INSURANCE LAWS STATE OF CALIFORNIA Compiled by E. C. COOPER, Insurance Commissioner SAN FRANCISCO 1914 California State Printing Office 1914 fjancrc ** PRINCIPAL REQUIREMENTS AS TO INSURANCE COMPANIES OF OTHER STATES AND FOREIGN COUNTRIES Desiring to Enter the State of California for the Transaction of Business. All capita] stock fire, marine and life companies must have an unim- paired paid-up capital of at least $200,000.00. A fire insurance company may transact, in addition to such kind of insurance, marine, sprinkler, boiler and machinery, automobile, and mis- cellaneous. Marine insurance companies may transact, in addition to such kind of insurance, only fire insurance, team and vehicle, automobile, and miscellaneous. Each of such companies must have such unim- paired capital stock of at least $200,000.00 for either fire or marine insurance or $400,000.00 for both fire and marine insurance. Should a company desire to do any of the additional classes mentioned, it must have an additional unimpaired capital of $50,000.00 for each class. No company shall do any of said kinds of insurance, unless authorized so to do by their charter. Life companies may transact, iu addition to such kind of insurance, only accident and health and Liability insurance, and must have an unim- paired capital of $200,000.00 and an additional capital of $50,000.00 for transacting accident and health or liability insurance, and $100,000.00 additional capital For transacting both kinds. All companies other than these, if stock companies, must have a paid-up capital, unimpaired, of at least. $100, 000. 00 for transacting one kind of business and $50,000.00 additional for transacting any other kind of insurance. A capital stock company is insolvent if its paid-in capital is impaired more than twenty-five per centj although the balance exceeds the re- quired amount above specified. Only that portion of the capital stock can be considered as unimpaired which is free from all liabilities; in- cluding statutory requirements as to reserves, etc. Where policyholders participate in the management of the company whether it has a capital stock or not) the company must (in lieu of such capital stock) hold in "available cash assets" free from all liabili- ties the amount above specified unless some special provision governs. Companies organized outside of the United States must have on de- posit with some State official charged with the supervision of insurance in that State, and in which State the company must be transacting business, an amount equal to the amount of capital stock or cash assets required. Such deposits must be for the benefit and security of all the policyholders in the United States. 4 INSURANCE LAWS OF CALIFORNIA. Such companies must file both Home Office and United States state- ments. Generally, each company on applying must file the following docu- ments and pay the fees specified : 1. Certified copy of Charter (or Articles of Incorporation), and Certificate as to Organization, Capital and Assets from the Insurance Commissioner of its own State $55 00 2. Appointment of General Agent and Stipulation 5 00 3. Bond in the sum of .$20,000.00 5 00 4. Statement as to financial condition 20 00 5 % Application for Certificate of Authority (fee for issuing certificate) 10 00 6. Certificate of Deposit of Securities (required only of companies organ- ized outside of the United States) 5 00 Authorization empowering general agent to sign bond and appoint solicitors and agents may also be filed. The Certificate of Authority expires on July 1st of each year unless sooner revoked. Financial statement mast be on the latest convention form, and must be verified by an examination made either by the Department of the State in which the company is organized, or by this Department at the company's expense. Every agent or solicitor must have a license which, unless sooner revoked, expires on July 1st of each year; the fee for same is $1.00. Taxes. All companies pay a tax of 1} per cent on premiums, less return premiums, and reinsurance in authorized companies. Retaliatory statute. Applies when statutes of other States discriminate in favor of their domestic companies and may affect taxes, fees and other matters. Requirements of office of secretary of state. Companies must file with the Secretary of State at Sacramento cer- tified copies of their Articles of Incorporation, the fee for which varies according to the amount of capital stock, and an appointment of agent upon whom service of summons and other legal process may be made; the fee for filing which is $5.00. INSURANCE LAWS OF THE STATE OF CALIFORNIA POLITICAL CODE. TAUT III. TITLE 1. CHAPTER III. ARTICLE II. Sec c(6S. Insurance commissioner, how appointed. .')('!>. Term of office. Insurance commissioner, how appointed. Sec. 368. The following executive officers shall be appointed by the governor, with the consent of the senate: 1. The directors of the insane asylums; the trustees for the asylum for the deaf, dumb and blind; the insurance commissioner; the members of the state board of health; the fish and game commissioners. 2. The port wardens, when port wardens and their appointment are not otherwise provided for by law; the pilot commissioners ; and the pilots for each harbor where there is not a board of pilot commissioners, and when the appointmenl of pilots is not otherwise provided for by law. '.\. All other executive officers whose appointment is provided by law to he made by the governor. Amended Stats, of 1913, p. 412. Term of office. Skc. 369. The officers enumerated in the first subdivision of the last section hold their offices for the term of two years, those in the second subdivision for the term of four years, and those in the third subdivision during the governor's pleasure. Enacted -March 12. 1872. PART III. TITLE I. CHAPTER III. ARTICLE XVI. INSURANCE COMMISSIONER. Sec. 588. Eligibility. 589. Salary. 591. Rooms. Expenses. Special fund. .-,_>. office. .">!>_.' J. Pond. 594. Insurance classified. Capital stock. 594a. I>c|>osiis by foreign companies. 595. Genera] duties of commissioner. Withdrawal of companies. .">!><;. Certificates of authority to companies. Insurance in unauthorized com- panies. 596a. Attorn \\ general t<> examine documents. 597. Examination of companies. 598. Obtaining and furnishing information to policyholders and others. 599. Subpoena. 800. Records. 601. Actuary. 602. Insolvency. 602a. Liability insurance reserve. 603. Revocation for insolvency. 603a. Restoration after revocation for Insolvency. <>(>4. Reporting insolvency to attorney general, 604a. insolvency laws applicable. 605. Fees. tine,. Collections and assessments, 6 INSURANCE LAWS OF CALIFORNIA. Sec. GOT. Charter and similar papers to be filed. 608. Actions not to be transferred to United States court. 609. Approval of company name. 610. Verifying statements. 611. Filing, adjusting and publishing annual statements. 612. Statements by companies, other than life. 613. Statements of life, health and accident companies. 614. Mutual companies. 615. Furnishing statement forms. 616. Designation of principal agent and stipulation for service of papers. 617. Penalty for failure to file statements. * 618. General provisions for deposits. . . 619. Certificate of deposit. 620. Withdrawal of deposit. 621. Annual examination of securities. 622. Applying foreign discrimination laws. 622a. Tax. 623. Bond of company. 624. Separate bonds. 625. Furnishing information to assessors. 625a. Listing surety companies to county clerks. 626. Complying with Civil Code. 627. Computations and payments on gold basis. 628. Special valuation of policies of life insurance companies. 629. General valuation of policies of life insurance companies. 630. Secret and fraternal societies. 631. Reviewing commissioner's acts. 631a. Publication of notice of withdrawal. 632. Informing district attorneys. 633. Licensing agents and solicitors. 634. Registration of policies of life insurance companies. 634a. Definitions and exceptions. 634o. Demanding and recovering payments other than fees. Eligibility. Sec. 588. No person is eligible to the office of insurance commissioner or deputy who is an officer, agent, or employee of an insurance company. Enacted as section 594, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 141. The first legislation in the State of California providing for a supervisory control of the business of insurance was the Act of March 26. 1868 (Stats. 1868, p. 336). By that act the office of insurance commissioner was created. * ' * * The act was re-enacted in 1872, in sections 594 et seq. of the Political Code. (State Invest- ment and Insurance Co. vs. Superior Court of San Francisio. 101 Gal. 143-4.) The Political Code, from sections 594 to 634, inclusive, deals specifically with insurance corporations, both domestic and foreign. * * * and particularly pro- vides in great detail how foreign insurance corporations must put themselves in position to be served with process in this State. ( Harrigan vs. Home Life Insurance Company, 128 Cal. 537.) By an act, approved March 8, 1907, which went into effect immediatelv (Statutes 1907. p. 141) article 16. chapter 3, part III, title I, of the Political Code, and each and every section thereof, were repealed and a new article 16, covering the same subject of insurance, was enacted. {Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413, 416.) Salary. Sec. 589. The annual salary of the insurance commissioner is four thousand dollars and the annual salary of the deputy of the insurance commissioner is two thousand seven hundred dollars. Enacted as sections 628 and 629, March 12, 1872. Amended Stats. 1880, p. 411; 1887, p. 12. Repoaled and present section enacted, Stats. 1907, p. 141. Rooms, expenses, special fund. Sec. 591. The commissioner may procure suitable rooms for his offices and may provide a suitable safe and furniture therefor. He may also provide stationery, fuel, printing and other conveniences and assist- ance and incur traveling and such other expenses as are necessary for INSURANCE COMMISSIONER POWERS AND DUTIES. 7 the transaction of the business of his office. Out of the funds paid into the state treasury by the insurance commissioner, there shall be set aside and reserved each and every year the sum of thirty thousand dollars as a special fund to be called the insurance commissioner's special fund. All expenditures authorized in this section must be audited by the board of examiners, who must allow the same and direct payment thereof to be made, and the controller shall draw warrants therefor on the state treasury for the payment of the same to the insurance com- missioner out of the said insurance commissioner's special fund. Enacted as section 630, March 12, 1872. Amended, Stats. 1887, p. 12 ; 1906. p. 31. Repealed and present section enacted, Stats. 1907, p. 141. Amended May 1, 1911. Stats. 1911, p. 1247. Office. Sec. 592. The commissioner must keep his office in the city of San Francisco. Enacted as section 631, March 12. 1872. Repealed and present section enacted, Stats. 1907, p. 141. Bond. Sec. 593. The commissioner must execute an official bond in the sum of twenty thousand dollars. Enacted as section 632, March 12, 1872. Repealed and present section enacted. Stats. 1907, p. 141. Insurance classified. Capital stock. Sec. 594. All insurance business in the State of California is hereby classified in the following sixteen kinds, namely: 1. Life insurance, including within its meaning insurance upon the lives of persons and every insurance appertaining thereto, and the granting, purchasing and disposing of annuities. 2. Fire insurance, including within its meaning insurance against loss or damage by fire. Lightning, windstorm, tornadoes or earthquakes. ">. Marine Insurance, including within its meaning insurance upon vessels, freights, goods, wares, merchandise, specie, bullion, jewels, profits, commissions, bank notes, bills of exchange, and other evidences of debt, bottomry and respondentia interests, and every insurance con- nected with marine risks and risks of transportation and navigation, including the risks of lake, river and inland transportation and navigation. 4. Title insurance, including within its meaning the issuance of guarantees and policies of insurance affecting titles to real estate, and guaranteeing or insuring owners of real or personal property, or others interested therein, or haying liens or encumbrances thereon, against loss by reason of defective titles, encumbrances, or adverse claims of title, or other-wise. 5. Fidelity and surety insurance, including within its meaning the guaranteeing of persons holding places of public or private trust, and guaranteeing and executing all bonds, undertakings, and contracts of suretyship, and guaranteeing the performance of contracts other than insurance policies, and not including guaranteeing the payment of mortgages or t rust deeds. INSURANCE LAWS OP CALIFORNIA. 6. Accident insurance, and either sickness or health insurance, includ- ing: within its meaning insurance against injury, disablement or death resulting from traveling or general accidents, and against disablements resulting from sickness and every insurance appertaining thereto. 7. Plate glass insurance, including within its meaning all insurance against breakage of glass, whether local or in transit. 8. Liability insurance, including within its meaning workmen's com- pensation insurance and all other insurance against loss or damage re- sulting from accident to or injury, fatal or non-fatal, suffered by an employee or other person, and for which the insured is liable. 9. Boiler and machinery insurance, including within its meaning in- surance upon steam boilers and pipes, fly wheels, engines and machinery connected therewith or operated thereby, against explosion and acci- dent, and against loss and damage to life or property resulting there- from, and against loss of use and occupancy caused thereby. 10. Burglary insurance, including within its meaning insurance against loss by burglary or theft or both. 11. Credit insurance, including within its meaning insurance of mer- chants, traders, and those engaged in business and giving credit for loss and damage by reason of giving and extending credit to their customers and those dealing with them, and insurance or guarantee cither by agreement to purchase uncollectible debts or otherwise, against loss or damage from the failure of persons indebted or to become indebted to the insured, or to meet existing or contemplated liabilities. 12. Sprinkler insurance, including within its meaning insurance against loss or damage by water to any goods or premises arising from the breakage or leakage of sprinklers, pumps or other apparatus placed for extinguishing fires, and of water pipes, and against accidental injury to such sprinklers, pumns, or other apparatus. 13. Team and vehicle insurance, including within its meaning insur- ance against loss or legal liability for loss because of damage to property caused by the use of teams or vehicles whether by accident or collision or by explosion of any engine or tank or boiler or pipe or tire of any vehicle, and also including insurance against theft of the whole or any part of any vehicle; the term vehicle as here used does not include ships or vessels nor boats nor any railroad rolling stock. 14. Automobile insurance, including within its meaning the insur- ance of the owners of or dealers in automobiles against any and all hazards incident to ownership, maintenance, operation and use of such automobiles. No company shall assume any hazard or risk upon an automobile unless authorized to assume hazards or risks of that charac- ter by its charter or articles of incorporation. Nothing herein contained shall be construed to prevent a fire insurance company from issuing a policy of insurance upon an automobile covering the fire hazard only, nor be construed to prevent a marine insurance company from issuing a policy of insurance upon an automobile covering the marine hazard of transportation only, nor be construed to prevent a life insurance company which also transacts liability insurance from issuing a policy of insurance upon an automobile, covering the liability hazard only. 15. Mortgage insurance, including within its meaning the guaran- teeing of the payment of the principal, interest and other sums agreed to be paid under the terms of any note or bond secured by mortgage INSURANCE COMMISSIONER POWERS AM) DUTIES. U or triLst deed, or other sums secured under the terms of any such mort- gage or trust deed, in its entirety, or of an undivided or other partial interest in any such mortgage or trust deed, or in a group of such mort- gages or trust deeds, and the guaranteeing or insuring, directly or indirectly, against loss thereon. 16. Miscellaneous insurance, including within its meaning lightning, windstorm, tornado and earthquake insurance, and any and all casualty insurance not included in any of the foregoing kinds, and which is a proper subject of insurance. \<> company shall do any of the foregoing sixteen kinds of insurance unless authorized to do so by its charter. No company having a capital stock shall do life insurance in California without having a capital stock of at least two hundred thousand dollars, nor shall any such company do in California any other of said kinds of insurance, except the sixth and eighth classes; provided, that any such insurance company desiring to do either the sixth or eighth class, must have in addition to such two hundred thousand dollars of capital stock, at least fifty thousand dollars el' capital stock for each class it desires to do. and one hundred thou- sand dollars additional capital stock to do both such additional classes. Xo company having a capital stock shall do in California any fire insur- ance without having a. capital stock of at least two hundred thousand dollars nor shall any such company do in California, any other of said kinds of insurance, except the third, ninth, twelfth, fourteenth and sixteenth classes. To do both tire and marine insurance such company must have a capital stock of a1 least four hundred thousand dollars, and to do any other class of insurance, such company must have an addi- tional capital stock of at least fifty thousand dollars for each such additional class that it desires to do. in addition to the two hundred thousand dollars required if it does fire insurance or the four hundred thousand dollars required if it does both fire and marine insurance. Xo company having a capital stock shall do in California any of said third kind of insurance without having a capital stock of at least two hundred thousand dollars, nor shall any Mich company do in California any other of said kinds of insurance except the second, thirteenth, four- teenth and sixteenth classes. To do both fire and marine insurance such company must have a capital stock of at least four hundred thousand dollars, and to do any i ther class of insurance, such company must have an additional capital stock of at least fifty thousand dollars for each such additional class it desires to do. in addition to the two hundred thousand dollars required if it docs marine insurance or the four hundred thousand dollars required if it dees both marine and fire insurance. Xo company having a capital stock shall do in California any of the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth or Fixteenth of said kinds of insurance without having a capital stock of at least one hundred thousand dollars for the first class of insurance su<-h company desires to do, nor do any other of such classes without having in addition to such one hundred thousand dollars of capital stock at Nasi fifty thousand dollars additional capital stock for each additional kind of insurance, that it desires to do. Except as above prescribed, no company doing either the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth or sixteenth classes of insurance, shall do anv of the first, second or third classes of 10 INSURANCE LAWS OP CALIFORNIA. insurance. No company doing the fourth class of insurance shall do any other class of insurance, and no company doing the fifteenth class of insurance shall do any other class of insurance, and no company doing any other class of insurance shall do either the fourth class or the fifteenth class of insurance. Such capital stock required must be fully paid up before doing any such business in the State of California, except that companies incorpo- rated under the laws of California, must have at least twenty-five per cent of their capital stock paid in previous to the issuance of any policies and the residue within twelve months of the filing of the articles of incorporation with the secretary of state. If such residue is not paid within twelve months, the insurance commissioner must cancel any cer- tificate of authority previously issued to such company. The capital stock required must be unimpaired and shall be exclusive of all liabilities for losses reported, expenses, taxes and reinsurance of all outstanding risks as provided in sections six hundred and two and six hundred and two a of the Political Code. Every company organized or formed under the laws of any other state or country as a mutual or as a joint stock and mutual company having a capital stock less than as above pre- scribed must have in lieu of such capital stock available cash assets of at least two hundred thousand dollars above all liabilities for losas reported, expenses, taxes and reinsurance of all outstanding risks as provided in sections six hundred and two and six hundred and two a of the Political Code. No company shall do in California any title insur- ance without having at least one hundred thousand dollars of capital stock fully paid in in cash, previous to the issuance of any policy ; and no company shall do in California any mortgage insurance without having at least one hundred thousand dollars of capital stock fully paid in in cash, previous to the issuance of any policy. Enacted March 8, 1907 ; Stats. 1907, p. 141. Amended, Stats. 1909, p. 928. Amended, Stats. 1911, p. 1347. Amended, Stats. 1913, p. 483. See former sections 419 and 420, Civil Code, repealed by act amending above section 594 of the Political Code. That portion of this section classifying insurance business was added to the law in 1907. The sect ion was amended in 1909 to provide for " Team and Vehicle" insurance, and such amending act of 1909 contained the following provision: "Sec. 2. The provisions of this act shall not apply to life or fire insurance associa- tions operating on the assessment plan or on the fraternal plan." See sections 630 and 634a, Political Code; post, also adopted by the act so adding section 594 in 1907. A corporation was attempted to be formed by articles dated May 27, 1874, the purpose of which was "to insure dwellings, barns, etc." The amount of the capital stock named was one hundred thousand dollars, only five thousand dollars of which was actually subscribed. After doing business for several years, the attorney general, on the relation of one Schindler, brought an action in the name of the people against the parties individually, who were alleged to constitute the alleged unlawful corpora- tion, to have them each and all restrained from the usurpation of the rights, privileges, immunities, and franchises of a corporation ; but the alleged corporation was treated as a nullity and was not joined as a party defendant. The trial in the lower court resulted in an injunction forbidding the alleged corporation from doing any further business, or from prosecuting or maintaining any action in its name or for its benefit. On appeal the supreme court declared that though illegally formed, and in fact never properly constituted, it still had a right to be heard as an entity, and was a necessary party defendant in the action: and further, that it had a right under section 400 of the Civil Code to wind up its business through trustees, collect what was due to it, pay its debts, and divide anv surplus among its stockholders. (People ex rel Schind- ler vs. FUnt ct al, 64 Cal. 49.) INSURANCE COMMISSIONER POWERS AND DUTIES. 11 An association organized to do fidelity and surety business must have a capital stock of at least $100,000.00. A company organized without capital stock, but having in lieu thereof five bonds, either personal or surety, each in the sum of $20,000.00, is not organized in accordance with law and can not legally do. nor obtain a cer- tificate of authority to do. any insurance business in the State of California : Opinion of the Attorney General. February 12. 1910. The so-called bond issued by the Children's Home Society of California is in all respects an annuity policy in its form, except that the consideration paid by the annuitant is called throughout a gift or gift subject to certain terms and conditions. It is obvious that the name which the payment is called is not conclusive as to the character of the payment. In this case the real character of the transaction is so obvious that the name hardly causes hesitation. The policy moreover after reciting the gift proceeds "and for other good and valuable consideration." From the circular enclosed, we find the following: "The rates which we are nrepared to pay are deter- mined by the age. at the time the bond is issued, of the person to whom the annuity is to be paid." A table of rates is given from which it appears that by a payment of > 1,000.00, the annuitant receives any amount from $55.00 per year, if between the age of 45 and 50, to $100.00 in case he is over 85. It is therefore clear that the amount that is paid the annuitant is determined upon the age of the annuitant, and the amount that is paid by the annuitant to the society. This annual payment there- fore is the payment of an annuity and if it is done as a business and for a considera- tion it is insurance business. It may be claimed that the amount paid by the annuitant to the society is a gift and not a consideration for the annual payments, but the annual payments being determined in direct proportion of the amount of "gift" and the age of the annuitant, this claim would seem to be unfounded on fact. For this reason, I conclude that tile payments made are the direct consideration for the annual payments made by the society, and that the issuance or sale of these annuity bonds constitutes the business of insurance: Opinion of attorney for insurance com- missioner, December 8, 1913. See oninion attorney for insurance commissioner, September 5, 1913. holding, that the issuance of certain certificates by the Insurance Investment Company of Los Angeles guaranteeing the payment of certain mortgages and deeds of trust consti- tutes the business of insurance, to wit: mortgage insurance, when the same are issued as a business and for a profit. Deposits by foreign companies. Sec. 594a. No insurance company organized or existing under the laws of any country outside of the United States shall transact any business of insurance in the State of California without first making deposit, and thereafter continuously maintaining such deposit except as hereinafter otherwise specially provided, so long as any such business transacted in this state remains in existence for any purpose whatever. either unmatured or matured but unsettled, and whether in controversy or not. Such deposit must be of securities which the law of California permits for the investment of the assets of such California insurance companies. Such deposits may he with the insurance commissioner or superintendent of insurance, or with the auditor, comptroller or general fiscal officer lie given by persons engaged, or to be engaged, in insurance business, and cause the same to be renewed in case of the insufficiency or invalidity thereof; and perform all other duties imposed upon him by the laws INSURANCE COMMISSIONER POWERS AND DUTIES. 13 regulating the business of insurance in this state, and enforce the execu- tion of such laws. He must make, on or before 1 he first day of August in each year, a report to the governor of the state, containing a tabular statement and synopsis of the reports which have been tiled in his office, showing, generally, the condition of the insurance business and interests in this state, and other matters concerning insurance, and a detailed verified statement, of the moneys and fees of offiee received by him, and for what purpose; and the printing of said report and ali other printing required by the insurance department shall be exempt from the provisions of article twelve, chapter three, title one, part three of the Political Code. Any insurance company may pay the fees and costs therefor and may surrender to the insurance commissioner its certificate of authority previously granted, and apply to withdraw from this state, such appli- cation to be in the form of a written instrument, duly executed, and accompanied with evidence of due authority for such execution, and such written instrument to be properly acknowledged. The commissioner, at the expense of the company, paid by it in advance, must make due publication of such application for withdrawal, daily, for the period of one week, in each of two daily newspapers of general circulation, the one published in the city of San Francisco, and the other in the city of Sacramento. The commissioner must make such examination of the books of such e< mpany as may be necessary to ascertain that such company has no liabilities outstanding and not paid to residents of this state and no uncanceled policies in favor of residents of this state and if he finds that such company has no outstanding liabilities to residents of this state and no uncanceled policies in favor of the residents of this state, he shall cancel such certificate of authority. All such examinations must be at the expense of the company, and such expense must be paid in advance. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 8 ; 1877-8, p. 18 ; L907, p. 13. Repealed and present section enacted, Stats. 1907, p. 145. Provisions somewhat similar to that portion of former section 595, authorizing and requiring the insurance commissioner to revoke the certificate of authority of any foreign insurance company doing business in this state, which transfers to the federal court, from any court of this state, any action brought by a citizen of the state arising out of business transacted in this state, have been reenacted in present section 608, post . Genera] duties of commissioner and his authority to revoke certificates construed. i Illinium) vs. Home Life Insurance Company, 128 Cal. 539.) In a proceeding brought by a foreign insurance company to compel the insurance commissioner to issue a license authorizing the company to transact business in this state for i lie year ending July 1. 1908, where it had caused removal of suits to the federal courts, the appellate court held: It appearing that at the time the act of March 8, 1907, went into effect, the company was doing business in the state and that its license had not been revoked, and there being no saving clause in the repealing act providing for the enforcement of the penalty for past delinquency, a removal of suits to the federal court prior to March 8, 1908, was no authority for withholding license. {Commercial Unton Assurance Company vs. Wolf,- 8 Gal. App. 413.) The power of the insurance commissioner to revoke the certificate of authority under which a foreign company is doing business in the state arises only (1) when such company removes an action to a federal court, and (2) when it becomes insol- vent, lie can cancel its bond only when defective in form or substance, or when the sureties are financially insufficient : and he has no power or discretion to do either merely on the ground that such company is a member of an illegal combination to raise insurance rates, or because it refuses to pay a tax which it claims is illegal. ( Liverpool, London t (- Globe I u.snr0.) 14 INSURANCE LAWS OP CALIFORNIA. The commissioner is required to make distribution of printed copies of his report under section 337, Political Code, which section is as follows: Sec. 337. Of the report of the insurance commissioner, the commissioner must have printed, at the expense of his office, one thousand copies, and must deliver of the same as follows: To the governor, twenty copies. To the state librarian, ten copies. To the secretary of state, thirty copies. To the sergeant-at-arms of the senate, eighty copies. To the sergeant-at-arms of the assembly, one hundred and sixty copies. And the residue must be distributed by the commissioner in* furtherance of the interest of insurance. Certificates of authority to companies. Insurance in unauthorized companies. Sec. 596. No company shall transact any insurance business in this state without first complying with all the provisions of the laws of this state, and thereafter procuring from the insurance commissioner a certificate of authority, and continuing to comply with the laws of this state, provided that insurance may be procured from or placed with companies not authorized to transact business in this state upon the terms and conditions hereinafter stated. Every such certificate of authority shall expire on the first day of the July after its issuance unless sooner revoked. No certificate of authority shall be granted or renewed to any company in arrears to the state or to any county, city and county, city or town in the state for fees, licenses, taxes, assessments, fines or penalties accrued on business previously transacted in the state, nor while said company is otherwise in default for failure to comply with any of the laws of this state regarding the governmental control of such company by the state. No person shall act as agent in any transaction of any insurance business for any insurance company not authorized to transact such business in this state. A surplus line broker is one licensed by the insurance commissioner to act as broker in soliciting, negotiating, and effecting insurance under conditions hereinafter stated, to be procured from or placed with companies not authorized to transact such business in this state. Within the meaning of this law ''authorized companies" are those authorized by the insurance commissioner to transact in the State of California the kinds of insurance business that they are trans- acting. All others are "unauthorized companies." The insurance commissioner may issue a license authorizing any indi- vidual to act as surplus line broker from its date until the first of July following, on the following conditions : (a) Payment to the insurance commissioner of a fee of twenty-five ($25.00) dollars in advance. (b) Delivery to the insurance commissioner of a bond to the State of California in the sum of five thousand ($5,000) dollars with sureties having the qualifications mentioned in sections 1056 and 1057 of the Code of Civil Procedure, conditioned that said licensee will fully and faithfully comply with the requirements of section 596 of the Political Code. A surplus line broker, after having procured from and placed with authorized companies the total amount of insurance obtainable on any property from a majority of all authorized companies, may place the excess of insurance desired over such amount with unauthorized com- panies. No insurance is to be procured from or placed with unauthor- ized companies by any one except by a surplus line broker and under such conditions. INSURANCE COMMISSIONER POWERS AND DUTIES. 15 The following' are the duties of a surplus line broker with which he is required to eomply: 1. To maintain in good faith an office in this state. 2. To keep in said office books of account correctly showing in sepa- rate accounts all business transacted with unauthorized companies. Said books are to specify the dates of such insurance going into effect, the name of the insurers and of the insured, the gross premiums payable therefor, the terms, character of insurance and locations of the insured property. They shall also contain statements in the same detail of all such insurance canceled, or on which premiums have been increased or reduced and the amounts of additional or of return premiums thereon. Such books are to be open at all times for the inspection of. and exam- ination by, the insurance commissioner, or any one appointed by him for said purpose. 3. Within one week after the surplus line broker shall have obtained knowledge of the completion of the procurement of insurance on any property from an unauthorized company, he shall file with the insurance commissioner a true report showing the name of the insured and of the insurers, the character of the insurance, location of the property, gross premium payable therefor, and the date of - uch insurance taking effect and the term thereof; also a list of authorized companies comprising a majority thereof from whom the insurance so effected was not obtain- able As soon as practicable after any su -h insurance has been canceled or any premium thereon has been increased or reduced, such surplus line broker shall file with the insurance commissioner a report thereof in the same detail as above required in the case of the report above referred to. 4. On or before the first day of March of each year he shall file with the insurance commissioner a sworn st a lenient of all business transacted under his license during the last preceding calendar year ending Decem- ber 31st. Such statement shall contain true accounts of the gross amount of insurance procured from and placed w T ith unauthorized companies during said calendar year, the gross premiums charged therefor includ- ing additional insurance premiums, and the gross amount of all insur- ance canceled during said year, and the gross return premiums thereon. Such statements shall also include additional premiums charged during said calendar year on insurance previously effected and the gross return premiums during said calendar year on insurance previously effected. 5. All such reports and statements, shall be made on blanks to be fur- nished surplus line brokers by the insurance commissioner on applica- tion therefor. 6. On or before the 1st day of June of each year said surplus line broker shall pay to the insurance commissioner for use of the State of California three (3%) per cent of the grass premiums charged, less three (3%) per cent of all return premiums on policies canceled, or upon which the premiums have been reduced during the year ending December 31st last preceding. The insurance commissioner shall revoked the license of any surplus line broker who wilfully fails or refuses to perform any of his duties hereinabove specified. If in the opinion of the insurance commissioner the solvency of any surety on a bond hereby required has become im- 16 INSURANCE LAWS OP CALIFORNIA. paired or doubtful, he shall notify the surplus line broker in writing, and unless within ten (10) days after reeeipt of such notice the solvency of such surety is proved to the satisfaction of the insurance commis- sioner, or a new bond is substituted therefor, said insurance commissioner shall revoke the license of the surplus line broker. The removal of the office of the surplus line broker from this state, or the removal therefrom of his accounts of his business as such, or the closing of his said office for a period of more than twenty (20) consecutive days, shall constitute a termination of the authority of said surplus line broker, and shall be tantamount to an express revocation of his license, whether or not the insurance commissioner thereafter revokes the same. No new license shall be issued to any surplus line broker whose license has been revoked for any reason other than the insufficiency of his sureties, within the period of one year after such revocation, and until all indebtedness of said surplus line broker on former business has been paid to said insurance commissioner. Every insured for whom insurance has been effected with unauthorized companies shall produce for examination by the insurance commissioner, whenever requested by him, in writing, so to do, all policies, contracts, and other documents evidencing such insur- ance and disclose to him the true amount of the gross premiums paid or agreed to be paid therefor, or upon refusal so to do, he shall forfeit to the State of California, the sum of two hundred ($200) dollars for each refusal. All policies and other contracts of insurance issued without full compliance by all parties concerned with the laws of this state, shall be null and void. Enacted March 12, 1872. Amended, Stats. 1873-4. pp. 9-61; 1877-8, p. 13; 1880, p. 89. Repealed and reenacted. Stats. 1907, p. 146. Amended, Stats. 1911, p. 1269. A justice's court has .iurisdict : ou of an action to recover a penalty given by statute; and a penalty of two hundred dollars claimed for issuing a certificate of relief without authority from the insurance commissioner, is such a penalty. {Thomas vs. Justice Court, SO Cal. 40.) A contract to indemnify in case of loss of a lighter by the hirer of the same is not an insurance contract requiring authority from the insurance commissioner. ( Wilmington Trans. Co. vs. O'Neil, 98 Cal. 7.) In a proceeding brought by a foreign insurance company to compel the insurance commissioner to issue a certificate of authority to do business in the state, the court cites this section and holds that the act repealing all of the prior sections of the Political Code, relating to the subject of insurances contains a saving clause as to all causes of action that had accrued, or that had been commenced, for assessments. penalties and fines under the repealed law, but no saving clause for any other delin- quency, and the insurance commissioner had no authority to withhold license. (Com mercial Union Assurance Company vs. Wolf, 8 Cal. App. 417.) See opinion of attorney for insurance commissioner, dated January. 1014. holding, that the business intended to be licensed by this section is the business of surplus line broker as distinguished from insurance business proper; that only business trans acted in this state is covered by the section: that the place of execution and delta y of policy is not determinative of the question as to where the business of the surplus line broker is transacted; all business transacted by a surplus line broker where either the property insured or the owner of the same, or both, are situated in this state is business done in this state within the meaning of the section; but where both the owner and the property are outside of the state the business transacted by the surplus line broker is not business transacted in this state and is not subject to the provisions of this section. That the insurance commissioner may revoke licenses of surplus line brokers foi failing to make a return ; that one not a licensed broker who transacts such business in this state may be prosecuted under section 439 of the Penal Code if the business is done for a resident of this state, and under section 435 of the Penal Code otherwise. That the insurance commissioner may revoke licenses of, or sue to recover tax from, surplus line brokers failing to pay the tax as provided by this section. INSURANCE COMMISSIONER POWERS AND DUTIES. 17 Attorney general to examine documents. Sec. 596a. Before the insurance commissioner issues any certificate of authority or any other certificate or gives any permission or authority of any kind, based upon any written instrument or document or certified copy thereof, required by the statutes of the State of California, the commissioner shall submit such instrument, document or certified copy to the attorney general of the State of California, who shall examine the same and return it to the commissioner with his certificate or opinion as to whether such instrument, document or certified copy is in accord- ance with the requirements of law, and such certificate or opinion of the attorney general shall govern and control the commissioner, subject only to review by a court of competent jurisdiction, provided that neither the authority to nor bond of an agent or solicitor, nor the annual state- ments as to the condition and affairs need, but may, be so submitted ( with the same effect) by the commissioner to the attorney general. Enacted, Stats. 1907, p. 147. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413. Examination of companies. Sec. 597. The commissioner, whenever he deems necessary, or when- ever he is requested by verified petition, signed by twenty-five persons interested, either as stockholders, polieyhoMors. or creditors of any company engaged in insurance business in this state, showing that such company is insolvent under the laws of this state, must make an exami- nation of the business and affairs relating to the insurance business of such company, and must make such an examination whenever any com- pany is organized to do insurance business in this state, and before issuing a certificate of authority other than renewals to such company ; provided, the insurance commissioner shall have no authority to issue and no certificate of authority shall be issued to any insurance company or corporation hereafter organized or incorporated in this state, whether the same be organized and promoted directly or by means of a holding company or corporation, one of the purposes of which is the organization and promotion of such insurance company or corporation, where such examination shows the expense of organization and promotion to be in excess of fifteen per cent of the total amount actually paid on its capital stock exclusive of surplus. Whenever any company not organized under the laws of this state, applies for a certificate of authority to do business in this state, the insma nee commissioner may make or cause to be made by the insurance department of the state where such company is organized, an examina- tion of the business and affairs relating to the insurance business of such company. The company organized or existing under the laws of any country outside of the United States, shall be deemed to be organized wil liin the meaning of this act in any state wherein such company main- tains the deposits recpiired by the laws of this state. For the purpose of making such examination the insurance commissioner shall have free access to all the books and papers of such company, and must thoroughly inspect and examine all its affairs, and ascertain its condition and ability to fulfill its engagements, and that it has complied with all the provisions of law applicable to its insurance transactions. 18 INSURANCE LAWS OF CALIFORNIA. Every company examined under the provisions of this section must open its books and papers for the inspection of the commissioner, and otherwise facilitate such examination ; and the commissioner may admin- ister oaths and examine under oath any person relative to the business of such company ; and if he finds the books to be carelessly or improperly kept or posted he must employ sworn experts to re-write, post, and balance the same at the expense of such company. Such examination must be conducted in the county where such company has its principal office, and must be private, unless the commissioner deems it necessary to publish the result of such investigation in which case he may publish the same in two of the public newspapers of this state, one of which must be published in the city of San Francisco. All examinations must be at the expense of the company, such expense to be paid in advance, and if any such company refuses to pay such expenses in advance the insurance commissioner may refuse to issue any such certificate of authority and must revoke any existing certificate of authority authoriz- ing such company to do business. Enacted March 12, 1872. New section enacted, Stats. 1907, p. 147. Amended, Stats. 1911, p. 334. Obtaining and furnishing information to policyholders and others. Sec. 598. Any person interested in. as owner, assignee, pledgee or payee, of any policy of. insurance and desiring any information about such policy, may file with the insurance commissioner an affidavit show- ing that he is entitled to the benefits of the provisions of this section and apply to the insurance commissioner for his certificate of the facts or information desired. If the records of his office show the facts or infor- mation desired, the insurance commissioner shall prepare his certificate reciting such facts or information. If his records do not show the facts or information desired the insurance commissioner may deliver an order to the agent of the company, designated under section 616 of the Political Code, directing such company to state such information or facts in an affidavit and deliver such affidavit to him. In such affidavit the company must make a full, true and correct statement of all the said facts and information in the possession of said company, whether such information be contained in the books, records, or papers in this state or in any other state or country. If such company neglects or refuses to make and deliver such affidavit to the insurance commissioner within ninety days from the date of the delivery of the said order by the commissioner to the said agent as herein provided, the commissioner must revoke the certificate of authority authorizing the company to do business in this state. Immediately after receiving any affidavit from any insurance company pursuant to the provisions of this section the commissioner must certify such affidavit to the person so applying for the information or facts. Such affidavit so certified by the insurance commissioner shall be delivered to the applicant by delivering it to him personally or by depositing the same in the United States post office and prepaying the postage thereon. If a loss has been sustained under any policy of insurance and such policy has been lost or destroyed all rights of every kind and nature and the time for the presentation of notice of loss and the time for the presentation of proof of loss are stayed from the date such interested person delivers to the commissioner the affidavit herein provided for INSURANCE COMMISSIONER POWERS AND DUTIES. 19 and until five days after the date of the delivery by the insurance com- missioner to such interested person of any affidavit furnished by any insurance company pursuant to the provisions of this section Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 148. Practically new section substituted for old one. Subpoena. Sec. 599. The commissioner may issue subpoenas for witnesses to attend and testify before him on any subject touching insurance busi- ness, or in aid of his duties, which may be served, obeyed, and enforced as provided in the Code of Civil Procedure for civil cases, and the commissioner may issue attachments and impose the same penalty which a court might impose for disobedience ; and, in addition, the defaulting witness may be punished as provided in the Penal Code. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 149. Records. Sec. 600. The commissioner must keep and preserve in a permanent form a full record of his proceedings, including a concise statement of the condition of each company visited or examined by him. Enacted as section 603, .March 12, 1872. Repealed and present sec- tion enacted. Stats. 11)07. p. 149. Actuary. Sec. 601. The commissioner may employ an actuary to make the valuation of life policies, at a compensation of not exceeding one cent for each thousand dollars of insurance, to be paid by the company for which the valuation is made. Enacted as section 604, March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 149. Insolvency. Sec. 602. Whenever provisions for the liabilities of any company engaged in the business of fire, marine, or inland navigation insurance in this state, for losses reported, expenses, taxes and reinsurance of all out- standing risks, estimated at fifty per cent of the premiums received and receivable on all fire risks and marine time risks, at the full premiums received and receivable on all other marine risks, would so far impair its capital paid in as to reduce the same below two hundred thousand dollars, or below seventy-five per cent of said capital paid in, such com-' pany is insolvent; and in case of a company engaged in such insurance in tliis state, on the mutual plan, if the available cash assets of such com- pany shall not exceed its liabilities, as hereinbefore enumerated, in the full sum of two hundred thousand dollars, such company is insolvent; and wherever provision for the liabilities of any company engaged in the business of insuring any one against loss or damage resulting from accident to or injury suffered by an employee or other person for which the person insured may be liable, for losses reported, expenses, taxes and reinsurance of all outstanding risks estimated as provided in section 602a of the Political Code would so far impair its capital paid in as to reduce the same below one hundred thousand dollars, or below seventy- live per cent of said capital paid in, such company is insolvent; and 20 INSURANCE LAWS OP CALIFORNIA. whenever provision for the liabilities of any company engaged in any kind of insurance business in this state, other than life, liability, and insurance of titles to real estate, provided for in section 594 of the Political Code of this state, for losses reported, expenses, taxes, and reinsurance of all outstanding risks, estimated at such rates as are accepted by the insurance authorities of the State of New York, w r ould so far impair its capital paid in as to reduce the same below one hun- dred thousand dollars, or below seventy-five per cent of said capital stock paid in, such company is insolvent; and in case of a company engaged in such insurance business in this state, on the mutual plan, if its available cash assets shall not exceed its liabilities, as hereinbefore enumerated, in the full sum of one hundred thousand dollars, such company is insolvent. In the case of a company engaged in the business of life insurance, whenever its liabilities for losses reported, expenses, taxes, and reinsurance of all its outstanding risks written prior to January first, eighteen hundred and ninety-two, at the rates based upon the American Experience Table of Mortality with interest at the rate of four and one half per cent per annum, and reinsurance of all its out- standing risks written from and after the thirty-first day of December, eighteen hundred and ninety-one, up to and including the thirty-first day of December, nineteen hundred and seven, at rates based upon the Combined Experience or Actuaries' Table of Mortality with interest at the rate of four per cent per annum, and reinsurance of all its .out- standing risks written from and after December thirty-first, nineteen hundred and seven, at rates based upon the American Experience Table of Mortality with interest at the rate of three and one half per cent per annum, exceeds its assets, such company is insolvent. In the case of a company engaged in the business of insurance of the title to real estate, whenever provision for its liability for losses reported, expenses, and taxes, would, after exhausting its surplus fund, required by section 432 of the Civil Code or otherwise, so far impair its capital stock paid in as to reduce 1 the same below one hundred thousand dollars, or below seventy -five per cent of said capital paid in, such company is insolvent. The provisions of this act shall not apply to life or fire insurance associations operating on the assessment plan or on the fraternal plan. Enacted March 12, 1872. Amended, Stats. 1873-4, pp. 9 and 62; 1877-8, p. 14; 1887, p. 19; 1905, p. 379. Repealed by act approved March 8, 1907. and present section, with same number, covering same subject-matter with material important changes, enacted, Stats. 1907, p. 149. Amended by act approved April 15, 1909, Stats. 1909, p. 915, and such amending act in 1909 contained the sentence appearing at the end of the section as above given. See comment in connection with section 594, Political Code, ante. See State Investment & Ins. Co. vs. Superior Court, 101 Cal. 135, 144, 145, 149. Liability insurance reserve. Sec. 602rt. In estimating the condition of any company engaged in the business of liability insurance under the provisions of this article the insurance commissioner shall charge as liabilities all outstanding indebtedness of such company, and the premium reserve of policies in force, equal to the unearned portions of the gross premiums charged for covering risks, computed on each respective risk from the date of the issuance of the policy. The indebtedness for outstanding losses under INSURANCE COMMISSIONER POWERS AND DUTIES. 21 insurance 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 a schedule of its experience thereunder, in the United States and foreign countries -in the case 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 expe- rience separately, and crediting or charging each item to the year in which the policy to which it relates was written, as follows: (1) the earned premiums on all such policies written during the period of ten years immediately preceding the date as of which the statement is made, being the gross premiums on all such policies including excess and addi- tional premiums and premiums in course of collection, less return pre- miums and premiums on canceled policies, and less the unearned pre- miums on policies in force as shown in such annual statement; (2) the amount of all payments 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, adjust- ers, 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; (3) the number of suits being defended at the date as of which the statement is made 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, cov- ered 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 without proof of negligence, 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 pay- ments shown in item (2) plus the amounts charged in items (3), (!) 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 negli- gence 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; (9) the number of unpaid claims at the date ;is of which the statement 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 payments in item (2) made in a given calendar year subsequent to the 22 INSURANCE LAWS OP CALIFORNIA. 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 year preceding, 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 the 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 distri- bution shall be included in such annual statement: Each such corpora- tion shall be charged with indebtedness for outstanding losses upon such policies determined as follows: (10) for all suits being defended under policies written more than ten years prior to the date as of which the statement is made, except suits in which liability is not dependant 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 hundred and 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 immediately 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 ascer- tained as in item (6) on all the policies written in the first five years of the said ton-year period using as the divisor the sum of the earned premiums shown in item (1) for such first five 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-two per centum at and after December thirty-first, nineteen hundred and thir- teen, nor less than fifty-three per centum at and after December thirty- first nineteen hundred 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 INSURANCE COMMISSIONER POWERS AND DUTIES. 