court may, in its discretion, dispense with notice of the application^ § 151. Order to show cause why injunction and receiver should not be permanent. The court, on granting an order without notice, either for the appointment of a receiver or for an injuuiotian, or for both forms of relief, as herein provided, shall make an order that the corporation so proceeded against show cause at a term of the court to be held not more than tbirty days thereafter, why such receiver and General Coepokation Law. § 152. injunction should not be permanent. Such order shall be served not less than eight days before the date upon which the hearing thereon is to be had. Unless the court otherwise directs, the receiver appointed in the first instance shall be permanent re- ceiver of such corporation, and the injunction shall be continued during the pendency of the litigation. Such receiver shall, unless otherwise ordered by the court, continue to act as such up to and after final judgment, and until the affairs of the corporation shall be finally settled and its property distributed by him according to law. The bond to be given by the receiver on his appointment shall be fixed at such sum and so conditioned that it shall con- tinue in force and effect until the final discharge of such receiver, including any liability which may be incurred by said receiver by virtue of his appointment as such in the final judgment, in case he shall be so named therein. § 152. Inventory and appraisal by receiver. It shall be the duty of the receiver to take an inventory and make an appraisal of the assets and property of the corporation. In case the corporation is subject to the banking law, two disinterested appraisers shall be appointed by the superintendent of banks to aid in this duty, and in case the corporation is subject to the insurance law, such appraisers shall be appointed by the superin- tendent of insurance. Ten days' notice of such inventory and appraisal shall be given to the corporation and such inventory and appraisal shall be completed and filed with the clerk of the su- preme court in the county in which the trial is to be had, within ninety days after the appointment of such receiver, and a certified copy thereof in the office of the attorney-general, and in the office of the superintendent of banks, or in the office of the superin- tendent of insurance, as the case may be, unless for good cause shown the officer appointing such appraisers shall, in writing, extend the time for the completion thereof. Such appraisers shall receive as compensation a reasonable sum, not exceeding fifteen dollars per day and actual and necessary expenses, to be paid by the receiver upon the approval of the officer by whom they were named. The receiver shall be chargeable with the amount of such §§ 153, 154, 155. General Corporation Law. inventory and shall be. relieved therefrom to the same extent and upon the same grounds as in the like case of an executor. § 153. Conversion of assets into cash by receiver- The receiver shall proceed, immediately upon his appointment, to convert the assets of the corporation into cash. § 154. Employment of counsel by receiver. It shall not be lawful for any receiver to pay to any attorney or counsel any costs, fees or allowance until the amount thereof shall have been stated to the special t^erm, as expenses incurred by sndi receiver and shall have been approved by that conrt by an order duly entered. Any such order shall be the subject of review by the appellate division and the court of appeals on appeal thereto taken by any party. The receiver may employ not to exceed one counsel unless the employment of additional counsel shall be autiiorized by the supreme court after notice to the attorney-general of an application therefor. § 155. Notice to creditors by receiver. 1. Within thirty days after a receiver qualifies he shall cause to be published once a week for twelve weeks in a newspaper pub- lished at the principal place of business of the corporation, a notice to all creditors of the corporation to present their claims to such receiver at his place of business within fifteen days after the last publication of such order. He shall also mail a copy of such notice to all the creditors of the corporation known to him or as shown on the books of the company, at their last known place of residenca 2. The receiver of any title guaranty company heretofore or hereafter appointed, which company is authorized by law to issue policies of insurance or agreements of indemnity or guar- anty, and which corporation has issued and outstanding at the time of the appointment of the receiver, policies of insurance or agreements of indemnity or guaranty, exceeding two thousand in number, shall not be required to mail to the holders or owners of said policies of insurance or of said agreements, the notice General Corporation Law. § 156. required by law to be given to creditors of an insolvent moneyed corporation ; but such receiver sball cause a notice to be published twice a week, for four successive weeks, in two newspapers pub- lished in the county where said corporation has its principal place of business ; which said notice shall require all creditors and owners und lioldors of outstanding policies of insurance or agreements of indemnity or guaranty, to exhibit and prove their claim, within sixty days; and, in default of so doing, shall be precluded froin all benefit of the judgment and from any and all distributiou which may be made thereunder, except that the creditor or holder or owner of any policy or agreement of indemnity or guaranty, who shall exhibit or prove his claim, with an affidavit that he had no notice or knowledge thereof, in time to comply with the pro- visions hereof, at any time before an order is made directing a final settlement and distribution of assets of such corporation, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of such corporation then remaining undistributed may be applied, as if his claim had been exhibited and proved within the time limited by such notice. This subdivision shall apply to receivers of moneyed corporations. Am'd by L. 1909, ch. 240. § 156. Allowance, rejection and adjustment of claims by receiver. The receiver shall have the same power and authority with ref- erence to the allowance or rejection of claims as is given to execu- tors, and no reference shall be had to pass upon claims except such as may be disputed by such receiver. In case any claim shall be disputed, the receiver shall immediately upon the expiration of the time for the presentation of claims, upon notice to the par- ties whose claims have been rejected, apply to the court for the appointment of a referee to hear and determine as to the allowance thereof. Claims allowed by the receiver shall be subject to objec- tion upon the final settlement and their validity may be determined as the validity of claims against estates are determined upon final settlement by a surrogate. §§ 157, 158. General Corporation Law. § 157. Final settlement and distribution by receiver. The receiver may apply for a final settlement of his accounts and an order for distribution at any time after the expiration of six months, and shall so apply within eighteen months after qualifying as such. The attorney-general or any creditor, or party interested, may apply for an order that the receiver show cause why an accounting and distribution should not be had at any time after the expiration of one year after the receiver qualifies; and it shall be the duty of the attorney-general, after the expiration of eigliteen months from tlie time the receiver enters upon his duties, in case he has not applied for a final settlement of his accounts, to apply for such an order on notice to such receiver. In case of such application by a party other than the receiver, the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or authorized to file any account, except as herein provided, except by special order of the court. § 158. Notice of account and accounting by receiver. 1. The receiver shall file his account, together with a statement of the items and amounts claimed by his counsel, up to that date with the court and a duplicate thereof, together with the vouchers, with the attorney-general, at least thirty days before the time fixed for his final settlement and accounting, and the attorney-general shall serve upon the attorney for the receiver any objections he may have to the account, or to the staitement as to the items and amounts claimed by counsel for compensation, appearing in such account on or before such hearing:. The receiver shall also within ten days after the filing of the account, mail to each creditor of the corporation a notice of the time and place of the filing of his account, and a notice of the time and place of the presentation of the account to the court. Unless objection is made to the items of the account by a creditor or on behalf of the attorney- general, no referee shall be appointed to pass thereon, but the same shall be examined and settled by tlie court. In case objection is made p referee may be appointed to take the testimony and report the same to the court General Corporation Law. § 159. 2. Prior to the final settlement of a/icounts of a receiver of any moneyed corporation, having in force, at the time of his appointment, outstanding policies of insurance or agreements of indemnity or guaranty, exceeding two thousand in number, said receiver shall give notice to all of the creditors and to the owners or holders of said policies of insurance or agreements of indemnity or guaranty, issued or entered into by such insolvent corporation, by publication of a notice published at least twice a week, for three successive weeks, immediately preceding the making of an application fox* a final settlement of his accounts and for an order for the distribution of the assets in his hands. Said notice shall state the fact that an application for a final settlement of his ax;- oounts and for an order for the distribution of the assets in hand will be made, and shall also state the time and place, when and where the application will be made. Upon the hearing of such application and motion, the court shall, unless objection is made to the items of the account by a creditor or by a bolder or owner of a policy of insurance or agreement of indemnity or guaranty, or on behalf of the attorney-general, examine and settle the said accounts, and make an order for the settlement, adjustment and distribution of the assets in tke hands of the receiver. Where objection is made to the items of account, the court may refer the same to a referee to examine and pass thereon. This subdivision shall apply to receivers of all moneyed corporations heretofore or hereafter appointed. Am'd by L. 1909, ch. 240. § 159. Proceedings upon accounting. Upon any accounting by the receiver, after the expiration of the time for creditors to present claims, the court shall direct the receiver to immediately convert the entire assets of the corporation in his hands into cash, in case any of the assets Lave not been so converted, unless good and sufficient cause to the contrary shall appear to the satisfaction of the court, such as to authorize an order granting the receiver additional time for that purpose, and upon any such accounting the court slinU direct the receiver to distribute the assets of the corporation in iiis hands to the persons entitled §§ 160, 161. General Corporation Law. thereto, except so much thereof as may be necessary to be retained for the purpose of administering the trust and making payment upon contested claims, and upon such claims as may thereafter be presented and entitled to be paid. Whenever the attorney-general shall apply for an order to show cause why an accounting should not be had by a receiver by reason of his failure to so account within twelve months after his appointment, and shall deem it ad- visable to designate counsel to act on his behalf, the court may, upon the accounting, make a reasonable allowance by way o^ counsel fee to counsel so designated. § 160. Claims barrftd after distribution of assets by receiver. Upon the granting of the application and the making of the order of distribution, as provided in subdivision two of section one hundred and fifty-eight of this article, and the distribution of the assets in the hands of the receiver, in the manner directed by the order of the court,, all claims of the creditors or of holders or owmers of policies of insurance or agreements of indemnity or guaranty, against such receiver, shall be barred. This section shall apply to receivers of all moneyed corporations. Am'i by L. 1909, ch. 240. § 161. Application of article. Except as provided in sections one hundred and fifty-five, one hundred and fifty-eight, subdivision two, and one hundred and sixty of this article, this article shall apply to a^^ actions for the ap]^ointment of receivers of moneyed corporations brought by tJie attorney-general, and to all receivers of such corporations hereto- fore or hereafter appointed, and to the settlement and adjustment of their accounts and distribution of assets in their hands, and all proceedings with reference thereto hereafter to be taken, and shall supersede and repeal all provisions of law inconsistent herewitli, so far as the same relate to actions for the sequestration, annul- ment or dissolution of moneyed corporations. As to all other corporations and as to matters not affected by this article, pro- visions of law heretofore existing shall remain in full force and effect. General Corporation Law. § 170. AKTICLE 9. Proceedings for Voluntary Dissolution of Corporation. Section 170. Petition for voluntary dissolution of corporation. 171. Directors or trustees may be required to petition. 172. Petition when directors or trustees do not agree. 173. Corporations excepted from two preceding sections. 174. Contents of petition. 175. Affidavit to be annexed to petition. 176. Presentation of petition. 177. Corporations without stockholders. 178. Action by court upon petition for dissolution. 179. Publication of order to ahow cause why corporation should not be dissolved. 180. Service of order to show cause. 181. Entering and filing order and papers. 182. Temporary receiver. 183. Application for appointment of receiver. 184. Injunction. 185. Referee. 186. Hearing. 187. Decision. 188. Use of original papers on hearing. 189. Amending papers. 190. Final orders. 191. Pemmnent receiver. 192. Appointment of director, trustee or other officer or stock- holder as receiver. 193. Certain sales, transfers and judgments void. 194. Omission, defect or default of receiver. 195. Exception of certain corporations. § 170. Petition for voluntary dissolution of corporation. If a majority of the directors, trustees, or other officers, having the managemeiit of the concerns of a corporation created by or under the laws of the state, discover that the stock, effects, and other property thereof are not sufficient to pay all just demands, for which it is liable, or to afford a reasonable security to those who may deal with it ; or if, for any reason, they deem it beneficial to the interests of the stockholders that the corporation should be dissolved, they may present a petition to the supreme court praying for a final order dissolving the corporation, as prescribed in this article. §§ 171-174. General Corporation Law. §171. Directors or trustees may be required to petition. It shall be the duty of a majority of the directors or trustees of every corporation created by or under the laws of this state to pre- sent a petition as prescribed in the last section whenever directed so to do by a majority in interest of its stockholders. § 172. Petition when directors or trustees do not agree. If a corporation, created under a general statute of the state for the formation of corporations or under any special act or charter has an even number of trustees or directors who are equally divided respecting the management of its affairs, or if the stock of such corporation is equally divided into not more than two inde- pendent ownerships or interests, or if the entire stock of the cor- poration is, at that time, owned by the trustees or directors who are even in number or equally divided representing the manage- ment of its affairs, or if the stock is so divided, that one-half thereof is owned or controlled by persons favoring the course of part of the trustees or directors and one-half thereof is owned by persons favoring the course of the other trustees or directors, the trustees or directors or the stockholders or one or more of them may present a petition as prescribed in section one hundred and seventy of this chapter. § 173. Corporations excepted from two preceding sections. Sections one hundred and seventy-one and one hundred and sev- enty-two of this chapter do not apply to a savings bank, a trust company, a safe deposit company, or a corporation formed to rent safes in burglar and fire-proof vaults, or for the construction or operation of a railroad, or for aiding in the construction thereof, or for carrying on the business of banking or insurance, or intended to derive a profit from the loan or use of money. § 174- Contents of petition. The petition must show that the case is one of those specified in sections one hundred and seventy and one himdred and seventy- two of this chapter, and must state the reasons, which induce the petitioner or petitioners to desire the dissolution of the corporation* General Cokpoeation Law. §§ 175, 176. A schedule must be annexed to the petition, containing the follow- ing matters, as far as the petitioner or petitioners know, or have the means of knowing the same : 1. A full and true account of all the creditors of the corpora- tion, and of all unsatisfied engagements, entered into by, and subsisting against, the corporation. 2. A statement of the name and place of residence of each creditor, and of each person with whom such an engagement was made, and to whom it is to be performed, if knowm ; or, if either is not known, a statement of that fact. 3. A statement of the sum owing to each creditor, or other per- son specified in the last subdivision, and the nature of each debt, demand, or other engagement. 4. A statement of the true cause and consideration of the in- debtedness to each creditor. 5. A full, just, and true inventory of all the property of the corporation, and of all the books, vouchers, and securities, relating thereto. 6. A statement of each incumbrance upon the property of the corporation, by judgment, mortgage, pledge, or otherwise. 7. A full, just, and true account of the capital stock of the cor])oration, specifying the name of ea(5h stockholder; his residence, if it is known, or if it is not known, stating that fact; the number of shares belonging to him; the amount paid in upon his shares; and the amount still due thereupon. Am'd by L. 1909, ch. 240. § 175. Affidavit to be annexed to petition. An affidavit, made by each of the petitioners, to the eifect that the matters of fact, stated in the petition and the schedule, are just and true, so far as the affiant knows or has the moans (>f kiio\' in.- the same, must be annexed to the petition and schedule. § 176. Presentation of petition. The papers must be presented at a special term of the supreme court, held within the judicial district, embracing the county wherein the principal office of the corporation is located. §§ 177-180. Genekal Corporation Law. ! § 177. Corporations without stockholders. In the case of corporations affected by the provisions of thi^ article and not having stockholders, it shall be sufficient for the purposes of this article to notify, name and refer to the " mem- bers " of such corporations, instead of " stockholders," as herein provided. § 178. Action by court upon petition for dissolution. In a case specified in sections one hundred and sevenjty-one and one hundred and seventy-two of this chapter the court may, in its discretion, entertain or dismiss the application. Where it enter- tains the application, or where the cause is one of those specified in section one hundred and seventy of this chapter, the court must make an order, requiring all persons interested in the corporation to show cause before it, or before a referee designated in the order, at a time and place therein spKXjified, not less than six weeks after the granting of the order, why the corporation should not be dissolved. Ara'd by L. 1909, ch. 240. § 179. Publication of order to show cause why corporation should not be dissolved. A copy of the order must be published, as prescribed therein, at least once in each of the three weeks immediately preceding the time fixed therein for showing cause, in one or more newspapers, specified in the order, published in the city or county wherein the order is entered. , § 1 80. Service of order to show cause. A copy of the order must also be serv^ed upon each of the persons, specified in the schedule as a creditor or stockholder of the corpora- tion, or as a person to whom an engagement of the corporation is to be performed, other than a person whose residence is stated to be unknown, or to be without the United States. The service must be made either personally, at least ten days before the time ap- pointed for the hearing; or by depositing a copy of the order, at least twenty days before the time so appointed, in the post-office, Genekal Cokpoeation Law. §§ 181-184:. inclosed in a postpaid wrapper, addressed to the person to be served, at his residence, as stated in the schedule. § 181. Entering and filing order and papers. The order must be entered, and the papers must be filed, within ten days after the order is made, with the clerk of the county where the principal office of the corporation is located. § 1 82. Temporary receiver. If it shall be made to appear to the satisfaction of the court that the corporation is insolvent, the court may at any stage of the proceedings before the final order, on motion of the petitioners on notice to the attorney-general, or on motion of the attorney- general on notice to the corporation, appoint a temporary receiver of the property of the corporation, which receiver shall have all the po\\ ers and be subject to all the duties that are defined as belonging to temporary receivers appointed in an action, in section one him- dred and four of this chapter. The court may also, in its discre- tion, at any stage in the proceeding after the appointment of a temporary receiver, upon like motion and notice, confer upon such temporary receiver the powers and authority, and subject him to the duties and liabilities of a permanent receiver, or as much thereof as it thinlcs proper, except that he shall not make any final distribution among the creditors and stockholders, before final order in the proceedings, unless he is specially directed so to do by the court. § 183. Application for appointment of receiver. Every application made for the appointment of a receiver of a corporation other than applications made by the attorney-general on behalf of the people of the state, shall be made at a special term of the supreme court held in and for the judicial district in which the principal business office of the corporation is located. § 184. Injunction. If a temporary receiver be appointed, the court may, in its dis- cretion, on like motion and notice, with or without security, at any stage of the proceeding before the final order, grant an injunction, §§ 185-189' General Corporation Law. restraining the creditors of the corporation, from beginning any action against the said corporation for the recovery of a sum of money, or from taking any further proceedings in such an action theretofore commenced. Such injuction shall have the same effect and be subject to the same provisions of law as if each creditor upon whom it is served was named therein. § 185. Referee. If a referee was not designated in the order to show cause, the court may, in its discretion, appoint a referee when or after the order is returnable. § 186. Hearing. At the time and place specified in the order, or at the time and place to which the hearing is adjourned, the court, or the referee, must hear the allegations and proofs of the parties, and determine the facts. § 187. Decision. The decision of the court, or the report of the referee, must be in writing, and must be made and filed with all convenient speed. It must contain a statement of the effects, credits, and other prop- erty, and of the debts and other engagements, of the corporation, and of all other matters, pertaining to its affairs. § 188. Use of original papers on hearing. The court or the referee is entitled to use, upon the hearing, the original petition, ^nd the schedules annexed thereto ; and the clerk must transmit them accordingly, upon the written order of the judge, or of the referee. In that case, they must be returned with the decision or report. § 189. Amending papers. The court may, at any stage of the proceedings before final order, on the application of the petitioners, or a majority of them, or on the application of the temporary receiver, grant an order amending the schedules annexed to the original petition, by the insertion of additional items, or by making the statements or General Coeporation Law. §§ 190, 191. inventory fuller and in greater detail than as originally filed, with the like effect as though said petition and schedules had been orig- inally presented and filed as amended. § 190. Final order. Where the hearing is before a referee, a motion for a final order must be made to the court, upon notice to each person who has made himself a party to the proceedings, by filing with the clerk, before the close of the hearing, a notice of his appearance, in per- son or by attorney, specifying a post-office within the state, where such a notice may be served. The notice may be served as pre- scribed in the code of civil procedure for the service of a paper upon an attorney in an action. Where the hearing was before the court, a motion for a final order may be made immediately, or at such a time and upon such a notice, as the court prescribes. § 191. Permanent receiver. Upon an application for a final order, if it appear to the court in a case specified in section one hundred and seventy of this chap- ter that the corporation is insolvent, or, in a case specified either in that section, or in section one hundred and seventy-one and one hundred and seventy-two of this chapter, that for any reason a dissolution of the corporation Vvill be beneficial to the interests of the stockholders and not injurious to the public interests, the court must mal^e a final order dissolving the corporation, and appointing one or more receivers of its property. But in the case of a solvent corporation, the court may, if there is no objection by creditors, dispense with a receiver and provide in the final order for the dis- tribution of the assets. The order shall be entered in the office of the clerk of the county in which the principal business office, or the principal place of business of the corporation is located, and a certified copy thereof, if a banking corporation, shall be filed in the office of the superintendent of banks; if an insurance corporation, in the office of the superintendent of insurance; and if a business, transportation, railroad or membership corporation, in the office of the secretary of state. Upon the entry of the order and the filing of a certified copy thereof as herein provided, the corporation is dissolved. A receiver appointed under this section §§ 192-19'5. Genekal Cokpokation Law. sliall have all the powers, duties and liabilities of j-eceivcrs under article eleven of this chapter. Amended by L. 1909, chap. 240, and L. 1916, chap. 53. In effect March 21, 1916. § 192. Appointment of director, trustee or other officer or stockholder as receiver. The court may, in its discretion, appoint a director, trustee, or other officer, or a stockholder of the corporation, a receiver of its property. § 193. Certain sales, transfers and judgments void. A sale, assignment, mortgage, conveyance, or other transfer, of any property of a corporation, made after the filing of a petition as prescribed in this article, in payment of, or as security for, an existing or prior debt, or for any other consideration ; or a judg- ment thereafter rendered against the corporation by confession, or upon the acceptance of an offer, is absolutely void, as against the receiver appointed in the special proceeding, and as against the creditors of the corporation. § 1 94. Omission, defect or default of receiver. In a proceeding for the voluntary dissolution of a corporation, the court may, in the furtherance of justice, upon notice to the attorney-general, and the attorney-general not objecting, and upon euch further notice to creditors or others interested as the court shall direct, which notice may be made by mail upon all persons and corporations not residing or existing within the state, relieve a receiver from any omission, defect or default, in any proceed- ing or act required by law to be taken or done, or in the giving of any notice required by law to be given, and the court may upK)n like notice, confirm any act of a receiver, and any decision, report, order or judgment made in such proceeding. § 195. Exception of certain corporations. This article does not apply to an incorporated library society, to a religious corporation, or to a select school or academy, incor- porated by the regents of the university or by the legislature, or to a mimicapal or other political corporation. Geneiull Cobpobation Law. §§ 220, 221. ARTICLE 10. Dissolution of Stock Cobpobation without Judicial Pboceedings. Seotion 220. Dissolution of stock corporation before beginning business. 221. Disisolution of stock corporation before expiration of time limit. § 220. Dissolution of stock corporation before beginning business. The incorporators named in any certificate of incorporation filed for the purpose of creating a domestic stock corporation, other than a moneyed or transportation corporation, may, before the payment of any part of the capital, and before beginning busi- ness, surrender all corporate rights and franchises, by signing, verifying and filing in the office of the secretary of state and the clerk of th^ county where the certificate of incorporation is filed, a certificate setting forth the names of the incorporators, that no part of the capital has been paid, that there are no liabilities, that such business has not been begun, and surrendering all rights and franchises ; and proof of the facts set forth in such certificate to the satisfaction of the secretary of state; and thereupon the said cor- poration shall be dissolved, and its corporate existence and power shall cease. In case any incorporator of such a corporation shall be deceased, then the aforesaid certificate may be made by the surviving incorporators providing two years shall have elapsed since the date of its incorporation, but in such case the certificate shall set forth the fact that one or more of said incorporators is deceased. § 221. Dissolution of stock corporation before expiration of time limit. Any stock corporation, except a moneyed or a railroad corpora- tion, may be dissolved before the expiration of the time limited in its certificate of incorporation or in its charter as follows: 1. The board of directors of any such corporation may at a meeting called for that nurpose, upon at least three days' notice § 221. General Coepoeation Law. tx) each director, bj a vote of a majority of the whole board, adopt a resolution that it is in their opinion advisable to dissolve such corporation forthwith, and thereupon shall call a meeting of the stocldiolders for the purpose of voting upon a proposition that such corporation be forthwith dissolved. Such meeting of the stock- holders shall be held not less than thirty nor more than sixty days after the adoption of such resolution, and the notice of the time and place of such meeting so called by the directors shall be published in one or more newspapers published and cir- culating in the county wherein such corporation has its principal office, at least once a \\eek for three weeks successively next pre- ceding the time appointed for holding such meeting, and on or before the day of the first publication of such notice, a copy thereof shall be served personally on each stockholder, or mailed to him at his last known post-office address. Such meeting shall be held in the city, town or village in which the last preceding annual meeting of the corporation was held, and said meeting may, on the day so appointed, by the consent of a majority in interest of the stockholders present, be adjourned from time to time, and notice of such adjournment shall be published in the newspapers in which the notice of the meeting is published. If at any such meeting the holders of two-thirds in amount of the stock of the corporation, then outstanding, shall, in person or by attorney, consent that such dissolution shall take place and signify such consent, in writing, then such corporation shall file such cx)nsent, attested by its secretary or treasurer, and its president or vice-president, together with the powers of attorney signed by such stockholders executing such consent by attorney, with a statement of the names and residences of the then existing board of directors of said corporation, and the names and residences of its officers duly verified by the secretary or treasurer or president of said corporation, in the office of the secretary of state. 2. The secretary of state shall thereupon issue to such corpora- tion, in duplicate, a certificate of the filing of such papers and that it appears therefrom that such corporation has complied with this section in order to be dissolved, and one of such duplicate certificates shall be filed by such corporation in the office of the General Oorpoeation Law. § 221* clerk of the county in which such corporation has its principal office ; and thereupon such corporation shall be dissolved and shall cease to carry on business, except for the purpose of adjusting and winding up its business. The board of directors shall cause a copy of ^uch certificate to be published at least once a week for two weeks in one or more newspapers published and circulating in the county in which the principal office of such corporation is located, and at the expiration of such publication, the said cor- poration by its board of directors shall proceed to adjust and wind up its business and affairs with power to carry out its con- tracts and to sell its assets at public or private sale, and to apply the same in discharge of debts and obligations of such corpora- tion, and, after paying and adequately providing for the payment of such debts and obligations, to distribute the balance of assets among the stockholders of said corporation, according to their respective rights and interests. :5. Said corporation shall nevertheless continue in existence for the purpose of paying, satisfying and discharging any existing debts or obligations, collecting and distributing its assets and doing all other acts required in order to adjust and wind up its business and affairs, and may sue and be sued for the purpose of enforcing such debts or obligations, until its business and affairs are fully adjusted and wound up, 4. After paying or adequately providing for the debts and obligations of the corporation the directors may, with the written consent of the holders of two-thirds in amount of the capital stock, sell the remaining assets or any part thereof to a corporation organized under the laws of this or any other state, and engaged in a business of the same general character, and take in payment therefor the stock or bonds or both of such corporation and dis- tribute them among the stockholders, in lieu of money, in pro- portion to their interest therein, but no such sale shall be valid as against any stockholder, who, within sixty days after the mail- ing of notice to him of such sale, shall apply to the supreme) court in the manner provided by section seventeen of the stock cx)rporation law, for an appraisal of the value oi his interest § 225, 226. General Corporation Law. in the assets so sold ; unless within thirty days after such appraisal the stockholders consenting to such sale, or some of them, shall pay to such objecting stockholder or deposit for his account, in the manner directed by the court, the amount of such appraisal aud upon such payment or deposit the interest of such objecting stock- holder shall vest in tlie person or persons making such payment or deposit. ARTICLE 10-a. Provisions Applicable to Temporary and Permanent Receivers of Corpop^tions. Section 225. Security. 226. Removal or new bond. ^ 227. Notice to sureties upon accounting. § 225. Security. A receiver, appointed in an action or special proceeding, mast, before entering upon his duties, execute and file with the proper clerk, a bond to the people, wdth at least two sufficient sureties, in a penalty fixed by the court, judge, or referee, making the appoint- ment, conditioned for the faithful discharge of his duties as re- ceiver ; and the execution of any such bond by any fidelity or surety company authorized by the laws of this state to transact business, shall be equivalent to the execution of said bond by two sureties. But this section does not apply to a case where special provision is made by law for the security to be given by a receiver or for increasing tlie same. Added by L. 1909, ch. 240. § 226. Removal or new bond. The court, or, where the order was made out of court, the judge making the order, by or pursuant to which the receiver was ap- pointed^ or his successor in office, may, at any time, remove the receiver, or direct him to give a new bond, with new sureties, with tJie like condition specified in the last section. But this section General Corporation Law. § 227. does not apply to a case where special provision is made by law for the security to be given by a receiver, or for increasing the same, or for removing a receiver. Added by L. 1900, ch. 240. § 227. Notice to sureties upon accounting. A receiver wlio, having executed and filed a bond as provided for in section two hundred and twenty-five or section two hundred and twenty-six of this chapter, before presenting his accounts as receiver, must give notice to the surety or sureties on his official bond, of his intention to present his accounts, not less than eight days before the day set for the hearing on said accounting. The same notice must be given to such surety or sureties where the accounting is ordered on the petition of a person or persons other tlian the receiver, and in no case shall the receiver's accounts be passed, settled or allowed, unless the said notice provided for in this section shall have first been given to the surety or sureties on tlie official bond of such receiver. Added by L. 1909, ch. 240. AETICLE 11. Powers, Duties and Liabilities of Receivers of Corporation. Sbotion 230. Application of this article. 231. Receiver trustee of property. 232. Receiver's title to property. 233. Transfer of assets of corporation to receiver. 234. Security of receiver. 235. Authority of single receiver. 236. Authority where there is more than one receiver. 237. Surviving reoeiverB. 238. Oath of receiver. 239. General powers of receivers. 240. Power of receiver to institute proceedings to recover assets 241. Power of receiver in the settlement of controversies. 242. Power of receiver to employ counsel. 243. Power of receiver to hold real property. 244. Power of receiver to recover stock subscriptions. 245. Duty of receiver to convert assets into money. 246. Duty of receiver as to private sales. 247. Duty of receiver to keep accounts. §§ 230, 231. General Coepobation Law. Section 248. Duty of receiver to serve copy of report upon attornoy-general and superintendent of banks. 249. Duty of certain receivers to make reports. 250. Duty of receivers to give notice to creditors, 251. Delivery of property and payment of debts to receiver after notice. 252. Penalty for concealing property from receiver. 253. Duty of receiver to call creditors* meeting. 254. Proceedings at creditors' meeting. 255. Deduction of disbursements and commissions by receiver. 258. Refunding consideration of subsisting contracts. 257. Retention of funds for subsisting contracts and pending suits. 258. Payment of debts not due. 259. Allowance of set-offs. 260. Penalties recovered by receiver. 261. Order of payment by receiver. 262. Failure to file claim before first dividend. 263. Second dividend by receiver. 264. Surplus to stockholders. 265. Disposition of moneys retained by receiver for suits. 286. Duty of receiver as to unclaimed dividend. 267. Effect of failure to file claim before second dividend. 268. Final accounting by receiver. 269. Notice of final accounting. 270. Hearing on final accounting. 271. Reference of final account. 272. Further accounting. 273. Removal of receiver. 274. Vacancy. 275. Renunciation by receiver. 276. Control of receiver by court. 277. Commissions and expenses of receiver in voluntary dissolution. 278. Commissions and expenses of receiver except in voluntary dissolution. § 230. Application of this article. Unless otherwise provided the provisions of this article shall apply only to permanent receivers appointed pursuant to section one hundred and six or section one hundred and ninety-one of this chapter. § 231. Receiver trustee of property. Permanent receivers shall he trustees of the property for the benefit of the creditors of the corDoration and of its stockholders. General Corporation Law. §§ 232-236. § 232. Receiver's title to property. Such receivers shall, from the time of their having filed the security required by law, be vested with all the property, real or personal, vested or contingent of the corporation. Am'd by L. 1909, ch. 240, and L. 1913, eh. 766. § 233. Transfer of assets of corporation to receiver. In all cases where receivers have been or shall be appointed for any corporation of this state other than an insurance company on application by the attorney-general, all property, real and personal, and all securities of every kind and nature belonging to such cor- poration, no matter where located or by whom held, shall be trans- ferred to, vested in and held by such receiver ; provided, however, that such transfer shall only be made when directed by an order of the supreme court, due notice of the application for such order having been made on the attorney-general and the custodian of the funds, securities or property. § 234. Security of receiver. Before entering upon the duties of their appointment, such receivers shall give such security to the people of the state, and in such penalty, as the court shall direct, conditioned for the faithful discharge of the duties of their appointment, and for the due accounting for all moneys received by them. § 235. Authority of single receiver. When one receiver only, shall be appointed, all the provisions herein contained, in reference to several receivers shall apply to him. § 236. Authority where there is more than one receiver. When there are more receivers than one appointed, the debts and property of the corporation may be collected and received by any one of them ; and when there are more than two receivers ap- pointed, every power and authority conferred on the receivers may be exercised by any two of thenu §§ 237-239. General Corporation Law. § 237. Surviving receivers. The survivor or survivors of any receivers shall have all the powers and rights given to receivers. All property in the hands of any receiver at the time of his death, removal or incapacity, shall be delivered to the remaining receiver or receivers, if there be any; or to the successor of the one so dying, removed or inca- pacitated ; who may demand and sue for the same. § 238. Oath of receiver. Before proceeding to the discharge of any of their duties, all such receivers shall take and subscribe an oath, that they will well and truly execute tlie trust by their appointment reposed in them, according to the best of their skill and understanding; which oath shall be filed vdth the officer or court, that appointed them. § 239. General powers of receivers. The said receivers shall have power: 1. To sue in their own names or otherwise, and recover all the property, debts and things in action, belonging or due or to become due to such corporation, whether accruing or maturing before or after the dissolution thereof and whether vested or con- tingent at the time of such dissolution, in the same manner and with the like effect as such corporation might or could have done if no receivers had been appointed ; and no set-off shall be allowed in any such suit, for any debt, unless it was owing to such creditor by such corporation before the appointment of the re- ceiver of such corporation, or unless it shall have been duly con- tracted by such receiver subsequent to his appointment; not- withstanding the notice to creditors the receivers may sue for and recover any property or effects of the corporation and any debts due to it, at any time, before the day appointed for the delivery or payment thereof ; 2. To take into their hands, all the property of such corpora- tion, whether attached, or delivered to them, or afterwards dis- covered; and all books, vouchers and securities relating to the, same; General Corporation Law. § 239. 3. In the case of a non-resident, absconding or concealed debtor, to demand and receive of every sheriff vrho shall have attached any of the property of snch debtor, or who shall have in his hands, any moneys arising from the sale of such property, all snch prop- erty and moneys, on paying him his reasonable costs and charges, for attaching and keeping the same, to be allowed by the court having jurisdiction ; 4. From time t/O time, to sell at public auction, all the prop- erty, real and personal, vested in them, which shall come to their hands, after giving at least fourteen days' public notice of the time and place of sale, and also publishing the same for two weeks in a newspaper, printed in the county, where the sale shall be made, if there be one ; 5. To allow such credit on the sale of real property by them, as they shall deem reasonable, subject to the provisions of this article for not more than three-fourths of the purchase money; which credit shall be secured by a bond of the purchaser, and a mortgage on the property sold; 6. On such sales, to execute the necessary conveyances and bills of sale. 7. To redeem all mortgages and conditional contracts and all pledges of personal property, and to satisfy any judgments, which may be an incumbrance on any property so sold by them ; or to sell such property subject to such mortgages, contracts, pledges or judgments; 8. To settle all matters and accounts between such corporation and its debtors, or creditors, and to examine any person touching such matters and accounts, on oath, to be administered by either of them ; 9. Under the order of the court appointing them, to compound with any person indebted to such corporation and thereupon to discliarge all demands again^ such person. Amended by L. 1913, chap. 766. § 240. General Corporation Law. § 240. Power of receiver to institute proceedings to recover assets. Whenever any receiver of a domestic corporation, or of the prop- erty within this state of any foreign corporation, shall have been appointed and qualiiied, as provided in articles five, six, seven, nine, eleven or twelve of this chapter either before, upon, or after final judgment or order in the action or special proceeding in which such appointment was made, and shall, by his own verified petition, affidavit or otlier competent proof, show to the supreme court, at a special term thereof, held within the judicial district wherein such appointment was made, that he has good reason to believe that any officer, stockholder, agent or employee of such corporation, or any otlier person whomsoever, has embezzled or concealed, or withholds or has in his possession or under his control, or has wrongfully disposed of, any property of such corporation which of right ought to be surrendered to the receiver thereof; or that any person can testify concerning the embezzlement, concealment, withholding, possession, control or wrongful disposition of any such property, the court shall make an order, with or without notice, commanding such person or persons to appear at a time and place to be designated in the order, before the court or before a referee named by the court for that purpose, and to submit to an examination concerning such embezzlement, concealment, with- holding, possession, control or wrongful disposition of such prop- erty ; and at the time of making such order or at any time there- after, the court may, in its discretion, enjoin and restrain the person or persons so ordered to appear and be examined from in any manner disposing of any property of such corporation which may be in the possession or under the control of the person so or- dered to be examined, until the further order of the court in rela- tion thereto. 'No person so ordered to appear and be examined shall be excused from answering any question on the ground that his answer might tend to convict him of a criminal offense; but his testimony taken upon such examination shall not be used against him in any criminal action or proceeding. Any person so ordered to appear and be examined shall be entitled to the same fees and mileage, to be paid at the time of General Coeporation Law. § 241. serving the order, as are allowed by law to witnesses subpoenaed to attend and testify in an action in the supreme court, and shall be subject to the same penalties upon failure to appear and tes- tify in obedience to such an order as are provided by law in the case of witnesses who fail to obey a subpoena to appear and testify in an action. Any person appearing for examination in obedience to such order shall be sworn by the court or referee to tell the truth, and shall be entitled to be represented on such examination by counsel, and may be cross-examined, or may make any voluntary statement in his own behalf concerning the subject of his examination which may seem to him desirable or pertinent thereto. The court before which such examination is taken, as well as the referee, if one be appointed for that purpose, shall have power to adjourn such examination from time to time, and may rule upon any question or objection arising in the course of such exami- nation, to the same extent that might be done if the person so examined were testifying as a witness in the trial of an action. When the examination of any person under such order shall be concluded, the testimony shall be signed and sworn to by the person so examined, and shall be filed in the office of the clerk of the county where the action is pending, or was tried, in which the receiver was appointed; and if from such testimony it shall appear to the satisfaction of the court that any person so exam- ined is wrongfully concealing or withholding, or has in his posses- sion or under his control, any property which of right belongs to such receiver, the court may make an order commanding the per- son so examined forthwith to deliver the same to such receiver, who shall hold the same subject to the further order of the cx)urt in relation thereto; and otherwise, the court may, at the con- clusion of any such examination, make such final order in the premises as the interests of justice require. § 241 . Power of receiver in the settlement of controversies. If any controversy shall arise between the receivers and any other jierson, in the settlement of any demands against such cor- poration, or of debts due to auch corporation tbe same may be § 24:1. General CoRroRATioN Law. referred to one or more indifferent persons, who may be agreed upon by the receivers and tlie party, with whom such controveray shall exist, by a writing to that effect, signed by them. If such referee or referees be not selected by agreement, then the receivers or the other party to the controversy, provided no action at law is pending arising out of any such debts or demands, may serve a notice of their intention to apply to any judge of the gupreme court at chambers, residing in the same district vrith said receivers, for the appointment of one or more referees, specifying the time and place when such application will be made, which notice shall be served at least ten days before the time so therein specified. On the day so specified, upon due proof of the service of such notice, the judge before whom the application is made may, in his discretion, proceed to select one or more referees, the same in all respects as they are now selected according to the rules and practice of the supreme court. When any witness to such controversy shall reside out of the county where the said receivers resided at the time of their appointment, the referee or referees appointed to hear said con- troversy shall have pmver to issue a commission or commissions in like manner as justices of the peace are now authorized to issue the same, and the testimony so taken shall be returned to said referee or referees in the same manner, and be read before them on a hearing, in like manner as testimony taken on commission before justices of the peace. The officer before whom they shall be selected, shall certify such selection in writing. Such certificate, or the written agreement of the parties, shall be filed by the receivers in the office of a clerk of the supreme court, and an order shall thereupon be entered by such clerk in vacation or in term, appointing the persons so selected to determine the controversy. Such referees shall have the same powers, and be subject to the like duties and obligations, and shall receive the same compensa- tion, as referees appointed by the supreme court, in personal actions pending therein. The report of the referees shall be filed in the same office where the order for their appointment was entered, and shall be con- clusive on the rights of the parties, if not set aside by the court General Corporation Law. §§ 242, 243. § 242, Power of receiver to employ counsel. If the receiver of a corporation employs counsel he shall within three months after he has qualified as receiver enter into a written contract fixing the compensation of such counsel at not exceeding a certain amount or a certain percentage of the sums received and disbursed by him, which contract must be approved by the supreme court, on at least eight days' notice to the attorney-general. A payment by such receiver to his counsel on account of services shall only be made, pursuant to an order of the court, on notice to the attorney-general and. subject to review on the final accounting. A contract with counsel shall not be made for a longer period than eighteen months, but may be renewed from time to time for periods of not more than one year, if approved by the supreme court on at least eight days' notice to the attorney-general. In c^se of the intervention of any policy-holder or depositor, by per- mission of the court, such policy-holder or depositor shall defray the legal expenses thereof, and no allowance shall be made for costs or fees to any attorney of such policy-holder or depositor. It shall be unlawful for receivers of an insurance, banking or railroad corporation, or trust company to pay to any attorney or counsel any costs, fees or allowances until the amounts thereof shall have been stated to the special term as provided in section two hundred and forty-nine of this chapter, as expenses incurred, and shall have been approved by that court., by an order of the court duly entered; and any such order shall be the subject of review by the appellate division and the court of appeals on an appeal taken therefrom by any party aggrieved thereby. § 243. Power of receiver to hold real property. A receiver,. appointed by or pursuant to an order or a judgment, in an action in the supreme court or a county court, or in a special proceeding for the voluntary dissolution of a corporation, may take and hold real property, upon such trusts and for such pur- poses as the court directs, subject to the direction of the court, from time to time, respecting the disposition thereof. §§ 244-248. General Cokpoeation Law. § 244. Power of receiver to recover stock subscriptions. If there shall be any sum remaining due upon any share of stock subscribed in such corporation, the receiver shall immediately proceed to recover the same, unless the person so indebted shall be wholly insolvent; and for that purpose may commence and pros- ecute any action or proceeding for the recovery of such sum, with- out the consent of any creditors of such corporation. § 245. Duty of receiver to convert assets into money. The receivers shall, as speedily as possible, convert the prop- erty, real and personal, of the corporation into money. § 246. Duty of receiver as to private sales. A receiver duly appointed in this state by and pursuant to a judgment in an action, or by and pursuant to an order in a special proceeding, may, upon application to the court by which such judgment was rendered, or such order was made, and upon notice to such parties as may be entitled to notice of applications made in such action or special proceeding, be authorized by the said court to sell or convey the property, whether real or personal, of the corporation of which he is the receiver, at private sale, upon such terms and conditions as the court may direct § 247. Duty of receiver to keep accounts. They shall keep a regular account of all moneys received by them as receivers ; to which, every creditor, or other person inter- ested therein, shall be at liberty, at all reasonable times, to have recourse. § 248. Duty of receiver to serve copy of report upon attor- ney-general and superintendent of banks. All receivers of insolvent corporations who are required by law to make and file reports of their proceedings shall at the time of making and filing such reports, serve a copy thereof upon the attorney-general of this state, and receivers of such corporations as report to, and are under the supervision of, the banking depart- ment shall on the first day of January and July of each year, General CoRPORATioisr Law. §§ 249, 250. during the continuance of their respective trusts, file with the superintendent of banks a report, verified by oath, in such form as the superintendent may prescribe, showing the condition of their respective trusts. In case any receiver of an insolvent corpo- ration shall neglect to make and file a report of his proceedings for thirty days after the time he is required by law to make and file such report, or shall neglect for the same length of time to serve a copy thereof on the attorney-general, as required by tliis section the attorney-general may mal^e a motion in the supreme court for an order to compel the making and filing and serving a copy on him of such report, or for the removal of such receiver from his office. § 249. Duty of certain receivers to make reports. It shall be the duty of every receiver of an insurance, banking or railroad corporation, or trust company, to present every six months to the special term of the supreme court, held in the judi- cial district wherein the place of trial or venue of the action or special proceeding in which he was appointed may then be, on the first day of its first sitting, after the expiration of such six months, and to file a copy of the same, if a receiver of a bank or trust com- pany, with the superintendent of banks ; if a receiver of an insur- ance company, with the superintendent of insurance; and in each case with the attorney-general, an account exhibiting in detail the receipts of his trust, and the expenses paid and incurred therein during the preceding six months. Of the intention to present such account, as aforesaid, the attorney-general, and also the surety or sureties on the official bond of such receiver, shall be given eight days' notice in writing; and the attorney-general shall examine the books and accounts of such receiver at least once every twelve months. § 250. Duty of receivers to give notice to creditors. The receivers, immediately upon their appointment, shall give notice thereof which shall be published for three weeks in a news- paper printed in the county where the principal place of con- ducting the business of such corporation shall have been situated ; and therein shall require, §§ 251-253. Geneeal Coepoeation Law. 1. All persons indebted to such corporation, by a day and at a place therein to be specified, to render an account of all debts and sums of money owing by them respectively, to such receivers and to pay the same. 2. All persons having in their possession any property or effects of such corporation to deliver the same to the said receivers by the day so appointed. 3. All the creditors of such corporation to deliver their respec- tive accounts and demands to the receivers or one of them, by a day to be therein specified, not less than forty days from the first publication of such notice. 