23 hundred and sixteen; provided, furthermore, that in the case of insur- ance covering liability for workmen's compensation the ratio to be used shall in no event be less than seventy per centum at and after December thirty-first, nineteen hundred and thirteen, nor less than seventy-two per centum at and after December thirty-first, nineteen hundred and fourteen, nor less than seventy-four per centum at and after December thirty- first, nineteen hundred and fifteen, nor less than seventy-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 not dependent upon negligence of the insured, being defended under policies written in that year and a charge of seven hundred and fifty dollars for each suit, (&) 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), (&) and (c) shall be the indebted- ness 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 required 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 Hie five years immediately preceding the date as of which the 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 mi I'c. Enacted as section 612a, Stats. 1905, p. 380. Repealed and present section enacted. Stats. 11)07. p. 151. Amended Stats. 1913, p. 493. Note. This section was again amended by an act approved the same day. (Stats. 1913, p. 465.) See "Editorial Note." Cyc. Code, 1906-1913, pp. 67 and 70. Revocation for insolvency. Sec. 603. Whenever the commissioner ascertains that any company engaged in the insurance business is insolvent within the meaning of this chapter, he must revoke the certificate of authority granted, and send by mail to such company, addressed to it at its principal place of business, or deliver to it, a notice of such revocation and cause a copy of such notice together with the proof of service to be filed in his office. Enacted as first part of section 600, March 12, 1872. Repealed and present section enacted. Stats. 1907, p. 152. Original Code section 603 is now sect ion 600. Sec Statt I n r> stiii< hi and Insurance Company vs. Superior Court of San Francisco, KM Cal. 135, which citea the following, viz: The insolvency of an insurance company which will authorize the insurance commissioner to 'revoke his certificate of authority and require the corporation to repair its capital is of ;i merely arbitrary character, defined by the statute. It is not 24 INSURANCE LAWS OP CALIFORNIA. the ordinary commercial insolvency; and for the purposes of the statute it may tie held insolvent, while at the same time it may be actually solvent in a business sense, and justly so regarded by th1(>. The insurance commissioner must require, as a condition precedent to the transaction of insurance business in this state by any foreign insurance company, that such company file in his office a writing designating the name of an agent, and his place of business in this state, on whom any notice provided by law or by any insurance policy, proof of loss, summons, and other process may be served in all actions or other legal proceeding against such company. All notices, proof of loss, sum- mons or other process so served give jurisdiction over the person of such company. The agent so appointed and designated shall be deemed in law a general agent, and must be the principal agent of such company in this state; any such foreign company shall, as a further condition precedent to the transaction of insurance business in this state, and in consideration of the privilege to transact such insurance business in this state, make and file with the insurance commissioner an agreement or stipulation, executed by the proper authorities of such company, in form and substance as follows: The (giving name of company) does hereby stipulate and agree that, in consideration of the permission granted by tli.' State of California to it to transact insurance business in this state, 32 INSURANCE LAWS OP CALIFORNIA. that if at any time said company shall leave this state or cease to transact business in this state or shall be without an agent in said state, on whom any notice, proof of loss, summons, or other legal process may be served, then in any action or proceeding arising out of any business or transactions which occurred in this state, service of any notice pro- vided by law, or insurance policy, proof of loss, summons, or other legal process may be made upon the insurance commissioner, and that such service upon the commissioner shall have the same force and effect as if made upon the company. Whenever such service of notice, proof of loss, summons, or other legal process shall be made upon the insurance commissioner, he must, within ten days thereafter, transmit by mail, postage paid, a copy of such notice, proof of loss, summons, or other legal process to the company, addressed to the manager, president, or secretary thereof at its home or principal office. The sending of such copy by the commissioner shall be a necessary part of the service of the notice, proof of loss, summons, or other legal process. When any notice, summons, or other legal process is served upon the insurance commissioner pursuant to the provisions of this section, the service as to the company shall be deemed complete at the end of sixty (60) days after the date of the delivery of the notice^ summons. or other process to the insurance commissioner. When any notice, provided by law or by any Insurance policy, is to be served on the agent designated, as in this section provided, such service may be made as provided in chapter V, part II, title XIV of the Code of Civil Procedure. Enacted March 12, 1872. Amended, Stats. 1S7:M4. p. 63; 1877-78, p. 17. Repealed and present section enacted. Stats. 1!M)7. p. 159. A motion to dismiss an appeal upon the ground thai the undertaking on appeal was executed by the American Surety Company, a foreign corporation, which had failed to file with the secretary of state a designation of some person residing in this state upon whom service of summons may be made, as required by the act of April 1, 1S72 (Stats. 1871-72, p. S2G). was denied, because it appeared from the certificate of the insurance commissioner that the company was duly authorized to transact business in this state, section 1056 of the Code of Civil Procedure providing that he should have the same jurisdiction over such companies as he had over others. (Gutzeil vs. Pennie, 95 Cal. ~>9S.) To the same effect is the case of Ha nit/an vs. Home Life Insurance Companu. 128 Cal. 540. See Commercial Union Assurance Company vs. Wolf, 8 Cal. App. 413-420. A foreign insurance company which, in compliance with the laws of the state appoints an agent therein upon whom service may be made distinctly agrees with the people of the state that summons and other process may be served upon it in all actions or legal proceedings against the company, and that all process so served gives jurisdiction over the person of the company. For all purposes of legal proceedings the company is. therefore, an "inhabitant" of the state, (tihainwald vs. Davids et al., 69 Fed. Rep. 704.) A foreign insurance company doing business in the state, may be served with process under Code of Civ. Proc, sec. 411, subd. 2, which provides generally for serving foreign corporations, or service may be made under sec. 016 of the Pol. Code, if it has filed with the insurance commissioner the name of its agent upon whom process may be served and an agreement that, should it at any time be without such agent process against it may be served on the commissioner, but substituted service on the commissioner is authorized only when the company is, by resignation, revoca- tion, or otherwise, without the agent specified in the latter section. {Buckingham tl n< cht vs. North German Fire Insurance Company of New York, 149 Fed. Rep. 622.) It is apparent from the nature of this section that in so far as the appointment of agent in this state is concerned, the same is subject to revocation or substitution at any time by the company, and that an appointment once made by the company con- tinues until revocation of the same is made irrespective of the number of years such company continues in business. The stipulation by its terms continues during the time such company transacts and after such company ceases to transact insurance business in this state. It is an irrevocable contract entered into with the state and INSURANCE COMMISSIONER POWERS AND DUTIES. 33 covers both the period during which such company may enjoy a license and all time thereafter. It furthermore covers any period when such company may be without the agent in the state contemplated by the section : Opinion of the Attorney General, June SO, 190S. Service Is Constructive. Service upon the secretary of state is not, in ordinary rases, to be considered tantamount to personal service upon a corporation, as distin- guished from constructive service. If such had been intended in all cases, the legisla- ture would undoubtedly have so provided, as it has provided in the case of foreign insurance companies. (Holiness Church of San Jose vs. Metropolitan Church Assn., 12 CaL App. 445, 448, 107 Pac. G33.) Penalty for failure to file statements. SBC. (ill. The commissioner must collect the sum of one hundred dollars from any company engaged in the business of insurance in this state, for a wilful failure to make and file in his office within the time prescribed by law, any statements or stipulations required by this title, and an additional penalty of two hundred dollars for each and every month or fractional part of a month thereafter, that such company continue to transact the business of insurance until such statements and stipulations are filed. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 65 ; 1877-8, p. 18 ; 1 ^ s 7. p. 11. Repealed and present section enacted, Stats. 1907, p. 160. A company which has written no new business during the preceding year and which has ceased writing business in the state is not subject to the penalty prescribed by section 617 of the Political Code for failing to file its annual statement: Opinion of the Attorney General, June 1J/, 1909. General provisions for deposits. Sec. 618. "Whenever the laws of any state of the United States, or of any country foreign to the United States, require any insurance com- pany organized under the laws of this state, to deposit with some officer of this state securities in trust for, and for the benefit of, the policy- holders of such company, as a prerequisite to transacting insurance business in such other state or foreign country, and whenever under any laws of this state any insurance company is required to deposit with any officer of this state securities in trust for, and for the benefit of policyholders of such company, the insurance commissioner of this state m nst receive from such company securities in the amount required by the law under which such deposit is made on deposit and in trust for the poj ieyholders of such company. None of such securities so deposited in i ist be estimated above the par value of the same, nor above their market value. The insurance commissioner must, upon the receipt of such securities, forthwith make a special deposit of the same in the state treasury, in packages marked with the name of the company from whom i -i reived, where they must remain as security for policyholders in the company to whom they respectively belong; but so long as the company continues solvent he must permit it to collect the interest or dividends on the securities so deposited, and from time to time to withdraw any such securities on depositing other securities in the stead of those to be withdrawn. Such new securities to be of the same value and character mentioned in this section, but such securities must not be withdrawn from the state treasury unless upon the written order of the company making the deposits, which order must be indorsed by the commissioner, or upon the order and authority of some court of competent jurisdiction. If the deposit is of mortgages, it shall be accompanied by full abstracts of title or policies of title insurance or certificates of title issued by a 3 IL 34 INSURANCE LAWS OF CALIFORNIA. duly organized title insurance company authorized to transact business under the laws of California, and the fees for examination of title, unless accompanied by such certificates of title or policies of title insurance, and the fees for appraisal of property shall be paid by the company making the deposit. If the deposit is of stocks or bonds, it shall be accompanied by the fees necessary for the appraisal thereof. Enacted March 12, 1872. Amended, Stats. 1877-78, p. 18. Repealed and present section enacted, Stats. 1907, p. 160. Amended, Stats. 1909, p. 909. Certificate of deposit. Sec. 619. Whenever an insurance company has deposited with the commissioner the requisite security, in conformity with the requirements of the preceding section, the commissioner must issue to such company a certificate, under his official seal, of such deposit, for each state or country requiring the same, which said certificate must state the items and amount of securities so deposited, and that they are of the value therein represented. # Enacted March 12, 1872. Amended, Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. Withdrawal of deposit. Sec. 620. Whenever any insurance company so depositing securities with the commissioner has paid, canceled, or reinsured all its unexpired policies outstanding in the state, satisfactorily to the insurance commis- sioner, and all its liabilities under such policies are extinguished, or assumed by other responsible companies or corporations, then, if on application of such company, duly verified, and from an examination of the books of the company, and of its officers under oath, the insurance commissioner is satisfied that all of its policies are so paid, canceled, extinguished, or reinsured, he must deliver up to the company the securities deposited; provided, however, that pending such examination the securities requested to be withdrawn may at the discretion of the commissioner be delivered to the depositor upon the condition that the applicant deposit with the commissioner securities of like value; and whenever the laws of any other state or country, by reason of which section 622 of the Political Code of this state is brought into force, shall be repealed and abrogated, then any deposit which shall have been made with the commissioner, under and by reason of said section 622 of the Political Code, must be delivered up to the company making the deposit. Enacted March 12, 1872. Amended, Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. See opinion of attorney for insurance commissioner, November 12, 1913, holding, contract of reinsurance sufficient to entitle policyholder to maintain an action against reinsuring company, and to permit company reinsured to withdraw deposit of security made with the State of California. Annual examination of securities. Sec. 621. The commissioner must make an annual examination of the securities received by him from each insurance company, and if it appear at any time that the securities deposited by any such company amount to less than the sum required for the purposes for which the deposit was made, he must notify the company thereof, and unless the deficiency is INSURANCE COMMISSIONER POWERS AND DUTIES. 35 made up within thirty days after notice, the commissioner must revoke the certificate of authority previously granted and countermand all the certificates he may have issued to the company under this chapter, and give notice thereof to the officers of the several states to whom the cer- tificate may have been transmitted. Enacted* March 12, 1872. Amended, Stats. 1877-8, p. 19. Repealed and present section enacted, Stats. 1907, p. 161. Applying foreign discrimination law. Sec. 622. When by the laws of any other state or country, any taxes, lines, penalties, licenses, fees, deposits of money or of securities, or other obligations or prohibitions, are imposed on insurance companies of this state doing business in such other state or country, or upon their agents therein, in excess of such taxes, fines, penalties, licenses, fees, deposits of securities, or other obligations or prohibitions, imposed upon insurance companies of such other state or country, so long as such laws continue in force, the same obligations and prohibitions of whatsoever kind must be imposed upon insurance companies of such other state or country doing business in this state. And whenever under this section any deposit of security shall be made in this state, such deposit shall be made in bonds of the United States Government, or in those of the State of California, or in interest-bearing bonds of any of the counties or incor- porated cities and towns of the State of California, not in default for interest on such bonds, which said securities must be estimated at not exceeding their par value nor their market value. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 11; 1877-8, p. 22; 1897, p. 242. Repealed and present section enacted, Stats. 1907, p. 162. When the act of March 3, 1885 (Stats. 1885, p. 15), was passed requiring the payment of certain premiums to counties and cities and counties by fire insurance companies not organized under the laws of California, the conditions on which such foreign corporations could do business were prescribed, and very full provision had heen made l>v the Political Code, sections 622-624, and the legislature had no power to impose the premiums mentioned., as the same do not constitute a condition precedent to their rignl to do business in this state, but on the contrary, by a special law a tax is created upon these corporations, alone, discriminatory in its nature, and conse- quently unconstitutional. (San Francisco vs. Liverpool, L. & G. Ins. Co., 74 Cal. 113.) See Liverpool, London & Globe Insurance Company et al. vs. Clunie, 88 Fed. Rep. 160-176. Tax. . Sec. 622a. Every insurance company other than life, not organized or incorporated under the laws of California, and doing business in this state, and every other insurance company other than life, whose charter may be owned, or a majority of whose stock may be controlled, or whose business may be carried on in the interest, or for the benefit of any insurance company or association not organized or incorporated under the laws of California, shall annually pay to the insurance com- missioner, for the state, a tax of two (2) per cent upon the amount of the gross premiums received upon its business done in the state, during the year ending on the preceding thirty-first day of December, less return premiums, reinsurance in companies authorized to do business in this state, and losses actually paid on its business in this state, and every life insurance company not organized or incorporated under the laws of California, which does business or collects premiums or assess- 36 INSURANCE LAWS OF CALIFORNIA. merits in the state, shall annually pay to the insurance commissioner, for the state, a tax of one per cent upon the amount of the gross premiums received upon its business done in this state during the year ending on the preceding thirty-first day of December. This section shall not be held or construed so as to relieve any company or organization from any tax, fee or other obligation or charge imposed upon it by the provisions of section 622 of this code, and whenever the taxes imposed by the appli- cation of section 622 exceed those imposed by the application of this section the provisions of the former section shall prevail. Enacted, State. 1903, p. 359. Amended, Stats. 1905, p. 136. Repealed and present section enacted, Stats. 1907, p. 162. See, post, section 3 of act to carry into effect the provisions of section fourteen of article thirteen of the constitution, etc., approved April 1, 1911. The use of the words "its business" found in the statute above cited, undoubtedly comprehends all of the classes of insurance which the corporation is licensed to transact, and in estimating the tax for which each company is liable, I am of the opinion that the tax is to be estimated upon the aggregate of the gross premiums received by the company from all of the branches or classes of insurance that it transacts : Opinion of the Attorney General, September 3, 1908. Bond of company. Sec. 623. The commissioner must require every company, not incor- porated under the laws of this state, now transacting or proposing to transact insurance business by agent or agents in this state, before com- mencing such business to file in his office a bond in favor of the people of the State of California, to be signed by the company, as principal, with two sureties, to be approved by the commissioner, in the penal sum of twenty thousand dollars, the condition of such bonds to be as follows : (1) That the company and its agents will pay all state, county, and municipal property and license taxes, in the manner and at the time prescribed by law; (2) that the company named therein will conform to all the provisions of the revenue and other laws made to govern them ; (3) and that the company will promptly pay all fees, assessments, taxes, penalties, and fines that may be laid upon or against such company. Such bonds may be sued on in the same manner and shall be subject to the same rules governing official bonds. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. See Commercial Union Assurance Company vs. Wolf, S Cal. App. 413-16 ; Liver- pool, London & Globe Insurance Company et al. vs. Clunie, 88 Fed. Rep. 160-166-173. The bond must be given "before commencing such business," lives and dies with the term of the license to which it related and upon which it is predicated, and upon a renewal of the license there must be a renewal of the bond required by section 623 of the Political Code : Opinion of the Attorney General, June 30, 1908. Bond containing proper continuation Clause, making such bond applicable alike to the first and all subsequent license periods for which renewals of certificates of authority are issued, is held to cover subsequent license periods without a renewal of such bond. Separate bonds. Sec. 624. Whenever the same company desires to collect premiums of insurance for more than one company, the commissioner must require a separate bond, as provided in the preceding section, for each company so represented by such company. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. San Francisco vs. Liverpool, London & Globe Insurance Company, 74 Cal. 113. See note to section 622, Political Code, ante. INSURANCE COMMISSIONER POWERS AND DUTIES. 37 Furnishing information to assessors. Sec. 625. The commissioner must, before the commencement of each fiscal year as fixed in the revenue laws, furnish the assessor of the county in which the principal office of any company doing business of insurance is situated, all the data concerning premiums collected by and all other necessary information in relation to the business of such com- pany as will assist the assessor in the performance of his duties. Enacted March 12. 1872. Repealed and present section enacted, Stats. 1907, p. 163. Listing surety companies to county clerks. Sec. 625<7. The insurance commissioner of the State of California must make up and certify to the county clerk of each county of this state a complete list of all corporations engaged in the business of making, guaranteeing or becoming a surety upon bonds or undertakings required or authorized by law, holding certificates of authority to trans- act such business in this state, which list shall set forth: ( 1 ) The full corporate name of such corporation ; (2) The name of the state, territory or country under whose laws such corporation is organized; (3) The date of the certificate of authority issued to such corporation to transact such a business in this state. From and after the date when the list aforesaid shall have been certi- fied as hereinbefore provided, the said insurance commissioners shall likewise certify to the county clerk of each county of this state, the same facts concerning any other corporation thereafter authorized to transact such business in this state. Whenever the certificate of authority of any such corporation to do business in this state shall for any reason be surrendered, revoked, can- celed, or annulled, or whenever the said certificate of any such corpora- tion has been suspended as provided in section 1056 of the Code of Civil Procedure of this state, or whenever any such corporation whose certifi- cate of authority has been so suspended, again becomes authorized in law to do business in this state under such certificate of authority, the insurance commissioner of this state shall forthwith certify to the county clerk of each county of this state, the name of such corporation, and the date of such surrender, revocation, cancellation, annulment or suspension, or of renewed authority to act under such certificate. Enacted, Stats. 1907. p. 977. Complying with Civil Code. Sec. 626. The commissioner must require from every company, before and after engaging in the business of insurance, a full compliance with all the provisions of title two, part four, division one, of the Civil Code applicable thereto; and every company neglecting to comply with such requirements is subject to the fines and penalties therein prescribed. Enacted March 12. 1872. Repealed and present section enacted, Stats. 1907, p. 163. Bee civil Code, lection 414-4f>o. pout. Computations and payments on gold basis. Sec, 627. All statements, estimates, percentages, payments, and cal- culations, required by this chapter to be made, either by the commis- 38 INSURANCE LAWS OP CALIFORNIA. sioner or companies, must be made on the basis of gold coin of the United States. Enacted March 12, 1872. Repealed and present section enacted, Stats. 1907, p. 163. Special valuation of policies of life insurance companies. Sec. 628. When the certificate of the insurance commissioner of this state, of the valuation of the policies of a life insurance company, as pro- vided in the next section of this code, issued to any company organized under the laws of this state, shall not be accepted by the insurance authorities of any other state, in lieu of a valuation of the same, by the insurance officer of such other state, then every company organized under the laws of such other state doing business in this state, shall be required to have a separate valuation of its policies made under the authority of the insurance commissioner of this state, as provided in the next section. Enacted, Stats. 1907, p. 163. Formerly section 449, Civil Code. Old section 628, Pol. Code, is now numbered 589. General valuation of policies of life insurance companies. Sec. 629. Every life insurance corporation organized under the laws of this state must, on or before the first day of February of each year, furnish the insurance commissioner the necessary data for determining the valuation of all its policies outstanding on the thirty-first day of December then next preceding. And every life insurance company organized under the laws of any other state or country, and doing busi- ness in this state, must, upon the written requisition of the commissioner, furnish him, at such time as he may designate, the requisite data for determining the valuation of all its policies then outstanding; such valuations must be based upon the rate of mortality established by the American Experience Life Table, and interest at four and one half per cent per annum on all outstanding risks written prior to January first, eighteen hundred and ninety-two, and such valuations must be based upon the rate of mortality established by the Combined Experience or Actuaries' Table of Mortality with interest at the rate of four per cent per annum on all outstanding risks written from and after the thirty- first day of December, A. D. one thousand eight hundred and ninety-one, up to and including the thirty-first day of December, one thousand nine hundred and seven, and such valuations must be based upon the rate of mortality established by the American Experience Table of Mortality with interest at the rate of three and one half per cent per annum on all outstanding risks written from and after December thirty-first, nine- teen hundred and seven. "When the laws of any other state or territory require of a life insurance company organized under the laws of this state a valuation of its outstanding policies by any standard of valuation different from that named in this section, the insurance commissioner is hereby authorized to make such valuation for use in such other state or territory, and to issue his certificate in accordance therewith. For the purpose of making the valuations, the insurance commissioner is authorized to employ a competent actuary, whose compensation for such valuations shall be one c#nt for each thousand dollars of insurance, to be paid by the respective companies whose policies are thus valued. Enacted, Stats. 1907.. p. 164. Formerly section 447, Civil Code. Old section 629, Pol. Code, is now numbered 589. INSURANCE COMMISSIONER POWERS AND DUTIES. 39 Secret and fraternal societies. Sec. 630. Secret or fraternal societies, lodges, or councils incorpo- rated or organized for the purpose of mutual protection and relief of their members and for the payment of stipulated sums of money to their members or to the beneficiaries of deceased members which conduct their business and secure membership on the lodge system exclusively, having ritualistic work and ceremonies in their societies, lodges, or councils, and all mutual or benefit associations, organized or formed and composed of members of any such society, lodge or council exclusively, are exempt from the provisions of all the insurance laws of this state. Enacted. Stats. 1907, p. 164 takes the place of, although differing in important respects from section 451, Civil Code, repealed at the same time. Old section 630 is now numbered 591. See Perkins vs. Fish. 121 Cal. 319-321 : Marshall vs. Grand Lodge, A. 0. TJ. W., 133 Cal. 686; Lyon vs. United Moderns, 148 Cal. 471. See opinion attorney for insurance commissioner, May 26, 1911, defining nature of insurance business and holding action by the Mutual Assistance Association to be the transaction of insurance business. Reviewing commissioner's act. Sec, 631. If at any time the insurance commissioner revokes the cer- tificate of authority theretofore granted to any insurance company, or refuses to grant a certificate of authority to any insurance company, any interested person or company may commence an action against the insurance commissioner for the purpose of reviewing the facts and the law pertinent to the controversy and for the purpose of obtaining the relief refused or for cancelling the action of the commissioner. In any sueli action the court, shall have full power to investigate all the facts <1< novo without regard to the determinations previously made by the commissioner. In the trial of such actions all of the provisions of the Code of Civil Procedure, not inconsistent herewith, shall be applicable. Enacted. Stats. 1907, p. 164. Old section 631, Pol. Code, is now numbered 592. Publication of notice of withdrawal. Sec. 631". Whenever any insurance company shall have withdrawn from business in this state, and whenever for any reason the insurance commissioner shall have revoked or cancelled the certificate of authority authorizing any insurance company to do business in this state, the insurance commissioner shall cause to be published, in each of two daily newspapers, one published in San Francisco and one published in Sacra- mento, a notice of such revocation or of such withdrawal. The expense of such publication shall be paid in advance by the insurance company withdrawing or whose certificate shall have been so revoked. Enacted, Stats. 1907, p. 165. Practically new section added in 1907; but see old section 595. Informing district attorneys. Sec. 632. "Whenever the insurance commissioner ascertains that any insurance company, or any of its agents, officers, or employees, or any other person has been guilty of violating any of the penal statutes of this 40 INSURANCE LAWS OF CALIFORNIA. state, the commissioner shall certify such facts to the district attorney of the county in which such offense was committed. Such offenses shall be prosecuted and tried in all respects as provided in the Penal Code. For the purpose of evidence the commissioner shall furnish to the district attorney, without cost to the county, certified copies of any papers or records of the office of the commissioner. Enacted, Stats. 1907, p. 165. Old section 632 is now numbered 593. Licensing agents and solicitors. Sec. 633. No person shall in this state act as the agent or solicitor of any insurance company doing business in this state until he has pro- duced to the commissioner, and filed with him, a duplicate power of attorney from the company, or its authorized agent, authorizing him to act as such agent or solicitor. Upon filing such power, the commissioner shall issue a license to him to act as such agent or solicitor for such com- pany, if such company has received a certificate of authority from such commissioner to do business in this state. Such license shall continue in force until July first after the date thereof, but must be, and shall be, sooner revoked upon application of the company or its authorized agent. Such license may be renewed from time to time, for an additional period of twelve months, on production by the holder to the commissioner of a certificate from the company that such person 's authority as such agent or solicitor continues. The commissioner shall keep an alphabetical list of the names of the persons to whom such licenses shall be issued, with the date of the license and renewal, and the name of the company for whom such person is working. Enacted, Stats. 1873-74, p. 66. Amended, Stats. 1880, p. 90 ; 1893, p. 116. Repealed and present section enacted, Stats. 1907, p. 165. Registration of policies of life insurance companies. Sec. 634. It shall be lawful for any company or corporation transact- ing the business of life insurance in this state to register with the insur- ance commissioner such of its policies as may be agreed upon by the company and the insured; such registration to consist in a written or printed list of such policies filed with the commissioner, showing the name and age of the insured, number and date of the policy, and the kind and amount of insurance in each case. Such list must be filed with the commissioner within thirty days after the issuance of the first regis- tered policy ; and must contain all such policies issued up to the date of filing. After that date the company must, within three days after the first day of each calendar month, file a statement embracing all its regis- tered policies issued since the filing of its last preceding list. Upon filing such lists of policies, from time to time, the company must deposit with the commissioner, as a special deposit for the benefit of such registered policies, securities of the denominations stated in section 421 of the Civil Code as permissible for the investment of the capital and accumulations of insurance companies. Such deposit must be in an amount equal to the full net value of all policies registered up to the time of making the deposit, and must at all times be equal to such net value of all registered policies. Upon receipt of such securities, the commissioner must imme- diately deposit them in the state treasury, in accordance with the provi- INSURANCE COMMISSIONER SURETIES. 41 sions of section 618 of the Political Code, where they must remain as a special security for the benefit of such registered policies. Such com- pany may at any time withdraw any excess of securities above the net present value hereinbefore specified, upon satisfying said commissioner by written proof that such excess exists, and shall be allowed to receive the interest on all securities deposited, and to exchange such securities by substituting other securities of the character in which, by the laws of this state, it may invest its funds. Enacted, Stats. 1877-8, p. 20. Amended, Stats. 1905, p. 151, Repealed and present section enacted. Stats. 1907, p. 166. See Harrigan vs. Home Life Insurance Company, 128 Col. 540. Definitions and exceptions. Sec. 634a. The word company as used in this title includes every association, corporation, firm or person transacting or desiring to trans- act any kind of insurance business under the laws of the State of Cali- fornia ; provided, that no part of this act shall be held to apply to any company organized under an act entitled "An act to provide for the organization and management of county fire insurance companies," ap- proved April first, eighteen hundred and ninety-seven, or to any corpo- ration doing or transacting the business of mutual insurance on the assessment plan as defined in section 453tf of the Civil Code of the State of California. The words "capital stock" as referred to in this title shall be deemed to include the capital of anv person, firm or association. Enacted, Stats. 1907, p. 166. Demanding and recovering payments other than fees. Sec. 634&. All fines, taxes, assessments, and penalties provided for in this title shall be due and payable on the demand of the insurance com- missioner. If the same are not paid within ten days after such demand is made, then the insurance commissioner shall institute an action in the name of the people of the State of California for the purpose of recover- ing such fine<, penalties, and taxes, or either, as the case may be. All such actions shall be subject to all the provisions of the Code of Civil Procedure which may be applicable thereto. Enacted, Stats. 1907. p. 166, PART III. TITLE I. CHAPTER VII. ARTICLE IX. BONDS OF OFFICERS. Sec. 955. Justification of sureties. 056. Sureties for less than the penal sum. Justification of sureties. Sec. 955. The officer whose duty it is to approve official bonds re- quired of state, county, city and county, or township officers, must not accept or approve any such bond unless each of the sureties severally justify before an officer authorized to administer oaths as follows: -j '* # # o * # # ;{ # # # 4. A corporation, such as is mentioned in section 1056 of the Code of Civil Procedure of this state, may become and shall be accepted as sole 42 INSURANCE LAWS OP CALIFORNIA. and sufficient surety upon any bond or undertaking authorized or re- quired by the provisions of this code or of any law of this state, subject to the provisions of said section, and those of section 1057 of the same code. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 72 ; 1889, p. 220. County of San Luis Obispo vs. Murphy, 162 Cal. 588, 591. Sureties for less than the penal sum. Sec. 956. "When the penal sum of any bond required to be given, amounts to more than one thousand dollars, the sureties may become sev- erally liable for portions of not less than five hundred dollars thereof, making, in the aggregate, at least two sureties for the whole penal sum. And if any such bond becomes forfeited an action may be brought thereon against all or any number of the obligors, and judgment entered against them, either jointly or severally, as they may be liable. The judgment must not be entered against a surety severally bound for a greater sum than that for which he is specially liable by the terms of the bond. Each surety is liable to contribution to his co-sureties in pro- portion to the amount for which he is liable. Any corporation, such as is mentioned in section 955 of this code, may become one of such sureties. or be accepted as sole and sufficient surety. Enacted March 12, 1872. Amended, Stats. 1889, p. 220. TITLE VI. CHAPTER I. ARTICLE VIII. PORT WARDENS. Sec. 2507. Sales of wrecks, etc., and merchandise for foreign underwriters, 2508. Notice of sale, how given. 2509. Wardens not to be connected with insurance. Sales of wrecks, etc., and merchandise for foreign underwriters. Sec. 2507. All wrecked or damaged vessels, or materials from the same, and all merchandise sold at public auction for account of under- writers residing abroad, when required by any party having an interest in the same, or for account of whom it may concern, or upon which claims are to be made against underwriters residing abroad, must be sold under the inspection of a warden of the port w T here such sale is made. And the warden must separate sound goods from those damaged and certify specially the nature, and, as far as can be done, the extent of such damage. No port warden has authority to sell or dispose of any prop- erty that may have been surveyed by him without the consent of the owner or agent of the same; nor when the settlement of losses has been agreed upon in w r riting by the parties interested and a copy thereof given to the warden. Enacted March 12, 1872. Notice of sale, how given. Sec. 2508. In case sales are made at auction under the direction of the port warden, he must give at least three days' notice of the same by publication in some newspaper published in the county where the survey is made, describing the articles to be sold; and if merchandise, the vessel by which imported ; and if a wrecked or damaged vessel or materials of INSURANCE COMMISSIONER PORT WARDENS. 43 the same, the name of the vessel and where from. If no newspaper is published in the place where the sale is made, then a written notice of such sale must be posted up in the vicinity. Enacted March 12, 1872. Wardens not to be connected with insurance. Sec. 2509. No port warden must, either directly or indirectly, have any connection with insurers of this state, or of any other of the states, or of foreign countries, or with the agents or representatives of such in- surers, so far as his duties as port warden are concerned. He must not in any manner be interested, directly or indirectly, in any repairs he may recommend, nor in any vessel,. cargo, or portion of cargo he may be required to survey. Enacted March 12, 1872. 44 INSURANCE LAWS OF CALIFORNIA. CIVIL CODE. DIVISION I. TART IV. TITLE I. CHAPTER II. ARTICLE II. ASSESSMENTS OF STOCK. Sec. 331. Directors may levy assessments. 332. Limitation. Directors may levy assessments. Sec. 331. The directors of any corporation formed or existing under the laws of this state, after one fourth of its capital stock has been sub- scribed, may, for the purpose of paying expenses, conducting business, or paying debts, levy and collect assessments upon the subscribed capital stock thereof, in the manner and form, and to the extent provided herein. Enacted March 21, 1872. Amended, Stats. 1873-74, p. 206. Limitation. Sec. 332. No one assessment must exceed ten per cent of the amount of the capital stock named in the articles of incorporation, except in the cases in this section otherwise provided for, as follows: 2 * * * 2 * * * 3. The directors of fire or marine insurance corporations may assess such a percentage of the capital stock as they deem proper. Enacted March 21, 1872. TITLE II. INSURANCE CORPORATIONS. Chapter I. General Provisions. Sees. 414-422. II. Fire, Marine, and Title Insurance Corporations. Sec. 424-432. III. Mutual Life, Health, and Accident Insurance Corporations. Sees.- 437-452. IV. Mutual Benefit and Life Associations. Sees. 452a, 453. V. Corporations to Discover Fire and Save Property and Human Life from Destruction Thereby. Sees. 453-453c. VI. Life, Health, Accident, and Annuity or Endowment Insurance on Ihe Assessment Plan. Sees. 453rf-453p. CHAPTER I. GENERAL PROVISIONS. "Sec. 414. Subscriptions to capital stock opened, and how collected. 415. Purchase and conveyance of real estate. 41<>. Policies, how issued and by whom signed. 417. Dividends, of what, and when declared. 418. Directors liable for loss on insurance in certain cases. 421. How capital and accumulations may be invested. 422. Reports on stocks and bonds held by insurance companies. Subscriptions to capital stock opened and how collected. Sec. 414. After the secretary of state issues the certificate of incorpo- ration, as provided in article one, chapter one, title one, of this part, the directors named in the articles of incorporation must proceed in the man- INSURANCE CORPORATIONS GENERAL PROVISIONS. 45 ner specified, or in their by-laws, or if none, then in such manner as they may by order adopt, to open books of subscription to the capital stock then unsubscribed, and to secure subscriptions to the full amount of the fixed capital; to levy assessments and installments thereon, and to collect the same, as in chapter two of title one provided. Enacted March 21, 1872. Purchase and conveyance of real estate. Sec. 415. No insurance corporation may purchase, hold or convey real estate, except as hereinafter set forth, to wit : 1. The building in which it has its principal office and the land upon which it stands. 2. Also, such as may be requisite for its accommodation in the con- venient transaction of its business. 3. Also, such as may be conveyed to it, or to any person for it, by way of mortgage, or in trust or otherwise, to secure or provide for the pay- ment of loans previously contracted or for moneys due. 4. Also, such as may be purchased at sales upon deeds of trust, or judgments obtained or made for such loans or debts. 5. Also, such as may be conveyed to it in satisfaction of debts pre- viously contracted in the course of its dealings. All such real estate, mentioned in subdivisions three, four and five so acquired, which is not requisite for the accommodation of such corpora- lion in the transaction of its business, must be sold and disposed of within five years after such corporation acquired title to the same. Enacted March 21, 1872. Amended, Stats. 1905, p. 21. Policies, how issued and by whom signed. Sec. 416. All policies made by insurance corporations must be sub- scribed by the president or vice-president, or in case of the death, absence, or disability of those officers, by any two of the directors, and countersigned by the secretary of the corporation. All such policies are as binding and obligatory upon the corporation as if executed over the corporate seal. Enacted March 21, 1872. Dividends, of what, and when declared. Sec. 417. The directors of every insurance corporation, at such times ;is their by-laws provide, must make, declare, and pay to the stockholders dividends of so much of .the net profits of the corporate business and interest on capital invested as to them appears advisable ; but the moneys received and notes taken for premium on risks which are undetermined and outstanding at the time of making the dividend must not be treated as profits, nor divided, except as provided in chapter two of this title. Enacted March 21, 1872. Directors liable for loss on insurance in certain cases. Sec. 418. If any insurance corporation is under liabilities for losses to an amount equal to its capital stock, and the president or directors, after knowing the same, make any new or further insurance, the estates of ;ill who make such insurance, or assent thereto, are severally and jointly liable for the amount of any loss which takes place under such insurance. Enacted March 21, 1872. 46 INSURANCE LAWS OF CALIFORNIA. How capital and accumulations may be invested. Sec. 421. Companies organized under the laws of this state for the transaction of business in any kind of insurance may invest their capital and accumulations in the following named securities : 1. In the purchase of, or loans upon interest-bearing bonds of the United States, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. 2. In the purchase of, or loans upon interest-bearing bonds of any of the states of the United States not in default for interest on such bonds, including bonds of this state, or those for which the faith and credit of the State of California are pledged for the payment of principal and interest. 3. In the purchase of, or loans upon interest-bearing bonds of any of the counties and incorporated cities and towns and duly organized school districts of any state or territory of the United States not in default for interest on such bonds. 4. In the purchase of, or loans upon interest-bearing bonds of irriga- tion districts as provided or authorized by section 8 of an act entitled "An act relating to bonds of irrigation districts, provided under what circumstances such bonds may be made legal investments for the funds of banks, banking associations, trust companies, insurance companies, and for the state school funds and trust funds, and providing for the deposit of such bonds as security for public moneys, and providing for a commission for approving certain bonds of irrigation districts, for a report thereon, for the filing of such report, for a certificate of the state controller, and for the recording of such bonds in the office of the state controller," approved December 18, 1911. 5. In loans secured by mortgage or deed of trust upon unencumbered real estate, improved or unimproved, or in the purchase of, or loans upon notes or bonds so secured ; provided, that the principal so loaned, or the entire note or bond issue under such mortgage or deed of trust shall not exceed sixty per centum of the market value of such real estate with improvements taken as security; and provided, further, in case said loan is made, or said note or bond issue created for a building loan on real estate, that at no time shall the principal so loaned or the entire note or bond issue exceed sixty per centum of the market value of the real estate and the actual cost of the improvements thereon taken as security. 6. Companies organized for and engaged in the business of fire, life, health, accident and marine insurance, may, after the investment of two hundred thousand dollars, and companies duly formed or organized for the transaction of business in any other kind of insurance except mort- gage insurance may, after the investment of one hundred thousand dollars, in the manner provided in subdivisions one, two, three, four and five of this section, invest the balance of their capital and any accumula- tions in the purchase of or loans upon the stock of any corporation (except mining companies) organized and carrying on business under the laws of the State of California which have at the time of investment a market value of not less than their paid in value, and which are rated as first-class securities, or in interest-bearing bonds of any corporation of any state or territory of the United States not in default for interest on such bonds; provided, that a two-thirds vote of all the directors of such INSURANCE CORPORATIONS GENERAL PROVISIONS. 47 corporation shall approve such investment. It shall be the duty of the officers of such corporation to report quarterly during the months of January, April, July and October of each year to the insurance com- missioner a list of such investments so made by them, and the insurance commissioner may, if such investment, or any of them, seem injudicious to him, require the sale of the same. But no investment in the securities named in subdivisions one, two, three, four and five of this section must be made in an amount exceeding the market value of such securities, at t he date of such investment. 7. Life insurance companies may loan upon their own policies; pro- vided, that the amount so loaned upon each policy shall not exceed the reserve against said policy at the time said loan is made; provided, further, that no policy loans whatever shall ever be used as security which may be deposited with the insurance commissioner under sec- tion 634 of the Political Code; and provided, further, that whenever any such loan in any amount is made on a policy registered with the insur- ance commissioner under said section 634 of the Political Code, such registration shall be forthwith canceled. Enacted, Stats. 1905, p. 628. Amended, St;:ts. 1907, p. 890. Amended, Stats. 1913, p. 487. Section 427 of the Civil Code, relating to how f . nils may be invested, was repealed in 11)05 and two sections, each 421 of the Civil Code, were enacted in 1905, one approved March 3d and the other approved March 24th. Of these two the former was repealled in 1J)05 and the latter was amended in 1907 as set forth above and is now the general statute of California relating to investment by insurance companies of California. Section 444 of the Civil Code relating to the investment of capital stock liv mutual health, life and accident insurance corporations was repealed in 1907. Fire insurance companies organized outside the State of California are not required, as a condition precedent to conducting business in this state, to exhibit securities named in section 421 of the Civil Code to the extent of a $200,000.00 invest- ment : Opinion of the Attorney General, April 21, 1909. The purchase of a promissory note by an insurance company, pure and simple would be prohibited by the section, but if such promissory note is secured by interest bearing bonds such as are specified in subdivision 6 of the section, then the trans- action is essentially a loan upon such bonds : Opinion of Attorney for Insurance Cotn- mitiioner, September 5, 1918. Report on stocks and bonds held by insurance companies. Sec. 422. 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, village, school district, municipality, or other civil division of any state, pursuant to the laws of this state, and the insurance commission 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. No 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. How valued. All bonds or other evidences of debt held by any insurance corpora- tion authorized to do business in this state, if amply secured and if not in default as to principal or interest, may in the discretion of the insur- ance commissioner, be valued as follows : If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase 48 INSURANCE LAWS OF CALIFORNIA. price adjusted so as to bring the value to par at maturity and so as to yield 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 pro- vided, farther, that the insurance commissioner shall have full discretion in determining the method of calculating values according to the fore- going 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 evidence 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 rule. Enacted June 6, 1913. State. 1913, p. 464. In effect August 10, 1913. CHAPTER II. FIRE AND MARINE INSURANCE CORPORATIONS. Sec. 424. Payment of subscriptions. Capital to be all paid in twelve months, 4lT. Certificate of capital stock paid up to be filed, and when. 420. Property which may be insured. 428. Limit of one risk. 421). Amounts to be reserved before making dividends. 430. Reservations by companies with less than two hundred thousand dollars capital. Payment of subscriptions. Capital to be all paid in twelve months. Sec. 424. The entire capital stock of every fire or marine insurance corporation must be paid up in cash within twelve months from the fil- ing of the articles of incorporation, and no policy of insurance must be issued or risk taken until twenty-five per cent of the whole capital stock is paid up. Enacted March 21, 1872. There is no good reason for holding that a company which has failed to pay up its entire capital stock within the one year period may not thereafter, upon fully paying up its capital stock receive a license, particularly in view of the fact that there is no provision of the law that it shall not, but merely the direction of the law that it must pay up its capital within one year: Opinion of the Attorney General, October 2, 1911. The insurance department has no authority to issue a certificate of authority to an insurance company until it has complied with all the laws governing such companies. The insurance department may require such company before issuing a certificate of authority to reduce the amount of its authorized capital to the amount shown by its books to have been fully paid up, and may then issue such certificate. Such company has the right to continue its stock selling until the amount of its capital is fully paid up, unless, before that, on a suit of some stockholder, the state shall have declared forfeited the right of the company to do business: Opinion of the Attorney General, October 2, 1911. Certificate of capital stock paid up to be filed and when. Sec. 425. The president and a majority of the directors must, within thirty days after the payment of the twenty-five per cent of the capital stock, and also within thirty days after the payment of the last install- ment or assessment of the capital stock limited and fixed, prepare, sub- scribe, and swear to a certificate setting forth the amount of the fixed capital and the amount thereof paid up at the times respectively in this section named, and file the same in the office of the county clerk of the county where the principal place of business of the corporation is located, and a duplicate thereof, similarly executed, with the insurance commissioner. Enacted March 21, 1872. FIRE AND MARINE INSURANCE CORPORATIONS. 40 Property which may be insured. Sec. 426. Every corporation formed for fire or marine insurance, or both, may make insurance on all insurable interests within' the scope of its articles of incorporation, and may cause itself to be reinsured. Enacted March 21, 1872. Limit of one risk. Sec. 428. Fire and marine insurance corporations must never take, on any one risk, whether it is a marine insurance or an insurance against tire, a sum exceeding one tenth part of their capital actually paid in, and intact at the time of taking such risk, without at once reinsuring the excess above one tenth. Enacted March 21, 1872. Amended, Stats. 1873-74, p. 210; Stats. 1905, p. 570. Amounts to be reserved before making dividends. Sec. 429. No corporation formed subsequent to April first, eighteen hundred and seventy-eight, under the law^ of this state, and transacting fire, marine or inland navigation insurance business, must make any dividends except from profits remaining on hand after retaining unimpaired : 1. The entire subscribed capital stock. 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks. 3. A fund equal to one half of the amount of all premiums on all other risks not terminated at the time of making such dividend. 4. A sum sufficient to pay all losses reported or in course of settle- ment, and all liabilities for expenses and taxes. Enacted March 21, 1872. Amended, Stats. 1877-78, p. 81 ; Stats. 1887, p. 23. Amended, Stats. 1913, p. 489. Sun Insurance Co. vs. White, 123 Cal. 196, 203. (Referred to Sec. 429.) Reservation by companies with less than two hundred thousand dollars capital. Sec. 430. No fire or marine insurance corporation, with a subscribed capital of less than two hundred thousand dollars, must declare any dividends, except from profits remaining on hand after reserving: 1. A sum necessary to form, with the subscribed capital stock, the aggregate sum of two hundred thousand dollars ; 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks ; 3. A fund equal to one half the amount of all premiums on fire risks and marine time risks not terminated at the time of making such divi- dend ; 4. A sum sufficient to pay all losses reported or in course of settle- ment, and all liabilities for expenses and taxes. Enacted March 21, 1872. 