4. All persons holding any open or susbsisting contract of such corporation, to present the same in writing and in detail to such receivers, at the time and place in such notice specified. § 251. Delivery of property and payment of debts to re- ceiver after notice. After the first publication of the notice of the appointment of receivers, every person having possession of any property belong- ing to such corporation, and every person indebted to such corpo- ration, shall account and answer for the amount of such debt and for the value of such property to the said receivers, * § 252. Penalty for concealing property from receiver. Every person indebted to such corporation, or having the posses- sion or custody of any property or thing in action, belonging to it, who shall conceal the same, and not deliver a just and true account of such indebtedness, or not deliver such property or thing in action, to the receivers, or one of them, by the day for that purpose appointed, shall forfeit double the amount of such debt, or double the value of such property so concealed; which penalties may be recovered by the receivers. § 253. Duty of receiver to call creditors' meeting. They shall call a general meeting of the creditors of such cor- poration, within four months from the time of their appointment by a notice to be published in the same manner, as herein- GrENERAL CoRPOEATlON LaW. §§ 254-257. before directed respecting the publication of tJie notice of their appointment; in which notice, they shall specify the place and time of such meeting, which time shall not be more than three months, nor less than two months after the first publication of such notice. Every such notice shall be published at least once in each week, until the time of such meeting. § 254. Proceedings at creditors' meeting. At such meeting, or other adjourned meeting thereafter, all accounts and demands for and against such corporation, and all its open and subsisting contracts, shall be ascertained and adjusted as far as may be, and the amount of moneys in the hands of the receivers declared. § 255. Deduction of disbursements and commissions by receiver. Out of the moneys in their hands the receivers may first deduct all the necessary disbursements made by them in the discharge of their duty and such commissions as may be allowed by law. § 256. Refunding consideration of subsisting contracts. If there shall be any open and subsisting engagements or con- tracts of such corporation, which are in the nature of insurances or contingent engagements of any kind, the receivers may, with the consent of the party holding such engagement, cancel and discharge the same, by refunding to such party the premium or consideration paid thereon by such corporation, or so much thereof as shall be in the same proportion to the time which shall remain of any risk assumed by such engagement, as the whole premium bore to the whole term of such risk; and upon such amount being paid by such receivers to the person holding or being the legal owner of such engagement, it shall be deemed canceled and dis- charged as against such receivers. § 257. Retention of funds for subsisting contracts and pending suits. The receivers shall retain out of the moneys in their hands, a suiRcient amount to pay the sums, which they are hereinbefore §§ 258-261. General Corporation Law. authorized to pay, for the purpose of canceling and discharging any open or subsisting engagements. If any suit be pending against the corporation or against the receivers, for any demand, the receivers may retain the proportion which would belong to such demand if established, and the necessary costs and proceed- ings, in their hands, to be applied according to the event of such suit, or to be distributed in a second or other dividend. § 258. Payment of debts not due. Every person to whom a corporation shall be indebted on a valuable consideration, for any sum of money not due at the time of such distribution, but payable afterwards, shall receive his proportion with other creditors, after deducting a rebate of legal interest upon the sum distributed, for the time unexpired of such credit § 259. Allowance of set-offs. Where mutual credit has been given by any corporation, and any other person, or mutual debts have subsisted between such cor- poration and any other person, the receivers may set off such credits or debts, and pay the proportion or receive the balance due. But no set-off shall be allowed of any claim or debt, which would not have been entitled to a dividend, as hereinbefore directed. No set-off shall be allowed by such receivers, of any claim or debt, which shall have been purchased by, or transferred to, the person claiming its allowance, which could not have been set off by him, in a suit brought by such receivers. § 260. Penalties recovered by receiver. All penalties which shall be recovered by any receivers, pursuant to the provisions of this article, shall be deemed a part of the property of the corporation, and shall be distributed as such among its creditors. § 261. Order of payment by receiver. The receivers shall distribute the residue of the moneys in their hands, among all those who shall have exhibited their claims as creditors, and whose debts shall have been ascertained, as follows: General Coepoeation Law. §§ 262, 263. 1. All debts due by such corporation to the United States, and all debts entitled to a preference under the laws of the United States, 2. All debts that may be owing by the corporation as guardian, executor, administrator or trustee; and if there be not sufficient to pay all debts of the character above specified, then a distribution shall be made among them, in proportion to their amounts respectively. 3. Judgments actually obtained against such corporation, to the extent of the value of the real estate on which they shall respectively be liens. 4. All other creditors of such corporation, in proportion to their respective demands, without giving any preference to debts due on specialties. § 262. Failure to file claim before first dividend. Every creditor who shall have neglected to exhibit his demand before the first dividend, and who shall deliver his account to the receivers before the second dividend, shall receive the sum he would have been entitled to on the first dividend, before any distribution be made to the other creditors. § 263. Second dividend by receiver. If tlie whole of the property of such corporation be not dis- tributed on the first dividend, the receivers shall, within one year thereafter, make a second dividend of all the moneys in their hands, among the creditors entitled thereto; of which, and that the same will be a final dividend, three weeks' notice shall be inserted once in each week in a newspaper printed in the county where the principal place of business of such corporation was situated. Such second dividend shall be made in all respects in the same manner as herein prescribed in relation to the first dividend, and no other shall be made thereafter among the creditors of such cor- poration, except to the creditors having suits against it, or against the receivers, pending at the time of such second dividend, and §§ 264-267. General Corporation Law. except of the moneys which may be retained to pay such creditors, as herein provided. § 264. Surplus to stockholders. If after the second dividend is made, there shall remain any surplus in the hands of the receivers, they shall distribute the same among the stockholders of such corporation, in proportion to the respective amounts paid in by them, severally, on their shares of stock. § 265. Disposition of moneys retained by receiver for suits. Wlien any suit pending at the time of the second dividend shall be terminated, they shall apply the moneys retained in their hands for that purpose, to the payment of the amount recovered, and tbeir necessary charges and expenses; and if nothing shall have been recovered, they shall distribute such moneys, after deducting their expenses and costs, among the creditors and stock- holders of the corporation, in the same manner as herein directed in respect to a second dividend. § 266. Duty of receiver as to unclaimed dividend. If any dividend that shall have been declared, shall remain un- claimed by the person entitled thereto for one year after the same was declared, the receivers shall consider it as relinquished, and shall distribute it, on any subsequent dividend, among the other creditors. § 267. Effect of failure to file claim before second dividend. After such second dividend shaJl have been made, the receivers shall not be answerable to any creditor of such corporation, or to any person having claims against such corporation, by virtue of any open or subsisting engagement, unless the demands of such creditor shall have been exhibited^ and the engagements upon which such claims are founded, shall have been presented to the said receivers, in detail and in writing, before or at the time specified by them in their notice of a second dividend. General Corporation Law. §§ 26S-270. § 268. Final accounting by receiver. A receiver shall apply within one year after qualifying as such for a final settlement of his accounts and an order for distribution, or shall apply to the court upon notice to the attorney-general for an extension of time, setting forth the reasons why he is unable to close his accounts, which order may be granted in the discretion of the court. The attorney-general or any cred- itor, or any party interested, may apply for an order that the receiver show cause why an accounting and distribution shall not be had at any time after the expiration of one year after the receiver qualifies; and it shall be the duty of the attorney- general after the expiration of eighteen months from the time the receiver enters upon his duties, in case he has not applied for a final settlement of his accounts, to apply for such an order on notice to such receiver. In case of such application by a party other than the receiver the court shall direct the receiver to take steps to account with all convenient speed. The receiver is not required or authorized to file any accoimt, except as herein provided, except by special order of the court § 269. Notice of final accounting. Previous to rendering such account the receivers shall insert a notice of their intention to present the same, once in each week, for three weeks, in a newspaper, of the county in which notices of dividends are herein required to be inserted, specifying the time and place at which such account will be rendered. Said receivers shall also give notice to the sureties on their official bonds, as pro- vided in section two hundred and twenty-seven of this chapter. Am'd by L. 1909, ch. 240. § 270. Hearing on final accounting. Upon \he coming in of such report, the court shall hear the alle- gations of all cx)ncemed therein, and shall allow or disallow such account, and decree the same to be final and conclusive upon all the creditors of such corporation, upon all persons who have claims §§ 271-275. General Coepoeation Law. against it, upon any open or subsisting engagement, and upon all the stockholders of such corporation. § 271. Reference of final account. The referee to whom such account shall be referred, shall hear and examine the proofs, vouchers and documents offered for or against such account, and shall report thereon fully to the court § 272. Further accounting. Such receivers shall also account from time to time in the same manner, and with the like effect, for all moneys which shall come to their hands after the rendering of such account, and for all moneys which shall have been retained by them for any of the purposes hereinbefore specified, and shall pay into court all unclaimed dividends. § 273. Removal of receiver. Such receivers may be removed by the court. § 274. Vacancy. Any vacancy created by removal, death or otherwise, may be supplied by the court. § 275. Renunciation by receiver. Any receiver who shall be desirous of renouncing the trust vested in him, may apply to the court from whom his appointment was received, for an order to all persons interested, to show cause why such renunciation should not be accepted. Such application shall be accompanied by a full, true and just account of all the transactions of such receiver, and particularly of the property, moneys and effects received by him; of all pay- ments made, whether to creditors or otherwise ; and of the remain- ing effects and property of the corporation, in respect to which he was appointed receiver, within his knowledge, and the situation of the same. General Corporation Law. § 276. To such account shall be annexed the affidavit of the receiver, that the said account is in all respects just and true, according to the best of his knowledge and belief; which affidavit shall be subscribed and sworn to, before the court, to whom the application is made, and shall be certified by the clerk of the court. Such court, shall thereupon grant an order, directing notice to be given to all persons interested in the property of the cor- poration, in respect to which such receiver was appointed, to show cause on a day or at a term and at a place therein to be specified, why he should not be permitted to renounce his appointment. Such notice shall be published, once in each week, for six weeks successively in such newspapers, as such court shall direct. On the day appointed for such hearing, and on such other days as shall from time to time be appointed, if it shall appear that notice was duly published, the court shall proceed to hear the proofs and allegations of the parties. If it shall appear that the proceedings of such receiver, in relation to his trust, have been fair and honest, and particularly in the collection of the property and debts vested in him; and if such court be satisfied that for any reason it is inexpedient for such receiver to continue in the execution of the duties of his appointment, and that such duties can be exec?ited by another receiver, without injury to the property of the corporation, or to the creditors; and if no good cause to the contrary appear, such court shall grant an order, allowing such receiver to renounce his appointment. Upon such order being granted, such receiver shall be dis- charged from the trust reposed in him, and his power and au- thority shall thereupon cease; but he shall, notwithstanding, re- main subject to any liability he may have incurred, at any time previous to the granting of such order, in the management of his trust. The expense of all proceedings in effecting such renunciation Rhall be paid by the receiver making the application. § 276. Control of receiver by court. The receivers shall be subject to the control of the court and may be compelled to accoimt at any time. §§ 2Y7, 278- General Corpokation Law. § 277. Commissions and expenses of receiver in voluntary dissolution. A receiver appointed pursuant to article nine is entitled, in addition to his necessary expenses, to commissions upon the sums received and disbursed by him as the court by which or the judge by whom he is appointed allows, as follows: On the first twenty thousand dollars riot exceeding five per centum ; on the next eighty thousand dollars, not exceeding two and one-half per centum ; and on the remainder, not exceeding one per centum ; but in case the commissions of a receiver so computed shall not amount to one hundred dollars, said court or judge may in his or its discretion allow said receiver such a sum not exceeding one hundred dollars for his commissions as shall be commensurate with the services rendered by said receiver. § 278. Commissions and expenses of receiver except in voluntary dissolution. A receiver of a corporation, except a receiver appointed in pro- oeedings for its voluntary dissolution, is entitled, in addition to his necessary expenses, to such commissions, not exceeding two and one-half per centum upon the sums received and disbursed by him, as the court by which or the judge by whom he is appointed allows, but except upon a final accounting such a receiver shall not receive on account of his services for any one year a greater amount than twelve thousand dollars, nor for any period less than a year more than at that rate. Upon final accounting, the court may make an additional allowance to such receiver, not exceeding two and one-half per centum upon the sums received and disbursed by him, if the court is satisfied that he has performed services that fairly entitle him to such additional allowance. Where more than one receiver shall be appointed, the compersation herein provided shall be divided between said receivers. General Corporation Law. § 300. ABTICLE 12. Provisions Applicable to Two or More of the Foreooino Proceedings or Actions. Section 300. Application of preceding articles to certain corporations. 301. Officers and agents may be compelled to testify in certain actions. 302. Injunction staying actions by creditors in certain axytions. 303. Creditors of corporation may be brought in to prove their claims in certain actions. 304. When attorney -general must bring certain actions. 305. Requisites of injunction against corporations in certain cases. 306. Appointment of receivers of property of corporations. 307. Judicial suspension or removal of officer of corporation. 308. Application of the last three sections. 309. Misnomer not available in action against stockholder. 310. Appraisal of property of insolvent corporation. 311. Application by attorney-general for removal of receiver and to facilitate closing affairs of receivership. 312. Service of papers upon attorney-generai. 313. Designation of depositories of funds in order appointing receiver. 314. Application to the court in certain actions and proceedings. 315. County vrherein action may be brought by attorney-general on behalf of the people. 316. Preferences in actions *of proceedings by or against receivers. § 300. Application of preceding articles to certain corporations. Articles fifth, sixth or seventh of this chapter do not apply to a religious corporation ; or to a municipal or other political corpo- ration, created by the constitution, or by or under the laws of this state; or to any corporation which the regents of the university have power to dissolve, except upon the application of the regents, or of the trustees of such a corporation ; and in aid of its liquida- tion under such dissolution. * So in original. §§ 301-303. General Corporation Law. § 301. Officers and agents may be compelled to testify in certain actions. In an action, brought as prescribed in article fifth, sixth or seventh, a stockholder, officer, alienee, or agent of a corporation, is not excused from answering a question, relating to the manage- ment of the corporation, or the transfer or disposition of its prop- erty, on the ground that his answer may expose the corporation to a forfeiture of any of its corporate rights, or will tend to convict him of a criminal offense, or to subject him to a penalty or for- feiture. But his testimony shall not be used, as evidence against him, in a criminal action or special proceeding. § 302. Injunction staying actions by creditors in certain actions. In such an action, the court may, in its discretion, on the appli- cation of either party, at any stage of the action, before or after final judgment, and with or without security, grant an injunction order, restraining the creditors of the corporation from bringing actions against the defendants, or any of them, for the recovery of a sum of money, or from taking any further proceedings in such actions, theretofore commenced. Such an injunction has the same effect, and, except as otherwise expressly prescribed in this section, is subject to the same provisions of law, as if each creditor, upon whom it is served, was named therein, and was a party to the action in which it is granted. § 303. Creditors of corporation may be brought in to prove their claims in certain actions. In such an action, the court may, at any stage of the action, before or after final judgment, make an order requiring all the creditors of the coi'poration to exhibit and prove their claims, and thereby make themselves parties to the action, in such a manner, and in such a reasonable time, not less than six months from the fti'st publication of notice of the order as the court directs; and rjiiit the creditors, who make default in so doing, shall be pre- General Corporation Law. §§ 304, 305. eluded from all benefit of the judgment, and from any distribu- tion which may be made thereunder, except as hereinafter pro- vided. Notice of the order must be given by publication, in such newspapers, and for such a length of time, as the court directs. Notwithstanding such order any such creditor who shall exhibit and prove his claim in the manner directed thereby, with proof, by aifidavit or otherwise, that he has had no notice or knowledge thereof in time to comply therewith, any time before an order is made directing a final distribution of the assets of such corporation, shall be entitled to have his claim received, and shall have the same rights and benefits thereon, so far as the assets of such cor- poration then remaining undistributed may render possible, as if his claim had been exhibited and proved within the time limited by such order. § 304. When attorney-general must bring certain actions. Where the attorney-general has good reason to believe, that an action can be maintained in behalf of the people of the state, as prescribed in articles fifth, sixth or seventh of the chapter, except section one hundred and thirty of this chapter, he must bring an action accordingly, or apply to a competent court for leave to bring an action, as the case requires ; if, in his opinion, the public interests require that an action should be brought. In a case where the action can be brought only by the attorney-general in behalf of the people, if a creditor, stockholder, director, or trustee of the corporation, applies to the attorney-general for that purpose, and furnishes the security required by law, the attorney-general must bring the action, or apply for leave to bring it, if he has good reason to believe, that it can be maintained. Where such an application is made section nineteen hundred and eighty-six of the code of civil procedure applies thereto, and to the action brought in pursuance thereof. § 305. Requisites of injunction against corporations in cer- tain cases« An injunction order, suspending the general and ordinary busi- aess of a corporation, or suspending from office, or restraining § 306. General Coeporation Law. from the performance of his duties, a trustee, director, or other officer thereof, can be granted only by the court, upon notice of the application therefor, to the proper officer of the corporation, or to the trustee, director, or other officer enjoined. If such an injunction order is made, otherwise than as prescribed in this section, it is void. § 306. Appointment of receivers of property of corporations. A receiver of the property of a corporation can be appointed only by the court, and in one of the following cases : 1. An action, brought as prescribed in articles fifth, sixth or seventh of this chapter. 2. An action brought for the foreclosure of a mortgage upon the property, of which the receiver is appointed, where the mortr gage debt, or the interest thereupon, has remained unpaid, at least thirty days after it was payable, and after payment thereof was duly demanded of the proper officer of the corporation and where either the income of the property is specifically mortgaged, or the property itself is probably insufficient to pay the mortgage debt. 3. An action brought by the attorney-general, or by a stock- holder, to preserve the assets of a corporation, having no officer empowered to hold the same. 4. A special proceeding for the voluntary dissolution of a corporation. 5. Upon the application of the regents of the university, in aid of the liquidation of a corporation whose dissolution they con- template or have decreed ; or upon the application of the trustees of such a corporation, with notice to the regents. Where the receiver is appointed in an action, otherwise than by or pursuant to a final judgment, notice of the application for his appointment must be given to the proper officer of the corporation. Genekal Corpoeation Law. §§ 307-310. § 307, Judicial suspension or removal of officer of corporation. A trustee, director, or other officer of a corporation shall not be suspended or removed from office, by a court or judge, otherwise than by tlie final judgment of a competent court, in an action brought by the attorney-general, as prescribed in section ninety of this chapter. § 308. Application of the last three sections. The last three sections apply to an action or special proceeding, against a corporation created by or under the laws of the state, or a trustee, director, or other officer thereof ; or against a corporation created by or under the laws of another state, government, or country, or a trustee, director, or other officer thereof, where the corporation does business within the state, or has, within the state, a business agency or a fiscal agency, or an agency for the transfer of its stock. § 309. Misnomer not available in action against stock- holder. Where an action, authorized by a law of the state, is brought against one or more persons, as stockholders of a corporation, an objection to any of the proceedings can not be taken, by a person properly made a defendant in the action on the ground that the plaintiff has joined with him, as a defendant in the action, a person, whose name appears on the stock-books of the corporation, as a stockholder thereof, by the name so appearing; but who is misnamed, or dead, or is not liable for any cause. In such a case, the court may, at any time before final judgment, upon motion of either party, amend the pleadings and other papers, without preju- dice to the previous proceedings, by substituting the true name of the person intended, or by striking out the name of the person who is dead, or not liable, and, in a proper case, inserting the name of his representative or successor. § 310. Appraisal of property of insolvent corporation. Whenever by reason of the provisions of any law of this state it shall become necessary to appraise in whole or in part the §§ 311, 312. Genekal Coepoeation Law. property of any corporation in the kands of a receiver or other- wise, the persons whose duty it shall be to make such appraisal shall value the real estate at its full and true value, taking into consideration actual sales of neighboring real estate similarly situated during the year immediately preceding the date of such appraisal, if any; and they shall value all such property, stocks, bonds or securities as are customarily bought or sold in open markets in the city of New York or elsewhere, for the day on \\hich such appraisal or report may be required, by ascertaining the range of the market and the average of prices as thus found, running through a reasonable period of time. § 311. Application by attorney-general for removal of re- ceiver and to facilitate closing affairs of receivership. The attorney-general may, at any time he deems that the inter- ests of the stockholders, creditors, policy-holders, depositors or other beneficiaries interested in the proper and speedy distribution of the assets of any insolvent corporation will be subserved thereby, mal^e a motion in the supreme court at a special term thereof, in any judicial district : 1. For an order removing the receiver of any insolvent corpo- ration and appointing a receiver tJiereof in his stead, or, 2. To compel him to account, or, 3. For such other and additional order or orders as to him may seem proper to facilitate the closing up of the affairs of such receivership, and Any appeal from any order made upon any motion under this section shall be to the appellate division of the department in which such motion is made. § 312. Service of papers upon attorney-general. A copy of all motions and all motion papers, and a copy of any other application to the court, together with a copy of the order or judgment to be proposed thereon to the court, in every action or proceeding for the dissolution of a corporation or a distribution of its assets, shall, in all cases, be served on the attorney-general, ' Geneeal Coepoeation Law. §§ 313-315. in the same manner as provided by law for the service of papers on attorneys who have appeared in actions, whether the applica- tions bnt for this section would be ex parte or upon notice, and no order or judgment granted shall vary in any material respect from the relief specified in such copy, order or judgment, unless, the attorney-general shall appear on the return day and shall have been heard in relation thereto ; and any order or judgment granted in any action or proceeding aforesaid, without such service of such papers upon the attorney-general, shall be void, and no receiver of any such corporation shall pay to any person any money directed to be paid by any order or judgment made in any such action or proceeding, until the expiration of eight days after a certified copy of such order or judgment shall have been served as aforesaid upon the attorney-general. § 313. Designation of depositories of funds in order ap- pointing receiver. All orders appointing receivers of corporations shall designate therein one or more places of deposit, wherein all funds of the corporation not needed for immediate disbursement shall be deposited and no deposits or investments of such trust funds shall be made elsewhere, except upon the order of the court upon due notice given to the attorney-general. § 314. Application to the court in certain actions and pro- ceedings. All applications to the court shall be made in the judicial district where the principal ofiice of the corporation against which pro- ceedings are taken is located, excepting such applications as are made in actions brought by the attorney-general on behalf of the people of the state, and all such applications shall be made in the judicial district in which the action is triable. § 315. County wherein action may be brought by attorney- general on behalf of the people. An action or proceeding brought by the attorney-general on behalf of the people of the state against any corporation for the §§ 316-321. Gejnehal Cokpokation Law. purpose of procuring its dissolution, the appointment of a receiver, or the sequestration of its property, may be brought in any county of the state, to be designated by the attorney-general. § 316. Preferences in actions or proceedings by or against receivers. All actions or other legal proceedings and appeals therefrom or therein brought by or against a receiver of any of the insolvent corporations referred to in this chapter, shall have a preference upon the calendars of all courts next in order to actions or proceed- ings brought by the people of the state of New York. AETICLE 13. Alteration and Kepeal of Charter of Corporation. Section 320. Alteration and repeal of oharter. ,1 321. Conflicting corporate laws. § 320. Alteration and repeal of charter. The charter of every corporation shall bo subject to alteration, suspension and repeal, in the discretion of the legislature. § 321. Conflicting corporate laws. If in any corporate law there is or shall be any provision in con- flict with any provisions of this chapter or of the stock corporation law, the provisions so conflicting shall prevail, and the provision of this chapter or of the stock corporation law with which it con- flicts shall not apply in such a case. If in any such law there is or shall be a provision relating to a matter embraced in this chap- ter or in the stock corporation law, but not in conflict with it, such provision in such other law shall be deemed to be in addition to the provision in this chapter or in the stock corporation law relating to the same subject-matter, and both provisions shall, in such case, be applicable. General Cokpoeation Law. §§ 330-332. ARTICLE 14. Laws Repealed; Consteuction ; When to Take Effect. Section 330. Laws repealed. 331. Construction. 332. When to take effect. § 330. Laws repealed. Of the laws enumerated in the schedule hereto annexed, that f)ortion specified in the last column is hereby repealed. § 331. Construction. Nothing in this chapter shall be construed to impair any right or liability which any existing corporation, its officers, directors, stockholders or creditors may have or be subject to or which any subject to on the date when this chapter takes effect, by virtue of any special act of the legislature creating such corporation or creating or defining any such right or liability, unless such special act is repealed by this chapter or the other general laws herein- bt^fore mentioned. § 332. When to take effect. This chapter shall take effect immediately. STOCK CORPORATION LAW, CHAPTER 6i of 1903. Chapter 69 of the Consolidated Laws. Article I. Short title (§1). 2. General provisions (§§ 5-18). 3. Directors and officers (§§ 25-35). 4. Stock and stockholders (§§ 50-70). 5. Law0 repealed; when to take effect (§§ 80, 81) AETICLE 1. Short Title. Section 1. Short title. § 1. Short title. This chapter shall be known as the " Stock Corporation Law." AKTICLE 2. General Provisions. Section 5. Application of article. 6. Power to Dorrow money and mortgage property. 7. Validating corporate mortgages. 8. Power to guarantee bonds of other corporations. 9. •Reorganization upon sale of corporate property. 10. Contents of plan or agreement. 11. Sale of property; possession of receiver and suits against him. 12. Municipalities may assent to plan of readjustment. 13. Change of place of business. 14. Combinations prohibited. 15. Merger. 16. Voluntary sale of franchise and property. 17. Rights of non-consenting stockholders on voluntary sale of franchise and prop^'rty. 18. Alterations or extension of business. 19. Issuance of sihares of stock without nominal or par value. 20. Commencement of business; authorized debts. 21. Taxation. 22. Increase or reduction of sihares or capital. 23. Amount of capital stock and of shares within meaning of other laws. • So in original. Stock Corporation Law. §§ 5, 6. § 5. Application of article. This article except sections eight, fifteen, sixteen, seventeen and eighteen thereof, shall not apply to moneyed corporations. § 6. Power to borrow money and mortgage property. In addition to the powers conferred by the general corporation law, every stock corporation shall have the power to borrow money and contract debts, when necessary for the transaction of its busi- ness, or for the exercise of its corporate rights, privileges or fran- chises, or for any other lawful purpose of its incorporation; and it may issue and dispose of its obligations for any amount so borrowed, and may mortgage its property and franchises to secure the payment of such obligations, or of any debt contracted for said purposes. Every such mortgage, except purchase-money mort- gages and mortgages authorized by contracts made prior to May first, eighteen hundred and ninety-one, shall be consented to by the holders of not less than two-thirds of the capital stock of the corpo- ration, which consent shall be given either in ^vriting or by vote at a special meeting of the stockholders called for that purpose, upon the same notice as that required for the annual meetings of the corporation ; and a certificate under the seal of the corpo- ration that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed and acknowledged by the president or a vice- president and by the secretary or an assistant secretary, of the corporation, and shall be filed and recorded in the office of the clerk or register of the county wherein the corporation has its principal place of business. When authorized by like consent, the directors under such regulations as they may adopt, may confer on the holder of any debt or obligation, whether secured or unsecured, evidenced by bonds of the corporation, the right to convert the principal thereof, after two and not more than twelve years from the date of such bonds, into stock of the corporation; and if the capital stock shall not be sufficient to meet the conversion when made, the directors shall from time to time, authorize an increase of capital stock sufficient for that purpose by causing to be filed in the office of the secretary of state, and a duplicate § 7. Stock Corporation Law. thereof in the office of the clerk of the county where the principal place of business of the corporation shall be located, a certificate under the seal of the corporation, subscribed and acknowledged by the president and secretary of the corporation setting forth, 1. A copy of such mortgage; or resolution of directors author- izing the issue of such bonds ; 2. That the holders of not less than two-thirds of the capital stock of the corporation duly consented to the execution of such niortgage_or resolution of directors authorizing the issue of such bonds by such corporation ; 8. A copy of the resolution of the directors of the corporation authorizing the increase of the capital stock of the corporation necessary for the purpose of such conversion; 4. The amount of capital theretofore authorized, the propor- tion thereof actually issued and the amount of the increased capital stock. Tf the corporation be a railroad corporation the certificate shall have indorsed thereon the approval of the public service commis- sion having jurisdiction thereof. When the certificate herein provided for has been filed, the capital stock of such corporation shall be increased to the amount specified in such certificate. § 7. Validating corporate mortgages. 'V\nienever any mortgage affecting property or franchises within this state heretofore or hereafter executed by authority of the boanl of directors in behalf of any stock corporation, domestic or foreign, of any description, recites or represents in substance or effect that the execution of such mortgage has been duly consented to, or authorized by stockholders, such recital or representation in any such mortgage, after r>ublic record thereof within this stat^, shall be presumptive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stock- holders as required by any provision of law. After any such mortgage heretofore or hereafter shall have been publicly recorded for more than one year in one or more of the counties of this state containing the mortgaged premises or any part thereof, and the corporation shall have received value for bonds actually issued Stock Corpoeation Law. § 7. under and secured by such mortgage, and interest shall have been paid on any of such bonds according to the terms thereof, such recital or representation of such mortgage so recorded shall be conclusive evidence that the execution of such mortgage has been duly and sufficiently consented to, and authorized by stocldiolders as required by any provision of law, and its validity shall not be impaired by reason of any defect or insufficiency of consent or authority of stockholders or in filing or recording such consent or authority, and such mortgage shall be valid and binding upon the corporation, and those claiming under it, as security for all valid bonds issued or to be issued thereunder, unless such mortgage shall be adjudged invalid in an action begun as hereinafter, in this sec- tion, provided. Notwithstanding the foregoing provisions of this section, the invalidity of any such mortgage heretofore recorded because of insufficiency of consent by stockholders may be adjudged in any action for such purpose begun before the first day of April, nineteen hundred and two, and the invalidity of any such mortgage hereafter recorded, because of insufficiency of consent by stockholders, may be adjudged in any action for such purpose begun, within one year after the earliest record of such mortgage in any county in this state, provided in either case that such action shall have been so begun by or in behalf of the corporation by direction of the board of directors acting in their own discretion, or upon the written request of the holders of not less than one- third of the capital stock of the corporation; and in any such action so begun by or in behalf of the corporation, the recitals or representations of the mortgage shall be presumptive evidence only as first above provided. Whenever hereafter, in compliance with any law of this state, the officers of any corporation shall have made and filed and recorded a certificate that the execution of a mortgage hereafter made by the corporation has been duly con- sented to by stockholders, such certificate shall be conclusive evidence as to the truth thereof, in favor of any and all persons who in good faith shall receive or purchase, for value, any bond or obligation purporting to be secured by such mortgage, at any time when said certificate shall remain of record and uncanceled). Nothing in this section contained shall affect any right or any §§ 8, 9. Stock Corporation Law. remedy in respect of any such right of any creditor accrued before this enactment nor shall it dispense with the necessity of obtaining the consent of the public service commission having jurisdiction thereof to any mortgage by a railroad corporation. § 8. Power to guarantee bonds of other corporations. Any stock corporation may, in pursuance of a unanimous vote of its stockholders voting at a special meeting called for that pur- pose by notice in writing signed by a majority of the directors of such corporation stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corporation, personally or by mail at his kist-known post-office address at least sixty days prior to such meeting, guarantee the bonds of any other domestic corporation engaged in the same general line of business; and any stock cor- poration owning the entire capital stock of any other domestic stock corporation engaged in the same general line of business may in pursuance of a two-thirds vote of its stockholders voting at a special meeting called for that purpose by notice in writing signed by a majority of the directors of such corporation, stating the time and place and object of the meeting and served upon each stockholder appearing as such upon the books of the corpora- tion personally, or by mail, at his last-known post-office address, at least sixty days prior to such meeting, guarantee the bonds of such other corporation. § 9. Reorganization upon sale of corporate property and franchises. When the property and franchises of any domestic stock cor- poration shall be sold by virtue of a mortgage or deed of trust, duly executed by it, or pursuant to the judgment or decree of a court of competent jurisdiction, or by virtue of any execution issued thereon, and the purchaser, his assignee or grantee shall have acquired title to the same in the manner prescribed by law, he may associate with him any number of persons, not less than the number required by law for an incorporation for similar pur- poses at least two-thirds of whom shall be citizens of the United Stock Coepobation Law. § 9. States and one shall be a resident of this state, and they may become a corporation and take and possess the property and franchises thus sold, and which were at the time of the sale possessed by the corporation whose property shall have been so sold, upon making and acknowledging and filing in the offices where certificates of incorporation are required by law to be filed, a certificate in which they shall describe by name and reference to the law under which it was organized, the corporation whose property and franchises they have acquired, and the court by whose authority the sale had been made, with the date of the judgment or decree authorizing or directing the same, and a brief description of the property sold, and also the following par- ticulars : 1. The name of the new corporation intended to be formed by the filing of such certificate; and the place where its principal office is to be located. 2. The maximum amount of its capital stock and the number of shares into which it is to be divided, specifying the classes thereof, whether common or preferred, and the amount of and rights pertaining to each class. 3. The number of directors, not less nor more than the number required by law for the old corporation, who shall manage the affairs of the new corporation, and the names and post-office addresses of the directors for the first year. They may insert in such certificate any provisions relating to the new corporation, or its management, contained in any plan or agreement which may have been entered into as provided in section ten of thia chapter. Such corporation shall be vested with, and be entitled to exercise and enjoy, all the rights, privileges and franchises, which at the time of such sale belonged to, or were vested in the corporation last owning the property sold, or its receiver, and shall be subject to all the provisions, duties and liabilities imposed by law on that cx)rporation. Any proceedings heretofore taken in substantial compliance with this section as hereby amended, and any and all incorporations based thereon are hereby, ratified and confirmed. § 10. Stock Cokporation Law. § 10. Contents of plan of agreement. At or previous to the sale the purchasers thereat, or the person* for whom the purchase is to be made, may enter into a plan or agreement, for or in anticipation of the readjustment of the respec- tive interests therein of any creditors, mortgagees, stockholders, or any of them, of the corporation owning such property and fran- chises at the time of sale, and of holders of claims for materials, supplies and equipment furnished, and for injuries and damages sustained, in and about the operation, maintenance or construc- tion of any or all the property formerly owned or leased to said corporation, and for the representation of such interests in the bonds or stock of the new corporation to be formed, and may therein regulate voting by the holders of the preferred and common stock at any meeting of the stockholders, and may pro- vide for, and regulate voting by the holders, and owners of any or all of the bonds of the corporation, foreclosed, or of the bonds issued or to be issued by the new corporation; and such right of voting by bondholders shall be exercised in such manner, for such period, and upon such conditions, as shall be therein described- Such plan or agreement must not be inconsistent with the laws of the state and shall be binding upon the corporation, until changed as therein provided, or as otherwise provided by law. The new oorporaiion when duly organized, pursuant to such plan or agree- ment and to the provisions of law, may issue its bonds and Htock in confoiTTiity with the provisions of such plan or agreement, and may at any time within six months after its organization, com- promise, settle or assume the payment of any debt, claim or liability of the former corporation or any claims for materials, supplies and equipment furnished, or any claims for injuries and damages sustained, in and about the operation, maintenance or construction of any or all the property formerly owned or leased to said corporation, upon such terms as may be lawfully approved by a majority of the agents or trustees intrusted with the carrying out of the plan or agreement of reorganization, and may establish preferences in favor of any portion of its capital stock and may divide its stock into classes; but the capital stock of the new corporation shall not exceed in the aggregate the maxi- mum amount of stock mentioned in the certificate of incorporation. Amended by L. 1911, chap. 858. i I Stock Corporation Law. §§ 11, 12. §11. Sale of property; possession of receiver and suits against him. The supreme court may direct a sale of the whole of the prop- erty, rights and franchises covered by the mortgage or mortgages, or deeds of trust foreclosed at any one time and place to be named in tlie judgment or order, either in case of the non-payment of interest only, or of both the principal and interest due and unpaid and secured by any such mortgage or mortgages or deeds of trust. Neither the sale nor the formation of the new corporation shall interfere with the authority or possession of any receiver of such property and franchises, but he shall remain liable to be removed or discharged at such time as the court may deem proper. No suit or proceeding shall be commenced against such receiver unless founded on wilful misconduct or fraud in his trust after the expiration of sixty days from the time of his discharge; but after the expiration of sixty days the new corporation shall be liable in any action that may be commenced against it, and founded on any act or omission of such receiver for which he may not be sued, and to the same extent as the receiver, but for this section would be or remain liable, or to the same extent that the new corporation would be had it done or omitt^ed the acts complained of. § 12. IVIunicipalities may assent to plan of readjustment. The commissioners, corporate authorities or proper officers of any city, town or village, who may hold stock in any corporation, the property and franchises whereof shall be liable to be sold, may assent to any plan or agreement of reorganization which lawfully provides for the formation of a new corporation, and the issue of stock therein to the proper authorities or officers of such cities, towns or villages in exchange for the stock of the old or former corporation by them respectively held. And such commissioners, corporate authorities or other proper officers may assign, transfer or surrender the stock so held by them in the manner required by such plan, and accept in lieu thereof the stock issued by such new corporation in conformity therewith. §§ 13, 14. Stock Corpokation Law. § 13. Change of place of business. Any stock corporation now existing or hereafter organized under the laws of this state, except moneyed corporations, may at any time change its principal office and place of business from the city, town or county named in its certificate of incorporation, or to which it may have been changed under the provisions of this sec- tion, to any other city, town or county in this state, in which it mny desire to actually transact and carry on its regular busines:? from day to day, provided that such change has been authorized, either by unanimous consent of the stockholders expressed in writ- ing and duly acknowledged and filed in the office of the secretary of state, by a vote of the stockholders of said corporation at a special meeting of the stockholders called for that purpose, or such change has been effected by an act of legislature creating a separate and distinct county wholly within the limits and boun- daries of a then existing county or counties. When such change shall be authorized by the stockholders or effected by the creation of a new county w^holly within the limits and boundaries of the then existing county or counties as herein provided, the president and secretary and a majority of the directors of such corporation shall sign a certificate stating the name of said corporation, the city, town and county where its principal office and place of business was originally located, and to which it may have been subsequently changed, and the city, town and county to which it is desired to change its said principal office and place of business, and that it is the purpose of said corporation to actually transact and carry on its regular business from day to day at such place, and that such change has been authorized as herein provided, and the names of the directors of said corporation and their respective places of residence, which certificate shall be verified by the oaths of all the persons signing the same, and when so signed and veri- fied, shall be filed in the office of the secretary of state and a duplicate thereof in the office of the clerk of the county from which said principal office and place of business is about to be removed or changed, and another in the office of the clerk of the county to which said removal or change is to be made, and there- upon the principal office and place of business of such corporation shall be changed as stated in said certificate. Amended by L. 1915, cliap. 117. In effect March 24, 1915. § 14. Combinations prohibited, ITo domestic stock corporation and no foreign corporation doing business in this state shall combine with any other corporation or Stock Corporation Law. §§ 15, 16. person for the creation of a monopoly or the unlawful restraint of trade or for the prevention of competition in any necessary of life. § 15. Merger. Any domestic stock corporation and any foreign stock corpora- tion authorized to do business in this state lawfully owning all the stock of any other stock corporation organized for, or engaged in business similar or incidental to that of the possessor corporation may file in the office of the secretary of state, under its common seal, a certificate of such ownership, and of the resolution of its board of directors to merge such other corporation, and thereupon it shall acquire and become, and be possessed of all the estate, property, rights, privileges and franchises of such other corpora- tion, and they shall vest in and be held and enjoyed by it as fully and entirely and without change or diminution as the same were before held and enjoyed by such other corporation, and be man- ag'^d Bnd controlled by the board of directors of such possessor corporation, and in its name, but without prejudice to any liabil- ities of such other corporation or the rights of any creditors thereof. Any bridge corporation may be merged under this sec- tion with any railroad corporation which shall have acquired the right by contract to run its cars over the bridge of such bridge corporation. § 16. Voluntary sale of franchise and properly. A stock corporation, except a railroad corporation and except as otherwise provided by law, with the consent of two-thirds of its stock, may sell and convey its property, rights, privileges and fran- chises, or any interest therein or any part thereof to a domestic corporation, engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organizing under any general law of this state for a business of the same general character, and a domestic corporation the principal business of which is carried on in, and the principal tangible property of which is located within a state adjoining the state of New York, may with the consent of the holders of ninety- § 17. Stock Coepokation Law. five per centum of its capital stock, sell and convey its property situate without the state of New York, not including its franchises, to a corporation organized under the laws of such adjoining state, and such sale and conveyance shall, in case of a sale to a domestic corporation, vest the rights, property and franchises thereby trans- ferred, and in case of a sale to a foreign corporation the property sold, in the corporation to which they are conveyed for the term of its corporate existence, subject to the provisions and restrictions applicable to the corporation conveying them. Before such sale or conveyance shall be made such consent shall be obtained at a meeting of the stockholders called upon like notice as that required for an annual meeting. § 17. Rights of non-consenting stockholders on voluntary sale of franchise and property. If any stocldiolder not voting in favor of such proposed sale or conveyance shall at such meeting, or within twenty days thereafter, object to such sale, and demand payment for his stock, he may, within sixty days after such meeting, apply to the supreme court at any special tenn thereof held in the district in which the principal place of business of such corporation is situated, upon eight days' notice to the corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers, and designate the time and place of their proceedings as shall be deemed proper, and also direct the manner in which payment for such stock shall be made to such stockholders. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent, and deliver one copy to such corporation, and another to such stockholder, if demanded; the charges and expenses of the appraisers shall be paid by the corporation. ^Vhen the corporation shall have paid the amount of such appraisal, as directed by the court, such stock- holders shall cease to have any interest in such stock and in the corporate property of such corporation and such stock may be held or disposed of by such corporation. Stock Cobpokation Law. §§ 18, 19. § 18. Alterations or extension of business. Any stock corporation heretofore or hereafter organized under any general or special law of this state may alter its certificate of incorporation so as to include therein any purposes, powers or provisions which at the time of such alteration may apply to cor- porations engaged in a business of the same general character, or which might be included in the certificate of incorporation of a corporation organized under any general law of this state for a business of the same general character, by filing in the manner provided for the original certificate of incorporation an amended certificate, executed by the president and secretary, stating the alteration proposed, and that the same has been duly authorized by a vote of a majority of the directors and also by a vote of stock- holders representing at least three-fifths of the capital stock, at a meeting of the stockholders called for the purpose in the man- ner ])rovided in section sixty-three of this chapter, and a copy of the proceedings of such meeting, verified by the affidavit of one of the directors present thereat, shall be filed with such amended certificate. § 19. Issuance of shares of stock without nominal or par value. Upon the formation or the reorganization of any stock corpora- tion, other than a moneyed corporation, and other than a corpora- tion under the jurisdiction of any public service commission, the certificate of incorporation may provide for the issuance of the shares of stock of such corporation, other than preferred stock having a preference as to principal, without any nominal or par value by stating in such certificate: (1) The number of shares that may be issued by the corpora- tion, and if any of such shares be preferred stock, the preferences thereof. If such preferred stock or any part thereof shall have a preference as to principal, the certificate shall state the amount of such preferred stock having such preference, the particular character of such preferences, and the amoimt of each share § 19. Stock Corpokation Law. thereof, wliicli shall be five dollars or some multiple of five dollars, but not more than one hundred dollars. (2) The amount of capital with which the corporation will carry on business, which amount shall be not less than the amount of preferred stock (if any) authorized to be issued with a prefer- ence as to principal, and in addition thereto a sum equivalent to five dollars or to some multiple of five dollars for every share au- thorized to be issued other than such preferred stock; but in no event shall the amount of such capital be less than five hundred dollars. Such statements in the certificate shall be in lieu of any state- ments prescribed by the law under which the corporation shall have been formed or reorganized as to the amount or the maxi- mum amount of its capital stock or the number of shares into which the same shall be divided, or of the amount or the par value of such shares. Each share of such, stock without nominal or par value shall be equal to every other share of such stock, subject to the prefer- ences given to the preferred stock if any authorized to be issued. Every certificate for such shares without nominal or par value shall have plainly written or printed upon its face the number of such shares which it represents and the number of such shares which the corporation is authorized to issue, and no such certifi- cate shall express any nominal or par value of suoh shares. The certificates for preferred shares having a preference as to princi- pal shall state briefiy the amount which the holders of each of such preferred shares shall be entitled to receive on account of principal from the surplus assets of the corporation in preference to the holders of other shares, and shall state briefly any other rights or preferences given to the holders of such shares. Such corporation may issue and may sell its authorized shares, from time to time, for such consideration as may be prescribed in the certificate of incorporation, or as from time to time may be fixed by the board of directors pursuant to authority conferred in Stock Corpokation Law. § 20. such certificate, or if such certificate shall not so provide, then by the consent of the holders of two-thirds of each class of shares then outstanding given at a meeting called for that purpose in such manner as shall he prescribed by the by-laws. Any and all shares issued as permitted by this section shall be deemed fully paid and non-assessable and the holder of such shares shall not be liable to the corporation or to its creditors in respect thereof. Added by L.