4 ii. 50 INSURANCE LAWS OP CALIFORNIA. CHAPTER III. MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE CORPORATIONS. Sec. 437. Capital stock. Guarantee fund. 438. Of what guarantee fund shall consist. 489. What constitutes, and deficiency in fixed capital. 440. Declaration of fixed capital to be filed. 441. Guarantee notes and interest, how disposed of. 442. Insured to be entitled to vote, when. 148. Number of directors may be altered, how. 445. Limitations to the holding of stock, and in other particulars, may be provided for in by4aws. 44(5. Premiums, how payable. 450. Policy to contain what provisions. 4.~2. Dividends, how made. Capital stock. Guarantee fund. Sec. 437. Every corporation formed for the purpose of mutual insur- ance on the lives or health of persons, or against accidents to persons for life or any fixed period of time, or to purchase and sell annuities, must have a capital stock of not less than two hundred thousand dollars. It must not make any insurance upon any risk or transact any other busi- ness as a corporation until its capital stock is fully paid up in cash, nor until it has alo obtained a fund, to be known as a "Guarantee Fund," of not less than two hundred and fifty thousand dollars, as is hereinafter provided. If more than the requisite amount is subscribed, the stock must be distributed pro rata among the subscribers. Any subscription may be rejected by the board of directors or the committee thereof, either as to the whole or any part thereof, and must be, so far as rejected, with- out effect; nothing in this section shall be deemed to contravene any of the provisions of section 451. Enacted March 21, 1872. Amended, Stats. 1905, p. 183. The so-called Home Benefit Life Association failed to organize in accordance with section 437, and after doing business for many years, an action was brought against the officers for a large sum of money paid in by plaintiff and his assignors, many in number, upon the theory that the association was never legally incorporated, and that the defendants acted without statutory authority. The evidence showed that the business had been honestly administered, that the moneys received had been paid out in accordance with the by-laws which were printed on the back of each certificate received by the plaintiff and his assignors, that there was no fraud, that all made substantially the same mistake in supposing the association to have been properly incorporated, and that under such circumstances the parties were estopped to recover back payments thus voluntarily made. (Perkins vs. Fish et al.. 121 Cal. 317.) Of what guarantee fund shall consist. Sec. 438. The guarantee fund mentioned in the preceding section must consist of the promissory notes of solvent parties, approved by the board of directors and by each other, payable to the corporation or its order, and at such times, in such modes, and in such sums, with or with- out interest, and conformable in all other respects to such requirements as the board of directors prescribe ; but the amount of the notes given by any one person must not exceed in the whole the sum of five thousand dollars, exclusive of interest. Such notes must be payable absolutely and at the option of the corporation ; they must be negotiable, and may be indorsed and transferred, or converted into cash, or otherwise dealt with by the corporation, at its discretion, without reference to any con- Ml "ITAL LIFE, HEALTH, AND ACCIDENT INSURANCE. 51 tingency of losses or expenses. Such notes, or the proceeds thereof, must remain with the corporation as a fund for the better security of persons dealing with it, and constitute the assets of the corporation, liable for all its debts, obligations, and indebtedness, next after its assets from pre- miums and other sources, exclusive of capital stock, until the net earn- ings over and above its expenses, losses and liabilities shall have accumu- lated in cash, or securities in which the net earnings have been invested, to a sum which, with the capital stock, is equal to the aggregate of the original amounts of the guarantee fund and of the capital stock. Enacted March 21, 1872. Merchants Trust Co. vs. Bcntel, 10 Cal. App. 75, 77. Held, not applicable to Sec. 438. What constitutes, and deficiency in fixed capital. SBC. 489. The sum accumulated, as provided in the preceding sec- tion, together with the capital stock, shall become and remain the fixed capital of the corporation, not subject to division among the stockholders or parties dealing with it, or to be expended in any manner otherwise than may be required in payment of the corporation's debts and actual expenses, until the business of the corporation is closed, its debts paid, and its outstanding policies and obligations of every kind canceled or provided for; and if from any cause a deficiency at any time occurs in such tixed capital, no further division of profits must take place until such deficiency has been made up. Enacted March 21, 1872. Declaration of fixed capital to be filed. Sac. 440. Whenever the fixed capital of the corporation is obtained as hereinbefore provided, the president of the corporation and its act- uary, or its secretary if there is no actuary, must make a declaration in writing, sworn to before some notary public, of the amount of such fixed capital, and of the particular kinds of property composing the same, with the nature and amount of each kind, which must be filed with the original articles of incorporate n. and a copy, certified by the county clerk, must be published for at least four successive weeks in a news- pa per published in the county where the principal business of the corpo- ration is situated. Upon the filing of such declaration the guarantee fund is discharged of its obligations, and all notes of the fund remain- ing in the control of the corporation, and not affected by any lien thereon, or claim of that nature, must be surrendered by it to the makers 1 hereof respectively, or other parties entitled to receive the same. Enacted March 21, 1872. Guarantee notes and interest, how disposed of. Sec. 441. Until the guarantee fund is discharged from its obliga- tions, as provided in the preceding section, no note must be withdrawn from the fund unless another note of equal solvency is substituted there- for, with the approval of the board of directors. The corporation must allow a com mission, not exceeding five per cent per annum, on all such guarantee notes while outstanding, and also interest on all moneys paid <>n such notes by the parties liable thereon, at the rate of twelve per cent per annum, payable half yearly, until repaid by the corporation, unless the current rate of interest is different from this amount, in which 52 INSURANCE LAWS OP CALIFORNIA. case the rate payable may, from time to time, at intervals of not less than one year, be increased or reduced by the board of directors, so as to con- form to the current rate. Enacted March 21, 1872. . Amended, Stats. 1873-4, p. 210. Insured to be entitled to vote, when. Sec. 442. After the filing of the declaration of the fixed capital, as in this article provided, the holders of policies of life insurance for the term of life, on which the premiums are not in default, may vote at the elec- tion of directors, and have one vote for each one thousand dollars insured bv their policies, respectivelv. ' Enacted March 21, 1872. Number of directors may be altered, how. Sec. 443. The number of directors specified in the articles of incor- poration may be altered from time to time during the existence of the corporation by resolution, at the annual meeting of a majority of those entitled to vote at the election of directors, but the number must never be reduced below five. Enacted March 21, 1872. Limitations to the holding of stock and in other particulars, may be provided for in by-laws. Sec. 445. The corporation may, by its by-laws, limit the number of shares which may be held by any one person, and make such other provi- sions for the protection of the stockholders and the better security of those dealing with it as to a majority of the stockholders may seem proper, not inconsistent with the provisions of this title or part. Enacted March 21, 1872. Premiums, how payable. Sec. 446. All premiums must be payable wholly in cash, or one half or a greater proportion in cash, and the remainder in promissory notes bearing interest, as may be provided for by the by-laws. Agreements and policies of insurance made by the corporation may be upon the luisis of full or partial participation in the profits, or without any participa- tion therein, as may be provided by the by-laws and agreed between the parties. Enacted March 21, 1872. Policy to contain what provisions. Sec. 450. Every contract or policy of life insurance hereinafter made by any person or corporation, with and upon the life of a resident of this state, and delivered within this state, shall provide, in event of default of any premium payment after three full annual premiums shall have been paid on such policy, that without any action on the part of the in- sured, the net value of such policy based upon the reserve basis used in computing the premiums and values thereunder (the policy to specify the mortality table and rate of interest so adopted) which net value shall be at least equal to its entire net reserve at the date of default, including that of dividend additions, if any, based upon a standard not lower than the American Experience Tables of Mortality with interest at three and one half per cent yearly, less a surrender charge of not more than two and one half per cent of the face amount of the policy and of any exist- MUTUAL LIFE, HEALTH. AND ACCIDENT INSURANCE. 58 ing dividend additions thereto and less any indebtedness to the company on or secured by the policy, shall be applied as a single premium to the purchase of one of the following stipulated forms of insurance : First Paid-up non-participating term insurance in the amount of the face of the policy, plus dividend additions, if any, for such a period as the net value outlined above will. purchase at the net single premium, at the attained age of the insured at the time of the lapse, based upon the reserve basis described in the policy; provided, however, that under en- dowment contracts the term shall not extend beyond the endowment period named in the original contract, and the excess value, if any, shall be applied as a net single premium to purchase in the same manner paid-up pure endowment insurance, payable at the end of the endow- ment period named in the contract if the insured be then living; or, Second Paid-up non-participating term insurance in the amount of the face of the policy, plus dividend additions, if any, and less any out- standing indebtedness, for such a period as the net value outlined above will purchase at the net single premium, at the attained age of the insured, based upon the reserve basis described in the policy ; provided, hoWi vi r, that under endowment contracts the term shall not extend be- yond the endowment period named in the original contract, and the excess value, if any, shall be applied as a net single premium to purchase in the same manner paid-up pure endowment insurance, payable at the end of the endowment period named in the contract if the insured be then living; or, Third Paid-up non-participating insurance payable at the time and on the conditions named in the policy for such an amount as the net value outlined above will purchase at the net single premium, at the attained age of the insured, based upon the reserve basis described in the policy; provi. 01 ; 1911, p. 1272. A policy of insurance was issued of (he character known as the ordinary life divi- dend insurance policy. After the premiums had been paid for several years, a default occurred and the policy was surrendered to the company for a cash consideration. Within eighteen months after the surrender the party, upon whose life the insurance 54 INSURANCE LAWS OF CALIFORNIA. was brought, died, and an action was brought against the company based upon its alleged fraud and deceit in procuring the surrender of the policy. It was contended that the stipulation mentioned in section 450, to the effect that after payment of three full annual premiums a policy should cease to become void solely by reason of non-payment, etc., should be read into and considered a part of the policy, as if it had been actually inserted therein. The court was of the opinion, however, that this contention was not tenable, because in providing severe penalties for the omission to insert the stipulation mentioned the legislature recognized the fact that it might be left out of any policy in which event the violation of the section was a matter between the company and the state, which could not affect the terms of the policy. (Straube vs. Pacific M. L. Ins. Co., 123 Cal. 077.) This construction of the section was affirmed in Rife vs. Union Central Life Co., 129 Cal. 455. See Nielsen vs. Provident Savings Life In*. Society of \. Y 130 Cal. 332. con- struing New York statute, similar in many respects to section 450 of our Civil Code. Dividends, how made. Sec. 452. No corporation formed under the laws of this state, and transacting life insurance business, must make any dividends, except from profits remaining on hand after retaining unimpaired : (1) The entire capital stock ; (2) A sum sufficient to pay all losses reported or in course of settle- ment, and all liabilities for expenses and taxes; (3) A sum sufficient to reinsure all outstanding policies, as ascer- tained and determined upon the basis of the American Experience Trildr of Mortality, and interest at the rate of four and one half per cent per annum. Enacted, Stats. 1877-8, p. 83. Repealed, Stats. 1880, p. 72. Added, Stats. 1905, p. 57] . CHAPTER IV. MUTUAL BENEFIT AND LIFE ASSOCIATIONS. Sec. 452ff. Formation of the association. 453. Levying of assessments. By-laws which may be made. Formation of the benefit association. Sec. 452a. Associations of any number of persons may be formed for the purpose of paying the nominee of any member a sum, upon the death of the member, not exceeding three dollars for each member of the association, but not exceeding, in any case, the sum of three thousand dollars. Such association may be formed by filing articles of incorpora- tion in the office of the clerk of the county in which the principal place of business is situated and a certified copy of such articles of incorpora- tion, duly certified by the county clerk, in the office of the secretary of state. Such articles must state the name of the corporation, its general purposes, its principal place of business, its term of existence, not ex- ceeding fifty years and the names and residences of the directors selected or appointed to serve for the first year. The articles of incorporation must be signed by not less than twenty-five members of such association and must be acknowledged by them as required by section two hundred and ninety-two. Enacted, Stats. 1905, p. 411. Amended, Stats. 1913, p. 12. Levying of assessments. By-laws which may be made. Sec. 453. Each association provided for in this chapter may, on the death of a member, lew an assessment on the surviving members of not CORPORATIONS TO SAVE PROPERTY AND HUMAN LIFE. 55 exceeding three dollars for each member, and collect and pay the same to the nominee of such decedent, and may also provide for the payment of such annual payments by members as may be deemed just, but no member must be subject to any annual assessment in excess of that estab- lished when he joined the association. The association may make such by-laws not inconsistent with the laws of the state as may be necessary for its government and the transaction of its business; may, by its name, sue and be sued ; loan such funds as it may have on hand ; and own suffi- cient real (state for its business purposes and such as it may be neces- sary to purchase od foreclosure of its mortgages. Enacted, Stats. 1905. p. 411. The statute of 1873-4, page 745, as amended by the statutes of 1880, page 250, and 1901, page 6, relating to Mutual Benefit Associations, is codified in the above sections of the Civil Code (452a, 453). CHAPTER V. CORPORATIONS TO DISCOVER FIRE AND SAVE PROPERTY AND HUMAN LIFE FROM DESTRUCTION THEREBY. Sec. 45;!,'/. Powers of the corporation. A^'Mt. flight of way of corporation and its officers when running to fires. 153c. Yearly meeting of corporation, notice to be given thereof, and proceedings which may be authorized thereat. Powers of the corporation. Sec. 453a. Any corporation of underwriters heretofore organized and now existing, or which may be hereafter organized under the laws of this; state, for the purpose of discovering and preventing fires and of saving property and human life from conflagration, and doing business within any municipal corporation of this state, has power, at its own proper cost and expense, to maintain a corps of men, with proper officers, equipped with the accessary machinery and apparatus therefor, whose duly it is. so far as practicable, to discover and prevent tires and save pr< perty and human life from conflagration; and for the effective dis- cha pge of such duties, authority is hereby granted such corps to enter any building on fire, or in which property is on fire, or which such corps or any officer 1 hereof deems to be immediately exposed to any existing fire, or iu danger of taking fire from a burning building, and to remove or otherwise save and protect from conflagration or damage by water any property, during and immediately after such fire. Nothing in this chapter must be so construed as in any degree to lessen, impair, or inter- fere with the powers, privileges, duties or authority of the regular fire department of such municipality; nor can any act of such corps justify any owner of any building or property in abandoning such building or property. Enacted, Stats. 1905. p. 571. Right of way of corporations and its officers when running to fires. Sec. 4536. Such corporation, with its officers and corps, when run- ning to a fire with its horses, vehicles, and salvage apparatus, has the same right of way as is or may be bestowed by any ordinance of the municipality or law of this state upon the regular fire department of the municipality wherein such corporation is acting; but the rights of such 56 INSURANCE LAWS OF CALIFORNIA. fire department must always be paramount to the rights of such corpora- tion. All ordinances now existing or which may hereafter be passed by the municipal authorities of any city and county, or of any incorporated city or town wherein such a corporation may carry on business, and all laws of this state applicable to such city and county, or city or town, for the conviction or punishment of any person or persons wilfully or care- lessly obstructing the progress of the apparatus of the fire department of such city and county, or city or town, while going to a fire, or of any person or persons wilfully or carelessly injuring any animal or property of said fire department, are equally applicable to any person or persons wilfully or carelessly obstructing the progress of the apparatus of such corporation while going to a fire, and to any person or persons who wilfully or carelessly injures any animal or property of such corpo- ration; and said laws and ordinances, and their penalties, may be enforced in the same courts and in the same manner, and with equal force and effect, as in the case of the fire department. Enacted, Stats. 1905, p. 572. Yearly meeting of corporation, notice to be given thereof, and proceedings which may be authorized thereat. Sec. 453c. In the month of July, in every year, there must be held a meeting of all corporations created for the purposes specified in this chapter, of which ten days' previous notice must be inserted in at least one daily newspaper published in the municipality where said corpora- tion is organized or established, at which meeting each insurance com- pany, corporation, association, underwriter, agent, person, or persons doing a fire insurance business in said municipality, whether members of said corporation or not, shall have a right to be represented, and shall be entitled to one vote. A majority of the whole number so represented lias power to decide upon the question of sustaining the fire patrol organized by corporations heretofore created, or that may be hereafter created, and fixing the maximum amount of expenses which may be incurred there- for during the fiscal year next to ensue, which amount must in no case exceed two per centum of the aggregate premiums returned as received, as provided in this section, and the whole of such amount, or so much thereof as may be necessary, may be assessed upon all insurance com- panies, corporations, associations, underwriters, agents, person, or per- sons who assume risks and accept premiums for fire insurance in said municipality, as hereinbefore mentioned, in proportion to the several amounts of premiums returned, as received by each, as hereinafter pro- vided, and such assessment is collectible by and in the name of said corporation, in any court of law in the State of California having juris- diction, in such manner and at such time or times as said corporation may determine. In order to provide for the paj-ment of persons employed by said corporation, and to maintain suitable rooms, and apparatus for sav- ing life and property contemplated, said corporation is empowered to require a statement to be furnished, semiannually, by all insurance companies, corporations, associations, underwriters, agents or persons of the aggregate amount of premiums received for insuring property in the municipality where said corporation is organized or established, for and during the six months next preceding the first day of July and the first clay of January of each year, which statement must be sworn to by LIFE, HEALTH, ACCIDENT, AND ANNUITY INSURANCE. 57 the president or secretary of the corporation or association, or by the agent or person so acting or effecting such insurance in said munici- pality, and must be handed to the secretary of said corporation hereto- fore created or hereafter to be created under the provisions of this chapter within ten days after the first day of July and the first day of January of each j^ear. Said secretary must, within the ten days afore- said, by written or printed demand signed by him, require from every insurance company, corporation, association, underwriter, agent, or per- son engaged in the business of fire insurance in the municipality where said corporation is organized or established, the statement hereinbefore provided for. Such demand may be delivered personally at the office of such insurance company, corporation, association, underwriter, agent or person within said municipality, and every officer of such insurance company, corporation, association, and every such underwriter, agent or person, who, for fifteen days after said demand, neglects to render the statement herein provided for, forfeits fifty dollars for the use of said corporation, and also forfeits for its use twenty-five dollars in addition for every day he so neglects after the expiration of the said fifteen days, and such additional penalty may be computed and collected up to the time of the trial of any action brought for the recovery thereof. The penalty herein provided for may be sued for and collected, with costs, in any court of law within the State of California having jurisdiction, by and in the name of said corporation. Enacted, Stats. 1905, p. 572. The statute of 1875-6, page 689, concerning the powers of underwriters, as amended by the statute of 1897, page 22... is codified in the foregoing sections of the Civil Code (453, 6, c). CHAPTER VI. LIFE, HEALTH, ACCIDENT, AND ANNUITY OR ENDOWMENT INSURANCE ON THE ASSESSMENT PLAN. Sec. 453rf. Contracts which may be made by, defined. 453e. Formation of corporations; issuing of contracts; investments. 453/. Preexisting corporations, right of to reincorporate. 453<7. Contracts of insurance, contents and effects of. 453A. Reserve and emergency fund. 453i. Foreign corporations, conditions precedent to doing business in this state. 453;. Limitations upon right to issue contracts of insurance. 453A*. Exemptions from attachment and execution. 453Z. Statements to be filed with the insurance commissioner ; proceedings to be taken by him thereon. 453m. Lapsing of policies when forbidden. 453. Fees and penalties. 453o. Insurance commissioner to present bills for certain expenses. U53p. Exemption of fraternal societies from this chapter. Contracts which may be made by, defined. Sec. 453c?. Every contract whereby a benefit may accrue to a party or parties therein named upon the death or physical disability of a person insured thereunder, or for the payment of any sums of money dependent in any degree upon the collection of assessments or dues from persons holding similar contracts, is deemed a contract of mutual insurance upon the assessment plan. Such contracts must show that the liabilities of the insured thereunder are not limited to fixed premiums. Enacted, Stats. 1905, p. 418. 58 INSURANCE LAWS OF CALIFORNIA. T T pon the insolvency of a benefit life association organized upon the assessment plan, the reserve fund of five thousand dollars required by the act of 1891, to be held and deposited in trust for the contract-holders of the corporation, is designed as an emergency fund, to be used only in case of the insolvency of the corporation, and can not be used to pay the benefits due from the corporation while solvent, nor is it subject to any liens in favor of policyholders, nor to executions for any debts of the corporation. It must be distributed pro rata among the beneficiaries for whose benefit the policies were issued ; and neither the members of the association per capita nor its general creditors can share in the distribution. {San Francisco Savings Union vs. Long, 123 Cal. 109.) The term "contract-holders" has been defined to mean holders of contracts of life insurance, and does not include general creditors, or holders of "debenture con- tracts." who have loaned money to the company, and who have no interest in tin* trust fund until all holders of insurance have been paid therefrom. All contract- holders are entitled to share ratably in the trust funds and are all necessary parties to a distribution, which can not be had except upon a bill in equity in the nature of a creditors' bill, upon the hearing of which with all parties interested before it. the court may make distribution and appoint a receiver to carry distribution into effect. (Engwicht vs. Pacific States, etc. Co., 153 Cal. 183.) A contract issued by the Home Protective Association of Santa Barbara provid- ing that the member is entitled "to one half all necessary medical treatment, free of charge, by any local physician" and for a funeral benefit not to exceed $100.00 on the death of each contract-holder, is not a contract for service but one of insurance : Opinion of Attorney for Insurance Commissioner, February 16, 1911. Formation of corporations; issuing contracts; investments. Sec. 453c. Corporations may be formed to earry on the business of mutual insurance upon the assessment plan, and are subject only to the provisions of this chapter. No such corporation must issue contracts of insurance until at least two hundred persons have applied, in writing, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of five thousand dollars. This sum must be invested in bonds or securities, approved by the insurance commissioner of this state, or deposited in some bank in this state where it will earn interest. Said bonds or securities, or evidences of such deposit, must be placed, through the insurance commissioner of this state, with the state treasurer, and the principal sum must be held in trust for the contract- holders of such corporation, with the right in the corporation to exchangi- said bonds, securities, or evidence of bank deposit for others of like value. Such corporation must also, as a condition precedent to issuing any contracts of insurance, obtain the written certificate of the insurance commissioner that it has complied with the requirements of this chapter; and that the name of the corporation is not the same as that of any other corporation of this or other states, as indicated by the insur- ance department reports in his office ; nor must the commissioner approve any name or title so closely resembling another as to mislead the public. No corporation formed hereunder has legal existence after one year from the date of its articles, unless its organization has been completed and business commenced; nor must any corporation or individual solicit, or cause to be solicited, any business, until such corporation has com- plied with the provisions of section 633 of the Political Code. Nothing contained in this chapter shall be con trued to exempt any corporation from the provisions of sections 296 and 299 of this code. Enacted. Stats. 1905. p. 418. See note to section 453tf, ante. . . Before one of these corporations can be declared insolvent, it has a right to be heard before the insurance commissioner, and the superior court at the suit of a creditor or stockholder has no right to appoint a receiver. A complete remedy by proceeding instituted by the attorney general, after exam- ination by the commissioner, is provided by section 10 of the act of 1891. There is no other method provided in the act by which the authority of the corporation to do business can be revoked. (Murray vs. Superior Court, 129 Cal. 628.) See section 4531, post. LIFE, HEALTH, ACCIDENT, AND ANNUITY INSURANCE. 59 The act evidently contemplates that there must he such confidence in the proposed scheme that at least two hundred persons can be found who will apply for member- ship or insurance and pay in the prescribed amount of money not that any one or two promoters can evade that provision by themselves putting up some sort of security. {Stevens vs. Reeves, 13S Cal. 6S3. ) To recover upon a certificate of membership which entitled the holder to a benefit of ten thousand dollars, payable in five equal installments or endowments, five coupons being attached to the certificate for two thousand dollars each, to mature at different periods of time, on the falling due of the first coupon, after demand, the holder brought suit against the corporation and joined the treasurer of the State of California as a defendant, as the holder of securities under the act upon which the holder claimed a lien. The court gave judgment for plaintiff, and on appeal the supreme court affirmed the judgment, holding the treasurer to be a proper party defendant. (Kruger vs. Life 3, relating to life, health, accident and annuity endowment insurance on the assessment plan. CHAPTER VII. TITLE INSURANCE CORPORATIONS. Sec. 453. Title insurance companies subject to insurance laws and to insurance commissioner. 453*. Guarantee fund and investments. 453u. Title insurance surplus fund. 453t>. Policy of title insurance defined. 453w. Further powers of title insurance companies. 453#. Combined title insurance and trust company. 453//. Must have certificate of insurance commissioner. 453z. Loans to directors, officers and employees. Sec. 453s. Every title insurance company shall be subject to and shall comply with all the requirements of the insurance laws and the TITLE INSURANCE CORPORATIONS. 63 rules and regulations of the insurance department of this state, and the insurance commissioner shall have the same power and authority regard- ing any such corporation that lie may exercise in relation to other insur- ance corporations organized under the Jaws of this state, including the right to examine and inspect the financial condition and affairs of such company relating to the insurance business of such company, and to compel compliance with the provisions of law governing any such cor- poration. Stats. 1913, p. 490. Sec. 453. Every title insurance company, before issuing any guar- antee or policy of insurance shall deposit as a " guarantee fund ' ' for the benefit of the holders of such guarantees and policies of insurance, the sum of one hundred thousand dollars in the securities mentioned in sub- divisions one, two, three, four and five of section 421 of the Civil Code, in which the capital and accumulations of insurance companies are allowed by the laws of this state to be invested. Said securities shall be subject to the approval of the insurance commissioner, and shall be deposited with the treasurer of state, and said treasurer shall give his receipt therefor, and the state shall be responsible for their custody and site return. Said securities so deposited may be exchanged from time to time, with the approval of the insurance commissioner, for other securities receivable as aforesaid, and so long as the company so deposit- ing said securities shall continue solvent, said company shall have the right and shall be permitted by the state treasurer to receive the in- teresl and dividends on the securities so deposited. Said securities shall be subject to sale and transfer and to the disposal of the proceeds by said treasurer, only on the order of a court of competent jurisdiction, and for the benefit of the holders of such guarantees and policies of insurance. When any part of such deposit is made in bonds secured by mortgages or deeds of trust of real property, or in loans upon real prop- erty secured by mortgages or deeds of trust, such mortgages or deeds of trust shall be accompanied by evidence of title issued by a person, company, or corporation designated or approved by the insurance com- misioner and authorized by law or otherwise found by the insurance commissioner to be competent to issue such evidence of title. Such evi- dence of title shall consist either of a full abstract of title, a full certifi- eate of title, or a policy of title insurance, and such evidence of title shall be examined and approved by op under the direction of the insur- ance commissioner. The value of the property covered by each such mortgage or deed of trust, shall be appraised by one or more appraisers selected or approved by the insurance commissioner. The appraisers shall be residents of the county in which the property or some part thereof is situated. The reasonable cost of examining such evidence of title and of making such appraisement, shall be paid by the title insur- ance company making such deposit, and shall not exceed twenty dollars for examining the title to the property covered by each mortgage or deed of trust, nor five dollars for each appraiser, not exceeding two, besides the necessary expenses of such appraisers. Any such corpora- tion organized under the laws of this state and having a capital stock paid in, in cash, of more than one hundred thousand dollars and after 64 INSURANCE LAWS OF CALIFORNIA. depositing said guarantee fund as above provided, may invest an amount not exceeding fifty per cent of its subscribed capital stock in the prepa- ration and purchase of materials or plant necessary to enable it to en- gage in such title insurance business ; and such materials or plant shall be deemed an asset, valued at the actual cost thereof, in all statements and proceedings required by law for the ascertainment and determina- tion of the condition of such corporation, or at such lesser value as may be estimated by such corporation in any such statement or proceeding, or omitted entirely therefrom. Stats. 1913, p. 490. Sec. 453m. Every title insurance company shall annually set apart a sum equal to ten per cent of its premiums collected during the year, which sums shall be allowed to accumulate until a fund shall have been created equal in amount to twenty-five per cent of the subscribed capital stock of such corporation. Such fund shall be maintained as a further security to holders of the guarantees and policies of insurance issued by such corporation, and shall be known as the "Title insurance surplus fund"; and if at any time such fund shall be impaired by reason of a loss, the amount by which it may be impaired shall be restored in the manner hereinabove provided for its accumulation. The reporting of a loss shall be deemed an impairment of such fund for the purposes of this section. Such corporation must not make any dividends except from profits remaining on hand after retaining unimpaired : 1. The entire subscribed capital stock. 2. The amount set apart as a surplus fund under the provisions of this section. 3. A sum sufficient to pay all liabilities for expenses and taxes, and all losses reported or in course of settlement, without impairment of the title insurance surplus fund required to be set apart as hereinabove provided. Sec. 453f. Any written contract or instrument purporting to show the title to real property, or furnish information relative thereto, which shall in express terms purport to insure or guarantee such title or the correctness of such information, shall be deemed a policy of title in- surance. Stats. 1913, p. 491. Sec. 453m\ Every title insurance company organized under the laws of this state shall also have power to guarantee or insure the identity, due execution, and validity of any note or bond secured by mortgage or trust deed, and the identity, due execution and validity and recording of any such mortgage or trust deed, and the identity, due execution and validity of bonds, notes or other evidence of indebtedness issued by this state, or by any county, city and county, city, school district, irrigation trict, or other municipality or district therein, or of any private or public corporation, and to act as registrar or transfer agent of this state, or of any county, city and county, city, school district, irrigation dis- trict, or other municipality or district therein, or of any private or public corporation, and to transfer or countersign any such bonds, notes or other evidence of indebtedness and to transfer or countersign certifi- cates of stock of any private or public corporation. Stats. 1913, p. 491. TITLE INSURANCE CORPORATIONS. 65 Sec. 453;r. Any title insurance corporation incorporated under the general incorporation laws of this state, authorized by its articles of incorporation to act as executor, administrator, guardian, assignee, re- ceiver, depositary, agent or trustee, or to do a general trust business, and having a capital of not less than three hundred thousand dollars actually paid in, in cash, may also do business as a trust company, and maintain a trust department as well as a title insurance department, on compliance with the following conditions : 1. When such title insurance company desires to do such a depart- mental business, it shall first obtain the consent of both the superintend- ent of banks and of the insurance commissioner, and in its application for such consent, must file a statement making a segregation of its capital and surplus for each such department. At least two hundred thousand dollars of its capital must be apportioned by such statement to its trust department. Ihe respective portions of such capital and surplus, when such apportionment has been approved by the superintendent of banks and by the insurance commissioner, shall be considered and treated as the separate capital and surplus of each such department respectively, as if each such department was a separate business. 2. Such company, as to its title insurance department, shall be subject to and shall comply with all the requirements of the insurance laws and the rules and regulations of the insurance department of this state, and may invest its capital apportioned to its title insurance department, and the accumulations therefrom, in the securities in which the capital and accumulations of insurance companies are allowed by the laws of this state to be invested, including the materials and plant necessary to enable it to engage in the title insurance business, as provided in this chapter. 3. Such company, as to its trust department, shall be subject to and shall comply with all the requirements of the banking laws and the rules and regulations of the state banking department of this state, and may invest its capital apportioned to its trust department, and the accumula- tions therefrom, and trust funds received by it, in accordance with the laws of tli is state relative to the investment of funds of trust companies. Stats. 1913, p. 492. Sec. 453t/. No corporation shall make any contract or issue any pol- icy of guarantee or insurance affecting titles to real estate, or engage in the business of a title insurance company, until it has obtained from the insurance commissioner his certificate that such company has complied with the provisions of this chapter and is duly authorized to do business as such title insurance company; provided, hoivever, that any corpora- tion heretofore organized under the laws of this state for the purpose of issuing policies of insurance affecting title to real estate, or for the purpose of carrying on, and which is actually engaged in the business of title insurance, or of issuing policies of insurance affecting titles to real estate, shall be subject to and shall be entitled to all the rights and privileges of a title insurance company under the provisions of this chapter, by depositing with the state treasurer the guarantee fund re- quired to be deposited by title insurance corporations; provided, such deposit is made at any time prior to the first day of January, A. D. 1914, and any such corporation heretofore organized shall have the right to continue to transact such business until said date; and provided, also, 66 INSURANCE LAWS OF CALIFORNIA. that the failure to deposit said guarantee fund prior to said date shall be deemed an abandonment of all such rights and privileges. Stats. 1913, p. 492. Sec. 4532. No loan shall be made by any title insurance company, directly or indirectly, to any of its officers or directors or employees or to any member of the family of any officer or director. Any officer, director, agent or employee of any such company who knowingly con- sents to any violation of the terms or provisions of this section shall be guilty of a misdemeanor. Stats. 1913, p. 493. CHAPTER VIII. MORTGAGE INSURANCE. Sec. 453oo. Mortgage insurance companies subject to insurance laws and to insurance commissioner. 45366. Policy of mortgage insurance defined. 453cc. Capital stock of mortgage insurance companies. 4X3(1(1. Kind and amount of securities that may be guaranteed. 453ee. Guaranteed mortgages and trust deeds to be legal investments. Premiums may he paid from income. 453//. Must have certificate of insurance commissioner. 453//:]/)/>. shall be legal investments for all trust funds held by any executor, administrator, guardian, trustee or other person holding trust funds for investment, and for the funds of insurance companies, hanks, banking institutions and trust companies, and all premiums paid en such guarantys and certificates may be charged to or paid out of the income from such notes or bonds; provided, however, that if any such investment be in a mortgage participation certificate or certificates, the mortgage or mortgages and deed or deeds of trust referred to in such certificates, together with the note or notes and bond or bonds secured by the same, shall he assigned to a trust company organized and doing busi- ness under the laws of this state, and shall be held by such trust company as security for the payment of said mortgage participation certificates, including all of the mortgage participation certificates secured by such mortgages and deeds of trust so assigned, and for the performance of all of the conditions of said mortgage participation certificates imposed thereby upon the mortgage insurance company issuing the same; and such trust company shall certify on each such mortgage participation certificate, the the aggregate amount of the certificates issued, eviden- cing and conferring participation in such mortgages and deeds of trust and in the notes and bonds secured thereby, does not exceed the prin- cipal of the debts evidenced and secured by such mortgages and deeds of trust; and provided, also, that such investment shall be accompanied 68 INSURANCE LAWS OF CALIFORNIA. by a copy of the appraisement and of the certificate of the directors filed or to be filed with the insurance commissioner as required by the provisions of this chapter. Stats. 1913, p. 480. Sec. 453/*/". No corporation shall make any insurance contract or issue any policy of mortgage insurance, or engage in the business of a mortgage insurance company until it has obtained from the insurance commissioner his certificate that such company has complied with the provisions of this chapter and is duly authorized to do business as such mortgage insurance company ; provided, that any corporation heretofore organized under the laws of this state for the purpose of guaranteeing the payment of mortgages shall have the right to transact business as a mortgage insurance company until the first day of January^ A. D. 1914 ; provided, also, that the failure of such company to obtain the certificate of the insurance commissioner required by the terms of this act on or before said date shall terminate such right to transact such business until such certificate shall be obtained. Stats. 1913, p. 480. Sec. 453##. A mortgage insurance company may invest its capital and accumulations in the following named securities : 1. In the purchase of, or loans upon interest-bearing bonds of the United States, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. 2. In the purchase of, or loans upon interest-bearing bonds of any of the states of the United States not in default for interest on such bonds, including bonds of this state, or those for which the faith and credit of the State of California are pledged for the payment of principal and interest. 3. In the purchase of, or loans upon interest-bearing bonds of any of the counties and incorporated cities and towns, and duly organized school districts of any state or territory of the United States not in default for interest on such bonds. 4. In the purchase of, or loans upon interest-bearing bonds of irriga- tion districts as provided or authorized by section 8 of an act entitled "An act relating to bonds of irrigation districts, providing under what circumstances such bonds may be made legal investments for the funds of banks, banking associations, trust companies, insurance companies, and for the state school funds and trust funds, and providing for the deposit of such bonds as security for public moneys, and providing for a commission for approving certain bonds of irrigation districts, for a report thereon, for the filing of such report, for a certificate of the state controller, and for the recording of such bonds in the office of the state controller," approved December 18, 1911. 5. In loans secured by mortgage or deed of trust upon unincumbered real estate, improved or unimproved, or in the purchase of, or loans upon notes or bonds so secured; provided, that the principal so loaned, or the entire note or bond issue under such mortgage or deed of trust shall not exceed sixty per centum of the market value of such real estate with improvements taken as security; and provided, further, in case said loan is made, or said note or bond issue created for a building loan on real estate, that at no time shall the principal so loaned, or the entire note or bond issue, exceed sixty per centum of the market value of the real estate MORTGAGE INSURANCE. 69 and the actual cost of the improvements thereon taken as security. No mortgage insurance company shall invest in, hold or own any of the capital stock of any other corporation, ncr make any loan, in whole or in part, on the security of the capital stock of any other corporation. Slats. 1913. p. 481.* Sec. 453/t/i. Every mortgage insurance company shall make a report in writing to the insurance commissioner, which report shall be made quarterly, and shall be verified by the oath of its president or vice presi- dent, and its secretary or treasurer or of any two of its principal officers. Such report shall contain a statement of each new policy of mortgage insurance issued by such company since the last preceding report, stat- ing specifically whether such policy relates to an entire mortgage guar- anty, or to a mortgage participation certificate or certificates. When such policy relates to an entire mortgage guaranty, such report shall specify separately the following facts regarding the loan on which the guaranty is based, and regarding the security therefor, namely : 1. The aggregate amount of principal loaned. 2. A description of the property securing the loan. 3. Separately, the market value of the land and the market value of the improvements thereon, if any, as shown by the appraisement pro- vided for by the terms of this section, and the aggregate value of such land and improvements. 4. The book and page of the record of the mortgage or mortgages, and deed or deeds of trust securing the loan. When such policy relates to a mortgage participation certificate or certificates, such report shall specify separately in connection with each such certificate, the following facts regarding the loan or loans on which the participation certificate or certificates are based, and regarding the security or securities therefor, namely: 1. The aggregate amount of principal loaned evidenced by the note or notes, or bond or bonds secured by the mortgage or mortgages, or deed or deeds of trust referred to in such certificate or certificates, and consti- tuting the security on which such mortgage participation certificate or certificates are based, and, separately, the amount of principal secured by each such mortgage or deed of trust. 2. A description of the property securing the loan under each such security. 3. Separately, the market value of the land and the market value of the improvements thereon, if any, securing the loan under each such security, as shown by the appraisement provided for by the terms of this section, and the aggregate ^nhie of such land and improvements. 4. The book and page of the record of each such mortgage or deed of trust ('(instituting such security. 5. The aggregate amount of such participation certificates issued againsi the mortgage or mortgages, or deed or deeds of trust forming the security for such participation certificate. There shall be filed with such report an appraisement of each separate parcel of property taken as security as mentioned in such report as above required, which appraisement shall be made by a person or corporation approved by the insurance commissioner. In such appraisement the market value of each parcel of land and of the improvements thereon, if 70 INSURANCE LAWS OF CALIFORNIA. any. and the aggregate value of such parcel of land and improvements shall be stated, together with a general statement of the character of such land and of the kind and condition of such improvements, if any. Such appraisement shall be signed and verified by such appraiser, or by an officer of the corporation making such appraisement, and shall be accompanied by a certificate signed and verified by at least three direc- tors of such mortgage insurance company to the effect that in the opinion of the affiants, and each of them, such appraisement is correct, and that in their opinion the amount thereof does not exceed the market value of the property, and that the principal amount loaned on the security of such property does not in their opinion exceed sixty per centum of the market value of such property and, also, to the effect that said company has in its possession or control evidences of title consisting of either a full abstract of title, a full certificate or guaranty of title, or a policy of title insurance, showing that the mortgage or deed of trust securing such loan is a first lien upon a marketable title in fee to the property covered thereby. In case of the neglect or failure of any such mortgage insurance com- pany to make any such quarterly report as herein provided, such com- pany shall be liable therefor, and shall forfeit to the State of California ten dollars per day for every day during which such neglect or failure continues; provided, however, that the insurance commissioner shall have the authority to extend the time within which any such report may be filed for not exceeding a period of ten days. Stats. 1913, p. 482. DIVISION III. PART IV. TITLE XI. INSURANCE. Chapter I. Insurance in General. Articles I-X1I. Sees. 2527-2649. II. Marine Insurance. Articles I-IX. Sees. 2<>.">-2742-27.">7. IV. Life and Health Insurance. Sees. 27(>2-27t><>. CHAPTER I. INSURANCE IN GENERAL. Article I. Definition of Insurance. Sec. 2~)27. II. What may be Insured. Sees. 2531-2534. III. Parties to the Contract. Sees. 2538-2542. IV. Insurable Interest. Sees. 2."V4(;-2.">S. V. Concealment and Representations. Sees. 2561-2583. VI. The Policy. Sees. 2586-2599. VII. Warranties. Sees. 2603-2612. VIII. Premium. Sees. 2616-2622. IX. Loss. Sees. 2<>2l>-2<>2<>. X. Xotice of Doss. Strs. 2<>33-2<;:57. XI. Double Insurance. Sees. 2041-2042. XII. Reinsurance. Sees. 2(54C>-2(>4!>. INSURANCE IN GENERAL DEFINITION. 71 ARTICLE I. DEFINITION OF INSURANCE. Six . 2.127. Insurance, what. Insurance, what. Sec. 2527. Insurance is a contract whereby one undertakes to indem- nify another against loss, damage, or liability, arising from an unknown or contingent event. Enacted March 21, 1872. The general rule is that a policy, if delivered, takes effect from its date, unless it be otherwise stated, or unless there is evidence of a contrary intent. If the premium be paid and the policy he not delivered till afterward, the policy takes effect by rela- tion as of its date, even though a loss intervenes. ( Union Ins. Co. vs. American F. I. Co., 107 Cal. 329.) To the same effect is Crawford vs. Tranxatlu ntic, etc., Co., 125 Cal. 609. A beneficiary certificate of a fraternal association, being a contract of insurance, can not be impaired in its obligation by either party without the assent of the other, and an enactment by the association passed subsequent to the issuance of such a cer- tificate, reducing the amount payable on outstanding certificates, is not a regulation for the government of the association, but an attempt to repudiate its obligation under its contract. ( Bornttein vs. District (hand Lodge No. ), 2 Cal. App. 624, 629.) I 1 i lis Judicial Definition. "Contract with party to secure him against apprehended loss on account of his interest in particular subject-matter, and not at all incidental to or transferable with the subject-matter." (Davis vs. Phoenix Ins. Co., 111 Cal. dot). 415, 43 Pac. Rep. 1115.) (2) As to Definition and Nature or Insurance. Insurance is a contract by which the one party, in consideration of a price paid to him adequate to the risk, becomes security to the other that he shall not suffer loss, prejudice or damage by the happening of the perils specified to certain things which may be exposed to them. The principal ingredients of such a contract are the consideration, the risk and the indemnity. The consideration is the premium for the insurer's undertaking; the risk may be said to be the perils or contingencies against which the assured is protected; and the indemnity is the stipulated desideratum to be paid to the assured in case he has suffered hiss or damage through the perils and contingencies specified. (l'lii/si- ci'.> Fed. 576, 579.) As to what is an "insurance company" or "contract of insurance." see note Ann. Cms. 1!>12d. 1026. As to what is an unsurable interest in propertv, see notes, 7 Am. Dec. 42; 20 Am. Dec. 510. As to when a contract of insurance is complete, see note, 69 Am. St. Rep. 143. As to delivery and acceptance of policy, see note, 140 Am. St. Rep. 346. As to the divisibility of insurance contracts, see note, Ann. Cas. 1912c, 989. As to conditions on the back of the policy as forming part of the contract, see note, Ann. Cas. 1912b, 7. (4) CONTRACT ok Indemnity Liability Under. An insurance policy is a con- tract of indemnity against loss, and except in the case of valued insurance, the insured is entitled to recover only for the loss actually sustained, not exceeding the sum stipulated. (Whitney Estate Co. vs. Northern Assur. Co., 155 Cal. 524, 101 Pac. 911.) (5) Forfeiture for Nonpayment of Premiums. A provision in a policy of life insurance, agreeing to pay upon the death of the insured, to the beneficiary darned, the amount of the policy, "less all indebtedness to the company on this policy, together with any unpaid premium or portion of the premium for the then current year," can only apply to such unpaid premium or part thereof as was not due at the time of the death, or an extension of the time for payment which had not then expired: and must be held inapplicable to the deduction of any overdue premium for- feiting the policy as such, "except as herein provided," which exception has no reference to any overdue premium. (Burton vs. Columbian Nat. Life Ins. Co., 20 Cal. App. 21, 127 Pac. 1087.) 72 INSURANCE LAWS OF CALIFORNIA. (6) Same Construction of Exception to Forfeiture Clause. The excep- tion to the forfeiture clause, "except as herein provided," refers only to an ensuing provision in the policy, that after premiums have been paid for the period of three years, the insured may avail himself of specified options. But since in fact only one year's premiums had been paid, and the insurance policy was forfeited for nonpay- ment of the second premium when due, the forfeiture therefor was as absolute as if the words of exception had not been contained therein, and they must be disre- garded in that case. (Burton vs. Columbian Nat. Life Ins. Co., 20 Cal. App. 21, 127 Pac. 1037.) (7) A life insurance company can not be expected or required to base its business on credit for overdue premiums unpaid, looking to itself alone for their payment by deduction from the policy in case of death. Forfeiture for nonpayment is a neces- sary means of protecting the company from embarrassment. Nonpayment at the time specified, if such be the terms of the contract, involves a forfeiture. A con- struction of the policy is to be rejected, which would involve notice to policyholders that they incur no risk by defaulting payment of an annual premium for the oeriod of one year. (Burton vs. Columbian Nat. Life Ins. Co., 20 Cal. App. 21, 127 Pac. 1037.) (8) Indemnity Insurance Duty to Examine Books. Where a bond indem- nifying a corporation against the personal dishonesty or culpable negligence of its treasurer contains a condition that the corporation shall take and use all necessary steps and precautions to prevent any act or omission on the part of such employee which would tend to make the insurance company liable for any loss, such condition does not require the plaintiff corporation to examine the books of a bank in which such treasurer has deposited plaintiff's funds, knowing that such bank was insolvent. (National Surety Co. vs. Western Pac. R. Co. (C. C. A.), 200 Fed. 675, 680.) (9) Same Renewal Bond Failure to Incorporate Conditions. Where an insurance company issued to the plaintiff bank an indemnity bond, whereby it agreed to make good and reimburse the plaintiff for all pecuniary loss sustained by such bank by or through the personal dishonesty or culpable negligence of the treasurer of the plaintiff corporation, which bond was afterward extended and then renewed for a year, a condition in the application or "employer's statement" for the original bond that such treasurer could sign checks or drafts on bank accounts only with the counter-signature of the secretary of the plaintiff corporation, to which no reference was made in the extension certificate or the renewal bond, will not be considered as incorporated therein, or binding on the plaintiff corporation, since, by section 2605 of the Civil Code of California, any statement which is to be incorporated in a policy of insurance must be referred to in the policy. (National Surety Co. vs. Western Pac. Ry. Co. (C. C. A.), 200 Fed. 675.) (10) Insured Building on Leased Premises Insurable Interest of Lessee. Where a building is erected on leased ground, and the lease contains no privilege of renewal, and it is further provided that at the expiration of the lease such building was to revert to and become the property of the lessor, the insurable interest of the lessee in the building, which was destroyed by fire before the expira- tion of the lease, will be determined not by the face value of the policy, but by the value of the interest of the insured. It has been said with regard to such cases that it is not the house but the interest of the owner therein that is insured. (Sievcrs vs. Union Assur. Soc. of London, 20 Cal. App. 250, 128 Pac. 771.) (11) License Tax To Whom Applicable. A corporation offering to the medical profession a contract whereby for a stipulated annual premium such corpora- tion guarantees to defend within certain limits any suit for damages against any physician paying such amount, which suit charges the physician with civil malprac- tice, is to be considered as engaged in the insurance business within the Civil Code of California, sections 2527, 2531, 2532, 2534, so that such corporation must, as a condition precedent to the right to pursue such business, complv with the insurance laws. (Physicians' Defense Co. vs. Cooper (C. C. A.), 199 Fed.' 576.) (12) Non-waiver Agreement signed by the insured can not have the effect to waive subsequent acts upon which he relied for waiver of the requirement of proofs of loss, not included in its terms. (Bank of Anderson vs. Home Ins. Co., 14 Cal. App. 224. Ill Pac. 507.) See note to Sec. 2753, post. (13) Must be specially pleaded when relied upon as a foundation for his cause of action ; but if the necessary statement appears in the complaint, though by impli- cation, it is sufficient. (Bank of Anderson vs. Home Ins. Co., 14 Cal. App. 213, 111 Pac. 507.) (14) Notwithstanding the unequivocal and exacting terms of the policy that its conditions or provisions can not be waived except by written endorsement of such waiver on the policy, it is well settled that the insurer may be bound by a waiver by the general agent though not endorsed on the policy. (Bank of Anderson vs. Home Ins. Co., 14 Cal. App. 213, 111 Pac. 507.) INSURANCE IN GENERAL WHAT INSURED. 73 (15) Same Waiver of Proof of Loss. A provision in a policy requiring proofs of loss within a specified time is waived where the adjuster, within the time limited, states to the insured that such proofs were unnecessary, and that he would adjust the loss without them and the insured failed to make proofs because of such statements, and the company made no denial of liability until after the time had expired. (McCuUougn vs. Home Ins. Co., 155 Cal. 663, 102 Pac. 814.) See pars. 4 and 5 of note to Sees. 2753, 2754, Civil Code part, post. (16) Notice of Loss Promptness. In a contract whereby an insurance com- pany agrees to indemnify a corporation for loss sustained through the personal dis- honesty or culpable negligence of its treasurer, "immediate notice" of any loss thus occasioned means no more than that degree of promptitude which is reasonable under the circumstances. (National Surety Co. vs. Western Pac. R. Co. (C. C. A.), 200 Fed. 675, 581.) (17) Same Failure to Allege Injury by Lack of Notice. In an action on a policy of fire insurance, an answer which sets up the alleged violation of a promise made by plaintiff not to adjust any loss without first giving notice thereof to defend- ant, but which fails to show that defendant was in any way injured by such failure to notify defendant of the adjustment is insufficient. (Royal Ins. Co. vs. Caledonian Ins. Co. (Cal. App.), 129 Pac. 597, 598.) (18) Reinsurance Liability of Reinsurer. Where a policy of insurance contained a clause that "if a building or any part thereof fall, except as the result of fire, all insurance by this policy shall immediately cease," and a policy of reinsur- ance contained the identical clause and also the following: "This policy is subject to the same risks, valuations, conditions, and adjustments as are or may be taken by the reinsure!, and the loss, if any thereunder, is payable pro rata with the reinsured and at the same time and place," the fact that the original insurer paid for damage caused by the fall of a wall prior to the fire would not render the reinsurer liable for its pro rata amount under the policy. (Royal Ins. Co. vs. Caledonian Ins. Co., 20 Cal. App. 504, 129 Pac. 597.) (19) RIGHT to Share in Insurance Money. Where a house in course of con- struction was destroyed by fire, the fact that the contractor failed to protect himself from loss by insurance, does not entitle him to share in the insurance money received by the owner. (Anderson vs. Quick, 163 Gal. 658, 126 Pac. 871.) As to who are entitled, as heirs, to proceeds, see note, 44 Am. St. Rep. 404. (20) Who Entitled to Insubance Money Executrix. Where certain prop- erty bequeathed to the executrix and by her insured is, after such insurance, destroyed by fire, the Insurance money takes the place of the personal property destroyed, and passes to the executrix. (Estate of Roll., 163 Cal. 801. 127 Pac. 55.) ARTICLE IT. WHAT MAY BE INSURED. Sec. 2531. What events may be insured against. 25.^2. Insurance of lottery or lottery prize unauthorized. 2533. Usual kinds of insurance. 2534. All subject to this chapter. What events may be insured against. Sec. 2531. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against turn, may be insured against, subject to the provisions of this chapter. Enacted March 21, 1872. See note to section 2527, ante. Insurance of lottery or lottery prize unauthorized. Sec. 2532. The preceding section does not authorize an insurance for or against the drawing of any lottery, or for or against any chance or ticket in a lottery drawing a prize. Enacted March 21, 1872. 74 INSURANCE LAWS OP CALIFORNIA. Usual kinds of insurance. Sec. 2533. The most usual kinds of insurance are : (1) Marine insurance; (2) Fire insurance; (3) Life insurance ; (4) Health insurance; and, (5) Accident insurance. Enacted March 21, 1872. All subject to this chapter. Sec. 2534. All kinds of insurance are subject to the provisions of this chapter. Enacted March 21, 1872. ARTICLE III. PARTIES TO THE CONTRACT. Sec. 2538. Designation of parties. 2539. Who may insure. 2540. Who may be insured. 2541. Assignment to mortgagee of policy on thing insured. 2.">42. New contract between insurer and assignee. Designation of parties. Sec. 2538. The person who undertakes to indemnify another by a contract of insurance is called the insurer, and the person indemnified is called the insured. Enacted March 21, 1872. Who may insure. Sec. 2539. Any one capable of making a contract may be an insurer, subject to the restrictions imposed by special statutes upon foreign cor- porations, non-residents and others. Enacted March 21, 1872. Who may be insured. Sec. 2540. Any one except a public enemy may be insured. Enacted March 21, 1872. Assignment to mortgagee of policy on thing insured. Sec. 2541. Unless the policy otherwise provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mort- gagor, who does not cease to be a party to the original contract, and any act of his, prior to the loss, which would otherwise avoid the insurant-.', will have the same effect, although the property is in the hands of the mortgagee, but any act, which, under the contract of insurance, is to be performed by the mortgagor, may be performed by the mortgagee therein named, with the same effect as if it had been performed by the mortgagor. Stats. 1909, p. 914. Where a mortgagee had assigned to him a policy of insurance, as further security for the mortgage deht, and afterwards on foreclosure proceedings became the pur- chaser of the land and premises on which the mortgage was made for the full amount INSURANCE IN GENERAL INSURABLE INTEREST. 75 of his judgment and costs, it was decided that when the entire indebtedness was thus discharged his interest in the policy was extinguished. (Reynolds vs. London, etc., Ins. Co.. 128 Cal. 16.) Where mortgagor made fire insurance policy payable to his mortgagee, as her interest may appear, and policy contained provision that commencement of fore- closure proceedings on property covered would render policy void, it was held that the filing of a complaint in foreclosure did not defeat right to recover on policy. Dis- senting opinion, however, states that the holding of the majority to the effect that mortgagee is not prejudiced by failure of insured to fulfill the conditions of his contract, seems to nullify the express provisions of section 2541, Civil Code. (Sharp vs. Scottish Union, etc. .'Co.. 136 Cal. 542, 547.) Section 2541 of the Civil Code gives the rule governing the effect of the creation of an interest in a mortgagee or creditor where the policy runs to the mortgagor or debtor, and does not apply to policies which themselves provide to what extent its conditions shall apply to such interest, when created. In an action to recover on a fire insurance policy by a creditor whose debt was secured by a deed of trust of the property insured executed after the issuance of the policy without the consent of the company, by virtue of the mortgage clause in the body of the policy (being the mortgage clause in the form of policy known as the "New York Standard Form"), the interest of the mortgagee was free from all conditions expressed in the body of the policy not expressly made applicable at the time of creation of such interest. ( Welch vs. British American, etc.. Co., 14s Cal. 223, 227.) In GENERAL. Except in case of a valued policy the insured is entitled to recover under the policv onlv such loss as he has actually sustained, not exceeding the sum stipulated. {Whitney Estate Co. vs. Northern Assur. Co., 155 Cal. 521, 524, 101 Pac, Ml.) I.xstHAUi.i: Ixtkkkst of LESSEE Reversion of BuiLDiNc.s. Under this section and sections 2551 and 2588, a tenant erecting a building on the leased premises, though the lease contained no privilege of renewal and provided for a reversion of the buildings to the lessor at the end of the lease, has an insurable interest in a building erected by him. during the life of the lease, and if the building is destroyed before the end of the term, may recover the value of his interest in the building, but not the value of the building. (Sieveri vs. Union Assur. Society of London, 20 Cal. A pp. 250, 128 Pac. 771.) New contract between insurer and assignee. Sec. 2542. If an insurer assents to the transfer of an insurance from a mortgagor to a mortgagee, and, at the time of his assent, imposes fur- ther obligations on the assignee, making a new contract with him, the nets of the mortgagor can not affect his rights. Enacted March 21, 1872. ARTICLE IV. INSURABLE INTEREST. Sec. 2546. Insurable interest, what. 2.~>47. In what may consist. 2548. Interest of carrier or depositary. 2549. Mere expectancies. 2550. Measure of interest in property. 2551. Insurance without interest, illegal. 2552. When interest must exist. 2553. Effect of transfer. 2554. Transfer after loss. 2555.' Exception in the case of several subjects in one policy. 2556. In case of the death of the insured. 2.">7. In case of transfer between co-tenants. 2558. Policy, when void. Insurable interest, what. Sec. 2546. Every interest in property, or any relation thereto, or liability in reaped thereof 3 of such a nature thai a contemplated peril niiuhl directly damnify Hie insured, is an insurable interest. Enacted March 21, 1872. When- nil applicant for lire insurance in the sum of eight hundred dollars had paid the consideration for the insured property hut had taken title in the name of 76 INSURANCE LAWS OP CALIFORNIA. another as security for a loan of five hundred dollars, and asked for insurance in the name of the creditor, loss, if any, to be paid to applicant as his interest might appear, and policy was issued with full knowledge of the facts, applicant and owner of legal title had each an insurable interest in the property, and policy was construed as intended to insure interests of both. (Loring vs. Dutchess Ins. Co., 1 Cal. Ann. 186, 1S8.) See note to section 2541, ante. In what may consist. Sec. 2547. An insurable interest in property may consist in: (1) An existing interest; (2) An inchoate interest founded on. an existing interest; or (3) An expectancy, coupled with an existing interest in that out of which the expectancy arises. Enacted March 21, 1872. Interest of carrier or depositary. Sec. 2548. A carrier or depositary of any kind has an insurable interest in a thing held by him as such, to the extent of its value. Enacted March 21, 1872. Mere expectancies. Sec. 2549. A mere contingent or expectant interest in anything, not founded on an actual right to the thing, nor upon any valid contract for it. is not insurable. Enacted March 21, 1872. Measure of interest in property. Sec. 2550. The measure of an insurable interest in property is the extent to which the insured might be damnified bv lass or injury thereof. Enacted March 21, 1872. Whitney Estate Co. vs. Northern Assur. Co., 155 Cal. 521, 524. Also Sievers vs. Union Assur. Soe., 20 Cal. App. 250. See notes to section 2527, ante. Insurance without interest, illegal. Sec. 2551. The sole object of insurance is the indemnity of the insured, and if he has no insurable interest the contract is void. Enacted March 21, 1872. See notes to sections 2527 and 2550. When interest must exist. Sec. 2552. An interest insured must exist when the insurance takes effect, and w r hen the loss occurs, but need not exist in the mean time. Enacted March 21. 1872. Effect of transfer. Sec. 2553. Except in the cases specified in the next four sections, and in the cases of life, accident, and health insurance, a change of interest in any part of a thing insured, unaccompanied by a correspond- ing change of interest in the insurance, suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person. Enacted March 21, 1872. Transfer after loss. Sec. 2554. A change of interest in a thing insured, after the occur- rence of an injury which results in a loss, does not affect the right of the insured to indemnity for the loss. Enacted March 21, 1872. INSURANCE IN GENERAL CONCEALMENT AND REPRESENTATION. 77 Exception in the case of several subjects in one policy. Sec. 2555. A change of interest in one or more of several distinct things, separately insured by one policy, does not avoid the insurance as to the others. Enacted March 21, 1872. In case of the death of the insured. Sec. 2556. A change of interest, by will or succession, on the death of the insured, does not avoid an insurance ; and his interest in the insur- ance passes to the person taking his interest in the thing insured. Enacted March 21, 1872. In case of transfer between co-tenants. Sec. 2557. A transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance, even though it has been agreed that the insurance shall cease upon an alienation of the thing insured. Enacted March 21, 1872. Policy, when void. Sec. 2558. Every stipulation in a policy of insurance for the pay- ment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy executed by way of gaming or wagering, is void. Enacted, Stats. 1873-4, p. 255. Bee notes to sections 2527, 2541, and 2550, ante. ARTICLE V. CONCEALMENT AND REPRESENTATIONS. Si;< . 2561. Concealment, what. 2562. K fleet of concealment. 2563. What must be disclosed. 2564. Matters which need not be communicated without inquiry. 2565. Test of materiality. 2566. Matters which each is bound to know. 2567. Waiver of communication. 2568. Interest of insured. 2569. Fraudulent warranty. 2670. Matters of opinion. 2571. Representation, what. 2572. When made. 2573. How interpreted. -574. Representation as to future. 2575. How may affect policy. 2576. When may be withdrawn. 2577. Time intended by representation. 2578. Representing information. 2579. Falsity. 2580. Effect of falsity. 2581. Materiality. 2582. Application of provisions of this article. 2583. Right to rescind. Concealment, what. Sec. 2561. A neglect to communicate that which a party knows, and Ought to communicate, is called a concealment. Enacted March 21, 1872. The owner of a cargo of wheat which was shipped on a barge, and which was overdue, received information that a barge had been lost that morning, and imme- 78 INSURANCE LAWS OF CALIFORNIA. diately effected an insurance on the cargo, without communicating his knowledge of (he supposed loss to the insurer. The court decided the same to be a fraudulent concealment. (Hart vs. British /'. .1/. Co., 80 Cal. 440.) Effect of concealment. Sec. 2562. A concealment, whether intentional or unintentional, en- titles the injured party to rescind a contract of insurance. Enacted March 21, 1872. See note to section 2501, ante. What must be disclosed. Sec. 2563. Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are or which he believes to be material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty. Enacted March 21, 1872. See note to section 2561, ante. Matters which need not be communicated without inquiry. Sec. 2564. Neither party to a contract of insurance is bound to com- municate information of the matters following, except in answer to the inquiries of the other: 1. Those which the other knows; 2. Those which, in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant; 3. Those of which the other waives communication ; 4. Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material ; and, 5. Those which relate to a risk excepted from the policy, and which are not otherwise material. Enacted March 21, 1872. It is a general rule that when a stipulation or exception to a policy of insurance emanating from the insurer is capahle of two meanings, the one to be adopted is that which is most favorable to the insured. (Bay ley vs. Employers' L. .1. Corp., 125 Cal. 345.) Test of materiality. Sec. 2565. Materiality is to be determined not by the event; but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. Enacted March 21, 1872. Matters which each is bound to know. Sec. 2566. Each party to a contract of insurance is bound to know all the general causes which are open to his inquiry, equally with that of the other, and which may affect either the political or material perils contemplated ; and all general usages of trade. Enacted March 21, 1872. Waiver of communication. Sec. 2567. The right to information of material facts may be waived, either by the terms of insurance or by neglect to make inquiries as to such facts, where they are distinctly implied in other facts of which information is communicated. Enacted March 21, 1872. INSURANCE IN GENERAL CONCEALMENT AND REPRESENTATION. 79 Interest of insured. Sec. 2568. Information of the nature or amount of the interest of one insured need not be communicated unless in answer to an inquiry, except as prescribed by section 2587. Enacted March 21, 1872. Fraudulent warranty. Sec. 2569. An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsitv of a warranty, entitles the insurer to rescind. Enacted March 21, 1872. Matters of opinion. Sec. 2570. Neither party to a contract of insurance is bound to com- municate, even upon inquiry, information of his own judgment upon the matters in question. Enacted March 21, 1872. Representation, what. Sec. 2571. A representation may be oral or written. Enacted March 21, 1872. Where a fire insurance policy referred to a si rvey of the insured property and made it a part of the policy, the fact that the survey was not made at or hefore the execution of the policy may have deprived it of the quality of an express warranty, hut it still operated as evidence of representations made as inducement for the issu- ance of the policy, and as such was proper matter to j?o to the jury. (Rankin vs. Amazon Ins. Co., 25 Pac. Rep. 280, 2<;i ; 80 Cal, 206 on rehearing.) When made. Sec. 2572. A representation may be made at the same time with issu- ing the policy, or before it. Enacted March 21, 1872. See note to section 2571, ante. Cited, Rankin vs. Amazon /us. Co.. 25 Pac. :2i;o, 281. How interpreted. Sec. 2573. The language of a representation is to be interpreted by the same rules as the language of contracts in general. Enacted March 21, 1872. See note to section 2571 , ante. Also 2572, ante. Representation as to future. Sec. 2574. A representation as to the future is to be deemed a promise, unless it appears that it was merely a statement of belief or expectation. Enacted March 21, 1872. See note to section 2571, ante. How may affect policy. Sec. 2575. A representation can not be allowed to qualify an express provision in a contract of insurance; but it may qualify an implied warranty. Enacted March 21, 1872. See note to section 2571, ante. 80 INSURANCE LAWS OP CALIFORNIA. When may be withdrawn. Sec. 2576. A representation may be altered or withdrawn before the insurance is effected, but not afterwards. Enacted March 21, 1872. Time intended by representation. Sec. 2577. The completion of the contract of insurance is the time to which a representation must be presumed to refer. Enacted March 21, 1872. See note to section 2571, ante. Representing information. Sec. 2578. When a person insured has no personal knowledge of a fact, he may nevertheless repeat information which he has upon the subject, and which he believes to be true, with the explanation that he does so on the information of others, or he may submit the information, in its whole extent, to the insurer ; and in neither case is he responsible for its truth, unless it proceeds from an agent of the insured, whose duty it is to give the intelligence. Falsity. Sec. 2579. A representation is to be deemed false when the facts fail to correspond with its assertions or stipulations. Effect of falsity. Sec. 2580. If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time when the representation becomes false. An insured is not entitled to sue for a cancellation of his policy and to recover a ratable proportion of the premium paid, without a provision in the policy to that effect. Sections 2G10, 2617 and 2619 construed. (Joshua Hcndy M. Works vs. Insur- ance Co., 86 Cal. 248.) The fact that a survey of insured premises was not delivered until after the deliv- ery of the policy to the insured, where it was referred to in the policy and made a part "thereof in express terms, did not justify the court in excluding it as evidence. Sections 2583 and 2605 also considered. Where the policy provided that a watchman was to be employed about the premises day and night and the person employed did not watch the premises at night but slept in a building about three hundred yards from the premises, the warranty was not kept. (Rankin vs. Amazon Ins. Co., 89 Cal. 203.) Materiality. Sec. 2581. The materiality of a representation is determined by the same rule as the materiality of a concealment. Enacted March 21, 1872. Application of provisions of this article. Sec. 2582. The provisions of this article apply as well to a modifica- tion of a contract of insurance as to its original formation. Enacted March 21, 1872. Right to rescind. Sec. 2583. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right may be exercised at any time previous to the commencement of an action on the contract. Enacted, Stats. 1873-4, p. 255. Rankin vs. Amazon Ins. Co., 25 Pac. Rep. 260. 261; 89 Cal. 203, on rehearing. See note to section 2580, ante. INSURANCE IN GENERAL POLICY. 81 ARTICLE VI. THE POLICY. Sec. 2586. Policy, what. 2587. What must be specified iu a policy. 2588. Whose interest is covered. 2589. Insurance by agent or trustee. 2590. Insurance by part-owner. 2591. General terms. 2592. Successive owners. 2593. Transfer of the thing insured. 2594. Open and valued policies. 2595. Open policy, what. 2596. Valued policy, what. 2597. Running policy, what. 2598. Effect of receipt. 2590. Agreement not to* transfer. Policy, what. Sec. 2586. The written instrument, in which a contract of insurance is set forth, is called a policy of insurance. Enacted March 21, 1872/ Provisions in an insurance policy are construed so as to prevent a forfeiture, if the language will reasonably pcrmil such a construction. (O'Neill vs. Caledonian Ins. Co., 46 Cal. Dec. 359, L35 Pae. 1121.) In an action upon fire insurance policy the insurer is not entitled to have it reformed on the ground of an alleged mutual mistake as to the form of the "rider" attached thereto, by the agents of the insurer, where the rider is in the same form as thai attached to a previous policy, and the insured was not informed of any change in the rule as to the form of such "riders" until after the (ire. (4(5 Cal. Dec. 359, 135 I'ac. 1121.) What must be specified in a policy. Sec. 2587. A policy of insurance must specify : 1. The parties between whom the eontracl is made; 2. The rate of premium ; 3. The property or life insured; 4. The interest of the insured in property insured, if he is not the absolute owner thereof ; 5. The risks insured against; and, 6. The period during which the insurance is to continue. Enacted March 21, 1872. Where a contract for the hiring of a lighter provided for the payment of $3,500, after loss, it was held to be a contract of bailment merely and not insurance within the meaning of sections 2587 and 2506. (Wilmington Trans. Co: vs. O'Neil, .98 Cal. l.i The rule as to what constitutes a policy of insurance, and also when the risk shall commence, considered and stated. See note to section 2527. (Union Ins. Co. vs. American In*. Co., 11*7 Cal. 329; Crawford vs. Transatlantic, etc., Co., 125 Cal. (509, to same effect.) Where .in application for insurance stated fully that the applicant held the prem- ises upon which was situated the house insured (afterwards destroyed by fire), under a contract to purchase the same, while the policy contained a proviso to the effect that if the assured was not the sole and unconditional owner in fee of said property, the policy should be null and void, making, however, the application by reference part of the policy, the court decided that the proviso in the policy could not defeat an action brought thereon. The court, however, reduced the amount of the judgment to the sura paid on the purchase price. (Davis vs. Phc&nia Ins. Co., Ill Cal. 409.) Where a policy of insurance against loss by fire allows the premises to be used as an "auto repair shop.*' a printed condition in the policy that the insurer shall not be liable for loss occurring while more than one quart of gasoline is used or kept on the premises, does not exempt from liability for loss from a fire occurring from the ignition of several gallons of gasoline emptied from the leaking reservoir of an auto mobile brought into the shop for repair. 6 ii 82 INSURANCE LAWS OP CALIFORNIA. Under a clause in the policy forbidding the admission into the insured building of any gasoline other than contained in the tanks of machines "permanently or tempo- rarily stabled therein," the policy is not suspended by the presence on the premises at the time of the fire of several other automobiles, each containing more than one quart of gasoline in its reservoir. Under the clause in the policy suspending the insurance while more than one quart of gasoline is kept on the premises, the fact that at divers times before the fire considerable quantities of gasoline have been kept therein in addition to that in tanks of machines and that kept for use in repair work, does not avoid the policy, if no such excess is on hand at the time of the fire. (O'Neill vs. Caledonian Ins. Co., 4(5 Cal. Dec. 359, 135 Pac. 1121.) Whose interest is covered. Sec. 2588. When the name of the person intended to be insured is specified in a policy, it can be applied only to his own proper interest. Enacted March 21, 1872. Sicvcrs vs. Union Assur. Soc, 20 Cal. App. 770, 771. Insurance by agent or trustee. Sec. 2589. When an insurance, is made by an agent or trustee, the fact that his principal or beneficiary is the person really insured may be indicated by describing him as agent or trustee, or by other general words in the policy. Enacted March 21, 1872. Insurance by part owner. Sec. 2590. To render an insurance, effected by one partner or part owner, applicable to the interest of his copartners, or of other part owners, it is necessary that the terms of the policy should be such as are applicable to the joint or common interest. Enacted March 21, 1872. General terms. Sec. 2591. When the description of the insured in a policy is so general that it may comprehend any person or any class of persons, he only can claim the benefit of the policy who can show that it was in- tended to include him. Enacted March 21, 1872. In an action brought to recover unpaid premiums on several policies of fire insur- ance on certain buildings which were part of the estate of one Samuel Hancock, deceased, said estate being then in process of administration and the administratrix and the defendant, Robert Hancock, being the sole heirs of said deceased. The policies purported, respectively, to insure the estate of Samuel Hancock, deceased, against loss on the several buildings described, the evidence showing that the defendant, Robert Hancock, had procured the policies to be issued, but neither himself nor the admin- istratrix was named personally in the policies, and the latter repudiated the trans- action. There was a verdict and judgment for plaintiff, the defendant claiming he should not be held personally liable for the premiums. The supreme court affirmed the judgment, holding that the phrase "Estate of Samuel Hancock, deceased," suffi- ciently covered the interest of the defendant in the property, and that although he had no authority to procure insurance for the administratrix, yet she could have rati- fied his act, even after the occurrence of a loss. -(Phoenix Insurance Co. vs. Hancock, 123 Cal. 222.) Successive owners. Sec. 2592. A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured. Enacted March 21, 1872. INSURANCE IN GENERAL POLICY. 83 Transfer of the thing insured. Sec. 2593. The mere transfer of a thing insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thing insured. Enacted March 21, 1872, Open and valued policies. Sec. 2594. A policy is either open or valued. Enacted March 21, 1872. Open policy, what. Sec. 2595. An open policy is one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss. Enacted March 21, 1872. Valued policy, what. Sec. 2596. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specified sum. Enacted March 21, 1872. Wilmington T. Co. vs. O'Neil, 98 Cal. 1, 7. See note to section 2587, ante. Whitney Estate Co. vs. Northern Assur. Co.', 155 Cal. 521, 524. See note to section 2541, ante. Running policy, what. Sec. 2597. A running policy is one which contemplates successive insurances, and which provides that the object of the policy may be from' time to time defined, especially as to the subjects of insurance, by addi- tional statements or indorsements. Enacted March 21, 1872. Effect of receipt. Sec. 2598. An acknowledgment in a policy of the receipt of pre- mium is conclusive evidence of its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid. Enacted March 21, 1872. An agent for an insurance company delivered a policy for one thousand dollars to the owner of a barn, and at the same time agreed, verbally, to credit the owner on the premium for a period of five months. The barn was destroyed by fire before the period of credit expired, and the company refused to pay the loss, for the reason that i li<- agent had exceeded his authority in granting a longer time of credit than sixty days. The policy contained no express acknowledgment of payment, but recited a i "nsideration. It did not contain, however, a proviso that the company should not be liable by virtue of the policy, or any renewal thereof, until the premium therefor had been actually paid. On appeal the supreme court decided that the agent having authority to grant a credit on the premium the unconditional delivery of the policy by him to the owner waived the general provision of non-liability until after payment of the premium contained in the policy. (Famum vs. Phoenix Ins. Co., 83 Cal. 246.) In a similar case and upon a like policy, where promissory notes were given for i In- premium, and where the policy recited that the premium had been paid, it was decided that the company was estopped to deny payment, and that the proviso for non-liability of the company until after actual payment of the premium set forth in the policy, was waived. {Palmer vs. Continental Ins. Co., 132 Cal. 68.) Agreement not to transfer. Sec. 2599. An agreement made before a loss, not to transfer the claim of a person insured against the insurer, after the loss has hap- pened, is void. Enacted March 21, 1872. 84 INST TRANCE LAWS OP CALIFORNIA. ARTICLE VII. WARRANTIES. Sec. 2003. Warranty, express or implied. 2004. Form. 2(50."). Express warranties to be in policy. 2000. Past, present, and future warranties. 2(507. Warranty as to past or present. 2005. Warranty as to the future. 2609. Performance excused. 2010. What acts avoid the policy. 2011. Policy may provide for avoidance. 2(512. Breach without fraud. Warranty, expressed or implied. Sec. 2603. A warranty is either expressed or implied. Enacted March 21, 1872. A policy of insurance on a combined harvester provided that risk assumed should be while in use in Tulare County. It was destroyed by fire while not in use. hut while housed in a shed. It was decided by the court that the company was not liable on the policy. (Stinkard vs. Manchester, etc. Co., 122 Cal. r>95.) Form. Sec. 2604. No particular form of words is necessary to create a warranty. Express warranties to be in policy. Sec. 2605. Every express warranty, made at or before the execution .of a policy, must be contained in the policy itself, or in another instru- ment signed by the insured and referred to in the policy, as making a part of it. Enacted March 21, 1872. Amended, Stats. 1873, p. 255. Rankin vs. Amazon F. Ins. Co., 2.1 Pac Rep. 200, 261; 89 Cal. 203, on rehearing. See note to section 2.~>so. ante. Past, present and future warranties. Sec. 2606. A warranty may relate to the past, the present, the future, or to any or all of these. Enacted March 21, 1872. A stipulation in a fire policy that the insurance company should not be liable for loss caused directly or indirectly by order of any civil authority, is not a warranty, but where (be supervisors of a county ordered tires to start to destroy insects, the fact that such supervisors bad authority under the law to start the fires, was sufficient to relieve an insurer of grain destroyed thereby from liability under a provision of the policy that the insurer should not be liable for loss occasioned by order of any civil authority, although the burning of the grain w r as occasioned by the fire getting beyond control. (Conner vs. Manchester Assw. Co., 130 Fed. Rep. 740, 743-4.) Warranty as to past or present. Sec. 2607. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as a fact, is an express warranty thereof. Enacted March 21, 1872. The statement in a policy to the effect that the insurers were the owners of the property insured, while in fact they were stockholders and creditors of a corporation, which was solvent: held to make the policv void. ( M cCormick .vs. Springfield F. & M. I. Co., 66 Cal. 301.) Overvaluation, failure to keep a watchman, and leasing without consent, held to avoid policy in which such conditions were contained. Sections 2607 and 2012 cited. (Wenzcl vs. Commercial Ins. Co., 07 Cal. 43S.) INSURANCE IN GENERAL WARRANTIES. 85 Where insured made a statement to the insuring company that the property ahout to he insured had been leased to a certain firm which lease was merely verbal held out to vitiate the policy. (National Bank vs. Union Ins. Co., 88 Gal. 407.) Cornier vs. Manchester Assur. Co.. lot) Fed. Rep. 740-74-1. See note to section 260(3, ante. Warranty as to the future. Sec. 2608. A statement in a policy, which imports that it is intended 1<> do or not to do a thing which materially affects the risk, is a warranty that such act or omission shall take place. Enacted March 21, 1872. An action commenced against a surety company resulted in favor of the company, a judgment of nonsuit having been entered. The action was on a bond to indemnify .in employer against the dishonesty of his cashier and bookkeeper. In his application for the bond, in answer to questions, he stated that all the books and accounts of his employee would be examined and audited, and all moneys, securities, vouchers, and property also would be examined and verified, by himself daily, and that these answers and representations were true and should be held to form the basis of the contract for the proposed bond. During an absence of four days of the employer the cashier absconded with his employer's money. In affirming the judgment on an appeal there- from, the supreme court said: "It is apparent at a glance that the employer com- mitted a breach of the contract of indemnity in failing to examine the books, etc., for four days." < Young vs. Pacific Surety Co., 137 Cal. 596.) Conner vs. Manchester Assur. Co.. 130 Fed. Rep. 743-744. See note to section 2000. ante. Performance excused. Sec. 2609. When, before the time arrives for the performance of a warranty relating to the future, a loss insured against happens, or per- formance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not avoid the policy. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 255. What acts avoid the policy. Sec. 2610. The violation of a material warranty, or other material provision of a policy, on the part of either party thereto, entitles the other to rescind. Enacted March 21, 1872. Joshua Bendy 1/. Works vs. American S. li. his. Co., 80 Cal. 248, 251. See note to section 2580, ante. Policy may provide for avoidance. Sec. 2611. A policy may declare that a violation of specified pro- visions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy. Enacted March 21, 1872. See note to section 2007, anie. The ordinary negligence of the insured and his agents is a risk which the insurer takes upon himself, and the existence of which does not absolve him from liability. But where Hie insured warranto, in case the property insured was idle and not in use. to have a watchman on duty constantly day and night in and immediately about the buildings or works, he bound himself to the performance of specific acts from which no negligence could exonerate him. regardless of whether material to the risk or not. ( McKenzie vs. Scottish U. d N. Jns. Co., 112 Cal. 54S, 558-9.) See note to section 2021). post. So where a policy provided that it should be void if dynamite were kept, used or allowed on the premises, a violation of such condition precluded a recovery on the policy though the dynamite did not cause the tire. (Bastian vs. British American, < ir.. Co.. 143 Cal. 287, 291 1 Where a tender of premium and all sums due was made within a reasonable time after premium was (\\\(\ the action of the company in refusing to accept payment on i he -round that policy had been forfeited, was upheld. (D'Orlx vs. Bankers' d Merchants' M. L. Assn.. l<; Fed. Elep. 355, 356.) 86 INSURANCE LAWS OF CALIFORNIA. Agreements of Parties. The parties to a contract of insurance have a legal right to agree that upon the happening of a certain event there should be no neces- sity for an inquiry as to the increase of the risk therefrom and that the mere event should at ouce terminate the insurance, and having done so the insurer is lawfully entitled to the advantage thereof. {Fountain vs. Connecticut Fire Ins. Co., 158 Cal. 760, 139 Am. St. Rep.217, 112 Pac. 546.) Building Falling. Effect of clause in a policy of insurance providing that if a building or any part thereof fall except as a result of fire, all insurance on such build- ing or its contents shall immediately cease, when considered with this section, is that the question whether the falling of a part of the building increased the fire risk or not is wholly immaterial, provided the part of the building which had fallen at the time the fire started was a material or important part of it. (Fountain vs. Conm cli- ent Fire Ins. Co., 158 Cal. 760, 139 Am. St. Rep. 217, 112 Pac. 546.) Insurer Is Bound by Tins Statutory Declaration of Law whether it accords with justice or not and by a provision in a policy that upon the happening of a given event all insurance shall immediately cease, as this in substance is the same as the statutory declaration. (Fountain vs. Connecticut Fire Ins. Co., 158 Cal. 760, 139 Am. St. Rep. 217, 112 Pac. 546.) Breach without fraud. Sec. 2612. A breach of warranty, without fraud, merely exonerates an insurer from the time that it occurs, or where it is broken in its incep- tion prevents the policy from attaching to the risk. Enacted March 21, 1872. See note to section 2607, ante. ARTICLE VIII. PREMIUM. Sec. 2616. When premium is earned. 2617. Return of premium. 2618. When not allowed. 2619. Return for fraud. 2620. Over-insurance by several insurers. 2621. Contribution. 2622. Proportionate contribution. When premium is earned. Sec. 2616. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Joshua Hendi/ M. Works vs. American 8. B. Ins. Co., S6 Cal. 248, 252. See note to section 2580, ante. 14 Cal. App. 222 (cited). Return of premium. Sec. 2617. A person insured is entitled to a return of premium, as follows : 1. To the whole premium, if no part of his interest in the thing insured be exposed to any of the perils insured against. 2. "Where the insurance is made for a definite period of time, and the insured surrenders his policy, to such proportion of the premium as corresponds with the unexpired time, after deducting from the whole premium any claim for loss or damage under the policy which has pre- viously accrued. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 256. Joshua Bendy M. Works vs. American 8. B. Ins. Co., 86 Cal. 248, 252. See note to section 2580, ante. Under an agreement between an insurance company and its general agents whereby the agents were to receive as compensation thirty-five per cent of the gross premiums "after deducting all return premiums, rebates and reinsurances," they were properly chargeable with all return premiums on surrendered policies after being credited with thirty-five per cent of the full amount of insurance written by them, and as this INSURANCE IN GENERAL PREMIUM, LOSS. 87 arrangement necessarily contemplated that return premiums might be payable after the termination of the agency, there could be no immediate settlement of accounts on termination of the agency. {Milwaukee Mechanics' Ins. Co. vs. Warren, 150 Cal. 346, 354.) When not allowed. Sec. 2618. If a peril insured against has existed, and the insurer lias been liable for any period, however short, the insured is not entitled to return of premiums, so far as that particular risk is concerned. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 256. Joshua Wendy M. Works vs. American & B. Ins. Co., 86 Cal. 248, 252. See note to section 2580, ante. Bank of Anderson vs. Home Ins. Co., 14 Cal. App. 222 (cited). Return for fraud. Sec. 2619. A person insured is entitled to a return of the premium when the contract is voidable, on account of the fraud or misrepresenta- tion of the insurer, or on account of facts, of the existence of which the insured was ignorant without his fault ; or when, by any default of the Insured oilier than actual fraud, the insurer never incurred any liability under the policv. Enacted March 21, 1872. Joshua Bendy M. Works vs. American 8. B. Tns. Co., 86 Cal. 248, 252. See note to section 2580, ante. Bank of Anderson vs. Home Ins. Co.. 14 Cal. App. 222 (cited). Over-insurance by several insurers. Sec. 2620. In case of an over-insurance by several insurers, the in- stiled is entitled to a ratable return of the premium, proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk. Enacted March 21, 1872. Contribution. Sec. 2621. When an over-insurance is effected by simultaneous poli- cies, the insurers contribute to the premium to be returned in proportion to the amount insured bv their respective policies. Enacted March 21, 1872. Proportionate contribution. Sec. 2622. When an over-insurance is effected by successive policies, those only contribute to a return of the premium who are exonerated by prior insurances from the liability assumed by them, and in proportion as the sum for which the premium was paid exceeds the amount for which, on account of prior insurance, they could be made liable. Enacted March 21, 1872. ARTICLE IX. . LOSS. Sec. 202(1. Perils remote and proximate. 2627. Loss incurred in rescue from peril. 262S. Excepted perils. 2020. Negligence and fraud. Perils, remote and proximate. Sec. 2626. An insurer is liable for ?i loss of which a peril insured againsl was the proximate cause; although a peril not contemplated by 88 INSURANCE LAWS OF CALIFORNIA. the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause. Enacted March 21, 1872. Construction. This section makes the insurer liable when the peril insured against was the proximate cause of the loss, although a peril not contemplated may have been the remote cause. (Pacific Hcatinq and )'. Co. vs. Williamsburgh City Fire Ins. Co., 158 Cal. 367, 11 Pac. 4.) As to the construction of an insurance policy and the exceptions and reservations therein, see Pacific Heating and V. Co. vs. Williamsburgh City Fire Ins. Co., MS Cal. 3(57, 111 Pac. 4. Loss incurred in rescue from peril. Sec. 2627. An insurer is liable where the thing insured is rescued from a peril insured against, that would otherwise have caused a loss, if in the course of such rescue the thing is exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part ; or where a loss is caused by efforts to rescue the thing insured from a peril insured against. Enacted March 21, 1872. Excepted perils. Sec. 2628. Where a peril is specially excepted in a contract of insur- ance, a loss, which would not have occurred but for such peril, is thereby excepted; although the immediate cause of the loss was a peril which was not excepted. Enacted March 21, 1872. Sec note t< section 2626, ante. Negligence and fraud. Sec. 2629. An insurer is not liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence of the in- sured, or of his agents or others. Enacted March 12, 1872. Amended, Stats. 1873-4, p. 256. See note to section 2580, ante. A policy of insurance provided that a watchman should be kept in and upon the premises insured day and night. The lower court found that a watchman was not kept thereon from and after the hour of ten o'clock nightly until an early hour of each morning thereafter, and that no watchman was in or upon said premises at the hour of ten o'clock of the night when the fire occurred. It was claimed by the plain- tiff that the insurer was not exonerated in consequence of the negligence f t he watchman, but the court decided that plaintiff could not recover. (Trojan M. Co. vs. Fireman's Ins. Co., 67 Cal. 27.) Where a watchman was employed, and at the time the fire occurred he was stand- ing on a tramway sixty-live feet away from the mill insured, but on higher ground, the warrant v was held to be complied with. (Sierra Milling, etc.. Co. vs. Hartford Fire Ins. Co.. 76 Cal. 287.) A warranty contained in a policy of insurance of a sawmill provided that in case the mill was shut down one or more watchmen should be on duty, constantly, day and night, in and immediately about the buildings and works: and further, that if the buildings and works should remain idle for more than thirty days notice thereof should be given to the insurer. The mill was shut down for more than three months, and the watchman employed did not remain on duty later than ten o'clock each night, when he retired. He slept in a house about three hundred yards away, from which the mill was only partially visible. The mill w r as destroyed by fire at 11 :15 o'clock in the night. Notice that the mill had been idle was not given. The court held that both warranties had been violated and that plaintiff was not entitled to recover. (McKenzie vs. Scottish U. & N. Ins. Co.. 112 Cal. 548.) Where an insurance company was sued for loss of an insured vessel wrecked by Moating ice in Behring sea. an allegation in the answer that the vessel was sailed into INSURANCE IN GENERAL NOTICE OF LOSS. 89 the ice with knowledge of the danger to he encountered, is nol an allegation that the loss was caused by the wilful act of the insured, hut an allegation of negligent devia- tion, which would constitute no defense to liability. (Nome Beach L. & T. Co. vs. Munich Atsur. <'<>.. 123 Fed. Rep, 820.) The conduct of the master of a vessel on a voyage to Alaska in forcing vessel through floating ice with knowledge of the danger, was not mere negligence, but wil- ful omission to" perform his legal duty. (Standard Marine Ins. Co. vs. Nome Beach L. & T. Co., 133 Fed. Rep. 636.) ARTIOLF X. NOTICE OF LOSS. SEC. 263a Notice of loss. 2633a. Time for giving notice of accident, etc. 2634. Preliminary proofs. Lie,: jr.. Waivers of defects in notice, etc. 2636. Waiver of delay. '2(h\~. Certificate, when dispensed with. Notice of loss. Sec. 2633. In case of loss upon an insurance against fire, an insurer is exonerated, if notice thereof be not given to him by some person insured, or entitled to the benefit of the insurance, without unnecessary delay. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 256. Time for giving notice of accident, etc. Sec. 2633a. No conditions, stipulations or agreements contained in any application for insurance in any foreign or domestic casualty or accident insurance company, or contained in any policy issued by any such company, or in any way made by any such company, limiting the time within which notice of the accident or injury, or death, shall be given to such company to a period of less than twenty days after the happening of the accident, or injury, or death, shall be valid. Said notice may be given to the company insuring, at any time within twenty days after the happening of the accident, or injury, or death and shall be valid and binding on the company. Enacted June 6, 1913. In effect Aug. 10, 1913. Stats of 1913. p. 677. Preliminary proofs. Sec. 2634. When preliminary proof of loss is required by a policy, the insured is not bound to give such proof as would be necessary in a court of justice: but it is sufficient for him to give the best evidence which he has in his power at the time. Enacted March 21, 1872. Waivers of defects in notice, etc. Sec. 2635. All defects in a notice of loss, or in preliminary proof thereof, which the insured might remedy, and which the insurer omits to specify to him, without unnecessary delay, as grounds of objection, are waived. Enacted March 21, 1872. At the trial of an action to recover upon an insurance policy, it was contended ilwit the insurer was entitled to an instruction to the jury to the effect that if they found that the plaintiff, in his proof of loss made to the company, had made any false statements, he could not recover; also, that the plaintiff could not recover if they found that plaintiff had refused to submit the matter of loss to arbitration. On appeal the supreme court sustained the action of the lower court, holding that fraud had not been properly charged or pleaded, and that the stipulation which provided for arbitration was too indefinite. (Greiss vs. State Inv. Ins. Co., 98 Cal. 241.) 90 INSURANCE LAWS OP CALIFORNIA. Waiver of delay. Sec. 2636. Delay in the presentation to an insurer of notice or proof of loss is waived, if caused by any act of his, or if he omits to make objection promptly and specifically upon that ground. Enacted March 21, 1872. Certificate, when dispensed with. Sec. 2637. If a policy requires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is suffi- cient for the insured to use reasonable diligence to procure it, and in case of the refusal of such person to give it, then to furnish reasonable evidence to the insurer that such refusal was not induced by any just grounds of disbelief in the facts necessary to be certified. Enacted March 21, 1872. A policy of insurance provided that in case of loss the insured should forthwith give notice thereof and should also produce a certificate under the hand and seal of the nearest magistrate or notary public not concerned in the loss, nor related to the assured, stating that he had examined the circumstances attending the loss, knew the character and circumstances of the assured, and verily believed that the loss had been sustained without fraud. The nearest magistrate refused to make the certifi- cate required, for the reason that he had been employed by the company to take some affidavits, and another signed the same. Under these circumstances the certificate was held by the court to have been properly made and furnished. (Noone vs. Trans- ail antic F. Ins. Co., 88 Cal. 152.) ARTICLE XI. DOUBLE INSURANCE. Sec. 2641. Double insurance. 2642. Contribution in case of double insurance. Double insurance. Sec. 2641. A double insurance exists where the same person is insured by several insurers separately in respect to the same subject and interest. Enacted March 21, 1872. Contribution in case of double insurance. Sec. 2642. In case of double insurance, the several insurers are liable to pay losses thereon as follows : 1. In fire insurance, each insurer must contribute ratably towards the loss, without regard to the dates of the several policies. 2. In marine insurance, the liability of the several insurers for a total loss, whether actual or constructive, where the policies are not simultaneous, is in the order of the dates of the several policies; no liability attaching to a second or other subsequent policy, except as to the excess of the loss over the amount of all previous policies on the same interest. If two or more policies bear date upon the same day, they are deemed to be simultaneous, and the liability of insurers on simultaneous policies, is to contribute ratably with each other. The insolvency of any of the insurers does not affect the proportionate liability of the other insurers. The liability of all insurers on the same marine interest for a partial or average loss, is to contribute ratably. Enacted March 21. 1872. Amended. Stats. 1873-4. p. 257. INSURANCE IN GENERAL REINSURANCE. 91 ARTICLE XII. REINSURANCE. Sec. 2646. Reinsurance, what. 2647. Disclosures required. 2648. Reinsurance presumed to be against liability. 2649. Original insured has no interest. Reinsurance, what. Sec. 2646. A contract of reinsurance is one by which an insurer procures a third person to insure him against lo v s or liability by reason of such original insurance. Enacted March 21, 1872. After notice of loss the insurer and reinsurer consulted and agreed that the claim was illegal and should be contested. On suit being brought the original insurer aban- doned its defense and compromised without notice to the reinsurer. The reinsurer was held to be exonerated. (Commercial Union Assurance Co. vs. American Central Insurance Co. r 68 Cal. 430.) Where policy of reinsurance provides for no past loss, it will not be given a retro- spective effect. (Union Ins. Co. vs. American F. Ins. Co., 107 Cal. 327.) Where a contract by which one insurance company assumes all the policies and risks of another like company, the former is primarily liable to the insured, and in case of loss may be sued directly on its obligation by the insured. (Whitney vs. American Ins. Co., 127 Cal. 464.) Disclosures required. Sec. 2647. Where an insurer obtains reinsurance, he must commu- nicate all the representations of the original insured, and also all the knowledge and information he possesses, whether previously or subse- quently acquired, which are material to the risk. Enacted March 21, 1872. Reinsurance presumed to be against liability. Sec. 2648. A reinsurance is presumed to be a contract of indemnity against liability, and not merely against damage. Enacted March 21, 1872. Union Ins. Co. vs. American F. Ins. Co., 107 Cal. 327, 330. See note to section 2646, ante. Original insured has no interest. Sec. 2649. The original insured has no interest in a contract of reinsurance. Enacted March 21, 1872. Commercial Union Assur. Co. vs. American Cent. his. Co., 68 Cal. 431, 433. See note tc section 2646, ante. 92 INSURANCE. LAWS OP CALIFORNIA. CHAPTER II. MARINE INSURANCE. Article I. Definition of Marine Insurance. Sec. 2G55. II. Insurable Interest. Sees. 2659-2665. III. Concealment. v Sees. 2669-2672. IV. Representation. Sees. 2676-2677. V. Implied Warranties. Sees. 2681-2688. VI. The Voyage, and Deviation. Sees. 2692-2697. VII. Loss. Sees. 2701-2712. VIII. Abandonment. Sees. 2716-2732. IX. Measure of Indemnity. Sees. 2736-2746. ARTICLE I. DEFINITION OF MARINE INSURANCE. SEC. 2655. Marino insurance, what. Marine insurance, what. Sec. 2655. Marine insurance is an insurance against risks connected with navigation, to which a ship, cargo, freightage, profits, or other insurable interest in movable property, may be exposed during a certain voyage or a fixed period of time. Enacted March 21, 1872. Insurance of a vessel against perils of the sea covers a loss by stranding or colli- sion, notwithstanding the loss results from the negligence of the master or crow. (American-Hawaiian 8. 8. Co. vs. Bennett, 207 Fed. 510.) Where a lighter, being operated in the usual way in the tide waters of Napa creek by means of a gasoline launch, strikes one of the hanks of the stream, the loss is within a policy insuring against perils of the sea. {American-Hawaiian S. 8. Co. vs. Bennett, 207 Fed. 510.) As to what is "peril of the sea" within a marine insurance policy, see note in Ann. Cas. 1912d, 1038. ARTICLE II. INSURABLE INTEREST. Sec. 2650. Insurable interest in a ship. 2(5(50. Interest reduced by bottomry. 2(5(51. Freightage, what. 2(5(52. Expected freightage. 2663. Interest in expected 'freightage, what. 2664. Insurable interest in profits. 2665. Insurable interest of charterer. Insurable interest in a ship. Sec. 2659. The owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who covenants to pay him its value in case of loss. Enacted March 21, 1872. Interest reduced by bottomry. Sec. 2660. The insurable interest of the owner of a ship hypothe- cated by bottomry is only the excess of its value over the amount secured by bottomry. ' Enacted March 21, 1872. Freightage, what. Sec. 2661. Freightage, in the sense of a policy of marine insurance. signifies all the benefit derived by the owner, either from the chartering of the ship or its employment for the carriage of his own goods or those of others. Enacted March 21, 1872. INSURANCE IN GENERAL CONCEALMENT. 