*1912, chap. 351 (in eflfeot April 15, 1912). § 20. Commencement of business; authorized debts. No corporation formed pursuant to section nineteen hereof shall begin to carry on busine&s or shall incur any debts until the amount of capital stated in its certificate of incorporation shall have been fully paid in money, or in property taken at its actual value. In case the amount of capital stated in its certificate of incorpora- tion shall be increased as herein provided, such corporation shall not increase the amount of its indebtedness then existing until it shall have received in money or property the amount of such in- crease of its stated capital. The directors of the corporation as- senting to the creation of any debt in violation of this section shall be liable jointly and severally for such debt; but no action shall be brought under the foregoing provision of this section un- less within one year after the debt shall have been incurred the creditor shall have served upon the director written notice of in- tention to hold him personally liable for such debt. Any direc- tor who, because of any such liability under this section, shall pay any debt of the corporation, shall be subrogated to all rights of the creditor in respect thereof against the corporation and its property and also shall be entitled to contribution from all other directors of the corporation similarly liable for the same debt and the personal representative of any such director who shall have died before making such contribution. No such corporation shall declare any dividend which shall re- duce the amount of its capital below the amount stated in the cer- § 21. Stock Corpokation Law. tificate as the amount of capital with which the corporation will carry on business; In case any such dividend shall be declared, the directors in whose administration the same shall have been declared, except those who may have caused their dissent there- from to be entered upon the minutes of such directors at the time or who were not present when such action was taken, shall be liable jointly and severally to such corporation and to the cred- itors thereof to the full amount of any loss sustained by such corporation or by its creditors respectively by reason of such dividend. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 21. Taxation. The organization tax payable under section one hundred and eighty of the tax law by any corporation issuing such shares without designated monetary value shall be at the rate of five cents on each such share which the corporation is authorized to issue, and a like tax upon any subsequent increase thereof. The tax payable under section two hundred and seventy of the tax law in respect of any sale or agreement of sale or any memorandum of sale or delivery or transfers of shares or certificates of any share without designated monetary value hereafter issued by any such corporation issuing such shares shall be at the rate of two cents for each and every share of such stock so transferred. The franchise tax upon any corporation issuing such shares of stock payable under section one hundred and eighty-two of the tax law shall be determined by the amoimt of the gross assets of such corporation employed in any business within this state, less such proportion of its liabilities as shall represent the ratio of its gross assets employed in any business within this state to its entire gross assets wherever employed in business, and the rate of such franchise tax shall be fixed in the manner provided in said section one hundred and eighty-two of the tax law. For this purpo?^ the rate of dividends shall be computed by dividing the total Stock Cobpoeation Law. § 22. amount of dividends which have been paid during the year by the amount of assets of the corporation upon the first day of such year. Added by L. 1912, chap. 351 (in effect April 15, 1912). § 22. Increase or reduction of shares or capital. Any corporation formed or reorganized pursuant to section nine- teen may amend its certificate of incorporation so as to increase or to reduce the number of shares which it may issue, or so as to in- crease or to reduce the amount of its stated capital, by filing, in the manner provided for the original certificate of incorporation, a certificate of amendment under seal executed by its president or a vice-president and by its secretary or its treasurer, stating the amendment proposed and that the same has been duly authorized by a vote of a majority of the directors and also by the vote of the holders of at least three-fifths of the outstanding shares of each class issued by the corporation, at a meeting of the stock- holders called for the purpose in the manner provided in section sixty- three hereof, and by filing with such certificate of amend- ment a copy of the proceedings of such meeting, made, signed, verified and acknowledged by the president or a vice-president and by the secretary or the treasurer of the corporation; but an amendment cannot be made under this section unless as so amended the certificate of incorporation could lawfully have been filed under section nineteen of this chapter. In case of a reduc- tion of the amount of capital of a corporation, a certificate setting forth the whole amount of the ascertained debts and liabilities of the corporation shall be made, signed, verified and acknowledged by the president or a vice-president and by the secretary or the treasurer of the corporation and shall be filed with the certificate of amendment; and such certificate of amendment shall have en- dorsed thereon the approval of the comptroller to the effect that as so stated the reduced amount of capital is sufficient for the proper purposes of the corporation and is in excess of its ascer- tained debts and liabilities. Added by L. 1912, chap. 351 (in etfeot April 15, 1912). §23. Stock Corpoeation Law. § 23. Amount of capital stook and of shares within mean- ing of other laws. For the purpose of any rule of law or of any statutory pro- vision (other than the foregoing sections nineteen, twenty, twenty-one and twenty-two) relating to the amount of the capital stock of a corporation or the amount or par value of its shares, the aggregate amount of the capital stock of any such corporation formed pursuant to section nineteen hereof shall be deemed to be the aggregate amount specified in the certificate or amended cer- tificate of incorporation or of reorganization as the amount of capital with which the corporation will carry on business ; the amount or the par value of each share of preferred stock having a preference as to principal shall be deemed to be the amount thereof so specified in such certificate or such amend^ed certificate ; and the amount or the par value of each other share shall be deemed to be an aliquot part of the aggregate capital so specified in such certificate or in such amended certificate in excess of the specified amount (if any) of the preferred stock therein authorized to be issued with a preference as to principal. Added by L. 1912 chap. 351 (in effect April 15, 1912). Stock Corporation Law. §§ 25, 26. ARTICLE 8. Directors and Officers. Section 25. Directx)rs. 26. Change of number of directors. 27. When acts of directors void. 28. Liability of directors for making unauthorized dividend*. 29. Liability of directors for loans to stockholders. 30. Officers. 31. Inspectors and their oath. 32. Books to be kept. 33. Stock books of foreign corporations. 34. Annual report to secretary of state. 35. Liability of officers for false certificates, reports or public notices. § 25. Directors. The directors of every stock corporation shall be chosen at the time and place fixed by the by-laws of the corporation by a plural- ity of the votes at such election. Each director shall be a stock- holder unless otherwise provided in the certificate, or in a by-law adopted by a stockholders' meeting. Vacancies in the board of directors shall be filled in the manner prescribed in the by-laws. Notice of the time and place of holding any election of directors shall be given by publication thereof, at least once in each week for two successive weeks immediately preceding such election, in a newspaper published in the county where such election is to be held, and in such other manner as may be prescribed in the by-law8. Policyholders of an insurance corporation shall be eligible to election as directors, whether or not they be stockholders. At least one-fourth in number of the directors of every stock corpora- tion .shall be elected annually. § 26. Change of number of directors. The number of directors of any stock corporation may be increased or reduced, but not below the minimum number pre- scribed by law, when the stockholders owning a majority of the § 26. Stock Corporation Law. stock of the corporation shall so determine, at a meeting to be held at the usual place of meeting of the directors, on two weeks' notice in writing to each stockholder of record. Such notice shall be served personally or by mail, directed to each stockholder at his last known post-office address. Proof of the service of such notice shall be filed in the office of the corporation at or before the time of such meeting. The proceedings of such meeting shall be entered in the minutes of the corporation and a transcript thereof verified by the president and secretary of the meeting shall be fi.led in the offices where the original certificates of incorporation were filed. Such increase or reduction may also be effected by unani- mous consent without a meeting, in which case there shall be filed in the offices herein specified the unanimous consent of the stock- holders in writing, signed by them, or their duly authorized proxies, but no such consent shall be valid unless there is annexed thereto an affidavit of the custodian of the stock book of such cor- poration stating that the persons who have signed such consent, either in person or by proxy, are the holders of record of the entire capital stock of said corporation issued and outstanding. If a corporation formed under or subject to the banking law, the consent of the superintendent of banks, and if an insurance cor- poration, the consent of the superintendent of insurance, shall be first obtained to such increase or reduction of the number of directors. This section shall apply to any stock corporation whether organized under a general or special law, and the num- ber of directors may be increased as hereby provided notwithstand- ing the maximum number of directors now prescribed by law. If the number of directors be increased, the additional directors authorized by such increase shall be elected by the votes of a majority of the directors in office at the time of the increase. If the original or an amended certificate of incorporation of the corporation shall provide that the directors shall be divided into two or more classes, whose terms of office shall respectively expire at different times, the additional directors shall be divided among .such classes as nearly as practicable in proportion to the respective numbers of directors constituting each class prior to such increase. Amended by L. 1909, chap. 421. Stock Corporation Law. §§ 27, 28. § 27. When acts of directors void. When the directors of any corporation for the first year of its corporate existence shall hold over and continue to be directors after the first year, because of their neglect or refusal to adopt the by-laws required to enable the stockholders to hold the annual election for directors, all their acts and proceedings while so hold- insr over, done for and in the name of the corporation, designed to charge upon it any liability or obligation for the services of any such director, or any officer, or attorney or counsel appointed by them, and every such liability or obligation shall be held to be fraudulent and void. § 28. Liability of directors for making unauthorized dividends. The directors of a stock corporation shall not make dividends, except from the surplus profits arising from the business of such corporation, nor divide, withdraw or in any way pay to the stock- holders or any of them, any part of the capital of such corporation, or reduce its capital stock, except as authorized by law. In case of any violation of the provisions of this section, the directors under whose administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large upon the minutes of such directors at the time, or were not present when the same happened, shall jointly and severally be liable to such corporation and to the creditors thereof to the full amount of any loss sustained by such corporation or its creditors respectively by reason of such withdrawal, division or reduction. But this section shall not prevent a division and dis- tribution of the assets of any such corporation remaining after the payment of all its debts and liabilities upon the dissolution of such corporation or the expiration of its charter; nor shall it prevent a corporation from accepting shares of its capital stock in complete or partial settlement of a debt owing to the corporation, which by the board of directors shall be deemed to be bad or doubtful. §§ 29-31. Stock Corporation Law. § 29. Liability of directors for loans to stockholders. No loan of moneys shall be made by any stock corporation, except a moneyed corporation, or by any officer thereof out of its funds to any stockholder therein, nor shall any such corporation or officer discount any note or other evidence of deht, or receive the same in payment of any instalment or any part thereof due or to l->ecome dne on any stock in such corporation, or receive or dis- count any note, or other evidence of debt, to enable any stock- holder to withdraw any part of the money paid in by him on his stock. In case of the violation of any provision of this section, the officers or directors making such loan, or assenting thereto, or rfceiving or discounting such notes or other evidences of debt, shall, jointly and severally, be personally liable to the extent of such loan and interest, for all the debts of the corporation con- ti'acted before the repayment of the sum loaned, and to the full amount of the notes or other evidences of debt so received or discounted, with interest from the time such liability accrued. § 30. Officers, The directors of a stock corporation may appoint from their number a president, and may appoint a secretary, treasurer, and other officers, agents and employees, who shall respectively have such powers and perform such duties in the management of the property and affairs of the corporation, subject to the control of the directors, as may be prescribed by them or in the by-laws. The directors may require any such officer, agent or employee to give security for the faithful performance of his duties, and may remove him at pleasure. The policyholders of an insurance cor- poration shall be eligible to election or appointment as its officers. § 31. Inspectors and their oath. The inspectors of election of every stock corporation shall be appointed in the manner prescribed in the by-laws, but the inspec- tors of the first election of directors and of all previous meetings of the stockholderi shall be appointed by the board of directors named in the certificate of incorporation. No director or officer of a moneyed corporation shall be eligible to election or appoint- Stock: Corpoi?ation Law. § 82. ment as inspector. Each inspector shall be entitled to a reason- able compensation for his services, to be paid by the corporation, and if any inspector shall refuse to serve, or neglect to attend at the election, or his office become vacant, the meeting may appoint an inspector in his place unless the by-laws otherwise provide. The inspectors appointed to act at any meeting of the stocldi elders shall, before entering upon the discharge of their duties, be sworn to faithfully execute the duties of inspector at such meeting with strict impartiality, and according to the best of their ability, and the oath so taken shall be subscribed by them, and immediately filed in the office of the clerk of the county in which such election or meeting shall be held, with a certificate of the result of the vote taken thereat. § 32. Books to be kept. Every stock corporation shall keep at its office correct books of account of all its business and transactions, and a book to be known as the stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. The stock book of every such corporation shall be open daily, during at least three business hours, for insipection by any judgment creditor of the corporation; or by any person who shall have been stockholder of record in such corporation for at least six months immediately preceding his demand; or by any person holding stock of such cor- poration to an amount equal to five per centum of all its out- standing shares; or by any person thereunto in writing authorized by the holders of stock of sucli corporation to an amount equal to five per centum of all of its outstanding shares. Persons so entitled to inspect stock books may make extracts therefrom. No transfer of stock fehall be valid as against the corporation, its stockholders and creditors for any purpose except to render the transferee liable fot the debts of the corporation to the extent provided for in this chapter, until it shall have been entered in such book as required by this section, by an entry showing from and to whom trans- ferred. The stock book of every such corporation and the books § 33. Stock Corporation Law. of account of every bank shall be presumptive evidence of the facts therein so stated in favor of the plaintiff, in any action or proceed- ing against such corporation or any of its officers, directors or stockholders. Every corporation that shall neglect or refuse to keep or cause to be kept such books, or to keep any book open for inspection as herein required, shall forfeit to the people the sum of fifty dollars for every day it shall so neglect or refuse. If any officer or agent of any such corporation shall wilfully neglect or refuse to make any proper entry in such book or books, or shall neglect or refuse to exhibit the same, or to allow them to be in- spected and extracts taken therefrom as provided in this section, the corporation and such officer or agent shall each forfeit and pay to the party injured a penalty of fifty dollars for every such neglect or refusal,, and all damages resulting to him therefrom. It s.hall be a defense to any action for penalties under this section that the person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation or of any other corporation, or has aided or abetted any person in procuring any stock list for any such purpose. Nothing herein impairs the power of the courts to compel by mandamus or judgment the pro- duction for examination by any stockholder of the stock books of a corporation. Amended by L. 1916, chap. 127. In effect April 3, 1916. § 33. Stock books of foreign corporations. Every foreign stock corporation having an office for the transac- tion of business in this state, except moneyed and railroad corpo- rations, shall keep therein a book to be known as a stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, the number of shares of stock held by them respectively, the time when they respectively became the owners thereof, and the amount paid thereon. Such stock book shall be open daily, during business hours, for inspection by any judgment creditor vjf such corporation ; by any officer of this state authorized by law to investigate the affairs of any such corporation; by any person who shall have been stockholder of record in such corpora- tion for at least six months immediately pTCPcilino' his demand; by any person holding stock of such corporation to an amonnt equal to five per centum of all of its outstanding shares; or by Stock Corporation Law. § 34. any person tliereunto in writing authorized bj the holders of stock of such corporation to an amount equal to five per centum of all of its outstanding shares. Persons so entitled to inspect stock books may make extracts therefrom. If any such foreign stock corporation has in this state a transfer agent, whether such agent shall be a corporation or a natural person, such stock book may be deposited in the office of such agent and shall be open to inspection at all times during the usual hours of transacting business, to any stocldiolder, judgment creditor or officer of the state authorized by law to investigate the affairs of such corporation. For any refusal to allow such book to be inspected, such corporation and the officer or agent so refusing shall each forfeit the sum of fifty dollars to be recov- ered by the person to whom such refusal was made. It shall be a defense to any action for penalties under this section that the person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation or of any other corporation or has aided or abetted any person in procuring any stock list for any such purpose. Xothing herein impairs the power of the courts to compel by mandamus or judgment the pro- duction for examination by any stockholder of the stock books of a corporation. Amended by L. 1916, chap. 127. In effect April 3, 1916. § 34. Annual report to secretary of state. Every domestic stock corporation and every foreign stock cor- poration doing business within this state, except moneyed and railroad corporations, shall annually, during the month of Janu- ary, or, if doing business without the United States, before the first day of May, may make a report as of the first day of Janu- ary, which will state: 1. The amount of its capital stock, and the proportion actually issued. 2. The amount of its debts or an amount which they do not exceed. 3. The amount of its assets or an amount which its assets at least equal. 4. The names and addresses of all the directors and officers of the company, and in the case of a foreign corporation, the name also of the person designated in the manner prescribed by the § 35. Stock Corpoeation Law. code of civil procedure, as a person upon \vliom process against the corporation may be served within this state. Such report shall be made by the president or a vice-president or the treasurer or a secretary of the corporation and shall be filed in the office of the secretary of state. If such report be not so made and filed, any such officer who shall thereafter neglect or refuse to make and to file such report, within ten days after written request so to do shall have been made by a creditor or by a stockholder of the corporation, shall forfeit to the people the sum of fifty dollars for every day he shall so neglect or refuse. § 35. Liability of officers for false certificates, reports or public notices. If any certificate or report made or public notice given by the officers or directors of a stock corporation shall be false in any material representation, the officers and directors signing the same shall jointly and severally be personally liable to any person who has become a creditor or stockholder of the corporation upon the faith of any such certificate, report, notice or any material repre- sentation therein to the amount of the debt contracted upon the faith thereof if not paid when due, or the damage sustained by any purchaser of or subscriber to its stock upon the faith thereof. The liability imposed by this section shall exist in all oases where the contents of any such certificate, report or notice or of any material representation therein shall have been communicated either directly or indirectly to the person so becoming a creditor or stockholder and he became such creditor or stockholder upon the faith thereof. ]^o action can be maintained for a cause of action created by this section unless brought within two years from the time the certificate, report or public notice shall have been made or given by the officers or directors of such corporation. Stock Corporation Law. §§ 50, 51. AETICLE 4. Stock and Stockholders. Section 50. Issue and transfers of stock. 51. Transfers of stock by stockholder indebted to corporation. 52. Purchase of stock of other corporations. 53. Subscriptions to stock. 54. Time of payment of subscriptions to stock. 55. Consideration for issue of stock and bonds. 56. Liabilities of stockholders. 57. liabilities of stockholders to laborers, servants or employees. 58. Non-liability in certain cases. 59. Limitation of stockholder's liability. 60. Partly paid stock. 61. Preferred and common stock. 62. Increase or reduction of capital stock. 63. Notice of meeting to increase or reduce capital stock. 64. Conduct of such meeting; certificate of increase or reduction. 65. Change in par value of shares. 66. Prohibited transfers to officers or stockholders. certificate of stock. 67. Application to court to order iasue of new in place of lot»t 68. Order of court upon such application. 69. Financial statement to stockholders. 70. Liabilities of officers, directors and stockholders of foreign cor porations. § 50. Issue and transfers of stock. The stock of every stock corporation shall be represented by (^rtificates prepared by the directors and signed by the president or vice-president and secretary or treasurer and sealed with the seal of the corporation, and shall be transferable in the manner ])rescribed in this chapter and in the by-laws. 'No share shall be transferable until all previous calls thereon shall have been fully paid in. § 51. Transfers of stock by stockholder indebted to corporation. If a stockholder shall be indebted to the corporation, the direc- tors may refuse to consent to a transfer of his stock until such indebtedness is paid, provided a copy of this section is written or printed upon the certificate of stock. §§ 52, 53. Stock Corpoeation Law. § 52. Purchase of stock of other corporations. Any stock corporation, domestic or foreign, now existing or hereafter organized, except moneyed corporations, may purchase, acquire, hold and dispose of the stocks, bonds and other evidences of indebtedness of any corporation, domestic or foreign, and issue in exchange therefor its stock, bonds or other obligations if author- ized so to do by a provision in the certificate of incorporation of such stock corporation, or in any certificate amendatory thereof or supplementary thereto, filed in pursuance of law, or if the cor- poration whose stock is so purchased, acquired, held or disposed of, is engaged in a business similar to that of such stock corpora- tion, or engaged in the manufacture, use or sale of the property, or in the construction or operation of works necessary or useful in the business of such stock corporation, or in which or in con- nection with ^vliich the manufactured articles, product or prop- erty of such stock corporation are or may be used, or is a corporation with which such stock corporation is or may be author- ized to consolidate. ^^Tien any such corporation shall be a stock- holder in any other corporation, as herein provided, its president or other officers shall be eligible to the office of director of such corporation, the same as if they were individually stockholders therein and the corporation holding such stock shall possess and exercise in respect thereof, all the rights, powers and privileges of individual owners or holders of such stock. § 53. Subscriptions to stock. If the whole capital stock shall not have been subscribed at the time of filing the certificate of incorporation, the directors named in the certificate may open books of subscription to fill up the capital stock in such places and after giving such notices as they may deem expedient, and may continue to receive subscriptions until the whole capital stock is subscribed. At the time of sub- scribing, every subscriber, whose subscription is payable in money, shall pay to the directors ten per centum upon the amount sub- scribed by him in cash, and no such subscription shall be received or taken without such payment. Stock Corpoeation Law. §§ 54, 55. § 54. Time of payment of subscriptions to stock. Subscriptions to the capital stock of a corporation shall be paid at such times and in such instalments as the board of directors may by resolution require. If default shall be made in the payment of any instalment as required by such resolution, the board may declare the stock and all previous payments thereon forfeited for the use of the corporation, after the expiration of sixty days from the service on the defaulting stockholder, per- sonally, or by mail directed to him at his last-known post-office address, of a written notice requiring him to make payment within sixty days from the service of the notice at a place specified therein, and stating that, in case of failure to do so, his stock and all previous payments thereon will be forfeited for the use of the corporation. Such stock, if forfeited, may be reissued or subscriptions there- for may be received as in the case of stock not issued or subscribed for. If not sold for its par value or subscribed for within six months after such forfeiture, it shall be canceled and deducted from the amount of the capital stock. If by such cancellation, the amount of the capital stock is reduced below the minimum required by law, the capital stock shall be increased to the required amount within three months thereafter or an action may be brought or proceedings instituted to close up the business of the corporation as in the case of an insolvent corporation. If a re- ceiver of the assets of the corporation has been appointed, all unpaid subscriptions to the stock shall be paid at such times and in such instalments as the receiver or the court may direct. § 55. Consideration for issue of stock and bonds. No corporation shall issue either stock or bonds except for money, labor done or property actually received for the use and lawful purposes of such corporation. Any corporation may pur- chase any property authorized by its certificate of incorporation, or necessary for the use and lawful purposes of such corporation, and may issue stock to the amount of the value thereof in pay- ment therefor, and the stock so issued shall be full paid stock and not liable to any further call, neither shall the holder thereof §§ 56, 57. Stock Corpoeation Law. be liable for any further payment under any of the provisions of this chapter; and in the absence of fraud in the transaction the judgment of the directors as to the value of the property pur- chased shall be conclusive ; and in all statements and reports of the corporation, by law required to be published or filed, this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported as issued for property purchased. § 56. Liabilities of stockholders. Every holder of capital stock not fully paid, in any stock corpo- ration, shall be personally liable to its creditors, to an amount equal to the amount unpaid on the stock held by him for debts of the corporation contracted while such stock was held by him. As to existing corporations the liability imposed by this section shall be in lieu of the liability imposed upon stockholders of any exist- ing corporation, under any general or special law, excepting laws relating to moneyed corporations, and corporations and associa- tions for banking purposes, on account of any indebtedness here- after contracted or any stock hereafter issued ; but nothing in this section contained shall create or increase any liability of stock- holders of any existing corporation under any general or special law. § 57. Liabilities of stockholders to laborers, servants or employees. The stockholders of every stock corporation shall jointly and severally be personally liable for all debts due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation. Before such laborer, servant or employee shall charge such stockholder for such services, he shall give him notice in writing, within thirty days after the termination of such services, that he intends to hold him liable, and shall commence an action therefor within thirty days after the return of an execution unsatisfied against the corporation upon a judgment recovered against it for services. Stock Cokpokation Law. §§ 58-60. § 58. Non-iiability in certain cases. No person holding stock in any corporation as collateral security, or as executor, administrator, guardian or trustee, unless he shall have voluntarily invested the trust funds in such stock, shall be personally subject to liability as a stockholder; but the person pledging such stock shall be considered the holder thereof and shall be liable as stockholder, and the estates and funds in the hands of such executor, administrator, guardian or trustee shall be liable in the like manner and to the same extent as the testator or intestate, or the ward or person interested in such trust fund would have been, if he had been living and competent to act and held the same stock in his otvti name, unless it appears that such executor, admin- istrator, guardian or trustee voluntarily invested the trust funds in such stocks, in which case he shall be personally liable as a stockholder. § 5S. Limitation of stockholder's liability. No action shall be brought against a stockholder for any debt of the corporation until judgment therefor has been recovered against the corporation, and an execution thereon has been returned unsat- isfied in whole or in part, and the amount due on such execution shall be the amount recoverable, with costs against the stockholder. No stockholder shall be personally liable for any debt of the cor- poration not payable within two years from the time it is con- tracted, nor unless an action for its collection shall be brought against the corporation within two years after the debt becomes due ; and no action shall be brought against a stockholder after he shall have ceased to be a stockholder, for any debt of the corpora- tion, unless brought within two years from the time he shall have ceased to be a stockholder. § 60. Partly paid stock. The original or the amended certificate of incorporation of any stock corporation may contain a provision expressly authorizing the issue of the whole or of any part of the capital stock as partly paid stock, subject to calls thereon until the whole thereof shall have been paid in. In such case, if in or upon the certificate §§ 61, 62. Stock Cokpoeation Law. issued to represent such stock, the amount paid thereon shall be specified, the holder thereof shall not be subject to any liability except for the payment to the corporation of the amount remaining unpaid upon such stock, and for the payment of indebtedness to employees pursuant to sections fifty-seven, fifty-eight and fifty- nine of this chapter; and in any such case, the corporation may declare and may pay dividends upon the basis of the amount actually paid upon the respective shares of stock instead of upon the par value thereof. § 61. Preferred and common stock. Every domestic stock corporation may issue preferred stock and common stock and different classes of preferred stock, if the cer- tificate of incorporation so provides, or by the consent of the hold- ers of record of two-thirds of the capital stock, given at a meeting called for that purpose upon notice such as is required for the annual meeting of the corporation. A certificate of the proceed- ings of such meeting, signed and sworn to by the president or a vice-president, and by the secretary or assistant secretary, of the corporation, shall be filed and recorded in the oflSces where the original certificate of incorporation of such corporation was filed and received; and the corporation may, upon the written request of the holders of any preferred stock, by a two-thirds vote of its directors, exchange the same for common stock, and issue cer- tificates for common stock therefor, upon such valuation as may have been agreed upon in the certificate of organization of such corporation, or the issue of such preferred stock, or share for share, but the total amount of such capital stock shall not be increased thereby. § 62. Increase or reduction of capital stock. Any domestic corporation may increase or reduce its capital stock in the manner herein provided, but not above the maximum or below the minimum, if any, prescribed by general law governing corporations formed for similar purposes. If increased, the holders of the additional stock issued shall be subject to the same liabilities with respect thereto as are provided by law in relation Stock Coepokation Law. §§ 63, 64. to the original capital; if reduced, tlie amount of its debts and liabilities shall not exceed the amount of its reduced capital, unless an insurance corporation, in which case the amount of its debts and liabilities shall not exceed the amount of its reduced capital and other assets. The owner of any stock shall not be relieved from any liability existing prior to the reduction of the capital stock of any stock corporation. If a banking corporation, whether the capital be increased or reduced, its assets shall at least be equal to its debts and liabilities and the capital stock, as increased or reduced. A domestic railroad corporation may in- crease or reduce its capital stock in the manner herein provided, notwithstanding any provision contained herein, or in any genera] or special law fixing or limiting the amount of capital stock which may be issued by it. § 63. Notice of meeting to increase or reduce capital stock. Every such increase or reduction must be authorized either by the unanimous consent of the stockholders, expressed in writing and filed in the office of the secretary of state and in the office of the clerk of the county in which the principal business office of the corporation is located, or by a vote of the stockholders owning at least a majority of the stock of the corporation, taken at a meeting of the stockholders specially called for that purpose in the manner provided by law or by the by-laws. IsTotice of the meeting, stating the time, place and object, and the amoimt of the increase or reduction proposed, signed by the president or a vice-president and the secretary, shall be published once a week, for at least two successive weeks, in a newspaper in the county where its principal business office is located, if any is published therein, and a copy of such notice shall be duly mailed to each stockholder or member at Wis last-known post-office address at least two weeks before the meeting or shall be personally served on him at least loYe days before the meeting. § 64. Conduct of such meeting; certificate of increase or reduction. If, at the time and place specified in the notice, the stockholders shall appear in person or by proxy in numbers representing at § 64. Stock Corporation Law. least a majority of all the shares of stock, they shall organize by choosing from their number a chairman and secretary, and take, a vote of those present in person or by proxy, and if a sufficient number of votes shall be given in favor of such increase or reduc- tion, or if the same shall have been authorized by the unanimous consent of stockholders expressed in writing signed by them or their duly authorized proxies, a certificate of the proceedings show- ing a compliance with the provisions of this chapter, the amount of capital theretofore authorized, and the proportion thereof ac- tually issued, and the amount of the increased or reduced capital stock, and in case of the reduction of capital stock the whole amount of the ascertained debts and liabilities of the corporation, shall be made, signed, verified and acknowledged by the chairman and secretary of the meeting, and filed in the office of the clerk of the county where its principal place of business shall be located, a duplicate thereof in the office of the secretary of state, and, if a corporation formed under or subject to the banking law, a tripli- cate thereof in the office of the superintendent of banks, and if an insurance corporation, a triplicate thereof in the office of the superintendent of insurance. In case of a reduction of the capital stock, except of a railroad corporation or a moneyed corporation, such certificate or consent hereinafter provided for shall have indorsed thereon the approval of the comptroller, to' the effect that the reduced capital is sufficient for the proper purposes of the corporation, and is in excess of its ascertained debts and liabilities; and in case of the increase or reduction of the capital stock of a railroad corporation or a moneyed corporation, the certificate or the unanimous consent of stockholders, as the case may be, shall have indorsed thereon the approval of the public service commission having jurisdiction thereof, if a railroad corporation ; of the superintendent of banks, if a corporation formed under or subject to the banking law, and of the superintendent of insurance, if an insurance corporation. When the certificate herein provided for, or the unanimous consent of stockholders in writing, signed by them or their duly author- ized proxies, approved as aforesaid, has been filed, the capital stock of such corporation shall be increased or reduced, as the case may be, to the amount specified in such certificate or consent. The Stock Corporation Law. §§ 65, 66. proceedings of the meeting at which such increase or reduction is voted, or, if such increase or reduction shall have been authorized by unanimous consent without a meeting, then a copy of such con- sent shall be entered upon the minutes of the corporation. If the capital stock is reduced, the amount of capital over and above the amount of the reduced capital shall, if the meeting or consents so determine or provide, be returned to the stockholders pro rata, at such times and in such manner as the directors shall determine, except in the case of the reduction of the capital stock of an insur- ance corporation, as an alternative to make good an existing Impairment. Amended by L. 1913, cTiap. 305. § 65. Change in par value of shares. The number of shares into which the capital stock of any stock corporation is divided may be increased or reduced by a two-thirds vote of all stock duly represented at a meeting held and conducted in like manner, and upon filing a like certificate, as required for the increase or reduction of its capital stock. If such increase or reduction of the number of shares be so authorized, the corpora- tion shall issue to each stockholder certificates for as many shares of the new stock as equal in par value the shares of the old stock held by him, upon surrender and cancellation of such old stock. This section does not authorize the increase or reduction of the capital stock of such corporation. § 66. Prohibited transfers to officers or stockholders. Ko corporation which shall have refused to pay any of its not/es or other obligations, when due, in lawful money of the United States, nor any of its ofiicers or directors, shall transfer any of its property to any of its ofiicers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash. No conveyance, assignment or transfer of any property of any snch corporation by it or by any officer, director or stockholder thoroof, nor nny payment made, judgment suffered, lien created or ^opnrity given by it or by any officer, director or stockholder § 6Y. Stock Corporation Law. when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid, except that laborers' wages for services shall be preferred claims and be enti- tled to payment before any other creditors out of the corporation assets in excess of valid prior liens or incumbrances. TTo corpora- tion formod under or subject to the banking, insurance or rail- road law slinll make any assignment in contemplation of insolv- ency. Every person receiving by means of any such prohib- ited act or deed any property of the corporation shall be bound to account therefor to its creditors or stockholders or other trus- tees. Ko stockholder of any such corporation shall make any transfer or assignment of his stock therein to any person in con- templation of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void, l^o conveyance, assignment or transfer of any property of a corporation formed under or subject to the banking law, exceeding in value one thousand dollars, shall be made by such corporation, or by any officer or director thereof, unless authorized by previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business, and except payments in specie or other current money or in bank bills made by such officers, ^o such conveyance, assignment or transfer shall be void in the hands of a purchaser for a valuable consideration without notice. Every director or officer of a corporation v^ho shall violate or be concerned in violating any provisions of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer to the full extent of any loss they may respectively sustain by such violation. § 67. Application to court to order issue of new in place of lost certificate of stock. The owner of a lost or destroyed certificate of stock, if the cor- poration shall refuse to issue a new certificate in place thereof, may apply to the supreme court, at any special term held in tlie Stock Corpoeation Law. § 68. district where he resides, or in which the principal business office of the corporation is located, for an order requiring the corpora- tion to show cause why it should not be required to issue a new certificate in place of the one lost or destroyed. The application shall be by petition, duly verified by the owner, stating the name of tlie corporation, the number and date of the certificate, if known, or if it can be ascertained by the petitioner ; the number of shares named therein, to whom issued, and as particular a statement of the circumstances attending such loss or destruction as the peti- tioner can give. Upon the presentation of the petition the court shall make an order requiring the corporation to show cause, at a time and place therein mentioned, why it should not issue a new certificate of stock in place of the one described in the petition. A copy of the petition and order shall be served on the president or other head of the corporation, or on the secretary or treasurer thereof, personally, at least ten days before the time for showing cause. § 68. Order of court upon such application. Upon the return of the order, with proof of due service thereof, the court shall, in a summary manner, and in such mode as it may deem advisable, inquire into the truth of the facts stated in the petition, and hear the proofs and allegations of the parties in regard thereto, and if satisfied that the petitioner is the lawful owner of the number of shares, or any part thereof, described in the petition, and that the certificate therefor has been lost ol- dest royed, and can not after due diligence be found, and that no sufficient cause has been shown why. a new certificate should not be issued, it shall make an order requiring the corporation, within such time as shall be therein designated, to issue and deliver to the petitioner a new certificate for the number of shares specified in the order, upon depositing such security, or filing a bond in such form and with such sureties as to the court shall appear suf- ficient to indemnify any person other than the petitioner who shall thereafter be found to be the lawful o^vner of the certificate lost or destroyed ; but such provision requiring security to be de- posited or bond filed is to be construed as excluding an application §69. Stock Coepoeation Law. made by a domestic municipal corporation or by a public officer in bebalf of such corporation; and the court may direct the pub- lication of such notice, either before or after making such order as it shall deem proper. Any person claiming any rights under the certificates alleged to have been lost or destroyed shall have recourse to such indemnity, but in any application imder the pro- visions of this chapter, in which a domestic municipal corpora- tion or a public officer in behalf of such corporation, shall be by the foregoing provisions of this section excused from depositing security or filing a bond, such municipal corporation shall be liable for all damages that may be sustained by any person, in the same case and to the same extent as sureties to a bond or undertaking would have been, if such a bond or undertaking had been filed; and the corporation issuing such certificate shall be discharged from all liability to such person upon compliance with such order ; and obedience to the order may be enforced by attachment against thie officer or officers of the corporation on proof of his or their refusal to comply with it § 69. Financial statement to stockholders. Stockholders owning ^ve per centum of the capital stock of any corporation other than a moneyed corporation, not exceeding one hundred thousand dollars, or three per centum where it exceeds one hundred thousand dollars, may make a written request to the treasurer or chief fiscal officer thereof, for a statement of its affairs, under oath, embracing a particular account of all its assets and liabilities, and the treasurer shall make such statement and deliver it to the person presenting the request within thirty days thereafter, and keep on file for twelve months thereafter a copy of such statement, which shall at all times during business hours be exhibited to any stockholder demanding an examination thereof; but the treasurer or such chief fiscal officer shall not be required to deliver more than one such statement in any one year. The supreme court, or any justice thereof, may upon application, for good cause shown, extend the time for making and delivering such certificate. For every neglect or refusal of the treasurer or other chief fiscal officer thereof to comply with the provisions of Stock Cokpokation Law. §§ 70-81. this section he shall forfeit and pay to the person making such request the sum of fifty dollars, and the further sum of ten dollars for every twenty-four hours thereafter until such state- ment shall be furnished. § 70. Liabilities of officers, directors and stockholders of foreign corporations. Except as otherwise provided in this chapter the officers, direo tors and stockholders of a foreign stock corporation transacting business in this state, except moneyed and railroad corporations, shall be liable under the provisions of this chapter, in the same manner and to the same extent as the officers, directors and stock- holders of a domestic corporation, for : 1. The making of unauthorized dividends ; 2. Unlawful loans to stockholders; 3. Making false certificates, reports or public notices; 4. An illegal transfer of the stock and property of such cor- poration, when it is insolvent or its insolvency is threatened ; 5. The failure to file an annual report Such liabilities may be enforced in the courts of this state, in the same manner as similar liabilities imposed by law upon the officers, directors and stockholders of domestic corporations. AKTICLE 5. Laws Repealed ; Whei^ to Taxe Effect. Sectiow 80. Laws repealed. 81. Wlien to take effect. § 80. Laws repealed. Of the laws enumerated in the schedule hereto annexed, that portion specified in the last column is hereby repealed. § 81. When to take effect. This chapter shall take effect immediately. GENERAL INDEX (References are to sectiona.) Acceptance: of candidates, to be filed with certificate of nomination 94 Accidents: Insurance against 70 standard provisions 107 Accident Insurance: agents for 91a Accident Insurance Corporations (see Life, Health and Casualty Insurance Corporations) : incorporation of 70 assets of 88 standard provisions 107 discriminations prohibited 108 Accountants: at election, how appointed 04 to determine verification of ballots 94 Accumulation JBasis: fraternal benefit societies 243 Actions: against foreign insurance corporation, service of process on superin- tendent 29 effect of removal to federal courts 30 Accumulation: of contingency reserve 87 of reserve or emergency fund by co-operative company 206 Actuary: to be appointed by receiver 77 investigation by 77 report of 77 to make annual inve'stigation of insolvent corporation 79 appointment of, by receiver 81 compensation of 81 Administration Ticket: definition of 94 Advance premiums: fire insurance companies (see Co-operative Fire Insurance Corporations) : limitation on business 262 subject of insurance by 267 expense of managment 267 liability to be carried 267 surplus 267 deficiency 267 reinsurance of risk 267 General Index. (References are to sections.) Advertisement: deceptive statements by insurance corporations 47 by insurance corporations, contents of 48 contents of, by insurance companies 49 Affidavit: to be affixed with bonds and mortgages deposited 13 of agent as to notice of premium 92 of notices of assessment of fraternal beneficiary society 238 Agents: not to transact business for foreign corporation until certificate of authority is filed 31, 149b fiduciary capacity of 38 shall aid in the examination of corporation 39 shall state certain matters in advertisements 49 definition of 49 for foreign corporation, certificate of authority of 50 penalty for improper acts of 50 not to act for unauthorized corporations 54 not to transact business under fictitious name 54 not to be agent of insured 69 inducing person to surrender insurance 60 presents by 65 can make only contract expressed in policy 89 certificate of authority of 91 certificate of authority of, must be renewed annually 91 of industrial and prudential companies 91 certificate of authority of, may be revoked 91 for health or accident insurance 91a not to omit name of policyholder from list 94 not to advance money for elections 94 not to solicit votes during working hours 94 of life insurance corporations, salaries of 98 license to, in certain csises 137 not to act for foreign fire corporation until payment of taxes 139 of foreign fire corporation, undertaking of 134 neglect to pay tax 135 certificate of authority 142 of fire insurance companies to report consideration 145 penalties for violation, provisions of 144-147, 148 not to receive excessive rate for insurance upon canals 160 penalty for receiving excessive rates 160 of marine corporations outside of United States 161 power of title guaranty companies to act as 180 Amendment: of charter of marine corporation 167 of constitution and by-laws of fraternal beneficiary society 241 General Index. (References are to sections.) Amount of risk: that may be assumed 24 Annual Election: town co-operative corporation 272 Annual Meeting: of co-operative or assessment corporation 209 of governing body of fraternal society 238 of company to insure domestic animals 251 of co-operative fire insurance corporations 264 Annual Report: fee for filing fl of certain corporations 44 forms of, to be furnished by superintendent 45 to exhibit amount of capital notes 45 of foreign insurance company 45 penalty for failure to file 45 of superintendent 46 of registered policies and annuity bonds 74 of life insurance corporation 103 of life insurance corporation, contents of 103 of foreign mutual fire insurance corporation 149a by marine corporations, of agencies outside of United States 161 fraternal beneficiary society, contents of 242 of fraternal beneficiary society 242 of company to insure domestic animals 252 of town insurance corporation 344 Annuities: certain, how valued 84 provisions concerning contract for insurance and annuity 88 deferred, non-payment of premiums 88 Annuity Bonds: special deposit to secure 73 annual report of 74 liability of State to pay 74 registration of 76 payment of 77 Application: of article I 57 of other sections, fraternal beneficiary society 248 Articles of Incorporation (see Incorporation). Articles of Association: of Lloyds, to be filed 67 of Lloyds, contents of 67 Assessment: of corporations to defray expenses of insurance department 8 on premium notes by receiver 61 in mutual fire insurance corporations 116 to be made by directors 116 notice of 116 General Index. (References are to sections.) Assessment — (Continued) : effect of notice of 116 of mutual employers' liability corporations 189 of workmen's compensation corporations 189 in co-operative or assessment insurance corporations 210 policy to indicate plan 219 of members of company to insure domestic animals 254 by co-operative fire insurance corporations 264 collection of unpaid, town co-operative corporation 270 town insurance corporations may make 337 assessment fire insurance corporations (see Co-operative Fire Insur- ance corporations), form 262 subject of insurance by 266 classification of property 266 may borrow 266 mutual automobile fire insurance corporations 326 mutual automobile casualty insurance corporations 346 Assets: sufficiency of 21 when stock is not valued as an asset of 21 on reinsurance 23 of foreign corporation 25 receiver to take possession of 76 what shall be allowed as 86 of fire insurance corporations, allowance of 118 certain documents not to be considered as 132 Assignee of Policy: when allowed to vote for directors of life insurance corporation 94 Associations: rate-making 141 Attorney-General : certificate of authority to be approved by 10 consent of, to reinsurance by receiver 23 report of superintendent to, as to insolvency of corporation 76 proceedings to restrain co-operative company from doing business by 207, 208 Anthority, Certificate of (see Certificate of Authority). Automobiles: incorporation of companies to insure 110, 160 Bankrupt Corporation (see Insolvency). Bankers: indemnifying 70 Banks: indemnifying 70 Beneficiary: of co-operative or assessment company, charge of 211 payment to, is exempt from execution 212 General Index. (References axe to sections.) Benefits: agreements for 210 of fraternal society, to whom payable 231 certificate of, what to contain 232 Board of Directors (see Directors). Boiler: inspection of 357 Bonds (see Undertaking): deposit of 13 minimum amount of 13 affidavit annexed to deposit of 13 valuation of 18 deposit of, in certain cases 28 insurance of municipal, etc., validity of 70 of receiver 76 title guaranty companies may execute 181 title guaranty companies, justification upon 183 Books (see Documents): to record exchange of securities deposited 15 of foreign corporation 25 to be produced for examination 39 when to be opened for subscriptions • 71 in department, access of State Treasurer to 74 of fire insurance corporations, opening of 112 Bottomry Interests: marine insurance upon 150 Broker: present by agent or H5 certificate of authority of 91-142 indemnifying 70 Building: inspection by State Fire Marshal 36U Burglary or Theft: insurance against loss by 70 Business (see New Business): By-Laws: to be indorsed on certificate of stock or profits 19 of title and credit guaranty corporations, adoption of 171 contents of 172 copy of, to be filed with superintendent 173 amendment of, to be filed with superintendent 173 of fraternal beneficiary society, amendments to 241 of co-operative fire insurance corporations 264 Canals: insurance upon, by marine corporations 160 agent not to receive excessive rate for insurance upon 160 General Index. (References are to sections.) Cancellation: of policy of fire insurance corporation 122 of policies, by co-operative fire insurance corporations 264 Capital (see Capital Stock; Impairment of Capital): investment of 16 percentage of, to be exposed to loss 24 of corporation of foreign country 27 of foreign country corporation, taxation of 27 of foreign corporation subject to taxation 34 of insurance corporation heretofore incorporated 37 impairment of 41 of corporation to be stated in advertisement 48 of fire insurance corporations 112 cash capital of mutual fire insurance corporation 114 of title guaranty company, investment of 176 Capital Stock (see Capital): minimum amount 12 of life, health and casualty corporations to be paid in 71 to be computed as liability of corporation 82 impairment of, of life insurance corporation 86 plan of retirement of 95 of mutual fire insurance corporation Ill of fire insurance corporation, increase of 117 of marine corporation 161 of marine corporation, restrictions as to 152 of mutual marine company, increase of 153 cash capital of mutual marine corporations 154 rights and liabilities of holders of cash capital 155 subscriptions to, of title and credit guaranty corporation 171 of title and credit guaranty corporations, certificate of payment of. .. 174 of credit guaranty corporations, use of 178 Capital Stock Notes: of mutual fire insurance corporations 113 Caps: not kept in magazines 362 Cargoes: insurance upon 110 Cash Pajonent: to mutual fire company, in lieu of deposit note 115, 119 Casualty: insurance against 70 Casualty Insurance Corporations: fees for filing charter of fees for filing report of 6 minimum capital stock of 12 proceedings against, liquidation of delinquent 63 assets of 80 estimation of liabilities of 89 GENETtA-L Index. (References are to sections.) Casualty Insurance Corporations — (Continued). increased powers of 105 reincorporation of certain 217 See Life, Health and Casualty Insurance Corporations. Certificates: fee for filing 6 to extend time for deration for holding real property 20 of indebtedness issued by receiver 123 of profits of marine corporation convertible into stock 156, 159 of payment of capital stock of title and credit guaranty corporations, 174 life, must be filed and approved 220 of authority of co-operative fire insurance corporations 263 of right to continue as a co-operative fire insurance corporation 260 of right of voluntary association to continue a co-operative fire insur- ance corporation 261 4 Certificate of Attorney-General (see Attorney-General). Certificate of Authority: fees for filing • issuance by superintendent 9 no corporation to transact business without • recording of 9 must specify business to be transacted 9 superintendent may refuse to issue. 