93 Expected freightage. Sec. 2662. The owner of a ship has an insurable interest in expected freightage which he would have certainly earned but for the interven- tion of a peril insured against. Enacted March 21, 1872. Interest in expected freightage, what. Sec. 2663. The interest mentioned in the last section exists, in the case of a charter-party, when the ship has broken ground on the char- tered voyage, and if a price is to be paid for the carriage of goods when they arc actually on board, or there is some contract for putting them on board, and both ship and goods are readv for the specified voyage. Enacted March 21, 1872. Insurable interest in profits. Sec. 2664. One who has an interest in the thing from which profits are expected to proceed, has an insurable interest in the profits. Enacted March 21, 1872. Insurable interest of charterer. Sec. 2665. The charterer of a ship has an insurable interest in it. to the extent that he is liable to be damnified by its loss. Enacted March 21, 1872. ARTICLE III. CONCEALMENT. Sec. l'i'.i;:). [nformation must be communicated. 2670. Materia] information. 2871. Presumption of knowledge of loss. 272. Concealments which only affect the risk in question. Information must be communicated. Sec. 2669. In marine insurance each party is bound to communicate, in addition to what is required by section 2563, all the information which he possesses, material to the risk, except such as is mentioned in sec- tion 2564, and to state the exact and whole truth in relation to all matters that he represents, or upon inquiry assumes to disclose. Enacted March 21, 1872. Material information. Sec. 2670. In marine insurance, information of the belief or expec- tation of a third person, in reference to a material fact, is material. Enacted March 21, 1872. Presumption of knowledge of loss. Sec. 2671. A person insured by a contract of marine insurance is presumed to have had knowledge, at the time of insuring, of a prior loss, if the information might possibly have reached him in the usual mode of transmission, and at the usual rate of communication. Enacted March 21, 1872. Concealments which only affect the risk in question. Sec. 2672. A concealment in a marine insurance, in respect to any of the following matters, does not vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed. 1. The national character of the insured; 2. The liability of the thing insured to capture and detention ; 1)4 INSURANCE LAWS OF CALIFORNIA. 3. The liability to seizure from breach of foreign laws of trade ; 4. The want of necessary documents ; and, 5. The use of false and simulated papers. Enacted March 21, 1872. ARTICLE IV. REPRESENTATIONS. Sec. 2676. Effect of intentional falsity. 2677. Representation of expectation. Effect of intentional falsity. Sec. 2676. If a representation, by a person insured by a contnid of marine insurance, is intentionally false in any respect, whether material or immaterial, the insurer mav rescind the entire contract. Enacted March 21, 1872. Representation of expectation. Sec. 2677. The eventual falsity of a representation as to expectation does not, in the absence of fraud, avoid a contract of insurance. Enacted March 21, 1872. ARTICLE V. IMPLIED WARRANTIES. Sec. 2681. Warranty of seaworthiness. 2682. Seaworthiness, what. 2683. At what time seaworthiness must exist. 2684. What things are required to constitute seaworthiness. 2685. Different degrees of seaworthiness at different stages of the voyage. 2686. Unseaworthiness during the voyage. 2687. Seaworthiness for purposes of insurance on cargo. 2688. Neutral papers. Warranty of seaworthiness. Sec. 2681. In every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject of marine insurance, a warranty is implied that the ship is seaworthy. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 257. Kven if there be no technical warranty of seaworthiness, failure to provide the vessel with ground tackle reasonably fit to perform the services and meet the ordinary exigencies of the voyage contemplated, was a breach of implied warranty of sea- worthiness. (Pope vs. The Swiss Lloyd Ins. Co., 4 Fed. Rep. 153.) Seaworthiness, what. Sec. 2682. A ship is seaworthy, when reasonably fit to perform the services, and to encounter the ordinary perils of the voyage, contem- plated by the parties to the policy. Enacted March 21, 1872. At what time seaworthiness must exist. Sec. 2683. An implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk, except in the following cases : 1. When the insurance is made for a specified length of time, the implied warranty is not complied with unless the ship be seaworthy at INSURANCE IN GENERAL IMPLIED WARRANTIES. 95 the commencement of every voyage she may undertake during that time; and, 2. When the insurance is upon the cargo, which, by the terms of the policy, or the description of the voyage, or the established custom of the trade, is to be transshipped at an intermediate port, the implied warranty is not complied with, unless each vessel upon which the cargo is shipped, or transshipped, be seaworthy at the commencement of its particular voyage. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 257. See note to section 2571, ante. What things are required to constitute seaworthiness. Sec. 2684. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but. requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurte- nances and equipments, such as ballast, cables, and anchors, cordage and sails, food, water, fuel, and lights, and other necessary or proper stores and implements for the voyage. Enacted March 21, 1872. Different degrees of seaworthiness at different stages of the voyage. Sec. 2685. Where different portions of the voyage contemplated by a policy different in respect to the things requisite to make the ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each portion, the ship is seaworthy with refer- ence to that portion. Enacted March 21, 1872. Unseaworthiness during voyage. Sec. 2686. When a ship becomes unseaworthy during the voyage to which an insurance relates, an unreasonable delay in repairing the defect exonerates the insurer from liability from any loss arising llicrefrom. Enacted March 21, 1872. Seaworthiness for purposes of insurance on cargo. Sec. 2687. A ship which is seaworthy for the purpose of an insur- ance upon the ship may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of insurance upon the cargo. Enacted March 21, 1872. Neutral papers. Sec. 2688. Where the nationality or neutrality of a ship or cargo is exprt ssly warranted, it is implied that the ship will carry the requisite documents to show such nationality or neutrality, and that it will not carry any documents which cast reasonable suspicion thereon. Enacted March 21, 1872. 96 INSURANCE LAWS OF CALIFORNIA. ARTICLE VI. THE VOYAGE, AND DEVIATION. Sec. 2602. Voyage insured, how determined. 2693. Course of sailing, how determined. 2694. Deviation, what. 2695. When proper. 2696. When improper. 2697. Deviation exonerates the insurer. Voyage insured, how determined. Sec. 2692. When the voyage contemplated by a policy is described by the places of beginning and ending, the voyage insured is one which conforms to the course of sailing fixed by mercantile usage between those places. Enacted March 21, 1872. Course of sailing, how determined Sec. 2693. If the course of sailing is not fixed by mercantile usage, the voyage insured by a policy is the way between the places specified which, to a master of ordinary skill and discretion, would seem the most natural, direct and advantageous. Enacted March 21, 1872. i Deviation, what. Sec. 2694. Deviation is a departure from the course of the voyage insured, mentioned in the last two sections, or an unreasonable delay in pursuing the voyage, or the commencement of an entirely different voyage. Enacted March 21, 1872. When proper. Sec. 2695. A deviation is proper : 1. When caused by circumstances over which neither the master nor the owner of the ship has any control ; 2. When necessary to comply with a warranty, or to avoid a peril whether insured against or not ; 3. When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril ; or, 4. When made in good faith, for the purpose of saving human life, or relieving another vessel in distress. Enacted March 21, 1872. When improper. Sec. 2696. Every deviation not specified in the last section is im- proper. Enacted March 21, 1872. Deviation exonerates the insurer. Sec. 2697. An insurer is not liable for any loss happening to a thing insured subsequently to an improper deviation. Enacted March 21, 1872. Any voluntary deviation is a change of risk : it forms a departure from the con- tract, and an attempt to substitute another: and the legal effect is to discharge the insurer from liability for any loss happening to thp thing insured subsequently to the unauthorized deviation. The discharge of the insurer in such cases depends, not upon any supposed increase of risk, but wholly upon the departure of the insured from the contract of insurance. (Schroeder vs. Schweitzer /,. T. V. Q., 66 Cal. 2t4.) INSURANCE IN GENERAL LOSS. 97 ARTICLE VII. LOSS. Sec. 2701. Total and partial loss. 2702. Partial loss. 2703. Actual and constructive total loss. 2704. Actual total loss, what. 2705. Constructive total loss. 2706. Presumed actual loss. 2707. Insurance on cargo, etc., when voyage is broken up. 2708. Cost of reshipment, etc. 2700. When insured is entitled to payment. 2711. Average loss. 2712. Insurance against total loss. Total and partial loss. Sec. 2701. A loss may be either total or partial. Ki.a.-tcd March 21, 1872. Partial loss. Sec. 2702. Every loss which is not total is partial. Enacted .March 21, 1872. Actual and constructive total loss. Sec. 27():>. A total loss may be cither actual or constructive. Enacted March 21, 1872. Actual total loss, what. Sec. 2704. An actual total loss is caused by: 1. A total destruction of the thing insured ; 2. The loss of the thing by sinking, or by being broken up; I. Any damage to the thing which renders it valueless to the owner for the purposes for which he held it; or, 4. Any other event which entirely deprives the owner of the* posses- sion, at the port of destination, of the thing insured. Enacted March 21, 1872. hi n suit brought on two policies of insurance issued on two river steamboats about to be towed from Oregon to Alaska but which met with such damage they could uol be repaired so as to reach their point of destination, the loss was an "actual, total loss'' under subdivisions 3 and 4 of the above section. (Progresso 8. S. Co. vs. St. I'd ul. etc., Int. Co., 146 Cal. 279, 280.) Constructive total loss. Sec. 2705. A constructive total loss is one which gives to a person insured a right to abandon, under section 2717. Enacted March 21, 1872. I'nless something remains of value to pass to the underwriter, there is nothing to abandon, and no case for the operation of the doctrine of abandonment. Where dam- oged cargo was sold after reaching port of destination in satisfaction of salvage, there was no abandonment before the sale, and ii was held there could be none afterwards to create constructive total loss. (Standard Marine Ins. Co. vs. Nome Beach L. <& T. Co.. 133 Fed. Rep. 636.) Presumed total loss. Shc. 2706. An actual loss may be presumed from the continued absence of a ship without being heard of; and the length of time which is sufficient to raise this presumption depends on the circumstances of the case. Enacted March 21, 1872. 7 IL 98 INSURANCE LAWS OP CALIFORNIA. Insurance on cargo, etc., when voyage is broken up. Sec. 2707. When a ship is prevented, at an intermediate port, from completing the voyage, by the perils insured against, the master must make every exertion to procure, in the same or a contiguous port, another ship, for the purpose of conveying the cargo to its destination ; and the liability of a marine insurer thereon continues after they are thus reshipped. Enacted March 21, 1872. Cost of reshipment, etc. Sec. 2708. In addition to the liability mentioned in the last section a marine insurer is bound for damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses incurred in saving cargo reshipped pursuant to the last section, up to the amount insured. Enacted March 21, 1872. When insured is entitled to payment. Sec. 2709. Upon an actual total loss, a person insured is entitled to payment without notice of abandonment. Enacted March 21, 1872. Average loss. Sec. 2711. Where it has been agreed that an insurance upon a par- ticular thing, or a class of things, shall be free from particular average, a marine insurer is not liable for any particular average loss not depriv- ing the insured of the possession, at the port of destination, of the whole of such thing, or class of things, even though it become entirely worth- less; but he is liable for his proportion of all general average loss assessed upon the thing insured. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 259. Insurance against total loss. Sec. 2712. An insurance confined in terms to an actual total loss, does not cover a constructive total loss, but covers any loss which necessarily results in depriving the insured of the possession, at the port of destina- tion, of the entire thing insured. Enacted March 21, 1872. Amended, Stats. 1873-4, p. 259. ARTICLE VIII. ABANDONMENT. Sec. 271G. Abandonment, what. 2717. When insured may abandon. 2718. Must be unqualified. 2710. When may be made. 2720. Abandonment may be defeated. 2721. How made. 2722. Requisites of notice. 2723. No other cause can be relied on. 2724. Effect. 2725. Waiver of formal abandonment. 272G. Agents of the insured become agents of the insurer. 2727. Acceptance not necessary. 2728. Acceptance conclusive. 2720. Accepted abandonment, irrevocable. 2730. Freightage, how affected by abandonment of ship. 2731. Refusal to accept. 2732. Omission to abandon. INSURANCE IN GENERAL ABANDONMENT. 99 Abandonment, what. Sec. 2716. Abandonment is the act by which, after a constructive total loss, a person insured by contract of marine insurance declares to the insurer that he relinquishes to him his interest in the thing insured. Enacted March 21, 1872. When insured may abandon. Sec. 2717. A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against : 1. If more than half thereof in value is actually lost, or would have to be expended to recover it from the peril ; 2. If it is injured to such an extent as to reduce its value more than one half; 3. If the thing insured, being a ship, the contemplated voyage can not be Lawfully performed without incurring an expense to the insured of more than half the value of the thing abandoned, or without incurring a risk which a prudent man would not take under the circumstances ; or, 4. If the thing insured, being cargo or freightage, the voyage can not be performed nor another ship procured by the master, within a reason- able time and with reasonable diligence, to forward the cargo, without incurring the like expense or risk. But freightage can not in any case be abandoned, unless the ship is also abandoned. Enacted March 21, 1872. In a case where the insurance policies contained the provision that the vessels insured were "warranted free from all average and salvage," it was claimed that this limited the tight of recovery to an "actual, total loss" only, and excluded the "right to abandon" for "constructive total loss," but the question became immaterial as the loss was found to be an actual total loss. (Progresso S. S. Co. vs. St. Paul, etc., In*. Co., 146 Cal. 279, 280.) Must be unqualified. Sec. 271 S. An abandonment must be neither partial nor conditional. Enacted March 21, 1872. When may be made. Sec. 2719. An abandonment must be made within a reasonable time after the information of the loss, and after the commencement of the voyage, and before the party abandoning has information of its com- pletion. Enacted March 21, 1872. Abandonment may be defeated. Sec. 2720. "Where the information upon which an abandonment has been made proves incorrect, or the thing insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual. Enacted March 21, 1872. How made. Sec. 2721. Abandonment is made by giving notice thereof to the insurer, which may be done orally, or in writing. Enacted March 21, 1872. 100 INSURANCE LAWS OF CALIFORNIA. Requisites of notice. Sec. 2722. A notice of abandonment must be explicit, and must specify the particular cause of the abandonment, but need state only enough to show that there is probable cause therefor, and need not be accompanied with proof of interest or of loss. Enacted March 21, 1872. No other cause can be relied on. Sec. 2723. An abandonment can be sustained only upon the cause specified in the notice thereof. Enacted March 21, 1872. Effect. Sec. 2724. An abandonment' is equivalent to a transfer, by the insured, of his interest, to the insurer, with all the chances of recovery and indemnity. Enacted March 21, 1872. Waiver of formal abandonment. Sec. 2725. If a marine insurer pays for a loss as if it were an actual total loss, he is entitled to whatever may remain of the tiling insured, or its proceeds or salvage, as if there had been a formal abandonment. Enacted March 21, 1872. Agents of the insured become agents of the insurer. Sec. 2726. Upon an abandonment, acts done in good faith by those who were agents of the insured in respect to the thing insured, subse- quent to the loss, are at the risk of the insurer, and for his benefit. Enacted March 21, 1872. Acceptance not necessary. Sec. 2727. An acceptance of an abandonment is not accessary to the rights of the insured, and is not to be presumed from the mere silence of the insurer, upon his receiving notice of abandonment. Enacted March 21, 1872. Acceptance conclusive. Sec. 2728. The acceptance of an abandonment, whether express or implied, is conclusive upon the parties, and admits the loss and the suffi- ciency of the abandonment. Enacted March 21, 1872. Accepted abandonment, irrevocable. Sec. 2729. An abandonment once made and accepted is irrevocable, unless the ground upon which it was made proves to be unfounded. Enacted March 21, 1872. Freightage, how affected by abandonment of ship. Sec. 2730. On an accepted abandonment of a ship, freightage earned previous to the loss belongs to the insurer thereof; but freightage sub- sequently earned belongs to the insurer of the ship. Enacted March 21, 1872. Refusal to accept. Sec. 2731. If an insurer refuses to accept a valid abandonment, lie is liable as upon an actual total loss, deducting from the amount any INSURANCE IN GENERAL MEASURING OF INDEMNITY. 101 proceeds of the thing insured which may have come to the hands of the insured. Enacted March 21, 1872. Omission to abandon. Sec. 2732. If a person insured omits to abandon, he may m-wrl he- less recover his actual loss. Enacted .March 21, 1872. ARTICLE IX. MEASURE OF INDEMNITY. Sec. 2736. Valuation, when conclusive. 2737. Partial loss. 2738. Profits. 2739. Valuation apportioned. 2740. Valuation applied to profits. 2741. Estimating; loss under open policy 2742. Arrival of thing damaged. 274::. Labor and expenses. 2741. General average. 274.".. Contribution. 2746. One third new for old. Valuation, when conclusive. Sec. 2736. A valuation in a policy of marine insurance is conclusive between the parties thereto in the adjustment of either a partial or total loss, if the insured has some interest kt risk, and there is no fraud on his part ; except that when a thing has been hypothecated by bottomry or respondentia, before its insurance, and without the knowledge of the person actually procuring the insurance, he may show the real value. But a valuation fraudulent in fact entitles the insurer to rescind the contract. Enacted March 21, 1872. See note to section 2705, ante. Partial loss. Skc. 2737. A marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss hears to the value of the whole interest of the insured in the property insured. Enacted March 21, 1872. Profits. Skc. 2738. Where profits are separately insured in a contract of marine insurance, the insured is entitled to recover, in case of loss, a proportion of such profits equivalent to the proportion which the value of the propertv lost bears to the value of the whole. Enacted March 21, 1872. Valuation apportioned. Sec. 273!). In case of ;i valued policy of marine insurance on freight- age or cargo, if a part only of the subject is exposed to risk, the valuation applies only in proportion to such part. Enacted March 21, 1872. 102 INSURANCE LAWS OP CALIFORNIA. Valuation applied to profits. Sec. 2740. When profits are valued and insured by a contract of marine insurance, a loss of them is conclusively presumed from a loss of the property out of which they were expected to arise, and the valuation fixes their amount. Enacted March 21, 1872. Estimating loss under an open policy. Sec. 2741. In estimating a loss under an open policj^ of marine in- surance the following rules are to be observed : 1. The value of a ship is its value at the beginning of the risk includ- ing all articles or charges which add to its permanent value, or which are necessary to prepare it for the voyage insured ; 2. The value of cargo is its actual cost to the insured, when laden on board, or where that cost cannot be ascertained, its market value at the time and place of lading, adding the charges incurred in purchasing and placing it on board, but without reference to any losses incurred in raising money for its purchase, or to any drawback on its exporta- tion, or to the fluctuations of the market at the port of destination, or to expenses incurred on the way or on arrival ; 3. The value of freightage is the gross freightage, exclusive of pri- mage, without reference to the cost of earning it ; and, 4. The cost of insurance is in each case to be added to the value thus estimated. Enacted March 21, 1872. Arrival of things damaged. Sec. 2742. If cargo insured against partial loss arrives at the port of destination in a damaged condition, the loss of the insured is deemed to be the same proportion of the value which the market price at that port, of the thing so damaged, bears to the market price it would have brought if sound. Enacted March 21, 1872. Labor and expenses. Sec. 2743. A marine insurer is liable for all the expense attendant upon a loss which forces the ship into port to be repaired; and where it is agreed that the insured may labor for the recovery of the property, the insurer is liable for the expense incurred thereby, such expense, in either case, being in addition to a total loss, if that afterwards occurs. Enacted March 21, 1872. General average. Sec. 2744. A marine insurer is liable for a loss falling upon the insured, through a contribution in respect to the thing insured, required to be made by him towards a general average loss called for by a peril insured against. Enacted March 21, 1872. Contribution. Sec. 2745. Where a person insured by a contract of marine insur- ance has a demand against others for contribution, he may claim the whole loss from the insurer, subrogating him to his own right to con- tribution. But no such claim can be made upon the insurer after the INSURANCE IN GENERAL FIRE INSURANCE. 103 separation of the interests liable to contribution, nor when the insured, having the right and opportunity to enforce contribution from others, has neglected or waived the exercise of that right. Enacted March 21, 1872. Amended, Stats. 1873-4, p.. 259. One third new for old. Sec. 2746. In the case of a partial loss of a ship or its equipments, the old materials are to be applied toward payment for the new, and whether the ship is new or old, a marine insurer is liable for only two thirds of the remaining cost of the repairs, except that he must pay for anchors and cannon in full, and for sheathing-metal at a depreciation of only two and one half per cent for each month that it has been fastened to the ship. Enacted March 21, 1872. CHARTER III. FIRE INSURANCE. Sec. L'".:;. Alteration increasing risk. j.>4. Alteration not increasing risk. 2755. Acts of the insured. L'7."><;. Measure of indemnity. L'7.V7. Value of interest in policy of insurance. How may be fixed. Total or partial loss. Alteration increasing risk. Sec. 2753. An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increas- ing the risk, entitles an insurer to rescind a contract of tire insurance. Enacted March 21, 1872. Fire Insurance Clause as to Sole and Unconditional Ownership Equit- able Title. A vendee in possession of land, under a valid contract of purchase, which he is entitled to enforce specifically, although a portion of the purchase price remains unpaid, is the holder of such an equitable title as to constitute him the sole and unconditional owner within the meaning of a policy of insurance containing such a clause. (McCullough vs. Home Ins. Co., 155 Cal. 662, 102 Pac. 814.) Same Same Option to Purchase. One in possession of land under a more option to purchase, which neither binds him to make the payments or complete the purchase, nor the vendor to convey except upon condition, is not a sole and uncondi- tional owner within the meaning of such a clause in a policy of fire insurance. {McCullough vs. Home Ins. Co., 155 Cal. 663, 102 Pac. 814.) Same Fallen Building Clause. In order to constitute a fallen building within the meaning of a clause which provides that the insurance shall cease when the build- ing or any part thereof shall fall except as the result of fire, the building must have fallen in whole or in part to such an extent that its integrity as a building was destroyed or substantially impaired. (Clayburgh vs. Agricultural Ins. Co., 155 Cal. 709, 102 Pac. 812.) Same Provision of Policy Against Waiver by Agents and Officers. This provision may itself be waived by certain officers or agents; or the company be stooped from relying on it. (McCullough vs. Home Ins. Co., 155 Cal. 664, 102 Pac. 814. See Carroll vs. Girard F. Ins. Co., 72 Cal. 297, 13 Pac. 863 ; Arnold vs. Amer- ican Ins. Co., 148 Cal. 660, 84 Pac. 182; Mackintosh vs. Agricultural Ins. Co., 150 Cal. -110. 11!) Am. St. Bep. 2:51. 89 Pac. 102.) Such provision has no reference to stipulations after a loss has occurred, such as giving notice and furnishing proofs of loss. {McCullough vs. Home Insurance Co., 155 Cal, 664, 102 Pac. 814.) 104 INSURANCE LAWS OF CALIFORNIA. Alteration not increasing risk. Sec. 2754. An alteration in the use or condition of a thing insured from that to which it is limited by the policy, which does not increase the risk, does not affect a contract of fire insurance. Enacted March 21, 1872. Where policy of insurance was issued on combined harvester while in use, and it was destroyed by fire while housed in a shed, the alteration in the risk was held to be fatal to a recovery of the insurance money. (SlinJeard vs. Manchester, etc., Co., 122 Cal. 595.) See note to section 2753. Acts of the insured. Sec. 2755. A contract of fire insurance is not affected by any act 'of the insured subsequent to the execution of the policy, which does not violate its provisions, even though it increases the risk and is the cause of a loss. Enacted March 21, 1872. Measure of indemnity. Sec. 2756. If there is no valuation in the policy, the measure of indemnity in an insurance against fire is the expense it would be to the insured at the time of the commencement of the fire to replace the thing lost or injured in the condition in which it was at the time of the injury ; but the effect of a valuation in a policy of fire insurance is the same us in a policy of marine insurance. Enacted March 21, 1872. Value of interest in policy of insurance; how may be fixed; total or partial loss. Sec. 2757. Whenever the insured desires to have a valuation named in his policy, insuring any building or structure against fire, he may require such building or structure to be examined by the insurer and the value of the insured's interest therein shall be thereupon fixed by the parties. The cost of such examination shall be paid for by the insured. A clause shall be inserted in such policy stating substantially that the value of the insured's interest in such building or structure has been thus fixed. In the absence of any change increasing the risk without the consent of the insurer or of fraud on the part of the insured, then in case of a total loss under such policy, the whole amount so insured upon the insured's interest in such building or structure, as stated in the policy upon which the insurers have received a premium, shall be paid, and in case of a partial loss the full amount of the partial loss shall be so paid, and in case there are two or more policies covering the insured's interest therein, each policy shall contribute pro rata to the payment of such whole or partial loss. But in no case shall the insurer be required to pay more than the amount thus stated in such policy. This section shall not prevent the parties from stipulating in such policies concerning the repairing, rebuilding or replacing build- ings or structures wholly or partially damaged or destroyed. Enacted March 21, 1872. INSURANCE IN GENERAL LIFE AND HEALTH. 105 CHAPTER IV. LIFE AND HEALTH INSURANCE. Sec. 2762. Insurance upon life, when payable. 2763. Insurable interest. 2764. Assignee, etc., of life policy need have no interest. 2765. Notice of transfer. 2766. Measure of indemnity. Insurance upon life, when payable. Sec. 2762. An insurance upon life may be made payable on the death of the person, or on his surviving a specified period, or periodically so long as he shall live, or otherwise contingently on the continuance or determination of life. Enacted March 21, 1872. In an action to recover on a life insurance policy, where payment is resisted on the ground of fraudulent concealment and misrepresentations made in the answering of certain questions contained in the written application for the insurance, it is error to instruct the jury that in rendering special verdicts upon the answers given to such questions they should state whether or not such answers were "substantially true," without further instructing them as to the meaning of such term. "Substantially true" does not mean somewhat true, partially true, on the one hand : nor does it mean true in every possible and immaterial respect on the other. It means true, without qualification, in all respects material to the risk. It is also error to instruct the jury in such an action that notwithstanding the fact that it might find that the answers and representations were untrue, it should nevertheless render a verdict in favor of the plaintiff, unless it found that such repre- sentations were material. Where the materiality of the representations depends upon inferences drawn from facta and circumstances proved, the question is one for a jury, but where the repre- sentations are in the form of written answers made to written questions, the parties have thereby deemed the matter to be material. Evidence of declarations made by the insured at other times which are inconsistent with the representations made when applying for the policy are admissible against the beneficiary, where the policy in terms reserves the right of revocation as to the beneficiary. Where a policy of life insurance reserves to the insured the right to change the beneficiary upon written request therefor, the interest of a designated beneficiary prior to the death of the insured is that of a mere expectancy of an incompleted gift, sub- ject to revocation at the will of the insured. (McEtcen vs. New York Life Ins. Co., 18 Cal. App. page 112.) Insurable interest. Sec. 2763. Every person has an insurable interest in the life and health: 1. Of himself; 2. Of any person on whom he depends wholly or in part for educa- tion or support; 3. Of any person under a legal obligation to him for the payment of money, or respecting property or services, of which death or illness might delay or prevent the performance; and, 4. Of any person upon whoso life any estate or interest vested in him depends. Enacted March 21, 1872. An assignee of a policy of Insurance, as security for an indebtedness, may main- tain an aetion for the assured. The company has no concern with the application thereof after recovering. {Curtisa vs. JEtna L. Ins. Co.. 00 Cal. 245.) Assignee, etc., of life policy need have no interest. Sec. 27<>4. A policy <>!' insurance upon life or health may pass by transfer, will, <>r succession to any person, whether he has an insurable 106 INSURANCE LAWS OF CALIFORNIA. interest or not, and such person may recover upon it whatever the insured might have recovered. Enacted March 21, 1872. Curtiss vs. JEtna L. Ins. Co., 90 Cal. 245, 248. See note to section 2763, ante. Notice of transfer. . Sec. 2765. Notice to an insurer of a transfer or bequest thereof is not necessary to preserve the validity of a policy of insurance upon life or health, unless thereby expressly required. Enacted March 21, 1872. Measure of indemnity. Sec. 2766. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policv. Enacted March 21, 1872. CIVIL ACTIONS PLEADINGS. 107 CODE OF CIVIL PROCEDURE. PART II. TITLE III. PARTIES TO CIVIL ACTIONS. Plaintiff may sue in one action the different parties to commercial paper or insurance policies. Sec. 383, Persons severally liable upon the same obligation or in- strument, including the parties to bills of exchange and promissory notes, and sureties on the same or separate instruments, may all or any of them be included in the same action, at the option of the plaintiff; and all or any of them join as plaintiffs in the same action, concerning or affecting the obligation or instrument upon which they are severally liable. Where the same person is insured by two or more insurers sepa- rately in respect to the same subject and interest, such person, or the payee under the policies, or the assignee of the cause of action, or other successor in interest of such assured or payee, may join all or any of such insurers in a single action for the recovery of a loss under the several policies, and in case of judgment a several judgment must be rendered against each of such insurers according as his liability shall appear. Enacted March 11, 1872. Amended, Stats. 1897, p. 19; 1903, p. 203. Moreing vs. Webster, 3 Cal. App. 14, 22. PART II. TITLE VI. CHAPTER IV. PLEADINGS IN CIVIL ACTIONS. Actions to recover insurance what defendant claiming exemption must set up. Sec. 437a. Jn an action to recover upon a contract of insurance wherein the defendant claims exemption from liability upon the ground that, although the proximate cause of the loss was a peril insured against, the loss was remotely caused by or would not have occurred but for a peril excepted in the contract of insurance, the defendant shall in his .niswer set forth and specify the peril which was the proximate cause of the loss, in what manner the peril excepted contributed to the loss or itself caused the peril insured against, and if he. claim that the peril excepted caused the peril insured against, he shall in his answer set forth and specify upon what premises or at what place the peril excepted caused the peril insured against. Enacted, Stats. 1907, p.^ 836. This section was declared unconstitutional in an action on a fire insurance policy upon property in the city and county of San Francisco, which, among other exemp- tions, provided "This company shall not he liable for loss caused directly or indi- rectly by earthquake," as depriving defendant of the equal protection of the law, in i lint it discriminates against a particular class of actions and against defendants generally without apparent reason for the distinction; and was also held invalid as violating tli< i constitution of California, article 4, section 25, subdivision 3, prohibit- ing special laws regulating the practice of courts. (Board of Education vs. Alliance . Co. (C. C, . 159 Fed, Hep. 904.) 108 INSURANCE LAWS OP CALIFORNIA. PART II. TITLE XIV. CHAPTER VII. SURETY CORPORATIONS. Corporations may become sureties on undertakings and bonds. Sec. 1056. In all cases where an undertaking or bond, with any num- ber of sureties is authorized or required by any provision of this code, or of any law of this state, any corporation with a paid-up capital of not less than one hundred thousand dollars, incorporated under the laws of tli is or any other state of the United States for the purpose of making, guaranteeing, or becoming a surety upon bonds or undertakings required or authorized by law, or which, by the laws of the state where it was originally incorporated has such power, and which shall have complied with all the requirements of the law of this state regulating the forma- tion or admission of these corporations to transact such business in this state, may become and shall be accepted as security or as sole and suffi- cient surety upon such undertaking or bond, and such corporate surety shall be subject to all the liabilities and entitled to all the rights of natural persons' sureties; provided, that the insurance commissioner shall have the same jurisdiction and powers to examine the affairs of such corporations as he has in other cases; shall require them to file sim- ilar statements and issue to them a similar certificate. And whenever the liabilities of any such corporation shall exceed its assets, the insur- ance commissioner shall require the deficiency to be paid up in sixty days, and if it is not so paid up, then he shall issue a certificate showing the extent of such deficiency, and he shall publish the same once a week for three weeks, in a daily San Francisco paper. And, until such defi- ciency is paid up, such company shall not do business in this state. In estimating the condition of any such company, the commissioner shall allow as assets only such as are allowed under existing laws at the time, and shall charge as liabilities, in addition of eighty per cent of the capital stock, all outstanding indebtedness of the company, and a pre- mium reserve equal to fifty per centum of the premiums charged by said company on all risks then in force. Enacted .March 11, 1872. Repealed, Stats. 1880, p. 111. Enacted, Stats. 1889, p.- 21 5. Amount Paid as Premium fob Replevin Bond procured pendente lite by a plaintiff ultimately successful is not recoverable as costs. (*\Yilliams vs. Atchison, T. <0 8. F. R. Co., 156 Cal. 140, 103 Pac. 885.) Undertakings mentioned in this code, requisites of. Sec. 1057. In any case where an undertaking or bond is authorized or required by any law of this state, the officer taking the same must, except in the case of such a corporation as is mentioned in the next pre- ceding section, require the sureties to accompany it with an affidavit that they are each residents and householders, or freeholders, within the state, and arc each worth the sum specified in the undertaking or bond, over and above all their just debts and liabilities, exclusive of property exempt from execution ; but when the amount specified in the undertak- ing or bond exceeds three thousand dollars, and there are more than two sureties thereon, they may state in their affidavits that they are severally worth amounts less than the amount specified in the undertaking or bond, if the whole amount is equivalent to that of two sufficient sureties. Any corporation such as is mentioned in the next preceding section may SURETY C6RP0RATI0NS. 109 become sole surety on such bond. No such corporation must be accepted in any case as a surety when its liabilities exceed its assets as ascertained in tlic manner provided in section 1056. Whenever an undertaking has been given and approved in any action or proceeding, and it is there- after made to appear to the satisfaction of the court that any surety upon such undertaking has for any reason become insufficient, the court may, upon notice, order the giving of a new undertaking, with sufficient sureties, in lieu of such insufficient undertaking. In case such new undertaking so required shall not be given within the time required by Mich order, or in case the sureties thereon fail to justify thereon when required, all rights obtained by the filing of such original undertaking shall immediately cease. Enacted March 11, 1872. Amended, Stats. 1889, p. 216; Stats. 1907, p. 308. On a motion to dismiss an appeal, the two foregoing sections were considered by Department Two of the supreme court of this state, and the following decision was rendered, viz : Dl BAVEN, J. The undertaking on appeal herein was executed by the Ameri- can Surety Company, a foreign corporation, and the respondent moves to dismiss the appeal, upon the ground that the undertaking is not properly signed, and upon the further ground that the corporation has not filed with the secretary of state a desig- nation of some person residing in this state upon whom service of summons may be made ;is required by the act relating to foreign corporations, approved April 1, 1872. (State. 1871-2, p. 826.) ' 1. The undertaking is signed in behalf of the corporation surety by its second vie. -president and its assistant secretary, and has affixed to it the seal of the corpo- ration. There is nothing before us to show that these officers were not authorized to sign and deliver the undertaking, and we can not, therefore, hold that the under- taking is void because not properly signed. 2. The corporation has never filed with the secretary of state a paper designating the person upon whom service of process can be made for it in this state, as required l>.\ the act of the legislature above referred to; but it appears from the certificate of the insurance commissioner for this state that "The American Surety Company of New York City, New York, is duly authorized to transact business in this state, and has been so authorized since December 5, 1884." It is provided by section 105G of the Code of Civil Procedure that in respect to corporations organized for the purpose of becoming surety on bonds or undertakings authorized by law, "the insurance com- missioner shall have the same jurisdiction and powers to examine the affairs of such i < n>< rations as he has in other cases; (and) shall require them to file similar state- ments, and issue to them a similar certificate." The certificate referred to in this section is one by which the corporation is author- ized to transact business in this state, and the insurance commissioner is not author- ized to issue such a certificate to a foreign insurance company until it has first filed in his office "the name of an agent and his place of residence in this state, on whom summons and other process may be served in all actions or other legal proceedings against such corporation or company." (Pol. Code, section G1C. ) We think that under section 1066 of the Code of Civil Procedure this provision of section G16 of the Political Code also applies to corporations like that executing the undertaking on appeal in this case, and that when such a corporation has filed with the insurance commissioner the designation required by this section of the Political Code, that is all that is required of it in the. matter of naming an agent upon whom process in actions against it may be served, to entitle it to transact business in this state, although the failure to file such designation with the secretary of state might deprive it of the benefit of "the statutes of this state limiting the time for the commence- ment of actions," as provided by the second section of the above mentioned act of April 1. 1872. The certificate of the insurance commissioner, filed by the appellant herein, while it does not expressly state that the American Surety Company has complied with section 616 of the Political Code, is at least prima facie evidence that it has done so. There is a presumption that the insurance commissioner properly performed his official duty in issuing this certificate, and in the absence of any evidence showing that this certificate was issued under circumstances not authorized by law, the certificate will be regarded as sufficient proof that it was properly issued, and that as stated above, the American Surety Company had and has authority to transact business in this state. If, in fact, that corporation has not complied with the section of the Political < 'ode above referred to, the respondent will be permitted to renew his motion, and show that the certificate was improperly issued, but upon the facts now before us, the motion to dismiss the appeal must be denied. Motion denied. Outzeil vs. Pennie, 95 Cal. 598. 110 INSURANCE LAWS OF CALIFORNIA. Freeholders or Householders Defective Affidavit. An affidavit of a stay bond which fails to state that the sureties were freeholders or householders is defect- ive, and the bond thereby rendered invalid. {Maze vs. Langford, 16 Cal. App. 74. r >, 117 Pac. 929.) A corporation of the character defined by sections 1056 and 1057 of the Code of Civil Procedure as enacted in 1889, need not be accepted as sole and sufficient surety upon any undertaking no matter what the disparity between its amount and the amount of the corporate assets, but may be required, upon exception to its sufficiency as surety under section 948 of the Code of Civil Procedure, to show surplus assets equal to the amount of its undertaking. Fox vs. The Hale and Nor cross S. M. Co., 97 Cal. 353. How corporate sureties shall justify. Sec. 1057ft. Whenever the surety on a bond or undertaking author- ized or required by any law of this state is a corporation of the state or a foreign corporation, authorized to become surety on bonds or under- takings in the state, and exception is taken to the sufficiency of such surety as required by law, such corporate surety may justify on such bond or undertaking as follows: Any agent, attorney in fact, or officer of such corporation shall submit to the court, judge, officer, board or other person before whom the justification is to be made : First The original, or a certified copy of, the power of attorney, by- laws or" other instrument showing the authority of the person or persons who executed the bond or undertaking to execute the same ; Second A certified copy of the certificate of authority issued by the insurance commissioner as required by section 596 of the Political Code, showing that the corporation is authorized to transact business; Third A certificate from the county clerk of the county or city and county in which the bond or undertaking is filed, showing that the said certificate of authority has not been surrendered, revoked, canceled, anulled or suspended, or in the event that it has been, that renewed authority to act under such certificate has been granted, as provided for in section 625a of the Political Code ; Fourth A financial statement showing the assets and liabilities of such corporation at the end of the quarter calendar year next preceding the date of the execution of the bond or undertaking; such financial statement must be verified under oath by the president, or a vice-presi- dent and attested by the secretary or an assistant secretary of such corporation. Upon complying with the foregoing provisions and it appearing that the bond or undertaking was duly executed, that the corporation is authorized to transact business in the state, and that its assets exceed its liabilities in an amount equal to or in excess of the amount of the bond or undertaking, the justification of the surety shall be complete and it shall be accepted as the sole and sufficient surety on the bond or under- taking. The county clerk of any county or city and county shall upon request, issue the certificate hereinbefore provided for, which certificate shall state whether or not the certificate of authority of such corporation has been surrendered, revoked, canceled, anulled or suspended, and in the event that it has, whether or not renewed authority to act under such certificate of authority has been granted as provided in section 625a of the Political Code. For each certificate issued the county clerk shall receive a fee of fifty cents to be paid by the person obtaining the cer- tificate. Enacted March 20, 1911. Stats. 1911, p. 412. CRIMES AGAINST PROPERTY. Ill PENAL CODE. PART I. TITLE XII. CRIMES AGAINST THE REVENUE OF THE STATE. Carrying on business without license. Sec. 435. Every person who commences or carries on any business trade, profession, or calling, for the transaction or carrying on of which a license is required by any law of this state, without taking out or pro- curing the license prescribed by such law, is guilty of a misdemeanor. Enacted February 14, 1872. Effecting insurance on account of foreign companies that have not complied with the laws of this state. Sec. 439. Every person who in this state procures, or agrees to pro- cure, any insurance for a resident of this state, from any insurance com- pany not incorporated under the laws of this state, unless such company or its agent has filed the bond required by the laws of this state relating to insurance, is guilty of a misdemeanor. Enacted February^, 1872. On the 20th of September, 1888, one, Hooper, was charged before a police court of the city and county of San Francisco with having committed a violation of this section, as follows: On the 13th day of April, 1S88, C. W. Mott, a resident of the State of California, applied to Hooper to procure him an insurance for four thousand dollars on the steamer "Alliance'' at a named rate of premium. Hooper was the agent of J. & H., insurance brokers, having their principal place of business in New York, who procured the insurance in the China Mutual Insurance Company of Bos- ton and forwarded the policy to Hooper, who delivered it to Mott. The company mentioned was not incorporated under the laws of the State of California, and had not executed and delivered to the insurance commissioner the bond required by section 623 of the Political Code of the State of California. The prisoner was convicted and sentenced to pay a fine of five dollars, and, in default to be imprisoned for twenty- four hours in the city jail. On appeal to the superior court the judgment of the police court was affirmed, and the cause was taken to the United States supreme court. It was argued in behalf of the prisoner that the section amounts to a regulation of commerce between the several states and foreign nations; that it violates the right of the defendant to transact any business in the State of California not opposed to good morals or the health of the community ; that it is not a police regulation ; that it is in violation of the fourteenth amendment, and for these reasons unconstitutional. The supreme court decided that the business of insurance is not commerce, nor an instrumentality thereof, but merely an incident thereto; that the policy having been delivered within the state, and the premium paid within the state, the insurance was procured within the state ; that the fourteenth amendment does not guarantee to a citizen the right to contract within his state in violation of its laws, and that the foreign insurance company not having complied with the laws of the state and not having uiven the bond required thereby, the prisoner had been guilty of a misde- oieanoT under the section namen, which the court declared to be in no respect uncon- stitutional. (Hooper vs. State of California, 155 U. S. 648.) PART I. TITLE XIII. CHAPTER I. CRIMES AGAINST PROPERTY. "Arson" defined. Sec. 447. Arson is the wilful and malicious burning of a building, with intent to destroy it. Enacted February* 14, 1872. Evidence Aomissible to Show Value of Furniture in House. In a prosecu- lion for arson, in the absence of evidence that the property possessed a different or 112 INSURANCE LAWS OF CALIFORNIA. special value by reason of being installed in the house, the market value thereof, in view of the insurance obtained thereon by defendant, was a circumstance which the jury was entitled to consider in reaching their verdict. (People vs. White, 19 Oal. App. 555, 126 Pac. 505, 506.) Same Sufficiency. Evidence held sufficient to justify conviction for arson. (People vs. White, 19 Cal. App. 555, 126 Pac. 505.) Instruction. An instruction that "To constitute a burning, it is not necessary that the building set on fire should have been destroyed. It is sufficient that fire is applied so as to take effect upon any part of the substance of the building," is not open to the contention that it assumes a fact the existence of which was a question for the jury to determine. But, however that may be, since the evidence conclusively shows that the fire was of incendiary origin, which fact is conceded by appellant, no prejudice could result from the giving of the instruction. (People vs. White, 19 Cal. App. 555, 126 Pac. 505, 506, citing People vs. Bcsold, 154 Cal. 363, 97 Pac. 871.) As to what constitutes arson, see notes, 81 Am. Dec. 65 ; 101 Am. St. Rep. 21. "Building" defined. Sec. 448. Any house, edifice, structure, vessel, or other erection, capable of affording shelter for human beings, or appurtenant to or con- nected with an erection so adapted, is a "building" within the meaning of this chapter. Enacted February 14, 1872. 9 Cal. App. 756 (cited). "Inhabited building" defined. Sec. 44!). Any building which has usually been occupied by any person Lodging therein at night is an "inhabited building" within the meaning of this chapter. Enacted February 14, 1872. See note section 448. "Night-time" defined. Sec. 450. The phrase "night-time," as used in this chapter, means the period between sunset and sunrise. Enacted February 14, 1872. "Burning" defined. Sec. 451. To constitute a burning, within the meaning of this chapter, it is not necessary that the building set on fire should have been destroyed. It is sufficient that fire is applied so as to take effect upon any part of the substance of the building. Enacted February 14, 1872. Ownership of the building. Sec. 452. To constitute arson it is not necessary that a person other than the accused should have had ownership in the building set on fire. It is sufficient that at the time of the burning another person was right- fully in possession of, or was actually occupying such building, or any part thereof. Enacted February 14, 1872. Identification Sufficient. In prosecution for arson, it is not necessary for the prosecution to prove the ownership as alleged in the indictment, provided the house was otherwise described snHiciently for purposes of identification and otherwise identi- fied by the evidence. (People vs. LaverUj, 9 Cal. App. 766, 7r>9. 100 Pac. 890.) Degrees of arson. Sec. 453. Arson is divided into two degrees. Enacted Februarv 14, 1872. CRIMES AGAINST PROPERTY. Il3 Arson of the first degree. Arson of the second degree. Sec. 454. Maliciously burning in the night-time an inhabited build- ing in which there is at the time some human being, is arson in the first degree. All other kinds of arson are of the second degree. Enacted February 14, 1872. Punishment of arson. Sec. 455. Arson is punishable by imprisonment in the state prison, as follows: 1. Arson in the first degree, for not less than two years. '2. Arson in the second degree, for not less than one nor more than twenty-five years. Enacted February 14, 1872. Amended, State. 1901, p. 664. PART I. TITLE XIII. CHAPTER XI. Burning or destroying property insured. Sec. 548. Every person who wilfully burns or in any other manner injures or destroys any property which is at the time insured against loss or damage by fire, or by any other casualty, with intent to defraud or prejudice the insurer, whether the same be the property of or in pos- session of such person, or of any other, is punishable by imprisonment in the state prison not less than one nor more than ten years. Enacted February 14, 1872. Information SUFFICIENCY OF. Where the facts constituting the crime described in this section are set forth in the information, it is immaterial that the information also designate the offense as "arson." (People vs. Morley. 8 Gal. App. 372, 37.'i. J7 Pac. 84.) Ownkushii- Immaterial. One who burns insured property with the intent to destroy is guilty whether the property or possession be his or that of another. (People vs. Uorley, 8 Cal. App. 372, 376, 97 Pac. 84.) Validity OB Invalidity of the Insurance Policy is not a material issue in a pins, cut ion under this section. The gist of the offense is the intent to defraud the tnsuier. ( People vs. Morley, 8 Cal. App. 372, 375, 97 Pac. 84.) Since the act of an insured person in setting fire to the insured property avoids the insurance, there could be no successful prosecution under this section if the inability of the defendant to recover upon the policy be a defense. (People vs. Mor- ley, 8 Cal. App. 372, 375, 97 Pac. 84.) Presenting false proofs upon policy of insurance. SBC. 549. Every person who presents or causes to be presented any false or fraudulent claim, or any proof in support of any such claim, upon any contract of insurance for the payment of any loss, or who pre- pare3, makes, or subscribes any account, certificate of survey, affidavit, or proof of loss, or other book, paper, or writing, with intent to present or use the same, or to allow it to be presented or used in support of any such claim, is punishable by imprisonment in the state prison not exceed- ing three years, or by a fine not exceeding- one thousand dollars, or by both. Enacted February 14, 1872. People vs. Di h'l/una, 8 Cal. App. 333 (cited). - ii 114 INSURANCE LAWS OP CALIFORNIA. STATUTES. Act of March 26, 1868. The following sections of "An act creating the office of insurance com- missioner, and prescribing his duties and powers," approved March 26, 1868 (Stats. 1867-8, p. 336), were considered and construed by the supreme court of this state in the case of Palache vs. Pacific Insurance Co., 42 Cal. 418, before their reenactment in the Political Code. The sections are: Sec. 7. Whenever the liabilities of any person engaged in the insur- ance business for lasses reported, for expenses, taxes, and reinsurance of all outstanding risks, estimated at fifty per cent of the premiums received on fire risks and marine time risks, and at the entire premiums on all other marine risks, and at such rates for life, accidental and other kinds of insurance as shall be generally accepted by the actuaries of the states of New York and Massachusetts, would impair his capital stock- already paid in to an extent exceeding twenty per cent, such person is hereby declared to be insolvent. Sec. 8. Whenever it shall be ascertained by the commissioner that any person engaged in the insurance business in this state is insolvent, within the true intent and meaning of this act, he shall, and is hereby empowered to, revoke the certificate granted in behalf of such person, and shall send by mail to such person, addressed to him at his principal place of business, or deliver to him personally, notice of such revocation, and shall cause notice of such revocation to be filed in his office, and also to be published in some public newspaper published in the city of San Francisco for at least four weeks; and such person is required, after receiving notice of said revocation, or after the first publication thereof, to discontinue the issuing of any new policies and the renewal of any previously issued ; and in such cases the commissioner shall require the said person, or his manager or agent, to repair its capital within such period as he may designate in such requisition. Any company, corpora- tion, or association receiving the aforesaid requisition from the commis- sioner shall forthwith call upon its stockholders, by assessments, for such amounts as will make its capital equal to the amount of its paid-up cap- ital, exclusive of assets needed to pay all ascertained liabilities for losses reported, for expenses and taxes, and exclusive of the entire premiums received for outstanding risks ; and in case any stockholder shall refuse or neglect to pay the amount so called for, it shall be lawful for said company, corporation, or association to enforce said assessment by such notice and sale as are provided for by the act entitled "An act concern- ing assessments upon the stock of corporations," approved March twenty-sixth, eighteen hundred and sixty-six. In case any person, upon the requisition of the commissioner as aforesaid, shall fail to make up the deficiency of his capital in accordance with the requirements aforesaid, or to comply in all respects with the insurance laws of this state, the commissioner shall communicate the fact to the attorney general, whose duty it shall then become to commence an action in the name of the people of this state, in the district court of the judicial district where the INSURANCE COMMISSIONER. 115 person in question is located, or has his principal office, against such per- son, and apply for an order requiring him to show cause why his busi- ness should not be closed ; and the court shall thereupon proceed to hear the allegations and proofs of the respective parties as in other cases ; and in case it shall appear to the satisfaction of the court that such person is insolvent, as aforesaid, or that the interests of the public so require, the court shall decree a dissolution of such compan}', corporation, associa- tion, or firm, and a winding up of its affairs and a distribution of the effects of such person. But otherwise the court shall enter a decree annulling the act of the commissioner in the premises, and authorizing such person to resume business. But the commissioner shall not be held liable for damages in the attempted performance of his duty herein, if he has acted in good faith. In the event of any additional losses occur- ring upon new risks taken after the expiration of the period limited by the commissioner in the requisition, and before the deficiency shall have been filled up, the directors of any company, corporation, or association shall be individually liable to the extent thereof. In the case just mentioned it appeared from the agreed statement of facts that the insurance commissioner had made an examination of the business affairs of the defendant company, on the 20th day of October, 1871, and found its capital to be impaired in consequence of the disastrous Chicago fire. He then notified the com- pany to repair iis capital on or before the 30th day of December, 1801, but did not revoke bis certificate of authority to do business, and did not publish any notice of revocation of such certificate of authority. Immediately on receiving the notice of the insurance commissioner, the board of directors of the defendant company assembled and levied an assessment of seventy- live per cent upon the capital stock. At that time a general statute provided that no one assessment should exceed five per cent of the stated amount of capital stock of any corporation. (Stats. 1865-6, p. 458.) At the time of the levy of the assessment mentioned, one Ashburner was the owner of a certificate for ten shares of the capital stock of the defendant company, and after- wards, on the .">0th day of October, 1871, sold and assigned the same, in due form, to plaintiff in said action. A by-law of the defendant company provided that no transfer of stock should be made upon the books of the company until after payment of all assessments imposed thereon. On the day of the transfer mentioned, the plaintiff, as the assignee of Ashburner, tendered the said certificate of stock for cancellation, and requested the officers of the company to enter the transfer upon the books of the corporation, and to issue to him a new certificate for the said number of shares; but these officers refused to do so, upon the ground that an assessment of seventy-five per cent had been duly levied upon the capital stock, which had not been paid (and which plaintiff refused to pay), in conformity with said by-laws. The defendant brought this action to compel said transfer, and judgment going for the defendant company in the lower court, appealed to the supreme court of this state. On the appeal it was urged that, under the by-law quoted, plaintiff was entitled to have the transfer of stock made on the books of the company in accordance with his demand, for the reason that an assessment in excess of five per cent was pro- hibited by the general act of March 26, 1866, and therefore void, unless the levy of seventy-live per cent was justified under the provisions of the act of March 26, 1868, by i lie notification by the insurance commissioner to the defendant company, to repair its capital within the time stated; that the insurance commissioner had not complied with the requirements of the latter act in failing to revoke his certificate of authority and to advertise the insolvency of the company; and, consequently, his acts in the premises, and the levy of the assessment based thereon, were unlawful and void. The action of the commissioner, therefore, was the sole point in controversy. In disposing of this point the court said : It was objected in argument upon the part of the appellant, that the requisition of the commissioner, by which he required the company to repair their capital stock, and in assumed obedience to which the company levied the assessment complained of. was itself invalid and unauthorized by the provisions of the statute already referred to, because the commissioner did not then, nor at any time, revoke the certificate of authority which he bad previously, under section 4 of the statute, granted to the com- pany, authorizing it to transact insurance business. It was argued, in this connection, ihat the phrase 'in such cases," occurring in section 8, and defining the cases in which such a requisition is authorized, embraces only those cases in which the com- missioner had not only ascertained the fact of insolvency, but had also revoked the 116 INSURANCE LAWS OF CALIFORNIA. certificate itself. It was said that the language employed iii the statute (section 8), is mandatory upon the commissioner, that whenever he shall ascertain the fact of insolvency, he shall, and is hereby empowered to revoke "ihe certificate granted," etc. It is well settled that in the construction of statutes, for the purpose of ascertaining the legislative intent, regard is to be had not so much to the exact phraseology in which that intent has been expressed, as to the general tenor and scope of the entire legislative scheme embodied in the act. Mere philology often sticks in the bark, and so becomes an obstruction rather than an aid to the correct exposition of the meaning of the statute. The act under con- sideration plainly distinguishes between the effect of a revocation notified and a requisition received. In the former case it declares that the company shall absolutely discontinue the taking of new risks, the issuing of new policies, and the renewal of old ones. ( Section 8. ) Such revocation deprives the company of the certificate of authority which (under section 9) it" must possess before it can be lawful to transact insurance business at all, "and all policies issued or renewed, and all insurance taken before the issuance of such certificate, shall be null and void for all purposes what- soever." (Section 0.) But the consequences of a requisition for the repair of capital stock upon insurance business transacted intermediate the receipt of the requisition and the expiration of the time therein limited are widely different from those which ensue upon a revocation notified. The company may, of course, at once and without delay, supply the deficiency in its capital stock, and in that event the transaction of its business is wholly unaffected by the requisition made. Otherwise it may. at its option, suspend the taking of insurances and the issuance of new policies during the time limited in the requisition ; or. if it prefer, it may take such new risks, even before the deficiency in its capital stock be supplied, the directors being in that ease. however, personally liable for any loss which may occur upon such new risks thus taken. But if we are to hold that in every case where a requisition to repair capital stock is received a revocation must first be notified, it is obvious that the revocation must operate to utterly destroy the privilege plainly acceded to the company inter- mediate the receipt of the mere requisition and the expiration of the time therein limited for making the required repair of the capital stock. A construction involving such results would he in plain conflict with the apparent intent had in view by the statute. There are other considerations, too. which present themselves, if attention lie had to the general scope of the act and the purpose in which it originated, and which confirm us in the view we have expressed upon this point. The duties imposed upon the commissioner of insurance, though defined in a gen- eral way, are in their nature largely discretionary, and depend for their efficient per- formance in a great degree upon the exercise by him of an enlightened and careful discrimination with reference to the circumstances surrounding each particular case with which he is expected to deal. He is generally to do and perform, with justice and impartiality, the duties of his office in connection with the laws regulating tin 1 business of insurance in this state, and to enforce the execution of such laws accord- ing to the true intent and meaning thereof (section 4). With this view he is clothed with important powers, to be exercised to a greater or less extent according as the particular circumstances appearing may, in his judgment, require. It may be, for instance, that an insurance company is ascertained by him to be insolvent in fact and in a commercial sense, and the risks to be taken by such a company therefore absolutely worthless to the assured. In such a case it may, and doubtless would be. his duty to exert the high authority devolved upon him by law, to revoke its certificate at once, as the only means by which the interests of the public could be preserved. Such a case would, however, be clearly and easily distinguishable from another, in which there was found to be only the technical insolvency defined by the provisions of the statute itself. For it will be observed that section 7 of the act establishes a test of solvency and insolvency of a merely arbitrary character and under the operation of which an insur- ance company may, within the intent and for the purposes of the statute, be held insolvent, and at the same time be not only really and actually solvent in a business sense, but justly so regarded in the commercial world. Thus, in order to ascertain the p resent condition of the company as being one of solvency or insolvency, for the mere purposes of the statute, the commissioner must assume, against the condition of solvency, that certain losses, though yet in fact only reported, are already established and ascertained ; that in relation to outstanding risks, not yet heard from even by report, all of those of one and half of those of another designated class will eventually prove to be losses ; and the probable losses thereafter to be sustained upon outstand- ing risks of yet another general character are to be arrived at by applying the rules <>f calculation in such cases adopted by the actuaries in the states of New York and Massachusetts. If under the provisions of the statute the commissioner should determine, upon a proper investigation had, that the company, though insolvent within the intent of the act. was, nevertheless, solvent in a business point of view, we should be surprised to find, and we do not find, upon examination of the act, that he had no discretion to stop with the delivery of the requisition, but must of mere legal necessity, resort to the harsher measure of an absolute revocation of the company's certificate. We would, we think, greatly misapprehend the scope and purpose of the act should we GIVING OF BONDS. 117 hold that under its provisions, the commissioner is to exorcise no discretion in this most important respect, biit that, being once put in motion, lie must in all cases. nolens volens, proceed to the same and a uniform extremity against all companies with whose financial condition he is called upon to deal, and that he can not legally require a company to merely repair its capital, even in a case where such repair is all that is needed, but must first revoke its certificate, suspend, and perhaps thereby nearly destroy its business, and certainly injure its general credit in advance by an official promulgation of his judgment, that the company is wholly unfit fee transact business at all. and that only after that step has been taken, and notice thereof "pub- lished in some public newspaper published in the city of San Francisco for at least four weeks."' is he to call upoivthe company to repair its capital if it can. Wo think that such an interpretation of the statute would, in its inevitable con- sequences, involve the absolute destruction of the business of insurance, instead of regulating its transactions. Polachc vs. Pacific Insurance Co., 42 Cal. 418. An act to facilitate the giving of bonds required by law. [Approved March 12, 1SS5 ; Stats. 1885, p. 114.1 The people of the State of California, represented in s< note and assem- bly, do enact as follows: Section 1. Whenever any person who now or hereafter may be required or permitted by law to make, execute, and give a bond or undertaking, with one or more sureties, conditioned for the faithful per- formance of any duty, or for the doing or not doing of anything in said bond or undertaking specified, any head of department, board, court, judge, officer, or other person who is now or shall hereafter be required to approve the sufficiency of any such bond or undertaking, or the sureties thereon, may accept as sole and sufficient surety on such bond or undertaking, any corporation incorporated under the laws of any state of the United States for the purpose of making or guaranteeing bonds and undertakings required by law, and .which shall have complied with all the requirements of the laws of this state regulating the admis- sion of such corporation to transact such business in this state ; and all such corporations are hereby vested with full power and authority to make and guarantee such bonds and undertakings, and shall be subject 1o all the liabilities and entitled to all the rights of natural persons sureties. Sec. 2. It is further provided that the guaranty of any such com- pany shall not be accepted by heads of departments or others, as pro- vided in section 1 of this act, whenever its liabilities shall exceed its assets, as ascertained in the manner provided in section 3 of this act. Sec. 3. Whenever the liabilities of any such company shall exceed its assets, the insurance commissioner shall require the deficiency to be paid up, within sixty days, and if it is not so paid up, then he shall issue ;i certificate showing the extent of such deficiency, and he shall publish the same once a week for three weeks, in a daily San Francisco paper, and thenceforth, and until such deficiency is paid up, such company shrill not do business under the provisions of this act. And, in estimat- ing the condition of any such company, under the provisions of this act, the commissioner shall allow as assets only such as are authorized under existing laws at the time, and shall charge as liabilities, in addition to eighty per cent of the capital stock, all outstanding indebtedness of the company, and a premium reserve equal to fifty per centum of the pre- 118 INSURANCE LAWS OF CALIFORNIA. miums charged by said company on all risks then in force. Nothing herein contained shall apply to bonds given in criminal cases. Sec. 4. This act shall take effect immediately. See sections 1056-1057, 1057a, Code of Civil Procedure, ante. An act to require the payment of certain premiums to counties and cities and counties, by fire insurance companies not organized under the laws of the State of California, but doing business therein, and providing for the dispo- sition of such premiums. [Enacted, Stats. 1885, p. 13. Amended, Stats. 1887, p. 13.] This act was declared unconstitutional by the supreme court of this state, which rendered its decision to that effect on November 10, 1887. An action was brought to recover $441.36, with interest, under an act of the legis- lature, entitled "An act to require the payment of certain premiums to counties and cities and counties by fire insurance companies not organized under the laws of California, but doing business therein, and providing for the disposition of such premiums," approved March 3, 1885. The act required payment of one per cent of the premiums of such companies to constitute a fund to be known as the firemen's relief fund, etc. It was claimed, on the part of the appellant, that the act created a tax the exaction of which was illegal, as violative of section 12, article XI of the state constitution. Respondent claimed it to be a condition upon the performance of which foreign cor- porations were permitted to do business in this state. The court took the former view, and reversed the judgment, citing : Barron vs. Burnside, 121 U. S. 18G, and Trustees Exempt Firemen's Fund vs. Roome, 93 N. Y. 325, s. c. 45 Am. Rep. 217. San Franciseo vs. Liverpool and London and Olobe Insurance Co., 74 Cal. 113. An act to provide for the organization and management of county fire insur- ance companies. I Approved April 1, 1897; Stats. 1897, p. 439. Amended March 23, 1907; Stats. 1907, p. 941. Amended April 15, 1909; Stats. 1909, p. 912.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Incorporation. Section 1. Any number of persons, not less than twenty-five, resid- ing in any county in this state, owning insurable property aggregating not less than fifty thousand dollars in value, which they desire to have insured, may incorporate for the purpose of mutual insurance against loss or damage by fire. Filing of articles of incorporation Certificate. Sec. 2. Such persons shall file with the insurance commissioner a declaration of their intention to incorporate for the purposes expressed in section one of this act, which declaration shall be signed by all of the incorporators, and shall contain a copy of the articles of incorporation proposed to be adopted. The insurance commissioner shall examine the proposed articles of incorporation, and, if they conform to this act, he shall deliver to such persons a certificate permitting them to incorporate as such insurance company. Such certificate shall be directed to the clerk of the county in which such corporation is proposed to be organ- ized, and shall contain a copy of the proposed articles of incorporation. Upon filing with the secretary of state the certified copies of the duly executed articles of incorporation, as required by section 290 of the Civil Code of the State of California, and of the certificate above pro-. COUNTY FIRE INSURANCE COMPANIES. 119 vided for, the secretary of state shall thereupon issue a certificate of incorporation to such county insurance company, and, upon organizing under such articles of incorporation, such county fire insurance com- pany may carry on a fire-insurance business as hereinafter provided. The articles of incorporation and the charter or certificate obtained by any county fire-insurance company operating under the provisions of this act shall be subject to the control and modification by the legislature of the State of California. The by-laws and all amendments thereto shall be filed with the insurance commissioner within sixty (60) days after their adoption. Directors. Sec. 3. The number of directors shall not be less than seven (7), nor more than eleven (11), a majority of whom shall constitute a quorum to do business. These directors shall be elected from the members of the association by ballot, and shall hold office for one year, or until their successors are elected and qualified. The annual meeting of the members of the company shall be on the second Monday in Jan- uary of each year. In the election of the first board of directors each member shall be entitled to one vote. At every subsequent election, every person insured shall be entitled to as many votes as there are directors to be elected, and an equal additional number for every risk or risks he holds in the company, and he may cast the same in person or by proxy, distributing them among the directors to be elected, or among a !n made by the supervising insurance official of its home state or other state satisfactory to the insurance commissioner of this state ; a certifi- cate from the proper official in its home state, province or country that FRATERNAL BENEFIT SOCIETIES. 137 the society is legally organized ; a copy of its contract, which must show that benefits are provided for by periodical, or other payments by, per- sons holding similar contracts, and upon furnishing the insurance com- missioner such other information as he may deem necessary to a proper exhibit of its business and plan of working and upon showing that its assets are invested in accordance with the laws of the state, territory, district, province or country where it is organized, he shall issue a cer- tificate of authority to such society to do business in this state until the first day of the succeeding July and such certificate of authority shall, upon compliance with the provisions of this act, be renewed annually, but in all cases to terminate on the first day of the succeeding July ; provided, however, that certificate of authority shall continue in full force and effect until the new certificate of authority be issued or specifically refused. Any foreign society desiring admission to this state shall have the qualifications required of domestic societies organized under this act and have its assets invested as required by the laws of the state, territory, district, country, or province where it is organized. For each such certificate or renewal the society shall pay the insurance commissioner twenty dollars. When the insurance commissioner refuses to issue a certificate of authority to any society, or revokes its certificate of authority to do business in this state, he shall reduce his ruling, order or decision to writing and file the same in his office, and shall furnish a copy thereof, together with a statement of his reasons, to the officers of the society, upon request, and the action of the insurance commis- sioner shall be reviewable by proper proceedings in any court of com- petent jurisdiction within the state; provided, however, that nothing contained in this or the preceding section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein. Sec. 17. Power of attorney and service of process. Every society, whether domestic or foreign, now transacting business in this state shall, within thirty days after the passage of this act, and every such society hereafter applying for admission, shall, before being licensed, appoint in writing the insurance commissioner and his successors in office to be its true and lawful attorney, upon whom all legal process in any action or proceeding against it shall be served, and in such writing shall agree that any lawful process against it which is served upon such attorney shall be of the same legal force and validity as if served upon the society and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by said insurance commissioner shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted. Service shall only be made upon such attorney, must be made in duplicate upon the insurance com- missioner or in his absence upon the person in charge of his office and slmll be deemed sufficient service upon such society; provided, however, that no such service shall be valid or binding against any such society when it is required thereunder to file its answer, pleading or defense in less than thirty days from the date of mailing the copy of such service t<> such society. When legal process against any such society is served 138 INSURANCE LAWS OF CALIFORNIA. upon said insurance commissioner he shall forthwith forward by regis- tered mail one of the duplicate copies prepaid and directed to its secre- tary or corresponding officer. Legal process shall not be served upon any such society except in the manner provided herein. Sec. 18. Place of meeting; location of office. Any domestic society may provide that the meetings of its legislative or governing body may be held in any state, district, province or territory wherein such society has subordinate branches and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state. But its principal office shall be located in this state. Sec. 19. No personal liability. Officers and members of the supremo, grand or any subordinate body of any such incorporated society shall not be individually liable for the payment of any disability or death benefit provided for in the laws and agreements of such society, but the same shall be payable only out of the funds of such society and in the manner provided by its laws. Sec. 20. Waiver of the provisions of the laws. The constitution and laws of the society may provide that no subordinate body, nor any of its subordinate officers or members shall have the power or authority 1< waive any of the provisions of laws and constitution of the society, and the same shall be binding on the society and each and every member thereof and on all beneficiaries of members. Sec. 21. Benefits not attachabh. No money or other benefit, charity or relief or aid to be paid, provided or rendered by any such society shall be liable to attachment, garnishment or other process, or be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary. or any other person who may have a right thereunder, either before or after payment. Sec. 22. Constitution and laws; amendment. Every society trans- acting business under this act shall file with the insurance commissioner a duly certified copy of all amendments of or additions to its constitu- tion and laws within ninety days after the enactment of the same. Printed copies of the constitution and laws as amended, changed or added to, certified by the secretary or corresponding officer of the society shall be prima facie evidence of the legal adoption thereof. Sec. 23. Annual reports. Every society transacting business in tli is state shall annually, on Or before the first day of March, file with the insurance commissioner in such form as he may require, a statement under oath of its president and secretary or corresponding officers, of its condition and standing on the thirty-first day of December next pre- ceding, and of its transactions for the year ending on that date and also shall furnish such other information as the insurance commissioner may deem necessary to a proper exhibit of its business and plan of working, The insurance commissioner may at other times require any further statement he may deem necessary to be made relating to such society. In addition to the annual report herein required, each society shall annually report to the insurance commissioner a valuation of its certifi- cates in force on December 31st, last preceding, excluding those issued within the year for which the report is filed, in cases where the contribu- tions for the first year in whole or in part are used for current mortality and expenses ; provided, the first report of valuation shall be made as of FRATERNAL BENEFIT SOCIETIES. 139 1 December 31st, 1912. Such report of valuation shall show, as contingent liabilities, the present mid-year value of the promised benefits provided in the constitution and laws of such society under certificates then sub- ject to valuation ; and, as contingent assets, the present mid-year value of the future net contributions provided in the constitution and laws as the same are in practice actually collected. At the option of any society, in lieu of the above, the valuation may show the net value of the certifi- cates subject to valuation hereinbefore provided and said net value, when computed in case of monthly contributions may be the mean of the terminal values for the end of the preceding and of the current insur- ance years. Such valuation shall be certified by a competent account- ant or actuary, or at the request and expense of the society, verified by the actuary of the department of insurance of the home state of the society, and shall be filed with the insurance commissioner within ninety days after the submission of the last preceding annual report. The legal minimum standard of valuation for all certificates, except for dis- ability benefits, shall be the National Fraternal Congress Table of Mor- tality as adopted by the National Fraternal Congress August 23, 1899, or at the option of the society, any higher table, or, at its option, it may use a table based upon the society's own experience of at least twenty years and covering not less than one hundred thousand lives with in- terest assumption not more than four per centum per annum. Each such valuation report shall set forth clearly and fully the mortality and interest basis and the method of valuation. Any society providing for disability benefits shall keep the net contributions for such benefits in a fund separate and apart from all other benefit and expense funds and the valuation of all other business of the society; provided, that where a combined contribution table is used by a society for both death and permanent total disability benefits, the valuation shall be according to tables of reliable experience and in such case a separation of the funds shall not be required. The valuation herein provided for shall not be considered or regarded as a test of the financial solvency of the society, but each society shall be held to be legally solvent so long as the funds in its possession are equal to or in excess of its matured liabilities. Beginning with the year 1914 a report of such valuation and an explana- tion of the facts concerning the condition of the society thereby dis- closed shall be printed and mailed to each beneficiary member of the society not later than June 1st of each year, or, in lieu thereof, such report of valuation and showing of the society's condition as thereby dis- closed may be published in the society's official paper and the issue con- taining the same mailed to each beneficiary member of the society. The laws of such society shall provide that if the stated periodical contribu- tions of the members are insufficient to pay all matured death and dis- ability claims in full and to provide for the creation and maintenance of the funds required by its laws additional, increased or extra rates of contribution shall be collected from the members to meet such defi- ciency ; and such laws may provide that, upon the written application or consent of the member, his certificate may be charged with its propor- tion of any deficiency disclosed by valuation, with interest not exceeding- five per cent inn per annum. Sbcj. 23a. Provisions to insure future security. If the valuation of the certificates, as hereinbefore provided, on December 31st, 1917, shall 140 INSURANCE LAWS OP CALIFORNIA show that the present value of future net contributions, together with the admitted assets, is less than ninety per centum of the present value of the promised benefits and accrued liabilities, such society shall be required thereafter to reduce such deficiency not less than five per centum of the total deficiency on said December 31st, 1917, at each suc- ceeding triennial valuation. If at any succeeding triennial valuation such society does not show such percentage of improvement, the insur- ance commissioner shall direct that it thereafter comply with the require- ments herein specified. If the next succeeding triennial valuation after the receipt of such notice shall show that the society has not made the percentage of improvement required herein, the insurance commis- sioner may, in the absence of good cause shown for such failure, insti- tute proceedings for the dissolution of such society, in accordance with the provisions of section 24 of this act, or, in the case of a foreign society, he may cancel its certificate of authority to transact business in this state. Any such society, shown by any triennial valuation, subse- quent to December 31, 1917, not to have made the improvements herein required shall, within one year thereafter, complete such deficient im- provements, or thereafter, as to all new members admitted, be subject, so far as stated rates of contribution are concerned, to the provisions of sec- tion 12 of this act. applicable in the organization of new societies; pro- vided, that the contributions and funds of such new members shall be kept separate and apart from the other funds of the society until the required improvement shall be shown by valuation. If such required improvement is not shown by the succeeding triennial valuation, then the said new members may be placed in a separate class and their certifi- cates valued as an independent society in respect of contributions and funds. Sec. 24. Examination of domestic societies. The insurance com- missioner, or any person he may appoint shall have the power of visita- tion and examination into the affairs of any domestic society. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society and may sum- mon and qualify as witness under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and conditions of the society. The expense of such examination shall be paid by the society examined, upon statement furnished by the insurance commissioner, and the examination shall be made at least once in three years. Whenever after examination the insurance commissioner is satisfied that any domestic society has failed to comply with any pro- visions of this act, or is exceeding its powers, or is not carrying out its contracts in good faith, or is transacting business fraudulently or when- ever any domestic society, after the existence of one year or more, shall have a membership of less than four hundred (or shall determine to discontinue business), the insurance commissioner may present the facts relating thereto to the attorney general, who shall, if he deem the cir- cumstances warrant, commence an action in quo warranto in a court of competent jurisdiction, and such court shall thereupon notify the officers of such society of a hearing, and it shall then appear that such society should be closed, said society shall be enjoined from carrying on any further business and some person shall be appointed receiver of such FRATERNAL BENEFIT SOCIETIES. 141 society, and shall proceed at once to take possession of the books, papers, moneys and other assets of the society and shall forthwith, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled thereto. No such proceedings shall be commenced by the attorney general against any such society until after notice has been duly served on the chief executive officers of the society and a reasonable opportunity given to it, on a date to be named in said notice, to show cause why such proceedings should not be commenced. Sec. 25. Application for receiver, etc. No application for injunc- tion against or proceedings for the dissolution of or the appointment of a receiver for any such domestic society or branch thereof shall be entertained by any court in this state unless the same is made by the attorney general. Sec. 26. Examination of foreign societies. The insurance commis- sioner or any person whom he may appoint", may examine any foreign society transacting or applying for admission to transact business in this state. The said insurance commissioner may employ assistants, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society, and may summon and qualify as witness under oath and examine its officers, agents and employees and other persons in relation to the affairs, trans- actions and condition of the society. He may, in his discretion, accept in lieu of such examination the examination of the insurance depart- ment of the state, territory, district, province or country where such society is organized. The actual expenses of examiners making any such examination shall be paid by the society upon statement furnished by the insurance commissioner. If any such society or its officers refuse to submit to such examination or to comply with the provisions of the section relative thereto, the authority of such society to write new busi- ness in this state shall be suspended or license refused until satisfactory evidence is furnished the insurance commissioner relating to the con- dition and affairs of the society, and during such suspension the society shall not write new business in this state. Sec. 27. No adverse publication. Pending, during or after an exam- i nation or investigation of any such society, either domestic or foreign, the insurance commissioner shall make public no financial statement, report or finding, nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any such society, until a copy thereof shall have been served upon such society, at its home office, nor until such society shall have been afforded a reasonable opportunity to answer any such financial statement, report or finding and to make such showing in connection therewith as it may desire. Sec. 28. Revocation of license. When the insurance commissioner on investigation is satisfied that any foreign society transacting business under this act has exceeded its powers, or has failed to comply with any provisions of this act, or is conducting business fraudulently, or is not carrying out its contracts in good faith he shall notify the society of his findings, and state in writing the grounds of his dissatisfaction, and after reasonable notice require said society, on a date named, to show 142 INSURANCE LAWS OP CALIFORNIA. cause why its license should not be revoked. If on the date named in said notice such objections have not been removed to the satisfaction of the said insurance commissioner, or the society does "not present good and sufficient reasons why its authority to transact business in this state should not at that time be revoked, he may revoke the authority of the society to continue business in this state. All decisions and findings of the insurance commissioner made under the provisions of this section may be reviewed by proper proceedings in any court of competent juris- diction, as provided in section 16 of this act. Sec. 29. Exemption of certain societies. Nothing contained in this act shall be contrued to affect or apply to grand or subordinate lodges of Masons, Odd Fellows or Knights of Pythias (exclusive of the insur- ance department of the supreme lodge Knights of Pythias), and the Junior Order of United American Mechanics (exclusive of the bene- ficiary degree or insurance branch of the national council Junior Order United American Mechanics) or societies which limit their membership to any one hazardous occupation, nor to similar societies which do not issue insurance certificates, nor to an association of local lodges of a society now doing business in this state which provides death benefits not exceeding three hundred dollars to any one person, or disability benefits not exceeding three hundred dollars in an}' one year to any one person, or both, nor to any contracts of reinsurance business oh such plan in this state, nor to domestic societies which limit their membership to the employees of a particular city or town, designated firm, business house or corporation, nor to domestic lodges, orders or associations of a purely religious, charitable and benevolent description, which do not provide for a death benefit of more than one hundred dollars, or for disability benefits of more than one hundred and fifty dollars to any one person in any one year ; provided, always, that any such domestic order or society which has more than five hundred members, and provides for death or disability benefits, and any such domestic lodge, order or society which issues to any person a certificate providing for the payment of benefits, shall not be exempt by the provisions of this section, but shall comply with all the requirements of this act. The insurance commis- sioner may require from any society such information as will enable him to determine whether such society is exempt from the provisions of this act. No society, which is exempt by the provisions of this section from the requirement of this act shall give or allow or promise to give or allow, to any person any compensation for procuring new members. Any fraternal benefit society, heretofore organized and incorporated and operating within the definition set forth in sections 1, 2 and 3, of this act, providing for benefits in case of death or disability resulting solely from accidents, but which does not obligate itself to pay death or sick benefits, may be licensed under the provisions of this act, and shall have all the privileges and shall be subject to all the provisions and regulations of this act, except that the provisions of this act requiring medical examinations, valuations of benefit certificates, and that the cer- tificate shall specify the amount of benefits, shall not apply to such society. Sec. 30. Taxation. Every fraternal benefit society organized or licensed under this act is hereby declared to be a charitable and benevo- lent institution, and all of its funds shall be exempt from all and every CONTRACTS FOR EXCHANGE OP INDEMNITY. 143 state, county, district, municipal and school tax, other than taxes on real estate and office equipment. Sec. 31. Penalties. Any person, officer, member or examining phy- sician of any society authorized to do business under this act who shall knowingly or wilfully make any false or fraudulent statement or repre- sentation in or with reference to any application for membership, or for the purpose of obtaining money from or benefit in any society trans- acting business under this act, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars nor more than five hundred dollars, or imprisonment in the county jail for not less than thirty days nor more than one year, or both, in the discretion of the court; and any person who shall wilfully make a false statement of any material fact or thing in a sworn state- ment as to the death or disability of a certificate holder in any such society for the purpose of procuring payment of a benefit named in the certificate of such holder, and any person who shall wilfully make any false statement in any verified report or declaration under oath required or authorized by this act, shall be guilty of perjury, and shall be pro- ceeded against and punished as provided by the statutes of this state in relation to the crime of perjury. Any person who shall solicit member- ship for, or in any manner assist in procuring membership in any fra- ternal benefit society not licensed to do business in this state, or who shall solicit membership for, or in any manner assist in procuring mem- bership in any such society not authorized as herein provided, to do business as herein defined in this state shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not less than fifty nor more than two hundred dollars. Any society, or any officer, agent or employee thereof neglecting or refusing to comply with, or violating any of the provisions of this act, the penalty for which neglect, refusal or violation is not specified in this section, shall be fined not exceeding two hundred dollars upon conviction thereof. Sec. 32. All acts and parts of acts inconsistent with this act are hereby repealed. An act defining certain classes of contracts for the exchange of indemnity, prescribing regulations therefor and fixing a license fee. [Approved Dec. 24, 1911; Extra Session Stats. 1911, p. 111.] The people of the State of California do enact as follows: Section 1. Individuals, partnerships or corporations may exchange reciprocal or interinsurance contracts providing indemnity among each other from loss or from other damages in accordance with the following provisions of this act ; provided, that no individual, partnership or cor- poration thus exchanging indemnity shall assume on any single risk an amount greater than ten per cent of the net financial rating of such individual, partnership or corporation ; such financial rating to be shown by the reports of a commercial agency having at least one hundred thou- sand members. Sec. 2. Such individuals, partnerships or corporations so contract- ing among themselves shall have the power to appoint an attorney, agent or other representative and shall, through their attorney, agent or other 144 INSURANCE LAWS OP CALIFORNIA. representative, file with the insurance commissioner of this state a cer- tificate in writing, verified by the oath of said attorney, agent or other representative, setting forth : (a) The name or title by which said individuals, partnerships or cor- porations intending to make such contracts shall be known. The insur- ance commissioner may reject any name or title so submitted when the same is an interference with or too similar to one already appropriated or likely to mislead the public in any respect and, in such case, a name not liable to such objection must be chosen. (6) A verified copy of the form of policy, contract or agreement under or by which such indemnity is to be exchanged. (c) A verified copy of the form of power of attorney or other au- thority of any said attorney, agent or other representative setting forth the character of such representation and the authority of such repre- sentative. (d) The location of the office or offices through which said policies, contracts or agreements are to be issued. (e) Such attorney in fact shall also file a stipulation or agreement in writing that any notice, provided by law or by any insurance policy, proof of loss, summons or other process may be served upon the attorney in fact or upon the insurance commissioner of the State of California, in all actions or in other legal proceedings against such individuals, partnerships or corporations thus exchanging indemnity under the pro- visions of section 1 of this act. All notices, proofs of loss, summons or other legal process so served shall give jurisdiction over the persons of such individuals, partnerships or corporations thus exchanging in- demnity. Whenever such service of notice, proofs of loss, summons or other process shall be made upon the insurance commissioner, he must within ten days thereafter, transmit by mail, postage paid, a copy of such notice, proof of loss, or summons or other process to the attorney in fact so appointed by such individuals, partnerships or corporations so contracting among themselves and shall be addressed to such attorney in fact at the home or principal office through which such policies are to be issued. The sending of such copy by the insurance commissioner shall be a necessary part of the service of the notice, proof of loss, sum- mons or other process. When any notice, summons or other legal process is served upon the insurance commissioner pursuant to the provisions of this section, the service as to such individuals, partnerships, or corpora- tions thus exchanging indemnity shall be deemed complete at the end of sixty days after the date of the mailing of such copy of such notice, proof of loss, summons or other legal process to the attorney in fact as herein provided for. (/) The attorney, agent or other representative shall, whenever and as often as the same shall be requested, file with the insurance commis- sioner a statement verified by his oath to the effect that he has examined the commercial rating of the individuals, partnerships or corporations, composing the subscribers in such reciprocal or interinsurance exchange as shown by a commercial agency having at least one hundred thou- sand subscribers and that, from such examination, it appears that no subscriber of such exchange has assumed on any single risk an amount of liability greater than ten per cent of the net financial rating of such subscriber when such risk was assumed. CONTRACTS FOR EXCHANGE OP INDEMNITY. 145 (g) There shall also be filed with the insurance commissioner by any said attorney, agent or other representative, a written stipulation to the effect that all insurance written by him upon property situated within this state shall be deemed to be business done in this state and within the terms and subject as to taxation to the provisions of section 14 of article 13 of the constitution of this state. Sec. 3. The agent, attorney or other representative by or through whom are issued or negotiated any policies of or contracts or agreements for any insurance or indemnity of the character referred to in section one of this act shall procure from the insurance commissioner a certifi- cate of authority stating that all the requirements of this act have been complied with and upon such compliance and the payment of a fee of fifty dollars the insurance commissioner shall issue such certificate. Such certificate must be renewed annually, for which a fee of ten dollars shall be paid. Any such certificate so issued as above may be revoked or suspended by the insurance commissioner if any of such individuals, partnerships or corporations exchanging indemnity under the provisions of this act fail to comply with any or all of the requirements of this act. Sec. 4. The attorney in fact of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange shall file with the insurance commissioner of this state, on or before the first of March of each year, upon forms to be prepared by the insurance com- missioner, a statement which must exhibit the condition and affairs of such exchange on the 31st day of December then next preceding. Sec. 5. The insurance commissioner, whenever he deems necessary, must make an examination of the condition and affairs relating to the exchange of indemnity of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange and must make such an examination before issuing its original certificate of authority to do business in this state ; or where the home office of the interinsur- ance or reciprocal exchange is located outside of the State of California, and when such interinsurance or reciprocal exchange is licensed by the insurance commissioner or department of the state where such home office is located, the insurance commissioner shall accept as satisfactory a certificate of compliance issued by the insurance commissioner or department of the state where said home office is located. Such exam- ination shall verify the certificate and statement filed by the attorney in fact. Such exchange must open its books and papers for the inspection of the insurance commissioner and shall otherwise facilitate such exam- ination and the commissioner may administer oaths and examine under oath any person relative to the contracts of such exchange, and if he finds the books to have been carelessly or improperly kept or posted he must employ sworn experts to rewrite, post and balance the same at the expense of such individuals, partnerships or corporations composing such reciprocal or interinsurance exchange. Such examination must be conducted in the county where such individuals, partnerships or corpo- rations composing such reciprocal or interinsurance exchange has its principal office and must be private. Whenever the commissioner shall make such examination as aforesaid the same must be at the expense of the individuals, partnerships and corporations composing such recip- rocal or interinsurance exchange; such expense to be paid in advance, and in the event of refusal to pay such expenses the insurance commis- 10 IL 146 INSURANCE LAWS OF CALIFORNIA. sioner may refuse to issue any such certificate of authority and must revoke any existing certificate of authority authorizing such individuals, partnerships and corporations composing such reciprocal or interinsur- ance exchange to execute such contracts of indemnity. Sec. 6. Unincorporated interindemnity companies who do not issue policies of insurance, who do not charge expenses of management except in liquidation of losses, nor accept premiums from its members shall be exempt from the the provisions of this act. Sec. 7. All policies and insurance contracts or contracts of indem- nity upon a risk or risks situated in the State of California, held by an individual, partnership or corporations as a subscriber of any reciprocal or interinsurance exchange which exchange is not authorized to do busi- ness in the State of California shall be null and void ; provided, that any insurance agreement or agreement for indemnity on goods in transit or the property of common carriers used by such common carriers in the transaction of their business as such carriers shall be deemed not ren- dered void. Sec. 8. For the purpose of taxation under the provisions of sec- tion 14 of article 13 of the constitution of the State of California all con- tracts of indemnity upon risks located in this state between individuals, partnerships and corporations under the provisions of this act shall be deemed to be contracts of insurance upon business done in this state under and subject to the provisions of such section 14 article 13 of the constitution of the State of California. Sec. 9. Individuals, partnerships and corporations exchanging re- ciprocal or interinsurance contracts providing indemnity among each other shall be exempt from the provisions of other insurance laws of this state. Sec. 10. This act shall take effect July 1, 1911. An act to establish a standard form of fire insurance policy and to prevent variations therefrom, excepting under certain stated conditions and restric- tions. [Approved March 18, 1909; Stats. 1909, p. 404.] The people of the State of California, represented in senate and assem- bly, do enact as follows: Section 1. The following is adopted as a standard form of fire in- surance policy for the State of California : CALIFORNIA STANDARD FORM FIRE INSURANCE POLICY. No Amount $ Rate No other insurance permitted except by agreement endorsed hereon or added hereto. (Here insert name of company, and place of its main office in Cali- fornia, and name of state or country under which incorporated or organized. ) IN CONSIDERATION of the stipulations herein named and of dollars premium does insure for the term of from the day of , 19 , at noon, to the day of , 19 , STANDARD FORM OF FIRE INSURANCE POLICY. 147 at noon against all loss or damage by fire, except as hereinafter pro- vided. To an amount not exceeding dollars to the following described property while located and contained as described herein, and not else- where, to wit : The company will not be liable beyond the actual cash value of the interest of the insured in the property at the time of loss or damage nor exceeding what it would then cost the insured to repair or replace the same with material of like kind and quality; said cash value to be esti- mated without allowance for any increased cost of repair or reconstruc- tion by reason of any ordinance or law regulating repair or construction of buildings, and without compensation for loss resulting from interrup- tion of business or manufacture. This policy is made and accepted subject to the foregoing stipulations and conditions and those hereinafter stated, which are hereby specially referred to, and made part of this policy, together with such other pro- visions, agreements or conditions as may be endorsed hereon or added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except by writing endorsed hereon or added hereto, and no person, unless duly authorized in writing, shall be deemed the agent of this company. This policy shall not be valid until countersigned by the duly author- ized agent of the company, at In witness whereof, this company has executed and attested these presents (here insert name of company) by : Countersigned at , this day of , 19 , Agent. STIPULATIONS AND CONDITIONS SPECIALLY REFERRED TO. Property not covered, (a) This company shall not be liable for loss to accounts, bills, currency, evidences of debt or ownership or other documents, money, notes or securities ; nor ( b ) unless liability is specif- ically assumed hereon, for loss to bullion, casts, curiosities, drawings, dies, jewels, manuscripts, medals, models, patterns, pictures, scientific apparatus, business or store or office furniture or fixtures, sculptures, frescoes, decorations, or property held on storage or for repair. Hazards not covered. This company will not be liable for loss by (a) theft; or (6) by neglect of the insured to use all reasonable means to save and preserve the property at and after a fire, or when the prop- erty is endangered by fire; or (c) (unless fire ensues, and in that event for the damage by fire only) by explosion of any kind or lightning; or {d) by invasion, insurrection, riot, civil war, or commotion, or (except as hereinafter provided) by military or usurped power, or order of any civil authority, but the company will be liable (unless otherwise provided by endorsement hereon or added hereto) if the property is lost or damaged, by fire or otherwise, by civil authority or military or 148 INSURANCE LAWS OF CALIFORNIA. usurped power exercised to prevent the spread of fire not originating from a cause excepted hereunder and which fire otherwise probably would have caused the loss of or damage to the insured property. Matters avoiding policy. This entire policy shall be void, (a) if the insured has concealed or misrepresented any material fact or circum- stances concerning this insurance or the subject thereof; or, (b) in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss. Unless otherwise provided by agreement endorsed hereon or added hereto, this entire policy shall be void, (a) if the insured now has or shall procure any other insurance, whether valid or not, on property covered in whole or in part by this policy, or (/;) if the interest of the insured be other than unconditional and sole ownership, or (c) if the subject of insurance be a building on ground not owned by the insured in fee simple, or (d) if with the knowledge of the insured foreclosure proceedings be commenced or notice given of sale of any property cov- ered by this policy by virtue of any mortgage or trust deed, or (e) if this policy be assigned before a loss. Matters suspending insurance. Unless otherwise provided by agree- ment endorsed hereon or added hereto this company shall not be liable for loss or damage occurring (a) while the hazard be materially in- creased by any means within the control of the insured; or (b) if the subject of insurance be a manufacturing establishment, while it is oper- ated in whole or in part at night later than ten o'clock or while it ceases to be operated beyond the period of ten consecutive days; or (c) while mechanics or artisans are employed in building or altering or repairing the described premises for more than fifteen days at any one time; or (d) while illuminating gas or vapor be generated in the described build- ing (or adjacent thereto) for use therein- or (e) while there be kept, used or allowed on the described premises (any usage or custom of trade or manufacture to the contrary notwithstanding) calcium carbide, phos- phorus, dynamite, nitroglycerine, fireworks or other explosives; or exceeding one quart each of benzine, gasoline, naphtha or ether ; or more than twenty-five pounds of gunpowder; or (/*) while a building herein described whether intended for occupation by owner or tenant is vacant or unoccupied beyond the period of ten (10) consecutive days ; (g) while the interest in, title to or possession of the subject of insurance is changed excepting: (1) by the death of the insured; (2) a change of occupancy of building without material increase of hazard; and (3) transfer by one or more several copartners or co-owners to the others. Such suspension shall not extend the term of this policy nor create any right for refund of the whole or any portion of premium, nor affect the respective rights of cancellation. Chattel mortgage. Unless otherwise provided by agreement in writ- ing endorsed hereon or added hereto this company shall not be liable for loss or damage to any property insured hereunder while encumbered by a chattel mortgage, but the liability of the company upon other property hereby insured shall not be affected by such chattel mortgage. Fallen building clause. Unless otherwise provided by agreement endorsed hereon or added hereto, if a building or any material part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease. STANDARD FORM OP FIRE INSURANCE POLICY. 