9 not required by certain corporations 9 to bb approved by Attorney-General 10 when not to be issued 10 of foreign corporation 26 revocation of, on account of removal 30 to be filed in county clerk's oflSce by agent 31 renewal of, revocation of 32 revocation of, on account of impairment of capital 41 of agent for foreign corporation 50 of life insurance corporation, revocation of, for impairment of capital stock 86 of agent, when revoked 91 of agents 91 must be renewed annually 91 not required of industrial or prudential companies 91 of public adjuster 138-a agent's 142 broker's 143 of foreign mutual fire insurance corporation " 14? of co-operative company, revocation of 213 General Index. (Referecces are to sections.) Certificate of Examiners (see Examiners). Certificate of Incorporation (see Incorporation): to be examined by Attorney-General 10 of domestic corporation, to contain certain provisions 10 amendment of 52 Certificate of Nomination: to have acceptance of candidates 94 Certificate, Suspension, Cancellation and Reinstatement of: in mutual employers' liability corporations 101 in workmen's compensation corporations 191 Certificate of Solvency: issued by superintendent of insurance 182 Charter: fees for filing of 6 of foreign corporation, to be filed 29 amendment of 52 effect of amendment of 52 of fire insurance corporation 110 forfeiture of, by declaring improper dividends 117 amendment of, by mutual fire company, to change to stock company . . 125 of mutual fire company, extension of 126 amendment of, to reincorporate existing fire corporation 127 of fire insurance corporation, duration of 128 of marine insurance corporation 150 of marine corporation, duration of 150 of marine corporation, amendment of 157 of marine corporation, extension of 158 Children: insurance of, by a person liable for support of 55 City: no insurance in, by town co-operative corporation 271 City Bonds: investments in 16 Claim Reserves: for liability companies 86 Clerks: appointment of 6 compensation of 6 duties of 6 no charge for examination of corporation by 7 of receiver, appointment of 81 of receiver, compensation of 81 Colored Persons: discriminations against, prohibited W General Index. (References are to sections.) Comptroller certificate of, as to deposit of securities 25 Committee of Policyholden: at elections 94 Completion of Organization: of mutual automobile fire insurance corporations 320 of mutual automobile casualty insurance corporations 340 Concealing: envelope or ballot from custodians or inspectors 94 Conflagrations: proceedings in case of extensive 132 Consolidation (see Merger): of fire corporations , 129 Constitution: amendment to, of fraternal beneficiary society 241 Contingency Reserve: accumulation of, by life insurance corporation 87 Contracts: insurance guaranteeing performance of 70 Conversion: of a stock life insurance to a mutual corporation 96 Co-operative Fire Insurance Corporations: existing corporations continued 260 certificate from superintendent 260 voluntary associations continued and incorporated 261 certificate from superintendent 261 co-operative fire insurance corporations 262 subject of insurance 262 form of insurance 262 limitation on business of advance premium companies 262 assessment corporations 262 incorporation and certificate of incorporation 263 by-laws 264 directors 264 annual meetings 264 records 204 assessments 264 withdrawal of members 264 new members 264 non-residents may be insured 264 policies 265 property to be insured by 266 assessment companies 266 classification of property by assessment companies 266 assessment company may borrow 266 advance premium companies may insure 267 expenses of such company 207 liability carried • 267 General Index. (References are to sections.) Co-operative Fire Insurance Corporations — (Continued) : surplus of such company 267 deficiency 267 reinsure by such company 267 application of other sections 268 extension of corporate existence 269 Co-operative or Assessment Insurance Corporations (see Insurance Cor- porations) : fees for filing charter of • fees for filing report of reincorporation of 52 incorporation of 200 contents of declaration of 200 election of directors of 200 number of members required 200 declaration to contain statement as to members 200 license to commence business 200 what are deemed 201, 209 annual report of 202 no deposit of securities required by 202 designation of principal office of 203 designation of person on whom to serve process 203 foreign companies 204 restriction on foreign 204 accumulation of reserve or emergency fund 205 use of reserve fund 205 reserve or emergency f \md of foreign company 205 authority of foreign company may be revoked 205 reincorporation of 206 visitation of, by superintendent 207 replies to superintendent to be under oath 207 proceedings to restrain from doing business 207 hearing on such proceeding 208 annual meetings of 209 examinations of 209 transfers of risks of 209 reinsurance by , 209 payment of maximum amount of policy 210 assessments in 210 notice of assessments 210 contents of notice of assessment 210 change of beneficiary 211 payment to beneficiary is exempt from execution 212 penalties 213 proceedings against, liquidation of delinquent 63 revocation of certificate of authority of 213 Odd Fellows and Masons 214 deposit of securities with superintendent 215 General Index. (References are to sections.) Co-operative or Assessment Insurance Corporations (see Insurance Cor- porations) — Continued: quorum of members of 2IQ reincorporation of certain 217 Corporation: heretofore incorporated, privileges of 31 inducing person to surrender insurance 60 proceedings against and liquidation of delinquent insurance 03 increase powers certain corporations 105 license to, in excepted cases 138 reports Appendix reports, further requirements Appendix Corporators: of fire corporations, liability of 118 Cost of Insurance: fraternal benefit societies ^i'iS County Co-operative Insurance Companies (see Co-operative oi Assess- ment Insurance Companies). County Co-operative Insurance Corporations: see town or county co-operative insurance corporations 57 County Clerk: certificate of authority of broker to be filed vith 91 to furnish lists to State Fire Marshal 377 (Jourt of Record: may strike out name of candidate 04 Credit: insurance against loss from .....,., 70 Credit Guaranty Corporations: proceedings against, liquidation of delinquent . 63 incorporation of 170 certificate of incorporation of 170 amount of capital of 170 subscription to capital stock of 171 adoption of by-laws of 171 meeting to adopt by-laws 171 contents of by-laws of 172 copy of by-laws to be filed with superintendent 173 amendment of by-laws to be filed with superintendent 173 certificate of payment of capital stock 174 directors of, to be stockholders 175 number of directors of 176 quorum of directors 176 treasurer of, to give bonds 175 change of number of directors of 175 conditions requisite to commencing business as 177 powers of , , , 178 General Index. (References are to sections.) Credit Guaranty Corporations — (Continued): uses of capital funds 178 estimation of lia;bilities of 178 examination into affairs of 178 Creditor: may request examination of corporation 40 Custodians: of ballots, how appointed 94 Damage: umpire to ascertain, fire 121-a Deceptive Statements: not to be made by advertisement 47 penalty for making 48 Declarations: of fire insurance corporations 110 of marine insurance corporations 150 of co-operative or assessment insurance corporations 200 Definitions: of agent 49 of fraternal benefit societies 230 of explosives 358 Delinquent Corporations: proceedings against and liquidation of 63 Deposit: by credit guaranty corporation 177 Deposit Notes: of mutual fire insurance corporation 113, 115 payment of 113, 115 relinquishment of 113, 115 deposit of, by members of mutual companies 115 assessments on 116 liability of member on 116 cash payment in lieu of 116 Deposit of Securities: before receiving certificate of authority 11 to be made in stocks, bonds and mortgages 13 deposit by foreign corporations 13 stocks and bonds for foreign States 13 exchange of 14 interest on 14 by foreign corporation 26 amount of, by foreign corporation 26 General Index. (Keferences are to sections.) Deposit of Securities — (Continued) : by foreign country corporation 27 voluntary deposit by foreign country corporation 27 special deposits required in certain cases 23 reciprocal requirements as to foreign corporations 33 taxes collected out of interest of 34 securities to be examined 51 agents not to act until securities deposited 54 by life, health and casualty corporation, in certain cases 71 by life, health and casualty corporations, withdrawal of 72 withdrawal of, by foreign life insurance corporation 72 special deposit to secure registered policies and annuity bonds 73 special deposit, transfer of 73 special deposit, amount of 73 receiver to take possession of 76 conversion of, into money 77 transfer by superintendent to receiver 104 by foreign mutual fire insurance companies 149 not necessary by co-operative or assessment corporations 202 by co-operative companies 215 Deputy Superintendents: appointment of B powers and duties of 6 compensation of 5 no charge for personal examination by 7 Designation: of principal office of co-operative company 203 of person on whom process may be served by co-operative company. . . 203 Directors: number of 10 reduction of number of 10 not to be pecuniarily interested in transactions 36 misdemeanor of 36 in specially chartered corporation, residents of State 37 issuance of stock by 42 liability of, on account of impairment of capital 42, 43 to make good impairment of mutual insurance company 43 may reduce capital stock on account of impairment 86 nomination of candidates for 04 election of 04 approval :?f j '-c conversion of stock life to mutual 05 of fire insurance corporations, salaries of officers 08 to authorize investments of life insurance corporations 100 statement of monies used in election of 103 to be divided into classes 106 of mutual fire insurance corporation, powers of 113 of mutual fire companies, to make assessments 116 General Index. (References are to sections.) Oirectors — (Continued) : of fire corporations, liability of 119 of stock fire company, powers of, after change from mutual company, 125 of fire corporation, assent to consolidation or merger 129 of title and credit guaranty corporations i 175 number of 176 quorum of 176 change of number of 175 of mutual employers' liability corporations 187 of workmen's compensation corporations 187 of co-operative and assessment corporations, election of 200 number of companies to insure domestic animals 250 election of, company to insure domestic animals 251 of co-operative fire insurance cor»orations 264 of mutual automobile fire insurance corporations 322 of mutual automobile casualty ins'tirance corporations 342 Disbursements: vouchers required 99 Discrimination: between foreign corporations of same State 33 and rebating prohibited 65 prohibited 89 what is not 89 against colored persons, prohibited 90 under accident or health pol idles prohibited 108 District Attorney: to assist fire marshal 373 Dividends: payments of, by life insurance corporations 8S when to be declared by fire corporations 117 improper dividends by fire corporations 117 scrip dividends of fire corporations 117 not to be declared by fire corporation having guaranty or special reserve fund 130 of mutual employer's liability corporations 190 of workmen's compensation corporations 190 mutual automobile fire insurance corporations 325 mutual automobile casualty insurance corporations 345 Documents (see Books): to be in custody of superintendent 2 in department, access of State Treasurer to 74 not to be considered assets 132 Domestic Animals (see Domestic Animals, Corporations for Insurance of). Domestic Corporations (see Insurance Corporations): consent of directors of, to investment of surplus 16 doing business in other States, investment of securities in such States, 16 issuance of reciprocal certificate 204-a Gi:ni;rai. Iniu^x. (References are to sections.) Domestic Animals, Corporations for Insurance of: fees for filing charter Q fees for filing report of tf expenses for examinations of 7 incorporation 250 annual meeting, election of directors and officers 261 annual report, contents 252 annual report, failure to make 252 examinations by superintendent 253 order restraining, from doing business 253 receiver for 253 assessments, how made 254 by-laws regulate assessments 254 Earthquakes: insurance against loss by 110 insurance, by co-operative fire insurance corporations 262 Election (see Annual Election): of directors of life insurance corporation 94 of directors, methods of voting by policyholders 94 of directors, how held 94 of directors, inspectors of 94 subject to supervision of superintendent 94 eligibility of voters of mutual marine corporations 155 Emergency Fund: of co-operative or assessment insurance corporation 205 use of excess of 205 of foreign corporation 205 Employer's Liability: insurance for employee 70 unearned premium and claim reserves 70 Employes: employer can take out insurance on 55 insurance against injuries by 70 not to omit name of policyholder from list 94 of life insurance corporation, term of employment of 98 Endowment Policy: reserve upon 88 standard provisions concerning 101 Estimate: of surplus profits of fire corporations 117 of liabilities of fire corporations 118 Evidence: report of examiners is presumptive 39 affidavit of agent «a to notice of premium presumptive 92 General Index. (Refereuces axe to sections.) Examination: expenses of , 7 no charge for, if made by superintendent or deputy 7 expenses for, liow paid 7 expenses for, repayment of, by corporation 7 of proposed corporation by superintendent 11 of foreign coi*poration 25 of foreign country corporation 27 of trustees of foreign country corporation 27 when and by whom made 39 whom to be examined 39 upon request of stockholder 40 of capital of mutual insurance company 43 of securities deposited 61 certificate of 51 of fire corporations in case of extensive conflagration 132 into affairs of credit guaranty corporations 178 of title guaranty company 184 of co-operative or assessment companies 209 into affairs of fraternal benefit society 243 of corporations to insure domestic animals 253 Examiner: presentment of bill of 7 no fees for legislative service 7 appointed by superintendent 11 to examine affaiis of proposed corporation. 11 certificate of 11 appointed by superintendent 39 who are qualified to be 39 report to be made by order of 39 report of, presumptive evidence 39 Exchange of Securities: deposited with superintendent 14 when valid 16 record of 16 Exemption: of payn^pnt to beneficiary 212 from execution of benefits from fraternal societies 240 of certain societies , 245 certain police associations 245 of fraternal societies from taxation 246 Expenses: of examination of corporation 7 of department, how defrayed 8 of registration of policies and annuity bonds 75 limitation of 97 Explosion: insurauce against 70 General Index. (References are to sections.) Explosive: definition of 35S regulations regarding 359 where kept 360 magazines for 361 caps not kept in magazines 362 penalties regarding 363 exceptions 366 Extension: of charter of mutual fire company 126 of charter of marine corporation 158 Federal Courts: removal of causes to 30 Fees: for filing charter o for filing annual report 6 for filing certificate of authority, deposit, valuation or compliance 6 for filing of any paper 6 for affixing seal of superintendent 6 payment of, into State treasury 6 for examination of title to real property 28 remittance of, to foreign corporations 33 for forwarding process by superintendent 35 not to be included, fire insurance 144 to be indorsed on policy, fire insurance 146 Fictitious Name: use of, forbidden 54 Fidelity: insurance on 70 Fire: umpire to ascertain aamage by 121-a to be reported by fire insurance companies 354 Fire Departments: payment of taxes to, by foreign corporations 133 may collect penalty for neglect of foreign fire corporation to pay tax, 135 may collect penalty for refusal to exhibit foreign fire policies 136 Fire Insurance Corporations (See Insurance Corporations. See Mutual Fire Insurance Corporations. See Co-operative Fire Insurance Corjwrations) : minimum amount of capital stock of 12 lien on stock and profits 19 readmission of certain foreign corporations 56 proceedings against, liquidation of delinquent 63 incorporation of HO Gen-erai. Index. (References are to sections.) Fire Insurance Corporations (see Insurance Corporations. See Mutual Fire Insurance Corporations. See Co-operative Fire Insurance Corporations) — Continued: must publish notice of intention to incorporate 110 shall not deal in merchandise, etc 110 subscriptions to capital of 112 capital stock notes of 113 deposit notes of 113, 115 cash capital of mutual companies 114 deposit notes and cash payments by members of mutual companies. . . 115 assessments in mutual companies 116 estimation of surplus profits of 117 increase of capital stock of 117 examination of 118 allowance of assets and estimation of liabilities upon examination of, 118 liability of directors and corporators 119 what must appear on face of policy of 120 standard form of policy of 121 payment on cancellation of policy of 122 cancellation of policies of, by receiver 123 extension of joint-stock corporations 124 change of mutual to stock corporations 125 extension of term of charter of mutual fire corporations 126 reincorporation of existing corporations 127 duration of charter of 128 merger of 129 consolidation of 129 guaranty and special reserve funds 130 investment of guaranty and special reserve funds 131 proceedings in case of extensive conflagrations 132 amount of guaranty and special reserve fund to be set out in annual statement to superintendent 132 certain documents of, not to be considered as assets 132 payment of tax to fire departments by foreign fire corporations 133 payment of tax to superintendent by foreign fire corporations 138 agent of foreign corporation not to act until payment of taxes 139 undertaking of agent for foreign 134 penalty for neglect of agent to pay tax 135 penalty for failure to exhibit foreign fire policy 136 license to agents of foreign corporations in excepted cases 137 fees not included in consideration 144 report of consideration to company 145 fees and charges indorsed on policy 146 penalty, violation provisions 144, 147 penalties, oflSccrs and agents l'*8 Fire Marshal (see State Fire Marshal). Foreign Casualty Insurance Corporation: of foreign country, capital of *^ General Index. (References are to sections.) Foreign Co-operative or Assessment Corporations: must secure certificate of authority 204 of State, imposing restrictions on domestic corporations 204 reserve fund of 205 authority of, may be revoked 205 Foreign Corporation: jurisdiction of superintendent of 25 examination of 25 revocation of certificate of 25 transactions allowed 25 liabilities of 25 deposit of securities by 20 of foreign country, capital of 27 of foreign country, deposit of securities 27 of foreign country, voluntary deposit of securities 27 certificate of authority; renewal, revocation 32 of other States, capital required 5(5 authorization of, mutual automobile fire 328 authorization of, mutual automobile casualty 348 Foreign Country: capital of corporation of 27 Foreign Fraternal Beneficiary Corporation: transacting business in New York may continue 237 certificate to be filed with superintendent 237 Foreign Insurance Corporation: of foreign country, capital of 27 of foreign country, report of 27 to file copy of charter 29 business same as similar domestic insurance corporation 29 appointment as attorney of . 30 removal of cause to federal courts by 30 certified copy of certificate to be filed 31 renewal of certificate of authority 32 reciprocal requirements 33 taxation of 34 revocation of authority of, for failure to pay taxes 34 taxation of health or casualty company 34 report of 45 certificate of authority of agents of 60 certain provisions of policies, prohibited 60 Foreign Fire Insurance Corporation: taxation on premiums of 133, HS agent of, not to act until taxes paid 1 .1*5 undertaking of agent of K<4 transaction of business without agent 134 neglect of agent of, to pay tax 135 penalty for refusal to exhibit policy of 136 license to agents of, in excepted cases 137 General Index. (References are to sections.) Foreign Life Insurance Corporations: power to hold and dispose of real property 20 of foreign country, capital of 27 taxation of 34 discontinuance of business of 72 withdrawal of deposit by 72 distribution of surplus to policyholders 83 certificate of authority not required by certain agents of 91 limitation of new business 96 limitation of expenses of 97 annual report of 103 requirements of incorporation 149 annual tax 149a annual report required 149a •gents 149b distribution of annual tax 149c collector of annual tax 149c Foreign Mutual Fire Insurance Company; requirements of incorporation 149 annual tax 149a annual report 149a agents 149h distribution of annual tax 149c collector of annual tax 149c Foreign Mutual Insurance Corporations: authorization 194 Forfeited (see Forfeiture). Forfeiture: surrender of value of lapsed or forfeited policies 88 no forfeiture of policy without notice 92 Forms: of annual reports to be furnished by superintendent 45 Franchise Tax: on insurance corporations Appendix Fraternal Beneficiary Corporations: fees for filing charter of 8 fees for filing report of certificate of authorization not required by 9 Article I not applicable to 57 admission of minors to 241 Fraternal Beneficiary Societies: definition of 230 benefits, beneficiaries a^^ ^^.c^mbership 231 shall provide for death benefits 231 may provide sick or accident benefits 231 death benefits, to whom payable 231 General Index. (References are to sections.) Fraternal Beneficiary Societies — (Continued) certificate, what to contain 232 funds 233 incorporation 234 reincorporation 235 mergers must be by contract, etc 236 foreign societies may continue 237 place of meeting 238 liability of officers 238 power of subordinate body to waive laws 239 exemption from execution 240 amendment to constitution and by-laws 241 reports and valuations 242 examination by superintendent 243 revocation of license 244 exemption of certain societies 245 taxation, exemption from 246 penalties for false statements 247 appUoation of other sections 248 review of findings of superintendent 249 Freights: insurance upon 110 Funds: of title guaranty company, investment of 176 of fraternal beneht society 233 General Corporation Law (see Appendix). Glass (see Life, Health and Casualty Insurance Corporations): incorporation of company for insurance against breakage of 70 Guaranty Corporations (see Life, Health and Casualty Insurance Cor- porations) : incorporation of 70 Guaranty Fund: of title guaranty corporation 176 application of 176 additions to 176 Guaranty Surplus Fund: of fire corporations 130 examination of corporation before allowance of 130 no dividends by corporations having 130 deductions from profits, etc 130 net surplus turned into 130 how invested 131 amount of, to be set forth in annual statement to superintendent 132 discontinuance of 132-a Health: standard provisions 107 General Index. (References are to sections.) Health Insurance Corporations (see Life, Health and Casualty Insurance Corporations) : agents for Ola valuation of policies of 93 increased powers of 105 standard provisions 107 discriminations prohibited 108 Household Furniture: insurance on 110 Husband: wife may insure life, etc., of 66 Impairment of Capital: to be made good by stockholders 41, 42 of mutual insurance companies 43 of life insurance corporation 86 reduction of capital on account of 86 in case of extensive conflagrations 132 Incorporation: of life, health and casualty insurance corporations 70 of mutual companies 70 of fire insurance corporations 110 of foreign mutual fire insurance corporation 149 of marine insurance corporation 160 of title guaranty corporations 170 of credit guaranty corporations 170 of mutual employers' liability corporations 185 of workmen's compensation corporations 186 of co-operative or assessment corporations 200 of a fraternal beneficiary society 234 when a company to insiu-e domestic animals 250 of co-operative fire insurance corporation 263 mutual automobile fire insurance corporations 320 mutual automobile casualty insurance corporations 340 Incorporators (see Corporators). Indemnity: to banks, etc., against loss 70 Independent Nominations: when none is made 94 Independent Order of Odd Fellows: certificate of authority of agents of, not required 91 provisions of article VII does not apply 239 Industrial Companies: valuation of policies 84 certificate of authority of agents of, not required 91 Infants: insurance on life of, without consent of 66 insurance contract of 66 GENEit.iL Index. (References are to sections.) Injunction: to restrain insolvent corporation from traiisacliii;^ business 76 to restrain co-operative company from doing business 207, 208 to restrain corporation for insurance of domestic animals 252 corporation for insurance of domestic animals, for conducting basiness fraudulently, etc 263 Injuries: insurance against 79 Insolvency: when corporation deemed insolvent 21 insurance corporation, when deemed 41 when depositing corporation deemed to be 76 Inspection: report of by fire marshal 363 Inspectors of Election: how appointed, their duties 94 Insurance: restriction of, town co-operative corporation 271 Insurance Corporations: expenses of examination of 7 assessment of, to pay expenses of department 8 reduction of number of directors 10 examination of, by superintendent 11 minimum capital stock of , 12 may collept interest on securities deposited 14 "^ investment of capital and surplus 16 restrictions as to ownership of real property by 20 when deemed insolvent 21 reinsurance of risks 22 to file schedules of reinsurance 22 limitations of risks of 24 examination of affairs of 39 impairment of capital of 41 when deemed insolvent on account of impairment of capital 41 deceptive statements by, prohibited 47 agents of 49 to cause securities to be examined 6) reorganization of corporations 5i. amendment of certificates of 52 penalty for violation of Insurance Law 53 agent not to act for, unauthorized 54 policy of, to contain entire contract 58 certain provisions of policies prohibited 59 misrepresentations of, prohibited 60 General Index. (References are to sections.) Insurance Corporations — (Continued) valuation of policies of 84 proceedings against, liquidation of delinquent 63 not to omit name of policyholder from list 94 not to spend money in canvass of election U4 no officer to issue circular containing false statement in regard to elections 94 reincorporation of certain 217 franchise tax Appendix Insurance Department: creation of 2 offices for 3 expenses of; how defrayed 8 access of State Treasurer to books of 74 Insurance Law: application to religious orders 64 Insurance Rate: organizations to assist making 140 rate making associations 141 Interest: on seciu-ities deposited 14 on securities deposited, taxes collected out of 34 on scrip 79 on certain annuities 84 on cash capital of mutual company 114 Investigation: of insolvent corporation, yearly * 79 Investment: of surplus by domestic insurance corporation 16 of funds in foreign states 16 of capital and surplus 16 in what securities 16 on its own stock not allowed 16 on stock of corporation doing same business, not allowed 16 of securities of foreign country corporations 27 evidences of, to be filed by foreign corporation 32 of surplus by receiver 78, 79 cannot enter into joint 100 of life insurance corporations 100 of life insurance companies to be authorized by board of directors 100 of cash capital of mutual company 114 of proceeds from proceeds of deposit notes of mutual companies.... 115 of guaranty and special reserve fund 131 of capital and funds of title guaranty company 176 General Index. (References are to sections.) Jewels: marine insurance upon 150 Joint-Stock Corporation: may become mutual 18, 96 extension of charter of 124 Knights of Pythias: provisions of article VTI does not apply 239 insurance against loss by 110 Lake Navigation: insurance against loss by 110 Lapsed (see Policies): surrender value of lapsed or forfeited policies 88 Larceny: co-operative insurance against loss by 251 Liabilities: what shall be allowed as 86 of fire insurance corporations, estimation of 118 of directors and corporators of fire insurance corporations 119 of new fire corporation on merger 129 of credit guaranty corporations, estimation of 178 Liability Companies: claim reserves for 86 Liability Insurance: by any employee, etc 70 License: revocation of, of person inducing surrender of insurance 60 to agents in excepted cases 137 in excepted cases 138 revocation of, of fraternal societies 244 of company to insure domestic animals. 250 to Lloyds and inter-insurers 302 Lien: upon stock and profits 10 waiver of 19 Lieutenants' Benevolent Association: exemption of 245 Life, Health and Casualty Insurance Corporations (see Insurance Cor- porations) : minimum capital stock of 12 reincorporation of 62 proceedings against, liquidation of delinquent 6J incorporation of 70 for what purpose incorporated 70 mutual companies 70 completion of organization of 71 capital stock of, to be fully paid in 71 General Index. ' (References are to sections.) Life, Health and Casualty Insurance Corporations (see Insurance Cor- porations) — ^( Continued) : withdrawal of securities of 72 special deposit to secure registered policies, etc 73 annual report of registered policies and annuity bonds 74 registration of policies and annuity bonds 75 when deemed insolvent 78 annual investigation of insolvent corporation 79 powers of receiver of 81 valuation of policies of health insurance corporations 93 Life Insurance Corporations: power to hold and dispose of real property 20 loan upon policy by 36 amendment of charter of 52 reincorporation of 52 See Life, Health and Casualty Insurance Corporations. proceedings against, liquidation of delinquent 63 issuance of registered policies in exchange 80 powers of receiver of 81 when receiver not to be appointed 82 when not to issue new policies 82 distribution of surplus to policyholders 83 may require policyholders to elect as to manner of payment of dividends 83 payment of dividends to policyholders 83 valuation of policies of 84 may make voluntary valuation of policies 84 when actual premium is less than net 85 what shall be allowed as assets of 86 impairment of capital stock of 86 reduction of capital on account of impairment 86 may accumulate contingency reserve 87 surrender value of lapsed or forfeited policies 88 discriminations by, prohibited 89 discriminations against colored persons forbidden 90 no forfeiture of policy of, without notice 92 names of policyholders to be filed with superintendent 94 election of directors of 94 conversion of stock corporation to mutual 95 limitation of new business of 98 limitation of expenses 97 salaries of officers and agents 98 vouchers required for disbursements of 99 investments of, to be approved by directors 100 cannot enter into joint investments 100 Cenekaj. Index. ( References are to sections.) A Life Insurance Corporations — (Continued) : investments of 100 standard provision concerning policies 101 participating policies 102 annual reports of 103 directors to be divided, domestic mutual 100 reincorporation of certain 217 policies to indicate assessment plan 211) policies must be filed and approved 220 Lightning: insurance, by co-operative fire insurance corporations 262 Limitation: of risks 24 of new business of life insurance corporations 96 of expenses of life insurance corporation 97 of business, town co-operative corporation 278 of business, town insurance corporation 340 Limitation of Actions: on forfeited policy 92 Limit of Risks: amount of 24 Lloyds: Insurance Law applies 1 article I not applicable to 57 articles of association to be filed 57 amendment of articles of association 67 restrictions on policies of 121 provisions applicable 162 application of article 10 300 examination and certificate 301 general provisions affecting 302-304 application of other sections 303 of other States, admission of 305 Losses: statement of, to be filed 32 Machinery: insurance against damage by 70 Marine Insurance Corporations: minimum amount of capital stock of 12 lien on stock and profits 19 General Index. (References are to sections.) Marine Insurance Corporations — (Continued): power to hold real property 20 readmission of certain foreign corporations 56 proceedings against, liquidation of delinquent t)3 incorporation of 150 notice of intention to incorporate to be filed 150 charter of 150 duration of 150 certain transactions of, prohibited 150 subscription to capital stock of 151 restrictions as to capital stock and premium notes 152 increase of capital by mutual marine corporations 153 cash capital of mutual 154 division of profits of mutual 154 rights of holders to cash capital of mutual 155 certificates convertible into stock 156 amendment of charter of 157 extension of charter of 158 mutual may change to stock 159 insurance on canals 160 agent must not charge excessive rates for insiu*ance upon canals 160 may maintain agencies outside of United States 161 Marshal (see State Fire Marshal) : appointment of 350 Masons: exemption of, from provisions of article VI 214 Meetings (see Annual Meetings): election of directors of life, health, casualty corporations 94 changing number of directors of title and credit guaranty corporations. 175 of employers' liability corporations 188 of workmen's compensation corporations 188 of mutual automobile fire insurance corporations 323 of mutual automobile casualty insurance corporations 343 Members: of mutual fire insurance corporations 114 of mutual fire companies, assessments on 110 of mutual fire companies, liability of 116 of co-operative companies, number required 200 accumulation of fund for benefit of 205 of co-operative companies, quorum of 216 of co-operative fire insurance corporations 264 town insurance corporation, may withdraw 341 town insurance corporation, non-residents as 342 Membership: of company to insure domestic animals 250 General Index. (References are to sections.) Merger (see Consolidation): of fire corporations, approval of superintendent 129 to be filed in county clerk's oflSce 129 of fire corporations 129 of title guaranty corporations 179 with banking corporations 179 of fraternal benefit society 236 Minors: admission of 218 Misdemeanor: of directors or oflBcers pecuniarily interested in transactions 36 violation of Insurance Law is 53 misrepresentations by corporation 60 committed at election of directors 94 for agent to act for foreign corporation before payment of tax 139 Misrepresentations : by corporation prohibited 60 Mortgages: deposit of 13 property covered by, must be insured 13 minimum amount of 13 aflBdavit annexed to deposit of 13 deposit of, in certain cases 28 investments of life insurance corporations in 100 Municipal Corporations: insurance of bonds of 70 investments of life insurance corporations in 100 Mutual Benefit Fraternity: certain societies declared to be 233 Mutual Automobile Casualty Insurance Corporations: incorporation 340 completion of organization 341 directors and officers 342 meetings; basis of right to vote 343 reserves; suspension, etc.,, of certificates; expenses 344 dividends 345 assessments 346 reports to, etc., superintendent ; policy forms 347 authorization of foreign corporations 348 Mutual Automobile fire Insurance Corporations: incorporation 320 completion of organization 320 directors and officers 322 meetings; basis of right to vote 323 reserves; suspension, etc.. of certificate: oxpensos 324 dividends 325 assessments 326 reports, etc., to superintendent; policy forms 327 authorization of foreign companies 328 General Index. (References are to sections.) Mutual Employers' Liability; and Workmen's Compensation Corporations: incorporation 186 completion of organization 180 directors and officers 187 meetings ; basis of right to vote 188 assessments 189 dividends 190 reserves; supervision; cancellation and reinstatement of certificate.. 191 reports to and examinations by superintendent of insurance 192 prevention of accidents 193 authorization of foreign mutual insurance corporations 194 Mutual Fire Insurance Corporations: proceedings against, liquidation of delinquent 63 not to insure foreign property Ill See Fire Insurance Corporations. when permitted to begin business Ill capital stock of Ill premium notes of Ill See Fire Insurance Corporations. capital stock notes and deposit notes of 113, 115 members of 114 may unite cash capital as an additional security 114 investment of cash capital of 114 interest on cash capital of 114 liability of cash capital of 114 cash capital of, when to be paid in 114 cash capital of, when to be paid off 114 deposit notes of 115 cash payments in 115, 116 assessments in 116 examination of 118 policy of 120 change of, to stock corporations 125 extension of term of charter of 126 Mutual Insurance Corporations: impairment of capital of 43 directors of, to make good impairment 43 proceedings against, liquidation of delinquent 63 incorporation of 70 capital stock of 71 may borrow money 71 Mutual Life Insurance Corporations: conversion of stock life corporation to. 95 directors to be divided 106 0^^lS'ERAL Index. (References are to sections.) Mutual Marine Insurance Corporations (see Marine Insurance Corporations) : proceedings against, liquidation of delinquent 63 premium notes of 152 increase of capital of 15.3 cash capital of 154 division of profits of 154 rights and liabilities of holders of cash capital of 155 change of certificates of profits into stock 156 Names: of policyholders to be filed with superintendent before election of directors 14 agent not to transact business under fictitious 64 Net Surplus (see Surplus): turned into guaranty and special reserve fund 130 • New Business: limitation of 98 limitation of, foreign life company 96 New York City Police Endowment Association: exemption of 245 Nominations: of candidates for directors 94 Non-Residents: insurance of, town co-operative corporation 274 as members, town insurance corporation 342 Notes (see Premium Notes). Notice: of filing certificate of foreign corporation 31 of intention to form life, health or casualty insurance corporation... 71 of withdrawal of securities deposited 72 of payment of premium 92 contents of notice of premium 92 no forfeiture of policy without 92 of intention to incorporate a fire insurance company 1 10 of assessments in mutual fire companies 116 of intention to incorporate a marine insurance company 150 Notice of Assessments: of co-operative or assessment insurance corporations 210 contents of 210 afladavit of clerk is presumptive evidence of 210 Odd Fellows: exemption of, from provisions of article VI 214 General Index. (References are to sections.) Officers: not to be pecuniarily interested, in transactions 36 misdemeanor of 36 shall aid in the examination of corporation 39 to examine securities deposited 51 to issue certificate of examination of securities 51 not to omit name of policyholder from list 94 not to advance money ror elections 94 not to solicit votes during working hours 94 agent, employee, not to coerce other agent, officer or employee 94 of fire insuranciB corporations, officers of 98 of mutual employers^ liability corporations 187 of workmen's compensation corporations 187 of company to insure domestic animals 251 of co-operative fire insurance corporation 264 Offices: for insurance department 3 maintenance of 3 Official Ballot: to be provided by superintendent 94 how identified and numbered 94 how arranged 04 none others to be used 94 how enclosed in envelope 94 how witnessed 94 how returned 94 only ballot to be voted 94 Ordinary Life Policy: standard form for 101 Organization: promotion of insurance companies 66 Participating Policies: when life insurance corporation may issue 102 Partnership: insurance by 54 license to 138 Penalties: for failure to file annual report 45 for failure to reply to inquiries to superintendent 45 for improper advertisement 48 for improper act of agent 50 for violation of any provision of Insurance Law 53 for neglect of agent of foreign corporation to pay tax 135 for refusal to exhibit foreign fire policies 136 for charging excessive rates of insurance upon canals 16(1 co-operative or assessment insurance corporations 213 General Index. (References are to sections.) Penalties — (Continued) : unpaid assessment, town co-operative corporation 270 for violating provisions of 144 fire insurance company I47 for violation of provision 144-147 by officers and agents 148 for fraudulent or false statements 247 for failure to pay tax • Appendix Pensions: not to be granted to officers of fire insurance corporations 98 Personal Property: not alienable in certain cases , Appendix Policies: pledge of as collateral security 16 when not to be issued without consent of insured 55 to contain entire contract 58 contents of 58 certain provisions in, prohibited 59 misrepresentations of, prohibited 60 surrender of, to receiver 62 what may be embraced in 70 registration of 75 purchase of, by receiver 81 when new policies to be issued 82 valuation of 84 valuation of industrial 84 reserve upon endowment policy 88 surrender value of lapsed or forfeited 88 discrimination against colored persons prohibited 90 no forfeiture without notice 92 of health insurance, valuation of 93 of life and endowment insurance, standard 'provisions 101 participating 102 of fire insurance corporations 120 standard fire insurance 121 payment on cancellation of 122 cancellation of, by receiver 123 of foreign corporation, penalty for refusal to exhibit 136 of fire insuritnce, report of consideration 145 of fire insurance, fees and charges to be indorsed on 146 of mutual marine corporations 152 of co-operative company, payment of maximum amount of 210 to indicate assessment plan 219 life must be filed and approved 220 issued by co-operative fire insurance corporations 265 mutual automobile fire insurance corporatiouB 327 mutual automobile casualty insurance corporations 347 General Index. (References are to sectiona.) Policyholders: deposit of securities for benefit of 26, 2 < may request examination of corporation 40 distribution of surplus by receiver 79 distribution of surplus to 83 election of manner of payment of dividends 83 accumulations for benefit of 86 lists of, to be maintained at offices of corporation 94 lists of, subject to inspection 94 methods of voting by, for directors 94 entitled to vote for directors 94 names and addresses of, to be filed with superintendent before election 94 committee of, to receive names for elections 94 approval of, to conversion of stock life to mutual 95 Powers: certain existing corporations increased 105 Premium: on reinsurance 22 statement of amount of, to be filed by foreign corporation 32 of foreign corporation, taxation on 34 when actual premium is less than net premium 85 annuities, non-payment of 88 surrender value of policies forfeited for non-payment of 88 notice of payment of, to be given 92 of foreign fire corporations, taxation on 133 provisions concerning, life and endowment insurance 101 fire insurance, report of consideration as premium 145 assessment tax 149-a Premium Fund: how computed 22 Premium Notes: receivers to make assessment on 61 of mutual fire insurance corporation Ill to be approved by superintendent Ill of mutual marine corporations 152 Premium Rates: approval of 67 Principal Office: of co-operative or assessment corporation, designation of 203 Procedure: in case of impairment of reserve fund 86 Process : service of, on superintendent as attorney of foreign corporation 30 superintendent to forward to corporation 35 service on co-operative company, designation of person 203 General Index. (References are to sections.) Profits: lien on, by certain insurance companies 19 surplus of fire insurance corporations 117 of mutual marine corporation, division of 154 Proxy: right to vote by, on election of directors ^ 94 revocation of 94 nomination of person to receiver 94 execution of 94 when invalid 94 to be attached to official ballot 94 to sign official ballot 94 Prudential Companies: certificate of authority of agents of, not required 91 Public Adjuster: certificate of authority 138-a Quorum: of members of co-operative company 216 of annual meeting of company to insure domestic animals 251 Rate Making Associations: organizations to assist in 140 supervision and inspection of 141 Rates: town insurance corporations may fix 337 organizations for assisting in establishing 140 Real Property: deposits of mortgages on, as security 13 affidavit as to value of 13 insurance on 13 title and value of, covered by securities deposited 13 investment of capital and surplus in 16 restrictions as to ownership of 20 duration of ownership of 20 investment of life insurance corporations in mortgages on 100 Rebates: prohibited ] 89, 90 Receiver : may insure 23 order of court for reinsurance 23 to make assessment on premium notes 61 surrender of policies to 62 appointment of 76 bond of 76 to take possession of deposit and assets 76 proceedings by 77 to appoint actuary 77 when he may be discharged 77 General Index. (References are to sections.) Receiver— (Continued) : to receive proceeds of securities sold 77 to pay registered policies and annuity bonds 77 additional duties of 78 investment by, of surplus of assets 79 distribution of surplus 79 issuance of scrip 79 powers of 81 may employ clerks 81 compensation of, how paid 81 when not to be appointed 82 distribution of surplus to policyholders 83 of fire insurance corporations, cancellation of policies 123 issuance of certificate of indebtedness by 123 report of liabilities by 123 transfer of deposits by superintendent to 104 Reciprocal: requirements as to deposit 33 Reciprocal Certificate: issuance by superintendent 204-a Records: of co-operative fire insurance corporations 264 of sales of explosives 365 kept by State Fire Marshal 370 Reduction: of number of directors 10 Registered Policies (see Policies): special deposit to secure 73 annual report of 74 liability of State to pay 74 registration of 75 payment of 77 issued in exchange 80 Registration: of policies and annuity bonds 75 Regulation: to be made by State Fire Marshal 379 Reincorporation: of existing corporations 52 effect of BH of mutual fire company as a stock corporation 125 of existing fire insurance companies 127 of co-operative or assessment insurance corporations 206 of existing fraternal beneficiary society 235 Reinsurance: method of 22 Bchedule of, to be filed 22 by receiver 23 General Index. (llefereuces are to sections.) Reinsurance — (ContimuHl) : only by order of court 23 limitation of risk 24 by co-operative or assessment companies 209 Reinsurance Fund: of liability companies 86 Religious Orders: provisions of insurance law, application to 64 Removal : of cause to United States courts revokes certificate 30 Renewal: of certificate of authority 32 of statements and evidences of investment 32 Reorganization: of existing corporations 52 effect of 52 Report (see Annual Report): of foreign country corporation 27 of examiners 39 may be withheld by superintendent 39 of liabilities, by receiver 123 of consideration to fire insurance company 145 of fraternal society 242 of corporations Appendix of corporations further requirements Appendix mutual automobile fire insurance corporations 327 mutual automobile casualty insurance corporations 347 Representative: of policyholders, not to be paid by company 94 Reserve Fund (see Special Reserve Fund): computation of 86 impairment of, procedure 86 include dividend additions, etc 88 of foreign mutual fire insiurance corporations 149 mutual employers' liability corporations 191 workmen's compensation corporations 191 of co-operative or assessment insurance corporation 205 use of excess of 205 of foreign corporation 205 mutual automobile fire insurance corporations 324 mutual automobile casualty insurance corporations 344 Revenues: of fraternal beneficiary society 236 Revocation: of certificate of authority of foreign corporation 32 General Index. (Refprences are to sectiona.) Risks: reinsurance of 22 limitation of 24 taken after impairment of capital 42, 43 transfer of, by co-operative or assessment companies 209 classification of, town insurance corporation 337 Salary: of superintendent 2 of clerks 6 of deputy superintendents 5 of officers and agents of fire insurance corporations 98 Schedules: of reinsurance 22 Scrip: issuance ot, by receiver 79 interest on 79 contents of . , 79 Seal: of office of superintendent 4 as presumptive evidence 4 renewal of 4 fees for affixing 6 Securities (see Deposit of Securities): deposited with superintendent 11, 13 investment in what kinds 16 kinds credited to insurance corporation as part of capital 17 promotion of insurance companies, sale of 66 Securities Guaranty Corporation: incorporation of 170 Service: of process on superintendent as attorney of foreign corporation 30 of notices of assessment of town co-operative corporation 269 Short Title: of Insurance Law 1 Sick Benefits: societies paying only sick benefits not required to report 214 Solvency: certificate issued by superintendent of insurance 182 Special Deposit (see Deposit of Securities). General Index. (Keferences are to sections ) Special Reserve Fund: of fire corporations 130 examination of corporation before allowance of 130 no dividends by corporation having 130 deduction from profits, etc 130 net surplus turned into 130 how invested 131 in case of extensive conflagrations 132 amount of, to be set forth in annual statement to superintendent. . . . 132 discontinuance of 132-a Standard Fire Insurance Policy: form of, to be prescribed and used 121 Standard Provisions: concerning life and endowment insurance 101 accident and health policies 107 Statement (see Annual Statement): of insured to be considered representations 68 of monies in regard to election of directors 103 of condition, title guaranty company 183 Statute of Limitations (see Limitation of Actions). State Treasurer: payment of fees to to keep record of exchange of securities deposited 15 notice to corporation of exchange of securities 15 access to certain books of superintendent 15 compensation for services of 74 access to documents in department •. 74 Stationery: not to be used to further election 94 Steam Boilers: insurance against damage by 70 insurance and inspection of 70 Stock: value of to be appraised AppeniiLx Stocks: deposit of 13 of other corporations 18 valuation of bonds 1^ lien on. by certain insurance companies !• transfer of, on account of impairment of capital 42 Stock Corporation: may become mutual life insurance corporation 16, 95 Stock Corporation Law (see Appendix). General Index. (References are to sections.) Stockholders: may request examination of corporation 40 to make good impairment of capital 41, 42 refusal to make impairment good 42 transfer of stock by, before impairment made good 42, 43 issuance of scrip to. by receiver 79 to make good impairment of capital of life insurance corporation.... 86 approval of, to conversion of stock life to mutual 95 liability of, for improper dividends 1 17 approval to merger or consolidation of fire corporations 129 Stores: insurance on 110 Storms: insurance against loss by 110 Sub-Agent: , certificate of authority of 91 Snibscriptions: to capital stock 71 collection of 71 to capital stock of titb and credit guaranty corporations 171 Superintendent of Insurance: appointment of 2 salary of 2 qualification of 2 undertaking of 2 custody of documents 2 duties of 2, 3 sealed by, to be received as evidence, etc 4 in case of absence of, duties devolve on deputies 5 fees for affixing seal by 6 payment of fees to State treasury 8 no charge for examination by 7 certificate of authorization, issued by 9 certificate of authorization to be filed in office of 9 shall not file charter until approved by Attorney-General 10 when certificate of authority not to be issued 10 examination into afi'aira of proposed corporation by * 11 deposit to be made with superintendent 11 appointment of examiners by 11 deposit of securities with 13 duties of, in regard to deposit of securities 13 approval of foreign securities deposited 13 cjusent of, to exchange of securities 14 record of exchange of securities to be kept by 15 securities credited by 17 certificate to extend time for holding real property 20 shall require schedules of reinsurance to be filed 22 consent of, to reinsurance by receiver 23 jurisdiction of 25 General Index. (References are to sectiona.) Sflperintendent of Insurance— (Continued) : examination of foreign corporation 25 deposit of securities with 26 notice of deposit of securities with Comptroller 26 report of foreign country corporation 27 to examine trustees of foreign country corporation 27 to transfer excess of securities of foreign country corporation 27 to receive deposit of securities of foreign country corporation 27 attorney of foreign corporation 30 revocations of certificate of authority by 30, 149a statement to be filed in office of 31 renewal of certificate of authority of foreign corporation 32 remittance of fees to foreign corporations 33 revocation of authority of foreign corporation 33 revocation of certificate of authority of foreign corporation for neglect to pay taxes 34 power to collect taxes out of deposit of foreign corporation 34 to forward process 34 appointment of examiners by 39 may grant hearing to corporation 39 may make examination on request 40 shall determine amount of impairment or deficiency 41 examination of impairment of capital of mutual company 43 issuance of requisition for examination 41, 43 may addresg inquiries to insurance corporations 44 to furnish forms for reports 45 may change forms of reports 46 annual report of 46 igsuance of certificate of authority to agent of foreign corporation. ... 50 consent of, to amendment of charter 62 revocation of license of peraon inducing the surrender of insurance. ... 60 promotion of insurance companifes 66 securities of life, health and casualty corporation*, held by 71 winseut of, to withdrawal of securities deposited by life, health and casualty corporations 71 registration of policies and annuity bond*. 76 to fumiah copies of duplicate registered policies. 76 to report insolvency to Attorney- General in certain eases 76 shall annually make valuations of policies, etc S4 may restrain discrimination 89 may revoke certificate of authority of ag«nt tl ■kail make valuations of policies of health insurance 9$ power to supervise elections 94 to supervise M approval of, to conversion of stock life to mutual M transfer of deposits to receiver by 104 shall approve capital stock notes of mutual fire insurance oorpormtion, HI approval of, to merger of fire corporations 129 to supervise organizations assisting underwriters 13f distribution of certain taxes received by 140, 149c General Index. (References are to sections.) Superintendent of Insurance — (Continued): appointment of person to collect certain taxes 141, liHk certificate of solvency iM issuance of reciprocal certificate 204-a visitation of co-operative companies oy Wt reply of officers to, to be under oath '^0? may restrain co-operative company from doing business ZiOl to approve forms of life policies 22U findings of, may be reviewed 249 incorporation of company to insure domestic animals 250 certificate to co-operative insurance corporations 200 certificate to voluntary associations 261 voluntary fire insurance associations continued 261 filing certificate 261 declaration of intention to form a co-operative fire insurance corpo- ration 263 Supplementary Proceedings: when may be instituted 66 Sureties: companies allowed to act as, in certain cases 70 Surplus: investment of 16 percentage of, to be exposed to loss 24 of corporation to be stated in advertisement 48 of securities deposited of insolvent corporation 77 distribution of, by receiver 79 distribution of, to policyholders 83 profits of fire insurance corporations 117 Surplus Profits: of fire insurance corporation, how estimated 117 Surrender Value: of lapsed or forfeited policies 88 waiver of 88 Tax: payment, and penalty for failure Appendix Taxation: when reduction of, will not be allowed for reinsurance 22 of foreign corporations 34 on premiums of foreign fire insurance corporations 133, 13S distribution of certain taxes 140 appointment by superintendent of person to collect certain taxes 141 on premiums of foreign mutual fire insurance companies 149a distribution of annual tax 149e exemption from, of fraternal societies 246 Term Policy: standard form for 101 Territory: extension of, town co-operative corporation 278 General Index. (References are to sections.) Theft (see Burglary or Theft). Title Guaranty Corporations: incorporation of 170 certificate of incorporation of 170 amount of capital 170 subscriptions to capital stock of 171 adoption of by-laws of 171 meeting to adopt by-laws of 171 contents of by-laws of 172 copy of by-laws to be filed with superintendent 173 amendment of by-laws to be filed with superintendent 173 certificate of payment of capital stock 174 directors of, to be stockholders 175 number of directors of 175 quorum of directors 175 treasurer of, to give bonds 175 change of number of directors of 175 investment of capital and funds of 176 creation of guaranty fund of 176 when insurance cannot be made by 176 application of guaranty fund 176 additions to guaranty fund 176 merger of 179 merger of, with banking corporation 179 additional powers of certain 180 may execute bonds and imdertakings 181 supreme court may require statement filed LS3 Tornadoes: insurance against loss by HO insurance, by co-operative fire insurance corporations 262 Transfers: of deposits by superintendent to receiver 104 of risks, by co-operative or assessment companies 209 Transportation: of explosives • ^^^ Treasurer (see State Treasurer). Trustees: of foreign country corporations 27 transfer of securities to 27 statement of monies used in election of 103 Umpire: appointment of, to ascertain fire damage 121-a Unauthorized Corporations: agents not to act for ^ Unauthorized Insurance: not to be transacted ^ General Index. (References are to sections.) Undertaking: of agent for foreign corporation 134 penalty for failure of agent to deliver 135 title guaranty companies may execute 181 title guaranty company, justification upon 183 Underwriters: organizations to assist, supervision 139 Vacancy: on ticket, how filled 94 Valuation : of policies 84 of industrial policies 84 of policies, upon what basis 84 of policies, of health insurance 93 Value (see Surrender Value). Verification: of annual report 44 of annual report of foreign corporation 44 of replies to inquiries of superintendent 44 Vessels: insurance upon 110 marine insurance upon 150 Visitation: of co-operative or assessment corporations 207 Volumes: names of policyholders for elections 94 Voting: for directors of life insurance corporation 94 for conversion of stock life corporation to mutual 95 mutual automobile fire insurance corporations 323 mutual automobile casualty insurance corporations 343 Vouchers: when required for disbursements 99 Waiver: of provisions of section 58 void 58 Wares: marine insurance upon 160 Warranty: statements of insured not to be 68 Wife: can take out policy on husband 66 Wind: insurance against loss by HO insurance, by co-operative fire insurance corporations 262 General Index. (References are to sections.) Withdrawal: of securities deposited by health, life and casualty corporations 72 Withholding: envelope or ballot from custodians or inspectors 04 Witness : summoned by State Fire Marshal 372 Workmen's Compensation Corporations; and Mutual Employers* Liability Corporations: incorporation 185 completion of organization 186 directors and officers 187 meetings ; basis of right to vote 188 assessments 189 dividends 190 reserves; supervision; cancellation and reinstatement of certificate.. 191 reports to and examinations by superintendent of insurance 192 prevention of accidents jgg authorization of foreign mutual insurance corporations 194 i5^^^ 359280 ITY OF CALIFORNIA LIBRARY V