149 Removal when endangered by fire. Should any of said property be necessarily removed because of danger from fire, and there is no other insurance thereon, that part of this policy in excess of the value of the insured property remaining in the original location, or, if there is other insurance thereon, that part of this policy in excess of its proportion of the value of the insured property remaining in the original location, shall, for the ensuing five days only, cover said removed property in its new location or locations. Cancellation. This policy shall be canceled at any time at the request of the insured, in which case the company shall, upon surrender of this policy, refund the excess of paid premium above the customary short rates for the expired time. This policy may be canceled at any time, without tender of unearned portion of premium, by the company by giving five (5) days' written notice of cancellation to the insured and to any mortgagee or other party to whom, with the written consent of the company, this policy is made payable, in which case the company shall, upon surrender of the policy or relinquishment of liability thereunder, refund the excess of paid premium above the pro rata premium for the expired time. Duty of insured in case of loss. When a loss occurs the insured must give to this company written notice thereof without unnecessary delay ; and shall protect the property from further damage; forthwith separate the damaged and undamaged personal property and put it in the best possible order; and without unnecessary delay make a complete inven- tory stating as far as possible the quantity and cost of each article, and the amount claimed thereon. Within sixty days after the commencement of the fire the insured skill render to the company at its main office in California named herein preliminary proof of loss consisting of a written statement signed and sworn to by him setting forth: (a) his knowledge and belief as to the origin of the fire; (b) the interest of the insured and of all others in the property; (c) the cash value of the different articles or properties and the amount of loss thereon; (d) all incumbrances thereon; (e) all other insurance, whether valid or not, covering any of said articles or prop- erties; (f) a copy of the descriptions and schedules in all other policies unless similar to this policy, and in that event, a statement as to the amounts for which the different articles or properties are insured in each of the other policies; (g) any changes of title, use, occupation, loca- tion or possession of said property since the issuance of this policy; (//) by whom and for what purpose any building herein described, and the several parts thereof, were occupied at the time of the fire. If the company claims that the preliminary proof of loss is defective and within five days after the receipt thereof (without admitting the amount of loss or any part thereof) notifies in writing the insured, or the party making such proof of loss, of the alleged defects (specifically stating them) and requests that they be remedied by verified amend- ments the insured or such party within ten days after the receipt of such notification and request must comply therewith or, if unable so to do, present to the company an affidavit to that effect. The insured shall also furnish, if required, as far as it is practicable to obtain the same, verified plans and specifications of any buildings. 150 INSURANCE LAWS OP CALIFORNIA. fixtures or machinery destroyed or damaged ; and the insured shall exhibit to any person designated in writing by this company all that remains of any property herein described and shall submit to examina- tion under oath, as often as required, by any such person, and subscribe to the testimony so given and shall produce to such person for examina- tion all books of account, bills, invoices and other vouchers, and permit extracts and copies thereof to be made, and in case the originals are lost certified copies, if obtainable, shall be produced. Ascertainment of amount of loss. This company shall be deemed to have assented to the amount of the loss claimed by the insured in his preliminary proof of loss, unless within twenty days after the receipt thereof, or, if verified amendments have been requested, within twenty days after their receipt, or within twenty days after the receipt of an affidavit that the insured is unable to furnish such amendments, the company shall notify the insured in writing of its partial or total dis- agreement with the amount of loss claimed by him and shall also notify him in writing of the amount of loss, if any, the company admits on each of the different articles or properties set forth in the preliminary proof or amendments thereto. If the insured and this company fail to agree, in whole or in part, as to the amount of loss within ten days after such notification, this com- pany shall forthwith demand in writing an appraisement of the loss or part of loss as to which there is a disagreement and shall name a com- petent and disinterested appraiser, and the insured within five days after receipt of such demand and name, shall appoint a competent and disin- terested appraiser and notify the company thereof in writing, and the two so chosen shall before commencing the appraisement, select a com- petent and disinterested umpire. The appraisers together shall estimate and appraise the loss or part of loss as to which there is a disagreement, stating separately the sound value and damage, and if they fail to agree they shall submit their dif- ferences to the umpire, and the award in writing duly verified of any two shall determine the amount or amounts of such loss. The parties to the appraisement shall pay the appraisers respectively appointed by them and shall bear equally the expense of the appraise- ment and the charges of the umpire. If for any reason not attributable to the insured, or to the appraiser appointed by him, an appraisement is not had and completed within ninety days after said preliminary proof of loss is received by this com- pany, the insured is not to be prejudiced by the failure to make an appraisement, and may prove the amount of his loss in an action brought without such appraisement. Options of company in case of loss. This company may, at its option, take all or any part of the property for which insurance hereunder is claimed at its ascertained or appraised value, and may also, at its option, in satisfaction of its liability hereunder, repair, rebuild or replace any building or structure or machine or machinery used therein, with other of like kind and quality, within a reasonable time, upon giving notice within twenty days of its intention so to do after the receipt by it of the preliminary proof of loss, or if verified amendments have been requested, within twenty days after their receipt, or, within twenty days after the receipt of an affidavit that the insured is unable to furnish such STANDARD FORM OF FIRE INSURANCE POLICY. 151 amendments. There can be no abandonment to this company of any property. Apportionment of loss. This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by, and expenses of, removal from the premises endangered by fire, than the amount hereby insured bears to the entire insurance cover- ing such property whether valid or not, or by solvent or insolvent insurers. Loss when payable. A loss hereunder shall be payable in thirty days after the amount thereof has been ascertained either by agreement or by appraisement ; but if such ascertainment is not had or made within sixty days after the receipt by the company of the preliminary proof of loss, then the loss shall be payable in ninety days after such receipt. Non-waiver by appraisal or examination. This company shall not be held to have waived any provision or condition of this policy or any for- feiture thereof, by assenting to the amount of the loss or damage or by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for. Subrogation. If this company shall claim that the fire was caused by the act or neglect of any person or corporation, this company shall, on payment of the loss be subrogated to the extent of such payment to all right of recovery by the insured for the loss resulting therefrom, and such right shall be assigned to this company by the insured on receiving such payment. Time for commencement of action. No suit or action on this policy for the recovery of any claim shall be sustained, until after full com- pliance by the insured with all of the foregoing requirements, nor unless begun within fifteen months next after the commencement of the fire. Definitions. Wherever in this policy the word "insured" occurs, it shall be held to include the legal representatives of the insured in case of his death, and wherever the word "loss" occurs, it shall be deemed the equivalent of "loss or damage," and wherever the words "the time of loss or damage" are used they shall be deemed the equivalent of "the time of the commencement of the fire." Sec. 2. There shall be printed on the outside fold of said policy in type not smaller than small pica the following words in this form : READ THIS POLICY. Ins. Co. is liable only for actual cash value. Policy is void in case of any fraud, false swearing, mis- representation or concealment about material facts. Policy is void, unless otherwise agreed in writing, if 1st. It is assigned before loss ; 2nd. Insured has or shall procure other insurance ; 3rd. Any change occurs in location of property ; 4th. Insured building is on ground not owned in fee simple by insured; 5th. Insured is not sole and unconditional owner. Policy is suspended, unless otherwise agreed in writing, if 6th. Described building becomes vacant or unoccupied for ten days; 152 INSURANCE LAWS OP CALIFORNIA. 7th. Mechanics are employed more than fifteen days in repairing same ; 8th. Property is or becomes encumbered by chattel mort- gage; 9th. Illuminating gas or vapor is generated in or adjacent to described building; 10th. Explosives or prohibited quantities of gasoline, etc., are kept on premises. Insurance ceases if described building or any material part falls except as result of fire. Policy does not cover certain enumerated personal property. Note particularly duty of insured in case of loss ; Also provisions avoiding or suspending policy, including changes of ownership or possession. Sec. 3. By special agreement endorsed on the policy or added thereto the provisions regarding appraisement or apportionment of loss may be waived and the valuations of all or any of the insured property in case of total loss may be agreed upon in advance of loss. Sec. 4. Said standard form of policy shall be plainly printed and no portion thereof shall be in type smaller than small pica and subheads shall be in type larger than pica, and the lines of the policy shall be numbered consecutively. Sec. 5. This act shall not apply to any company organized under an act entitled " An act to provide for the organization and management of county fire insurance companies," approved April 1, 1897, or amend- ments to that act, but all other fire insurance policies on property in California shall be on said standard form, and, except as herein pro- vided, shall not contain additions thereto. No parts of the standard form shall be omitted therefrom. Sec. 6. The blanks in said standard form shall be appropriately filled. The company may add to the standard form any matter relat- ing to its financial condition, directors, officers, stockholders and his- tory, and the address of its home office and principal office in the United States; also in red ink any provisions respecting any limita- tion of liability of the company, its stockholders or members whicli it is required or permitted by the law of the state or country of its organization to insert in its policies. Sec. 7. Clauses may be added to the standard form providing for and defining the rights, duties and obligations of mortgagees, assignees and other parties who have acquired or may acquire an interest in, right to or lien upon the insured property. Sec. 8. No clause shall be inserted or rider attached affecting the standard form liability of the insurer for loss or damage by fire occa- sioned either directly or indirectly by earthquake, hurricane, volcanic action or other disturbance of nature, unless the same shall be printed in red ink in type larger than small pica and at the head of the policy there shall be printed in red ink in large bold-faced type the words, "This policy contains limitations of liability not permitted in the Cali- fornia standard form." Sec. 9. Clauses may be added to the standard form (a) covering property and risks not otherwise covered; (b) assuming greater liability than is otherwise imposed on the insurer; (c) granting insured permits and privileges not otherwise provided; (d) waivers of any of the mat- STANDARD FORM OF FIRE INSURANCE POLICY. 153 ters avoiding the policy or suspending the insurance; (am; action at law as contrasted with compensation under this act. &i (5) The term "person" includes an individual, firm, volun- "Person." tary association or a corporation. (6) The term "insurance carrier" includes the state com- "insurance pensation insurance fund herein created and any private com- c pany, corporation or mutual association authorized under the laws of this state to insure employers against liability for com- pensation under this act. (7) The phrase "compensation provisions of this act" s 'S?on P pro- means and includes sections twelve to thirty-five, inclusive, of visions." this act. 12 IL 178 INSURANCE LAWS OF CALIFORNIA. "Safety provi- sions." (8) The phrase "safety provisions of this act" means and includes sections fifty-one to seventy-two, inclusive, of this act. (9) Whenever in this act the singular is used the plural shall be included; where the masculine gender is used the feminine and neuter shall be included. Industrial Accident Commis- sion created. Members. Term. Salary. Organiza- tion of commis- sion. Delegation of power. Seal. Offices. Industrial Accident Commission. Sec. 3. There is hereby created a board to consist of three members who shall be appointed by the governor from the state at large and which shall be known as the "industrial accident commission" and shall have the powers, duties and functions hereinafter conferred. Within thirty days prior to the first day of January, 1914, the governor shall appoint the three members of said commission, one for the term of two 3ears, one for the term of three years and one for the term of four years. Thereafter, the term of office of each com- missioner shall be four years. Vacancies shall be filled by appointment in the same manner for the unexpired term. Each commissioner shall receive an annual salary of five thousand dollars. Each commissioner shall, before entering upon the duties of his office, take and subscribe the constitu- tional oath of office. Sec. 4. The commission shall organize by choosing one of its members as chairman. A majority of the commission shall constitute a quorum for the transaction of any business, for the performance of any duty, or for the exercise of any power or authority of the commission. A vacancy on the commis- sion shall not impair the right of the remaining members to perform all the duties and exercise all the power and authority of the commission. The act of the majority of the commission, when in session as a commission, shall be deemed to be the act of the commission, but any investigation, inquiry or hearing, which the commission has power to undertake or to hold, may be undertaken or held by or before any member thereof or any referee appointed by the commission for that purpose, and every finding, order, decision, or award made by any com- missioner or referee, pursuant to such investigation, inquiry or hearing, when approved and confirmed by the commission and ordered filed in its office, shall be deemed to be the finding, order, decision or award of the commission. Sec. 5. The commission shall have a seal, bearing the fol- lowing inscription : ' ' Industrial Accident Commission State of California, seal." The seal shall be affixed to all writs and authentications of copies of records and to such other instru- ments as the commission shall direct. All courts shall take judicial notice of said seal. Sec. 6. The commission shall keep its principal office in the city and county of San Francisco, and shall also keep an office in the city of Los Angeles, and shall provide itself with suit- able rooms, necessary office furniture, stationery and other supplies. For the purpose of holding sessions in other places, the commission shall have power to rent temporary quarters. COMPENSATION, INSURANCE AND SAFETY ACT. 179 Sec 7. The commission shall have full power and au- thority : (1) To appoint as its attorney an attorney-at-law of this Attorney, state, who shall hold office at the pleasure of the commission. It shall be the right and the duty of the attorney to represent and appear for the people of the State of California and the commission in all actions and proceedings involving any ques- tion under this act or under any order or act of the commis- sion and, if directed so to do by the commission, to intervene, if possible, in any action or proceeding in which any such question is involved; to commence, prosecute and expedite the final determination of all actions or proceedings, civil or criminal, directed or authorized by the commission; to advise the commission and each member thereof, when so requested, in regard to all matters in connection with the jurisdiction, powers or duties of the commission and members thereof; and generally to perform all duties and services as attorney to the commission which may be required of him. (2)* To appoint, and it shall appoint, a secretary, who shall Secretary, hold office at the pleasure of the commission. It shall be the duty of the secretary to keep a full and true record of all the proceedings of the commission, to issue all necessary processes, writs, warrants and notices which the commission is required or authorized to issue, and generally to perform such other duties as the commission may prescribe. The commission may also appoint such assistant secretaries as may be necessary and such assistant secretaries may perform any duty of the secre- tary, when so directed by the commission. (3) To appoint a manager of the state compensation insur- ^ f a s n t ate r iuice fund who shall hold office at the pleasure of the commis- compensa- sion. It shall be the duty of such manager to manage, super- anceSd. vise and conduct, subject to the general direction and approval of the commission, the business and affairs of the state com- pensation insurance fund and to perform such other duties as the commission may prescribe. Before entering on the Bond, duties of his office, he must give an official bond in the sum of $50,000, and take and subscribe to an official oath. Said bond must be approved by the commission, by written endorse- ment thereon, and be filed in the office of the secretary of state. (4) To appoint a superintendent of the department of fSSSnt'oi safety, who shall hold office at the pleasure of the commission safety. and who shall perform such duties as the commission shall prescribe. (5) To employ such other assistants, officers, experts, statis- {$J^| m " ticians, actuaries, accountants, inspectors, referees and other employees, as it may deem necessary to carry out the provisions of this act, or to perform the duties and exercise the powers conferred by law upon the commission. Sec. 8. All officers and employees of the commission shall SaIarlefl - receive such compensation for their services as may be fixed by the commission and shall hold office at the pleasure of the 180 INSURANCE LAWS OP CALIFORNIA. Expenses. Apportion ment of expenses. Blank forms. Hooks of record. Powers. Fees. Reports and pamphlets commission and shall perform such duties as are imposed on them by law or by the commission. The salaries of the mem- bers of the commission, its attorney, secretary and assistant secretary, as fixed by law or the commission, shall be paid in the same manner as are the salaries of other state officers. The salary or compensation of every other person holding office . or employment under the commission, as fixed by law or by the commission, shall be paid monthly, after being approved by the commission, upon claims therefor to be audited by the state board of control. All expenses incurred by the ( commission pursuant to the provisions of this act, including the actual and necessary traveling and other expenses and disbursements of the members thereof, its officers and employees, incurred while on business of the commission, either within or without the state, shall, unless otherwise provided in this act, be paid from the funds appropriated for the use of the commission, after being approved by the commission, upon claims therefor to be audited by the board of control ; provided, however, that no such expenses incurred outside of the state shall be allowed unless prior authorization therefor be obtained from the board of control. Sec. 9. In all cases in which salaries, expenses or outgoings of one department under the jurisdiction of the commission are expended in whole or in part on behalf of another depart- ment the commission may apportion the same between such departments. Sec. 10. The commission shall cause to be printed and fur- nished free of charge to any employer or employee, or other person, such blank forms as it shall deem requisite to facilitate or promote the efficient administration of this act ; it shall pro- vide a book in which shall be entered the minutes of all its proceedings, a book in which shall be recorded all awards made by the commission and such other books or records- as it shall deem requisite for the proper and efficient administration of this act; all such records to be kept in the office of the com- mission. Sec. 11. The commission shall also have power and au- thority : (1) To charge and collect the following fees: for copies of papers and records not required to be certified or otherwise authenticated by the commission, ten cents for each folio; for certified copies of official documents and orders filed in its office or of the evidence taken on proceedings had, fifteen cents for each folio. .(2) To publish and distribute in its discretion from time to . time, in addition to its annual report to the governor of the state, such further reports and pamphlets covering its opera- tions, proceedings and matters relative to its work as it may deem advisable. (3) To fix and collect reasonable charges for publications issued under its authority. COMPENSATION, INSURANCE AND SAFETY ACT. 181 (1) The fees charged and collected under this section shall Fees paid be paid monthly into the treasury of the state to the credit of Uustriai the "industrial accident fund" and shall be accompanied by a JJ^f, 1 ?' detailed- statement thereof. Compensation. Sec. 12. (a) Liability for the compensation provided by 'Compen- this act, in lieu of any other liability whatsoever, shall, without payable- regard to negligence, exist against an employer for any per- sonal injury sustained by his employees by accident arising out of and in the course of the employment and for the death of any such employee if the injury shall proximately cause dca tli. in those cases where the following conditions of com- pensation concur: Soyef 1 (1) Where, at the time of the accident, both the employer and em- ;iiid emplovee are subject to the compensation provisions of subjSt a to this act. ^ e d act: (2) Where, at the time of the accident, the employee is per- wheueni . forming service growing out of and incidental to his employ- dj?^^. ment and is acting within the course of his employment as duty !!" K such. * (3) Where the injury is proximately caused by accident, Not when either with or without negligence, and is not so caused by the ^used'hy" intoxication or the wilful misconduct of the injured employee. |j*jxfca- (b) Where such conditions of compensation exist, the right miscon- I.' recover such compensation pursuant to the provisions of duct - Ibis act. shall be the exclusive remedy against the employer for gjJJgJJJ" the injury or death, except that when the injury was caused she by the employer's gross negligence or wilful misconduct and u e r J 1 n e e 8 g y such act or failure to act causing such injury was the personal ^ p s 1 ^ er act <>r failure to act on the part of the employer himself, or if negligent. the employer be a partnership on the part of one of the partners, or if a corporation, on the part of an elective officer or officers thereof, and such act or failure to act indicated a wilful disregard of the life, limb, or bodily safety of employees, any such injured employee may, at his option, either claim compensation under this act or maintain an action at law for damages. (c) In all other cases where the conditions of compensation liability do not concur, the liability of the employer snail be the same damages. ^ if this act had not been passed. Sec. 13. The term ''employer" as used in sections twelve p^r" to thirty-five, inclusive, of this act shall be construed to mean: dtaed. The state, and each county, city and county, city, school dis- trict and all public corporations therein, and every person, firm, voluntary association, and private corporation (includ- ing any public service corporation) who has any person in service under any appointment or contract of hire, or appren- ticeship, express or implied, oral or written, and the legal representatives of any deceased employer. 182 INSURANCE LAWS OP CALIFORNIA. Medical treatment T m ee" ^ EC# ^' ^^ e * erm " em pl vee " as use d m sections twelve defined. to thirty-five, inclusive, of this act shall be construed to mean : Every person in the service of an employer as denned bi- section thirteen hereof under any appointment or contract of hire or apprenticeship, express or implied, oral or written, including aliens and also including minors, but excluding any person whose employment is both casual and not in the usual course of the trade, business, profession or occupation of his employer, and also excluding any employee engaged in farm, dairy, agricultural, viticultural or horticultural labor, in stock or poultry raising or in household domestic service. Scale of Compensation. Sec. 15. Where liability for compensation under this act exists such compensation shall be furnished or paid by the employer and be as provided in the following schedule : (a) Such medical, surgical and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, as may reasonably be required at the time of the injury and within ninety days thereafter, to cure and relieve from the effects of the injury, the same to be provided by the employer, and in case of his neglect or refusal seasonably to do so, the employer to be liable for the reasonable expense incurred by or on behalf of the employee in providing the same. (b) 1. If the accident causes disability, a disability indem- nity which shall be payable for one week in advance as wages on the fifteenth day after the injured employee leaves work as a result of the injury, and thereafter on the employer's regular payday, but not less frequently than twice in each calendar month, unless otherwise ordered by the commission, subject, however, to the following limitations : (1) If the period of disability does not last longer than two weeks from the day the employee leaves work as the result of the injury, no disability indemnity whatever shall be recov- erable. (2) If the period of disability lasts longer than two weeks from the day the employee leaves work as the result of the injury, no disability indemnity shall be recoverable for the first two weeks of such disability. 2. The disability indemnity payable shall be as follows : Temporary (1) If the accident causes temporary total disability, sixty- five per cent of the average weekly earnings during the period of such disability ; (2) If the accident causes temporary partial disability, sixty-five per cent of the weekly loss in wages during the period of such disability ; (3) If the temporary disability caused by the accident is at times total and at times partial, the weekly disability indemnity during the periods of each such total or partial disability shall be in accordance with paragraphs (1) and (2) of this subdivision respectively; Compensa tion, when payable. Compensa sat ion for- disability; COMPENSATION, INSURANCE AND SAFETY ACT. 183 (4) Paragraphs (1), (2) and (3) of this subdivision shall be limited as follows: aggregate disability indemnity for a single injury causing temporary disability shall not exceed three times the average annual earnings of the employee, nor shall the aggregate disability period for such temporary dis- ability in any event extend beyond two hundred forty weeks from the date of the accident. (5) If the accident causes permanent disability, the per- ^SK^ centage of disability to total disability shall be determined and the disability indemnity computed and allowed as follows : for a ten per cent disability, sixty-five per cent of the average weekly earnings for a period of forty weeks ; for a twenty per cent dis- ability, sixty-five per cent of the average weekly earnings for a period of eighty weeks; for a thirty per cent disability, sixty-five per cent of the average weekly earnings for a period of one hundred twenty weeks; for a forty per cent disability, sixty-five per cent of the average weekly earnings for a period of one hundred sixty weeks; for a fifty per cent disability, sixty-five per cent of the average weekly earnings for a period of two hundred weeks; for a sixty per cent disability, sixty- five per cent of the average weekly earnings for a period of two hundred forty weeks; for a seventy per cent disability, sixty- live per cent of the average weekly earnings for a period of two hundred forty weeks, and thereafter ten per cent of such weekly earnings during the remainder of life; for an eighty per cent disability, sixty-five per cent of the average weekly earnings for a period of two hundred forty weeks, and there- after twenty per cent of such weekly earnings during the remainder of life; for a ninety per cent disability, sixty-five per cent of the average weekly earnings for a period of two hundred forty weeks and thereafter thirty per cent of such weekly earnings during the remainder of life; for a hundred per eent disability, sixty-five per cent of the average weekly earnings for a period of two hundred forty weeks and there- after forty per cent of such weekly earnings during the remainder of life. (6) The indemnity for permanent disabilities intermediate inter- to those fixed by the foregoing schedule shall be computed and Smpensa- allowed as follows : if under seventy per cent, sixty-five per JjJJ^ le cent of the average weekly earnings for four weeks for each one per cent of disability; if seventy per cent or over, sixty- five per cent of the average weekly earnings for two hundred forty weeks and thereafter one per cent of such weekly earn- ings for each one per cent of disability in excess of sixty per cent to be paid during the remainder of life. (7) In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee and his age at the time of such injury.. 184 INSURANCE LAWS OF CALIFORNIA. SuS5t not (8) '. Not ^ n & contained in the foregoing schedule of perma- compensa- nent disability indemnity shall be held to limit the amount of payable, compensation recoverable for any such permanent injury dur- ing any period of total incapacity due to illness resulting from that injury, but any sum so received shall be deducted from the compensation payable in accordance with the said schedule permanent (9) The following permanent disabilities shall be conclu- d r S esSmJd sively Presumed to be total in character: Loss of both eyes or the sight thereof; loss of both hands or the use thereof; an injury resulting in a practically total paralysis; an injury to the brain resulting in incurable imbecility or insanity. In all other cases, permanent total disability shall be determined in accordance with the fact. deithon . 3 \ T he death of the in J ur cd employee shall not affect the liability, liability of the employer under subsections (a) and (b) of this section, so far as such -liability has accrued and become payable at the date of the death, and any accrued and unpaid compensation shall be paid to the dependents, if any, without administration, or if there are no dependents, to the personal representatives of the deceased employee or other person entitled thereto, but such death shall be deemed to be the ter- mination of the disability, benefits W ^ the ac cident causes death, either with or without dis- wnenre- ability,. a death benefit which shall be payable in installments c p ent s- e q Ua j to s ixty-five per cent of the average weekly earnings of the deceased employee, upon the employer's regular payday, but not less frequently than twice in each calendar month, unless otherwise ordered by the commission, which death bene- fit shall be as follows : wholly, or ( 1 ) In case the deceased employee leaves a person or per- sons wholly dependent upon him for support, the death benefit shall be a sum sufficient, when added to the disability indemnity which, at the time of death has accrued and become payable, under the provisions of subsection (b) hereof, to make the total disability indemnity and death benefit equal to three times his average annual earnings, such annual earnings to be taken at not less than three hundred and thirty-three dollars and thirty-three cents nor more than one thousand six hundred and sixty-six dollars and sixty-six cents. Partially (2) In case the deceased employee leaves no person wholly andT" ent ' dependent upon him for support, but one or more persons par- tially dependent therefor, the death benefit shall be such per- centage of three times such average annual earnings of the employee as the annual amount devoted by the deceased to the support of the person or persons so partially dependent bears to such average annual earnings; provided, that the death benefit shall not be greater than a sum sufficient, when added to the disability indemnity which, at the time of the death, has accrued and become payable under the provisions of sub- section (6) hereof to make the total disability indemnity and death benefit equal to three times his average annual earnings. COMPENSATION, INSURANCE AND SAFETY ACT. 185 such average annual earnings to be taken at not less than three hundred and thirty-three dollars and thirty-three cents nor more than one thousand six hundred and sixty-six dollars and sixty-six cents. (3) If the deceased employee leaves no person dependent ^enVde upon him for support, the death benefit shall consist of the pendents. reasonable expenses of his burial not exceeding one hundred dollars and such further death benefit as may be provided by law. (d) Payment of compensation in accordance with the order and direction of the commission shall discharge the employer from all claims therefor. Sec. 16. (a) Unless compensation is paid or an agreement Forfeiture for its payment made within the time limited in this section of rignts - for the institution of proceedings for its collection, the right to institute such proceedings shall be wholly barred. (6) The periods within which proceedings for the collection of compensation may be commenced are as follows : (1) Proceedings for the collection of the benefit provided Jj[!{}jf of by subsection (a) of section fifteen or for the collection of the disability indemnity provided by subsection (&) of said sec- tion fifteen must be commenced within six months from the date of the accident, except as otherwise provided in this act. (2) Proceedings for the collection of the death benefit pro- vided by subsection (c) of said section fifteen must be com- menced within one year from the date of death* and in any event within two hundred forty weeks from the date of the accident, and can only be maintained when it appears that death ensued within one year from the date of the accident, or that the accident causing death also caused disability which continued to the date of the death and for which a disability indemnity was paid, or an agreement for its payment made, or proceedings for its collection commenced within the time lim- ited for the commencement of proceedings for the recovery of the disability indemnity. (c) The payment of the disability indemnity or death ben- Extension efit, or any part thereof, or agreement therefor, shall have the effect of extending the period within which proceedings for its collection may be commenced, six months from the date of the agreement or last payment of such disability indemnity or death benefit or any part thereof. (d) If an injured employee, or in the case of his death, one Minora and or more of his dependents, shall be a minor or incompetent at (1(,fp(t,ves - any time when any. right or privilege accrues to such person under the provisions of this act, a general guardian, appointed by the court or a guardian ad litem or trustee appointed by the commission or a commissioner may, on behalf of any such person, claim and exercise any such right or privilege with the same force and effect as if no such disability existed ; and no limitation of time provided by this act shall run against any such minor or incompetent unless and until such guardian or trustee is appointed. 186 INSURANCE LAWS OF CALIFORNIA Effect of f (e) No compensation shall be payable in respect of the death medical or disability of an employee if his death is caused, or if and so treatment. f ar ^ j^g disability is caused, continued, or aggravated, by an unreasonable refusal to submit to medical treatment, or to any surgical treatment, the risk of which is, in the opinion of the , commission, inconsiderable in view of the seriousness of the injury. Previous (/") The fact that an employee has suffered a previous dis- no bar!* 7 ability, or receives compensation therefor, shall not preclude him from compensation for a later injury, or his depend- ents from compensation for death resulting therefrom, but in determining compensation for the later injury, or death resulting therefrom, his average annual earnings shall be fixed at such sum as will reasonably represent his annual earning capacity at the time of the later injury, during"* (&) An y payment? allowance or benefit received by the incapacity injured employee during the period of his incapacity, or by admission his dependents in the event of his death, which by the terms of oHiabiiity, t hj s aet was n0 {. t jj en fi ue an( j payable or when there is any dispute or question concerning the right to compensation, shall not, in the absence of any agreement, be construed to be an admission of liability for compensation on the part of the employer, or the acceptance thereof as a waiver of any right or claim which the employee or his dependents may have against the employ er, but any such payment, allowance or benefit may be taken into account by the commission in fixing the amount of the compensation to be paid. Average Sec. 17. (a) The average weekly earnings referred to in and k annuai section fifteen hereof shall be one fifty-second of the average earnings, annual earnings of the employee ; in computing such earnings his average annual earnings shall be taken at not less than three hundred and thirty-three dollars and three-three cents, nor at more than one thousand six hundred and sixty-six dollars and sixty-six cents and between said limits shall be arrived at as follows : computing! W ^ the injured employee has worked in the same employ- ment, whether for the same employer or not, during substan- tially the whole of the year immediately preceding his injury, his average annual earnings shall consist of three hundred times the average daily earnings, wage or salary which he earned as such employee during the days when so employed. (2) If the injured employee has not so worked in such em- ployment during substantially the whole of such immediately preceding year, his average annual earnings shall consist of three hundred times the average daily earnings, wage or salary which an employee of the same class, working substantially the whole of such immediately preceding year, in the same or a similar kind of employment, in the same or a neighboring place, earned during the days when so employed. (3) In every case where for any reason the foregoing methods of arriving at the average annual earnings of the injured employee can not reasonably and fairly be applied, COMPENSATION, INSURANCE AND SAFETY ACT. 187 such annual earnings shall be taken at such sum as, having regard to the previous earnings of the injured employee, and of other employees of the same or most similar class, working in the same or most similar employment, in the same or neigh- boring locality, shall reasonably represent the average annual earning capacity of the injured employee at the time of the injury in the kind of employment in which he was then work- ing, or in any employment similar thereto. ( b ) In determining such average weekly earnings, there deluded in shall be included the market value of board, lodging, fuel and estimate, other advantages received by the injured employee, as part of his remuneration and which can be estimated in money, but such average weekly earnings shall not include any sum which the employer paid to the injured employee to cover any special expenses entailed on him by the nature of his employment. (c) If the injured employee is a minor, and his incapacity, m s C a n se e f whether total or partial, is permanent, his average weekly a minor, earnings shall be deemed, within the limits fixed, to be the weekly sum, that under ordinary circumstances he would probably be able to earn after attaining the age of twenty-one years, in the occupation in which he was employed at the time of the injury, if he had not been injured. Sec. 18. The weekly loss in wages referred to in section ^ s e s e ^ f y fifteen hereof shall consist of the difference between the average wages. weekly earnings of the injured employee, computed according to the provisions of said section, and the weekly amount which . the injured employee, in the exercise of reasonable diligence, will probably be able to earn during the disability, to be determined in view of the nature and extent of the injury. In computing such probable earnings due regard shall be had to the ability of the injured employee to compete in an open labor market. Dependents Defined. Sec. 19. (a) The following shall be conclusively presumed ?2SSJJ to be wholly dependent for support upon a deceased employee : wholly" (1) A wife upon a husband with whom she was living at the de P ndent - time of his death. (2) A husband upon a wife upon whose earnings he is par- tially or wholly dependent at the time of her death. (3) A child or children under the age of eighteen years (or over said age, but physically or mentally incapacitated from earning) upon the parent with whom he or they are living at the time of the death of such parent or for whose main- tenance such parent was legally liable at the time of his death, there being no surviving dependent parent. (b) In all other cases, questions of entire or partial depend- Depend- ency and questions as to who constitute dependents and the question extent of their dependency shall be determined in accordance of fact ' with the fact, as the fact may be at the time of the death of the employee. 188 INSURANCE LAWS OF CALIFORNIA. Who are not de- pendents. Death benefits to whom payable. Commis- sion to apportion payments. Notice to employer. Within thirty days. Excep- tions. (c) No person shall be considered a dependent of any de- ceased employee unless a member of the family of such em- ployee or unless such person bears to such employee the relation of husband or wife, child, adopted child or stepchild, father or mother, father-in-law or mother-in-law, grandfather or grand- mother, brother or sister, nephew or niece. (d) 1. If there is one or more persons wholly dependent for support upon a deceased employee, such person or persons shall receive the entire death benefit, and any person or persons partially dependent shall receive no part thereof, unless other- wise ordered by the commission. 2. If there is more than one such person wholly dependent for support upon a deceased employee, the death benefit shall be divided equally among them, unless otherwise ordered by the commission. 3. If there is more than one person partially dependent for support upon a deceased employee, and no person wholly dependent for support, the amount allowed as the death benefit shall be divided among the persons so partially dependent in proportion to the relative extent of their dependency, unless otherwise ordered by the commission. (e) The death benefits shall be paid to such one or more of the dependents of the deceased, or to a trustee appointed by the commission, or a commissioner, for the benefit of the person or persons entitled, as may be determined by the commission, and the commission may, anything in this act contained to the contrary notwithstanding, apportion such benefits among the dependents in proportion to their respective needs and as may be just and equitable, and may order payment to a dependent subsequent in right, or not otherwise entitled, upon good cause being shown therefor. The person to whom the death benefit is paid for the use of the several beneficiaries shall apply the same in compliance with the findings and directions of the commission. Notice of Injury. Sec. 20. No claim to recover compensation under this act shall be maintained unless within thirty days after the occur- rence of the accident which is claimed to have caused the injury or death, notice in writing, stating the name and the address of the person injured, the time and the place where the acci- dent occurred, and the nature of the injury, and signed by the person injured or some one in his behalf, or in case of his death, by a dependent or some one in his behalf, shall be served upon the employer; provided, however, that actual knowledge of such accident and injury on the part of such employer, or his managing agent or superintendent in charge of the work, upon which the injured .employee was engaged at the time of the injury, shall be equivalent to such service; and provided, further, that the failure to give any such notice, or any defect or inaccuracy therein, shall not be a bar to recovery under this act if it is found as a fact in the proceedings for the collection examina- tion. COMPENSATION, INSURANCE AND SAFETY ACT. 189 of the claim that there was no intention to mislead or prejudice the employer, and that he was not in fact misled or prejudiced thereby. Examination by Physician. Sec. 21. (a) Whenever in case of injury the right to com- Medical pensation under this act would exist in favor of any employee, "~ he shall, upon the written request of his employer, submit from time to time to examination by a practicing physician, who shall be provided and paid for by the employer, and shall like- wise submit to examination from time to time by any physician selected by the commission or any member or referee thereof. '(b) The request or order for such examination shall fix a time and place therefor, due regard being had to the conven- ience of the employee and his physical condition and ability to attend at the time and place fixed. The employee shall be entitled to have a physician provided and paid for by himself ' present at any such examination. So long as the employee, Befuaai to after such written request of the employer, shall fail or refuse SSSJna" to submit to such examination or shall in any way obstruct the tion - same, his right to begin or maintain any proceeding for the collection of compensation shall be suspended, and if he shall fail or refuse to submit to such examination after direction by the commission, or any member or referee thereof, or shall in any way obstruct the same, his righl to the weekly indemnity which shall accrue and become payable during the period of such failure, refusal or obstruction, shall be barred. Any physician who shall make or be present at any such examina- tion may be required to testify as to the results thereof. Hearings. Sec. 22. Upon filing with the commission by any party in Appiica- interest of an application in writing stating the" general nature hlTrin^on of any dispute or controversy concerning compensation, or dis P ute - concerning any right of liability arising out of, or incident thereto, jurisdiction over which is vested by this act in the commission, a time and place shall be fixed for the hearing thereof, which shall be not less than ten days nor more than forty days after the filing of such application. The person filing such application shall be known as the applicant and the adverse party shall be known as the defendent. A copy of said application, together with a notice of the time and place of hearing thereof, shall forthwith be served upon all adverse parties and may be served either as a summons in a civil action or in the same manner as any other notice that is authorized or required to be served under the provisions of this act. A notice of the time and place of hearing shall also be served upon the applicant. Sec. 23. If any defendant desires to disclaim any interest Defend- in the subject-matter of the claim in controversy, or considers aSswer, that the application is in any respect inaccurate or incomplete, or desires to bring any fact, paper or document to the attention 190 INSURANCE LAWS OP CALIFORNIA. Pleadings. Testimony Witnesses. Inspection. Stipulation of facts. Findings and award Nominal disability indemnity. Orders may be rescinded, altered or amended. of the commission as a defense to the claim, or otherwise, he must within five days after the service of the application upon him, file with or mail to the commission his answer setting forth the particulars in which the application is inaccurate or incomplete, and the facts upon which he intends to rely. A copy of such answer must be forthwith served upon all adverse parties. Sec. 24. (a) No pleadings, other than the application and answer, shall be required. The hearing on the application may be adjourned from time to time and from place to place in the discretion of the commission. Either party shall have the right to be present at any hearing, in person or by attorney or by any other agent, and to present such testimony as shall be pertinent under the pleadings, but the commission may, with or without notice to either party, cause testimony to be taken, or inspection of the premises where the injury occurred to be made, or the time-books and pay roll of the employer to be examined by any commissioner or any referee appointed by the commission, and may from time to time direct any em- ployee claiming compensation to be examined by a regular physician ; the testimony so taken and the results of any such inspection or examination to be reported to the commission for its consideration. (6) The parties to a controversy may stipulate the facts relative thereto in writing and file such stipulation with the commission. The commission may thereupon make its findings and award based upon such stipulation, or may in its discretion set the matter down for hearing and take such further testi- mony or make such further investigations as may be necessary to enable it to completely determine the matter in controversy. Sec. 25. (a) After final hearing by the commission, it shall, within thirty days, make and file (1) its findings upon all facts involved in the controversy and (2) its award which shall state its determination as to the rights of the parties. (&) The commission in its award may fix and determine the total amount of compensation to be paid and specify the man- ner of payment, or may fix and determine the weekly disability indemnity to be paid and order payment thereof during the continuance of such disability. (c) If, in any proceeding under sections twelve to thirty- five, inclusive, of this act, it is proved that an accident has happened for which the employer would be liable to pay com- pensation if disability had resulted therefrom, but it is not proved that any incapacity had resulted, the commission may, instead of dismissing the application, award a nominal dis- ability indemnity, if it appears that disability is likely to result at a future time. (d) The commission shall have continuing jurisdiction over all its orders, decisions and awards made and entered under the provisions of sections twelve to thirty-five, inclusive, of this act and may at any time, upon notice, and after oppor- tunity to be heard is given to the parties in interest, rescind, COMPENSATION, INSURANCE AND SAFETY ACT. 191 alter or amend any such order, decision or award made by it upon good cause appearing therefor ; provided, that no award of compensation shall be rescinded, altered or amended after two hundred forty-five weeks from the date of the accident. Any order, decision or award rescinding, altering or amending a prior order, decision or award shall have the same effect as is herein provided for original orders, decisions or awards. Sec. 26. (a) Any party affected thereby may file a certi- JSJ**' * tied copy of the findings and award of the commission with the clerk of the superior court for any county, or city and county, and judgment must be entered by the clerk in conformity therewith immediately upon the filing of such findings and award. (b) The certified copy of the findings and award of the ^ gment commission and a copy of the judgment shall constitute the judgment roll. The pleadings, all orders of the commission, its original findings and award, and all other papers or docu- ments filed in the cause shall remain on file in the office of the commission. (c) The commission, or any member thereof, may stay the f^uon execution of any judgment entered upon an award of the commission, upon good cause appearing therefor and upon such terms and conditions as may be imposed. A certified copy of such order shall be filed with the clerk entering such judgment. (d) Satisfaction of a judgment entered upon the award of tkm S of C " the commission may be entered in the manner provided by law Judgment. for the satisfaction of judgment. When a judgment is satis- fied in fact, otherwise than upon an execution, the commission may, upon motion of either party or of its own motion, order the entry of satisfaction of the judgment to be made, and upon filing a certified copy of such order with the said clerk, he shall thereupon enter such satisfaction. Sec. 27. The orders, findings, decisions or awards of the Review by commission made and entered under sections twelve to thirty- courts - five, inclusive, of this act may be reviewed by the courts speci- fied in sections eighty-four and eighty-five hereof and within the time and in the manner therein specified and not other- wise. Sec. 28. No fees shall be charged by the clerk of any court Go ^ s - for the performance of any official service required by this act, except for the docketing of awards as judgments and for certi- "fied copies of transcripts thereof. In all proceedings under this act before the commission, costs as between the parties shall be allowed or not in the discretion of the commission and the commission may in its discretion, where payments of com- pensation have been unreasonably delayed, allow the bene- ficiary thereof interest thereon, at not to exceed one and one half per cent per month, during such period of delay. Liens. Sec. 29. (a) No claim for compensation shall be assign- m s e ^Jf " f able before payment, but this provision shall not affect the claim, survival thereof, nor shall any claim for compensation, or 192 INSURANCE LAWS OP CALIFORNIA. Attorney's fee. Medical expense. Burial expense. Other liens. compensation awarded, adjudged or paid, be subject to be taken for the debts of the party entitled to such compensation, except as hereinafter provided. (&) The commission may fix and determine and allow as a lien against any amount to be paid as compensation: (1) A reasonable attorney's fee for legal services pertaining to any claim for compensation or application filed therefor and the reasonable disbursements in connection therewith. (2) The reasonable expense incurred by or on behalf of the injured employee and for which the employer is liable under the provisions of subsection (a) of section fifteen hereof. (3) The reasonable burial expenses of the deceased em- ployee, not to exceed the sum of one hundred dollars. (c) If notice in writing be given to the employer setting forth the nature and extent of any claim, that may be allowed as a lien, the said claim shall be a lien against any amount thereafter to be paid as compensation, subject to the deter- mination of the amount and approval thereof by the commis- sion. The commission may, in its discretion, order the amount of such claim as fixed and allowed by it paid directly to the person entitled, either in a lump sum or in installments. (d) No claim or agreement for the legal services or dis- bursements mentioned in paragraph (1) of subsection (6) hereof, or for the expense mentioned in paragraph (2) of said subsection (6), in excess of a reasonable amount, shall be valid or binding in any respect. (e) A claim for compensation for the injury or death of any employee, or any award or judgment entered thereon, shall have the same preference over the other unsecured debts of the employer as is given by law to claims for wages. Such preference shall be for the entire amount of compensation to be paid, but this section shall not impair the lien of any pre- vious award. Liability of Principals and Contractors. Sec. 30. The liability of principals and contractors for compensation under this act, when other than the immediate employer of the injured employee, shall be as follows : (a) The principal, any general contractor and each inter- mediate contractor who undertakes to do, or contracts with another to do, or to have done, any work, shall be liable to pay to any employee injured while engaged in the execution of such work, or to his dependents in the event of his death, any compensation which the immediate employer is liable to pay. (b) The person entitled to such compensation shall have the immediate right to recover the same directly from his immediate employer, employer. an( j j n a( jdition thereto the right to enforce in his own name, in the manner provided by this act, the liability for compen- sation imposed upon other persons by this section, either by making such other persons parties to the original application or by filing a separate application; provided, however, that payment in whole or in part of such compensation by either Claim for legal services limited. Preference of claim. Who may be held liable. Recovery from COMPENSATION, INSURANCE AND SAFETY ACT. 193 the immediate employer or other person shall, to the extent of such payment, be a bar to recovery against the other by any person entitled to such compensation. (c) When any person, other than the immediate employer, ^covery shall have paid any compensation for which he would not have S onr I i- r ~ been liable independently of this section, he shall, unless he g^|^ caused the injury, be entitled to recover the full amount so paid from the person primarily liable therefor. (d) The liability imposed by this section upon such prin- Limita- tions cipal, general contractor and intermediate contractor shall be imposed, subject to the following limitations : (1) Such liability shall exist only in cases where the injury occurred on or in or about the premises on which the principal, general contractor or intermediate contractor has undertaken to execute any work, or when such premises or work are other- wise under his control or management. (2) Such liability shall not exist in the event that the imme- in SUranee diate employer, or other person primarily liable for the com- Jjj^{]f t rges pensation shall, previous to the happening of such accident, have taken out, and maintained in full force and effect, com- pensation insurance with any insurance carrier, covering his full liability for compensation to the injured person or his dependents. (3) The commission may, in its discretion, order that execu- tion against the principal, general contractor and any inter- mediate contractor, be stayed until execution against the immediate employer shall be returned unsatisfied. Sec. 31. The making of a lawful claim against an employer JX^su.-- f or compensation under this act for the injury or death of his ceeds to employee shall operate as an assignment to the employer of !n g tort. any right to recover damages which the injured' employee, or his personal representative, or other person, may have against any other party for such injury or death, and such employer shall be subrogated to any such right and may enforce in his own name the legal liability of such other party. The amount of compensation paid by the employer, or the amount of com- pensation to which the injured employee or his dependents is entitled, shall not be admissible in evidence in any action brought to recover damages, but any amount collected by the employer, under the provisions of this section, in excess of the amount paid by the employer, or for which he is liable, shall be held by him for the benefit of the injured employee or other person entitled. Releases and Settlement Agreements. Sec. 32. (a) No contract, rule or regulation shall exempt Enipl0 yer the employer from liability for the compensation fixed by this can not act, but nothing in this act contained shall be construed as liability. impairing the right of the parties interested to settle, subject to the provisions herein contained, any liability which may be claimed to exist under this act on account of such injury or death, or as conferring upon the dependents of any injured 13 IL 194 INSURANCE LAWS OF CALIFORNIA. Settlement to be for full amount unless approved by the commis- sion. Release to be filed with the commis- sion. Facts which must appear in all settle- ments. Commis- sion may commute compensa- tion to lump sum. Methods of com- puting lump sum settle- ments. employee any interest which such employee may not divert by such settlement or for which he, or his estate, shall, in the event of such settlement by him, be accountable to such depend- ents or any of them. (b) The compensation herein provided shall be the measure of the responsibility which the employer has assumed for injuries or death that may occur to employees in his employ- ment when subject to the provisions of this act, and no release of liability or settlement agreement shall be valid unless it provides for the payment of full compensation in accordance with the provisions of this act or until and unless it shall be approved by the commission. (c) A copy of any such release or settlement agreement signed by both parties shall forthwith be filed with the com- mission. When such release or settlement agreement is filed with the commission and approved by it, the commission may of its own motion, or on the application of either party, with- out notice, enter its award based upon such release or settle- ment agreement. (d) Every such release or settlement agreement shall be in writing, duly executed and attested by two disinterested wit- nesses, and shall specify the date of the accident, the average weekly wages of the employee, determined according to section seventeen hereof, the nature of the disability, whether total or partial, permanent or temporary, the amount paid or due and unpaid to the employee up to the date of the release or agree- ment or death, as the case may be, and, if any, the amount of the payment or benefits then or thereafter to be made, and the length of time that such payment is to continue. In case of death there shall also be stated in such release or settlement agreement the date of death, the name of the widow, if any, the name and ages of all children, if any, and the names of all other dependents, if any, and whether such dependents be total or partial, and the amount paid or to be paid as a death benefit and to whom such payment is to be made. Sec. 33. (a) At the time of making its award or at any time thereafter the commission on its own motion, either with or without notice, or upon application of either party with due notice to the other, may in its discretion, commute the compen- sation payable under this act to a lump sum, if it appears that such commutation is necessary for the protection of the person entitled thereto, or for the best interest of either party, or that it will avoid undue expense or hardship to either party, or that the employer has sold or otherwise disposed of the greater part of his assets, or is about to do so, or that the employer is not a resident of this state, and the commission may order such com- pensation paid forthwith or at some future time. (b) The amount of the commuted payment shall be deter- mined in accordance with the following provisions: ( 1 ) If the accident causes temporary disability, the commis- sion shall estimate the probable duration thereof and the probable amount of the temporary disability indemnity pay- COMPENSATION, INSURANCE AND SAFETY ACT. 195 able therefor in accordance with the provisions of section fifteen hereof and shall fix the lump sum payment at such amount so determined. (2) If the accident causes permanent disability or death, the commission shall fix the total amount of the permanent disability indemnity or death benefit payable therefor in accordance with the provisions of said section fifteen and shall estimate the present value thereof, assuming interest at the rate of six per cent per annum, disregarding the probability of the beneficiary's death in all cases except where the per- centage of permanent disability is such as to entitle the bene- ficiary to a life pension, and then taking into consideration the probability of the beneficiary's death only in estimating the present value of such life pension. (c) The commission in its discretion may order the lump commte- sum payment, determined as hereinbefore provided, paid JjSJJjine directly to the injured employee or to his dependents, or depos- recipient. ited with any savings bank or trust company authorized to transact business in this state, that will agree to accept the same as a deposit bearing interest at not less than four per cent, per annum, or the commission may order the same depos- ited with the state compensation insurance fund. Any such amount so deposited, together with all interest thereon, shall thereafter be held in trust for the injured employee, or in the event of his death, for his dependents, who shall have no fur- ther recourse against the employer. Payments from said fund, Payments when so deposited, shall be made by the trustee only in the gomtnwt same amounts and at the same times as fixed by the order of the commission and until said fund and interest thereon shall be exhausted. In the appointment of the trustee preference shall be given, in the discretion of the commission, to the choice of the injured employee or his dependents. Upon the making of such payment, the employer shall present to the commission a proper receipt evidencing the same, executed either by the injured employee or his dependents, or by the trustee, and the commission shall thereupon issue its certificate in proper form evidencing the same, and such certificate, upon filing with the clerk of the superior court in which any judgment upon an award may have been entered, shall operate as a satisfaction of said award and shall fully discharge the employer from any further liability on account thereof. Insurance Provisions. Sec. 34. (a) Nothing in this act shall affect the organiza- tion of any mutual or other insurance company, or any existing employer contract for insurance or the right of the employer to insure t0 insure ' in mutual or other companies, in whole or in part, against liability for the compensation provided for by this act; or, to provide by mutual or other insurance, or by arrangement with his employees, or otherwise, for the payment to such employees, their families, dependents or representatives, of sick, accident or death benefits, in addition to the compensation provided for by this act. 196 INSURANCE LAWS OP CALIFORNIA. insurance (b) Liability for compensation shall not be reduced or employer^ affected by any insurance, contribution, or other benefit what- liab,e - soever due to or received by the person entitled to such com- pensation, except as otherwise provided by this act, and the person so entitled shall, irrespective of any insurance or other contract, except as otherwise provided in this act, have the right to recover such compensation directly from the employer, and in addition thereto, the right to enforce in his own name, in the manner provided in this act, either by making the insur- ance carrier a party to the original application or by filing a separate application, the liability of any insurance carrier, which may, in whole or in part, have insured against liability for such compensation ; provided, however, that payment in whole or in part of such compensation by either the employer or the insurance company shall, to the extent thereof, be a bar to recovery against the other of the amount so paid; and pro- vided, further, that as between the employer and the insurance company, payment by either directly to the employee, or to the person entitled to compensation, shall be subject to the con- ditions of the insurance contract between them. Both n ( c ) Every contract insuring against liability for compensa- bound. tion, or insurance policy evidencing the same, must contain a clause to the effect that the insurance carrier shall be directly and primarily liable to the employee and, in the event of his death, to his dependents, to pay the compensation, if any, for which the employer is liable; that, as between the employee and the insurance carrier, the notice to or knowledge of the occurrence of the injury on the part of the employer shall be deemed notice or knowledge, as the case may be, on the part of the insurance carrier; that jurisdiction of the employer shall, for the purpose of this act, be jurisdiction of the insurance carrier and that the insurance carrier shall in all things be bound by and subject to the orders, findings, decisions or awards rendered against the employer under the provisions of this act. insolvency (d) Such policy must also provide that the employee shall employer have a first lien upon any amount which shall become owing insurance on account of such policy to the employer from the insurance carrier carrier and that in case of the legal incapacity or inability of the employer to receive the said amount and pay it over to the employee or his dependents, the said insurance carrier may and shall pay the same directly to the said employee or his depend- ents, thereby discharging to the extent of such payment the obligations of the employer to the employee, and such policy shall not contain any provisions relieving the insurance carrier from payment when the employer becomes insolvent or is discharged in bankruptcy, or otherwise, during the period that insurance * ne Pli cv * s ^ n operation or the compensation remains owing. carrier (e) 1. If the employer shall be insured against liability for substituted compensation with any insurance carrier, and if after the hap- Jmpioyer. P enni & of any accident such insurance carrier shall serve or insurance carrier. COMPENSATION, INSURANCE AND SAFETY ACT. 197 cause to be served upon any person claiming compensation against such employer a notice that it has assumed and agreed to pay the compensation, if any, for which the employer is ' liable, and shall file a copy of such notice with the commission, sucli employer shall thereupon be relieved from liability for compensation to such claimant and the insurance carrier shall, without notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such person to recover such compensation, and the employer shall be dis- missed therefrom. Such proceeding shall not abate on account of such substitution but shall be continued against such insur- ance carrier. 2. If at the time of the happening of an accident for which ^JjJjyjJ compensation is claimed, or may be claimed, the employer shall <>J liability be insured against liability for the full amount of compensa- tion payable, or that may become payable, the employer may serve or cause to be served upon any person claiming compen- sation on account of the happening of such accident and upon the insurance carrier a notice that the insurance carrier has, in its policy contract or otherwise, assumed and agreed to pay the compensation, if any, for which the employer is liable, and may file a copy of such notice with the commission. If it shall thereafter appear to the satisfaction of the commission that the insurance carrier has, through the issuance of its contract of insurance or otherwise, assumed such liability for compensa- tion, such employer shall thereupon be relieved from liability for compensation to such claimant and the insurance carrier shall, after notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such person to recover such compensation, and the employer shall be dismissed therefrom. Such proceeding shall not abate on account of such substitution, but shall be continued against such insurance carrier. (/) Where any employer is insured against liability for ^ r l r " ,r compensation with any insurance carrier and such insurance subrogated carrier shall have paid any compensation for which the employer's employer was liable, or shall have assumed the liability of r,ghts - the employer therefor, it shall be subrogated to all the rights and duties of the employer and may enforce any such rights in its own name. Sec. 35. (a) If any insurance policy shall be issued cover- JJjJJ^, ing liability for compensation, which policy shall contain any be plainly limitation as to the compensation payable, such limitation ev shall be printed in the body of such policy in boldface type and in addition thereto the words " limited compensation policy" shall be printed on the top of the policy in bold-faced type not less than eighteen point in size. (b) No insurance carrier shall insure against the liability ,",...,, of the employer for damages recoverable at law by the injured against employee under the optional provisions contained in section f r WlIty twelve hereof, and any insurance carrier liable to any such dama ,s 198 INSURANCE LAWS OF CALIFORNIA. Creation of the fund. Its purpose. Nature of the fund. Charges against fund. Self-sup- porting. Adminis- tered by Com- mission. injured employee for compensation upon the payment of the same shall have the same option given by said section twelve to such employee and shall be fully subrogated to his rights, and may enforce such liability for damages against the employer in its own name, anything in the insurance contract to the con- trary notwithstanding. An insurance carrier can not agree to defend nor to indemnify the employer against the costs and expenses of defending actions for damages brought under the optional provisions of section 12 of this act : Opinion of Insurance Commissioner, December 9, 1918. State Compensation Insurance Fund. Sec. 36. There is hereby created and established a fund to be known as the ' 'state compensation insurance fund," to be administered by the industrial accident commission of the state, without liability on the part of the state beyond the amount of said fund, for the purpose of insuring employers against liability for compensation under this act and insuring to employees and other persons the compensation fixed by this act for employees and their dependents. Sec. 37. (a) The state compensation insurance fund shall be a revolving fund and shall consist of such specific appro- priations as the legislature may from time to time make or set aside for the use of such fund, all premiums received and paid into the said fund for compensation insurance issued, all prop- erty and securities acquired by and through the use of moneys belonging to said fund and all interest earned upon moneys belonging to said fund and deposited or invested, as herein provided. (b) Said fund shall be applicable to the payment of losses sustained on account of insurance and to the payment of the salaries and other expenses to be charged against said fund in accordance with the provisions contained in this act. (e) Said fund shall, after a reasonable time during which it may establish a business, be fairly competitive with other insurance carriers, and it is the intent of the legislature that said fund shall ultimately become neither more nor less than self-supporting. Sec. 38. (a) The commission is hereby vested with full power, authority and jurisdiction over the state compensation insurance fund and may do and perform any and all things whether herein specifically designated, or in addition thereto, which are necessary or convenient in the exercise of any power, authority or jurisdiction over said fund in the administration thereof, or in connection with the insurance business to be carried on by it under the provisions of this act, as fully and completely as the governing body of a private insurance carrier might or could do. COMPENSATION, INSURANCE AND SAFETY ACT. 199 (b) The commission shall have full power and authority, J f S' s and it shall be its duty, to fix and determine the rates to be oommis- charged by the state compensation insurance fund for com- connection pensation insurance, and to manage and conduct all business TamSll and affairs in relation thereto, all of which business and affairs lf^ e n shall be conducted in the name of the state compensation insur- fund. anee fund, and in that name, without any other name or title, the commission may: (1) Sue and be sued in all the courts of the state in all actions arising out of any act, deed, matter or thing made, omitted, entered into, done, or suffered in connection with the slate compensation insurance fund, the administration, man- agement or conduct of the business or affairs relating' thereto. (2) Make and enter into contracts of insurance as herein provided, and such other contracts or obligations relating to the state compensation insurance fund as are authorized or permitted under the provisions of this act. (3) Invest and reinvest the moneys belonging to said fund as hereinafter provided. (4) Conduct all business and affairs, relating to the state compensation insurance fund, whether herein specifically desig- nated or in addition thereto. (c) The commission may delegate to the manager of the Delegation state compensation insurance fund, or to any other officer, ofpowns - under such rules and regulations and subject to such condi- tions as it may from time to time prescribe, any of the powers, functions or duties, conferred or imposed on the commission under the provisions of this act in connection with the state compensation insurance fund, the administration, manage- ment and conduct of the business and affairs relating thereto, and the officer or officers to whom such delegation is made may exercise the powers and functions and perform the duties dele- gated with the same force and effect as the commission, but subject to its approval. (d) The commission shall not, nor shall any commissioner, ^JJJ 1 ^ officer or employee thereof, be personally liable in his private personally capacity for or on account of any act performed or contract liable - or other obligation entered into or undertaken in an official capacity, in good faith and without intent to defraud, in con- nection .with the administration, management or conduct of the state compensation insurance fund, its business or other affairs relating thereto. Sec. 39. In conducting the business and affairs of the state powers compensation insurance fund, the manager of the said fund or JJ ^J 1 * 1 8 other officer to whom such power and authority may be dele- a t n h ager gated by the commission, as provided by subsection (c) of sec- fund. fcion thirty-eight thereof, shall have full power and authority: (1) To enter into contracts of insurance, insuring employers against liability for compensation and insuring to employees and other persons the compensation fixed by this act. (2) To sell annuities covering compensation benefits. 200 INSURANCE LAWS OF CALIFORNIA. (3) To decline to insure any risk in which the minimum requirements of the commission with regard to construction, equipment and operation are not observed, or which is beyond the safe carrying of the state compensation insurance fund, but shall not have power or authority, except as otherwise pro- vided in this subdivision, to refuse to insure any compensation risk tendered with the premium therefor. (4) To reinsure any risk or any part thereof. . (5) To inspect and audit, or cause to be inspected and audited the pay rolls of employers applying for insurance against liability for compensation. (6) To make rules and' regulations for the settlement of claims against said fund and to determine to whom and through whom the payments of compensation are to be made. (7) To contract with physicians, surgeons and hospitals for medical and surgical treatment and the care and nursing of injured persons entitled to benefits from said fund. Rates. Sec 40 ( a ) It ghall be the duty of the commission t0 nx and determine the rates to be charged by the state compensa- tion insurance fund for compensation insurance coverage as herein provided, and such rates shall be fixed with due regard to the physical hazards of each industry, occupation or employ- ment and, within each class, so far as practicable, in accord- ance with the elements of bodily risk or safety or other hazard of the plant or premises or work of each insured and the man- ner in which the same is conducted, together with a reasonable regard for the accident experience and history of each such insured, and the means and methods of caring for injured per- sons, but such rates shall take no account of the extent to which the employees in any particular establishment have or have not persons dependent upon them for support. whteh rates W The rates s0 mac ^ e sna ll be that percentage of the pay are to be roll of any employer which, in the long run and on the aver- age, shall produce a sufficient sum, when invested at three and one half per cent interest : (1) To carry all claims to maturity; that is to say the rates shall be based upon the "reserve" and not upon the "assess- ment" plan; (2) To meet the reasonable expenses of conducting the busi- ness of such insurance; (3) To produce a reasonable surplus to cover the catastrophe hazard. character Sec. 41. The insurance contracts entered into between the policy to state compensation insurance fund and persons insuring there- be issued. w j tn may De e ither limited or unlimited and issued for one year or, in the form of stamps or tickets or otherwise, for one month or any number of months less than one year, or for one day or any number of days less than one month, or during the performance of any particular work, job or contract; pro- vided, that the rates charged shall be proportionately greater for a shorter than for a longer period and that a minimum COMPENSATION, INSURANCE AND SAFETY ACT. 201 premium charge shall be fixed in accordance with a reasonable rate for insuring one person for one day. Nothing in this act shall be construed to prevent any person applying for com- pensation insurance from being covered temporarily until the application is finally acted upon, or to prevent the insured from surrendering any policy at any time and having returned to him the difference between the premium paid and the premium at the customary short term for the shorter period which such policy lias already run. The state compensation insurance fund may at any time cancel any policy, after due notice, upon a pro rata basis of premium repayment. Sec. 42. The state compensation insurance fund may issue seif-em- polieies. including with their employees, employers who per- Jn/cwuaJ form labor incidental to their occupations, and including also em P lo y ees - members of the families of such employers engaged in the same occupation, such policies insuring to such employers and work- ing members of their families the same compensations provided for their employees, and at the same rates; provided, that the estimations of their wage values, respectively, shall be reason- able and separately stated in and added to the valuation of their pay rolls upon which their premium is computed. Such policies may likewise be sold to self -employing persons and to casual employees, who, for the purpose of such insurance, shall be deemed to be employees within the meaning of sections twelve to thirty-five, inclusive, of this act. Si:c. 43. The treasurer of the state shall be custodian of all ^uuS" moneys and securities belonging to the state compensation insurance fund, except as otherwise provided in this act, and shall be liable on his official bond for the safe-keeping thereof. All moneys belonging to said fund collected or received by the commission, or the manager of the state compensation insur- ance fund, under and by virtue of the provisions of this act, shall be delivered to the treasurer of the state or may be deposited to his credit in such bank or banks throughout the state ;is he may, from time to time, designate, and such moneys when so delivered or deposited shall be credited by the treas- urer to the said fund and no moneys received or collected on account of such fund shall be expended or paid out of such fund without first passing into the state treasury and being drawn therefrom as provided in this act. In like manner there shall be delivered to the treasurer all securities belonging to said fund which shall be held by him until otherwise disposed of as provided in this act. Sec. 44. (a) The commission shall submit each month to ^ ount " the state board of control an estimate of the amount necessary to meet the current disbursements from the state compensation insurance fund during each succeeding calendar month and, when such estimate shall be approved by the state board of control, the controller is directed to draw his warrant on said fund in favor of said commission for such amount, and the treasurer is authorized and directed to pay the same. 202 INSURANCE LAWS OF CALIFORNIA. Semi- annual valuation of prop- erties. Investment of surplus. Insurance of public corpora- tions. Public officials to act as agents. (b) At the end of each calendar month the commission shall account to the state board of control and the state controller for all moneys so received, furnishing proper vouchers therefor. (c) During the months of January and of July of each year the state board of control or the commission shall cause a valu- ation to be made of the properties and securities which have been acquired and which are held for said fund, and shall report the results of the same to the state controller, whose duty it shall be to keep a special ledger account showing all of the assets pertaining to the state compensation insurance fund. In the controller 's general ledger this fund account may be carried merely as a cash account, like other accounts of funds in the state treasury, and therein only the actual cash coming into the state compensation insurance fund shall be credited to such fund. Sec. 45. (a) The commission shall cause all moneys in the state compensation insurance fund, in excess of current require- ments, to be invested and reinvested, from time to time, in the securities now or hereafter authorized by law for the invest- ment of funds of savings banks. (6) The commission shall, from time to time, submit to the state board of control an estimate of the amount required by it for investment, which estimate shall be accompanied by a full description of the kind and character of the investments to be made and, when such estimate shall be approved by the state board of control, the controller is directed to draw his warrant on the state compensation insurance fund in favor of the commission for such amount and the treasurer is authorized and directed to pay the same. (c) At the end of each calendar month the commission shall account to the said board of control and the state controller for all moneys so received, furnishing proper vouchers therefor. (d) All moneys in said fund, in excess of current require- ments and not otherwise invested, may be deposited by the state treasurer from time to time in the banks authorized by law to receive deposits of public moneys under the same rules and regulations that govern the deposit of other public funds and the interest accruing thereon shall be credited to the state compensation insurance fund. Sec. 46. Each county, city and county, city, school district or other public corporation within the state, may insure against its liability for compensation, with the state compensation insur- ance fund and not with any other insurance carrier unless such fund shall refuse to accept the risk when the application for insurance is made, and the premium therefor shall be a proper charge against the general fund of each such political sub- division of the state. Sec. 47. When the premium rates for insurance in the state compensation insurance fund shall have been established the commission shall furnish schedules of rates and copies of the forms of policy to the commissioner of labor, to the clerk COMPENSATION, INSURANCE AND SAFETY ACT. 203 and to the treasurer of every county, city and county, and city in the state, and it shall be the duty of every public officer to whom the foregoing may be furnished to fill out and trans- mit to the manager of the state compensation insurance fund applications for compensation insurance in such fund and to receive and transmit to said manager all premiums paid on account of any policy issued or applied for. Sec 48. The commission shall each quarter make to the Quarterly governor of the state, reports of the business done by the state compensation insurance fund during the previous quarter, and a statement of the fund's resources and liabilities, and it shall be the duty of the state board of control to audit such reports and to cause an abstract thereof to be published one or more times in at least two newspapers of general circulation in the state. The commission shall likewise make to the state insur- ance commissioner all reports required by law to be made by other insurance carriers. Sec. 49. Any employer who shall wilfully misrepresent the ^Jjg amount of the pay roll upon which his premium under this act representa- is to be based shall be liable to the state in ten times the amount tion - of the difference in premium paid and the amount the employer should have paid had his pay roll been correctly computed, and the liability to the state under this section shall be enforced in a civil' action in the name of the state compensation insurance fund and any amount so collected shall become a part of said fund. Sec. 50. Any person who wilfully misrepresents any fact in order to obtain insurance at less than the proper rate for such insurance, or in order to obtain any payments out of such fund, shall be guilty of a misdemeanor. Safety Provisions. Sec. 51. The following terms, as used in sections fifty-one TjgJjV to seventy-two, inclusive, of this act, shall, unless a different meaning is plainly required by the context, be construed as follows : (1) The phrase "place of employment" shall mean and employ- f include every place, whether indoors or out or underground, ment." or elsewhere, and the premises appurtenant thereto, where, either temporarily or permanently, any industry, trade, work or business is carried on, or where any process or operation directly or indirectly related to any industry, trade, work or business, is carried on, and where any person is directly or indirectly employed by another for direct or indirect gain or profit, but shall not include any place where persons are employed solely in farm, dairy, agricultural, viticultural or horticultural labor, in stock or poultry raising or in household domestic service. (2) The term "employment" shall mean and include any "Employ- trade, work, business, occupation or process of manufacture, or ment." any method of carrying on such trade, work, business, occupa- tion or process of manufacture in which any person may be "Genera] order." 204 INSURANCE LAWS OP CALIFORNIA. engaged, except where persons are employed solely in farm, dairy, agricultural, viticultural or horticultural labor, in poul- try or stock raising or in household domestic services. "Km- (3) The term "employer" shall mean and include every person, firm, voluntary association, corporation, officer, agent, manager, representative or other person having control or cus- tody of any employment, place of employment or of any employee. pioyee." W The term "employee" shall mean and include every person who may be required or directed by any employer, in consideration of direct or indirect gain or profit, to engage in any employment, or to go to work or be at any time in any place of employment. "Order." (5) The term "order" shall mean and include any decision, rule, regulation, direction, requirement or standard of the commission or any other determination arrived at or decision made by such commission under the safety provisions of this act. (6) The term "general order" shall mean and include such order made, under the safety provisions of this act, as applies generally throughout the state to all persons, employments or places of employment, or all persons, employments or places of employment of a class under the jurisdiction of the commis- sion. All other orders of the commission shall be considered special orders, order/' (?) The term "local order" shall mean and include any ordinance, order, rule or determination of any board of super- visors, city council, board of trustees or other governing body of any county, city and county, city or of any school district or other public corporation, or an order or direction of any other public official or board or department upon any matter over which the industrial accident commission has jurisdiction. ''safety." W The terms "safe" and "safety" as applied to an em- ployment or a place of employment shall mean such freedom from danger to the life or safety of employees as the nature of the employment will reasonably permit. "Safcty,, (9) The terms "safety device" and "safeguard" shall be "Safe-' t given a broad interpretation so as to include any practicable guards." method of mitigating or preventing a specific danger. Employ- Sec. 52. Every employer shall furnish employment which be reason- shall be safe for the employees therein and shall furnish a ably safe. p] ace f employment which shall be safe for employees therein, and shall furnish and use such safety devices and safeguards, and shall adopt and use such practices, means, methods, opera- tions and processes as are reasonably adequate to render such employment and place of employment safe, and shall do every other thing reasonably necessary to protect the life and safety of such employees, safety Sec. 53. No employer shall require, permit or suffer any employee to go or be in any employment or place of employ- ment which is not safe, and no such employer shall fail to fur- nish, provide and use safety devices and safeguards or fail to COMPENSATION, INSURANCE AND SAFETY ACT. 205 adopt and use methods and processes reasonably adequate to render such employment and place of employment safe, and no such employer shall fail or neglect to do every other thing reasonably necessary to protect the life and safety of such employees, and no such employer shall occupy or maintain any place of employment that is not safe. Sec. 54. No employer, owner or lessee of any real property unsafe in this state shall construct or cause to be constructed any B place of employment that is not safe. Sec. 55. No employee shall remove, displace, damage, de- interfer- stroy or carry off any safety device or safeguard furnished l&tlty and provided for use in any employment or place of employ- devi(,s ment, or interfere in any way with the use thereof by any other person, or interfere with the use of any method or pro- cess adopted for the protection of any employee in such em- ployment, or place of employment, or fail or neglect to do every other thing reasonably necessary to protect the life and safety of such employees. Seo. 56. The commission is vested with full power and P w f rsof jurisdiction over, and shall have such supervision of, every mission in employment and place of employmnt in this state as may be JJjJJ 66 * 1011 necessary adequately to enforce andadminister all laws and all safety law l'ul orders requiring such employment and place of employ- ment to be safe, and requiring the protection of the life and safety of every employee in such employment or place of employment. Sec. 57. The commission shall have power, after a hearing had upon its own motion or upon complaint, by general or special orders, rules or regulations, or otherwise: (1) To declare and prescribe what safety devices, safeguards g a *gj oi Other means or methods of protection are well adapted to <(X1(,S render the employees of every employment and place of em- ployment safe as required by law or lawful order. (2) To fix such reasonable standards and to prescribe, safety modify and enforce such reasonable orders for the adoption, rtftn .** J installation, use, maintenance and operation of safety devices, safeguards and other means or methods of protection, to be as nearly uniform as possible, as may be necessary to carry out all laws and lawful orders relative to the protection of the life and safety of employees in employments and places of employ- ment. (3) To fix and order such reasonable standards for the standards construction, repair and maintenance of places of employment ^'ruction, as shall render them safe. (4) To require the performance of any other act which the Protection protection of the life and safety of employees in employments * fe ' and places of employment may demand. (5) To declare and prescribe the general form of industrial Reporting accidents reports, the accidents to be reported and the inf orma- dents . tion to be furnished in connection therewith, and the time within which such reports shall be filed. Nothing in this act contained shall be construed to prevent the commission from requiring supplemental accident reports. 206 INSURANCE LAWS OF CALIFORNIA. Public Sec. 58. Upon the fixing of a time and place for the hold- . 235 iirer at the capitol prior thereto, five per cent will be added to the amount thereof. Taxes a lien. Sec. 21. The taxes levied under the provisions of this act shall constitute a lien upon all the property and franchises of every kind and nature belonging to the companies subject to taxation for state pur- poses, which lien shall attach on the first Monday in March of each year. itvery tax herein provided for has the effect of a judgment against the company, and every lien created by this act has the effect of an execution duly levied against all property of the delinquent; the judgment is not satisfied nor the lien removed until such taxes, penalties, and costs are paid, or the property sold for the payment thereof. No final discharge in bankruptcy or decree of dissolution shall be made and entered by any court until all taxes, penalties, and costs due on assessments made under ttie provisions of this act shall have been paid and discharged. Amended, Stats. 1913, p. 622. Taxes to be paid to state treasurer. Sec. 22. All taxes assessed and levied as provided in this act shall be paid to the state treasurer, upon the order of the controller, without deduction for any taxes assessed and levied to pay the principal and i n1 crest of any bonded indebtedness mentioned in subdivision (e) of section fourteen of article thirteen of the constitution of this state, and the amount due to the cities, cities and counties, counties, towns, town- ships, and districts on account of said taxes assessed and levied for such bonded indebtedness shall be paid to said cities, cities and counties, counties, towns, townships, or districts in the manner hereinafter in this act provided. The controller must mark the date of payment of any tax on the record of assessments for state taxes. He must give a receipt to the person paying any tax, or any part of any tax, specifying the amount of the assessment, and the tax, or part of tax, paid, and the amount remaining unpaid, if any, with a description of the property assessed; provided, that the receipt for the second half of the taxes may refer, by number or in any other intelligible manner, to the receipt given for the first half of said taxes, in lieu of a description of the property assessed. Whenever any taxes, penalties, or costs collected and paid to the state 1 rcasurer under the provisions of this act, shall have been paid more than once, or shall have been erroneously or illegally collected, or when any taxes shall have been collected and paid pursuant to this act upon a computation erroneously made by reason of clerical mistake of the officers or employees of the state board of equalization, or shall have been computed in a manner contrary to law, the state board of equaliza- tion shall certify to the state board of control the amount of such taxes, penalties, or costs, collected in excess of what was legally due, from whom they were collected or by whom paid, and it' approved by said hoard of control, the same shall be credited to the company or person to whom it rightfully belongs, at the time of the next payment of taxes. No claim for such eredit shall be so audited, approved, aWowed, or paid unless presented within one year after the payment sought to be refunded. In case the assessment of any property or any company is duplicated upon the state assessment roll, or there appears thereon the 236 INSURANCE LAWS OP CALIFORNIA. assessment of any company whose charter has been forfeited or right to do business in this state has been forfeited, or the assessment of any company which, for any reason, could not be legally assessed, the state board of equalization or the controller shall certify such fact to the state board of control and said board of control shall authorize the cancellation of such assessment. Amended, Stats. 1913, p. 622. Protest of taxes. * Sec. 23. Any company, person or association claiming and pro- testing as herein provided that the assessment made against him or it by the state board of equalization is void in whole or in part may bring an action against the state treasurer for the recovery of the whole or any part of such tax, penalties or costs paid on such assessment upon the grounds stated in such protest, but no such action may be brought later than the third Monday in February next following the day on which the taxes were due, nor unless such company, person or associa- tion shall have filed with the state controller at the time of payment of such taxes a written protest stating whether the whole assessment is claimed to be void, or if a part only, what part, and the grounds upon which such claim is founded ; and when so paid under protest the pay- ment shall in no case be regarded as voluntary. Whenever under the provisions of this section an action is commenced against the state treas- urer, a copy of the complaint and of the summons must be served upon the treasurer, or his deputy. At the time the treasurer demurs or answers, he may demand that the action be tried in the superior court of the county of Sacramento, which demand must be granted. The attorney general must defend the action. The provisions of the Code of Civil Procedure relating to pleadings, proofs, trials, and appeals are applicable to the proceedings herein provided for. A failure to begin such action within the time herein specified shall be a bar against the recovery of such taxes. In any such action the court shall have power to render judgment for plaintiff for any part or portion of the tax, penalties or costs found to be void and so paid by plaintiff upon such assessment. Amended, Stats. 1913, p. 623. Assessments adjudged invalid, how remade. Sec. 23a. 1. Every assessment of property made after November 8, 1910, under the provisions of section fourteen, article thirteen of the constitution and the provision of this act which is, or may hereafter be adjudged to be invalid by reason of any illegality, invalidity, or irregularity, declared or existing, in the assessment of such property, or in the mode provided for the assessment thereof, shall be remade and the property reassessed and equalized for each year for which such assessment is invalid as aforesaid, and for the year for which the assess- ment of such property was invalid as aforesaid, and such reassessment and equalization shall be made by the same officers and boards, at the same time or times, as are prescribed by law for the assessment and equalization of property, of the same classes or kinds as the property which hereby is required to be reassessed. The assessment and equalized assessment of such property shall be entered on the several assessment rolls or books in the same manner that assessments of such property TAXATION OF INSURANCE COMPANIES. 237 are or were required by law to be entered for the year or years for which such reassessments shall be made. And there is hereby levied for state purposes the same rates of taxation for each of such respective years as were levied upon such property for each of said years for said state purposes. 2. All property authorized to be reassessed by this act shall be re- assessed and equalized by the proper officers and boards at the value to which and to the person or corporation to whom or to which such property ought, for each of such years, to have been assessed, under such rules of notice and at the times and in the modes as are prescribed tor the assessment and equalization of like classes of property; and the assessment and equalization thereof, and the levy and collection of taxes thereunder, shall be made by the proper officers at the time, upon like notice and in the manner now or hereafter provided by law for making assessments and equalizing the same, and for the levy and collection of taxes on like classes of property; and if the taxes so relevied shall become delinquent, there shall be added thereto and the amount thereof the same percentage as a penalty for such delinquency as is added to other delinquent taxes on like classes of property ; and such delinquent taxes and penalties added thereto shall be collected by the proper officers in the manner now or hereafter provided by law for the collec- tion of delinquent taxes and penalties upon like classes of property, the collectors of such taxes to allow as credits thereon all payments thereto- fore made on the tax as first levied. 3. There shall be no limitation or limitations as to the time in which actions for the collections of taxes levied under this section may be commenced, and all the provisions of law now or hereafter provided in respect to assessments, equalization, levy, and collection of taxes shall, where applicable, apply to reassessments, equalization, and re- levies and collections of taxes made under the provisions of this act. Enacted June 12, 1913 ; Stats. 1913, p. 624. Controller to send notice of delinquent taxes. Sec. 24. Within ten days after the first Monday in February, the controller shall send by mail to the last known address of any company whose taxes are delinquent a notice of the amount of said taxes, penal- tics, and costs, and that if the said taxes, penalties, and costs are not paid on or before the Saturday preceding the first Monday in March next thereafter at six o'clock p. m. of said day, the delinquent company if it be a domestic corporation will forfeit its charter to the state, and that if the delinquent company be a foreign corporation it will forfeit its right to do business in this state. If the taxes, penalties, and costs are not paid within the time specified in said notice, the controller shall, on said Saturday preceding the first Monday in March at six o'clock p. m. of said day, mark on the record of assessments for state taxes opposite the assessment of the delinquent company the words "charter forfeited to the state," if the delinquent company be a do- mestic corporation, and thereupon said charter shall be so forfeited, and if the delinquent company be a foreign corporation the words "right to do business forfeited" and thereupon said right to do business shall be so forfeited. He shall at once report to. the secretary of state the name and number of charter of each corporation whose charter or right to do business has been forfeited for non-payment of taxes, and the 238 INSURANCE LAWS OP CALIFORNIA. secretary of state shall at once report the same to the governor. The governor shall forthwith issue his proclamation, declaring that the char- ters of such domestic corporations have been forfeited and the right of such foreign corporations to do business in this state has been forfeited. Said proclamation shall be filed immediately in the office of the secretary of state, and immediately thereafter a copy of said proclamation shall be published in the manner provided by law in one issue of one daily newspaper of general circulation published at the state capital, of one daily newspaper of general circulation published in the city and county of San Francisco, and of one daily newspaper of general circulation published in the city of Los Angeles. The secretary of state shall there- upon transmit a certified copy of the proclamation to each county clerk in the state, who shall file the same in his office. Any such corporation making subsequent payment of all taxes, penalties, and costs due the state, and in addition thereto an amount equal to the taxes levied under this act for the year in which such forfeiture occurred, for each year subsequent to such forfeiture and to the time of such redemption, shall be relieved of such forfeiture, and the controller shall notify the secre- tary of state thereof, and the secretary of state shall annually on the first Monday in April transmit to the county clerk of each county in this state a list of the corporations so paying, and which have been relieved of such forfeiture, which list shall be by said county clerk filed in his office ; provided, the rehabilitation of a corporation under the provisions of this act shall be without prejudice to any action, defense or right which accrued by reason of the original forfeiture; and provided, that in case the name of an} r corporation which has suffered the forfeiture prescribed in this act, or a name so closely resembling the name of such corporation as will tend to deceive, has been adopted by any other cor- poration since the date of said forfeiture, then said corporation having suffered such forfeiture shall be relieved therefrom pursuant to the terms of this section only upon the adoption by said corporation seeking revivor of a new name, and in such case nothing in this act contained shall be construed as permitting such corporation to be revived or carry on any business under its former name ; and such corporation shall have the right to use its former name or take such new name only upon filing an application therefor with the secretary of state and upon the issuing of a certificate to such corporation by the secretary of state setting forth the right of such corporation to take such new name or use its former name, as the case may be ; provided, however, that the secretary of state shall not issue any certificate permitting any corporation to take or use the name of any corporation heretofore organized in this state, and which has not suffered a forfeiture prescribed by this act, or to make ftakel or use a name so closely resembling the name of such corporation hereto- fore organized in this state as will tend to deceive. Ihe provisions of title 9, part 3 of the Code of Civil Procedure, in so far as they conflict with this section, are not applicable to corporations seeking revivor under this act. The controller may, on or before the thirtieth day of April next following said delinquency and forfeiture, bring an action in a court of competent jurisdiction in the county of Sacramento in the name of the people of the State of California, to collect any delinquent taxes, together with any penalties, or costs, which have not been paid in accordance with the provisions of this act and appearing delinquent TAXATION OP INSURANCE COMPANIES. 239 upon the record of assessments for state taxes hereinbefore in this act provided for. The attorney general must prosecute such action, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings herein provided for. In such action a writ of attachment may be issued, and no bond or affidavit previous to the issuing of said attachment is required. In the case of companies whose charters or right to do business has been forfeited under the provisions of this act, service of summons may be made upon the persons now provided for by law to be served as agents or officers of any of such companies and such persons shall be deemed to be the agents of such companies for all pur- poses necessary in order to prosecute such action. Payment of the taxes and penalties, or amount of the judgment recovered in such action must be made to the state treasurer. In such actions the record of assessments for state taxes, or a copy of so much thereof as is applicable in said action, duly certified by the controller, or by the secretary of the state board of equalization, showing unpaid taxes against any company, person or association assessed by the state board of equalization, is prima facie evidence of the assessment upon the property and fran- chises, the delinquency, the amount of the taxes, penalties, and costs due and unpaid to the state, and that the company, person, or associa- tion is indebted to the people of the State of California in the amount of taxes and penalties therein appearing unpaid, and that all the forms of law in relation to the assessment and levy of such taxes have been complied with. Amended, Stats. 1913, p. 7. Penalty for continuing business, on non-payment of taxes. Sec. 24a. It shall be unlawful for any company, either domestic or foreign, which has not paid to the state all taxes, penalties and costs as in this act prescribed and levied, to exercise the powers of such com- pany, or to transact any business in this state, after the Saturday preceding the first Monday in March following its delinquency. Each and every person exercising any of the powers of such delinquent com- pany or transacting any business for or in behalf of such company after the Saturday preceding the first Monday in March following the delin- quency of such company as provided in this act, except to settle the affairs of such company, shall be guilty of a misdemeanor, and upon eonviction thereof shall be punished by a fine of not less than twenty-five dollars nor more than one hundred dollars for each day such violation of the law continues, which fine shall be paid into the general fund of the state treasurer. Enacted June 12, 1913. Stats. 1913, p. 625. Powers and duties of state board. Sec. 25. In addition to the powers and duties prescribed in the Political Code, it is the duty of the state board of equalization, and the said board shall have power, for carrying this act into effect: 1 . To prescribe the forms upon which the reports required by sections 9, 12 and* 14 of this act shall be made. 2. Whenever deemed necessary, to visit as a board, or by the indi- vidual members thereof, or to send its secretary or duly appointed representative to any portion of this state for the purpose of inspect ing 240 INSURANCE LAWS OP CALIFORNIA. property and learning the value thereof, and of collecting information to enable it to justly assess and levy the taxes provided for in this act. 3. To call before it, or any member thereof, or before its secretary or duly appointed representative on such visit, any public officials, and to require him to produce any public record, papers or documents in their custody. 4. To issue subpoenas for the attendance of witnesses or the produc- tion of books before the board, or any member thereof ; which subpoenas must be signed by a member of the board, and may be served by any person. 5. To require any person having knowledge of the business of any of the companies mentioned in section fourteen of article thirteen of the constitution of this state, or having the custody of the books and accounts of such companies, to attend before the board or any member thereof, or before the secretary or the duly appointed representative of said board and bring with him for inspection any books, or papers, of such company in his possession or under his control, and to testify under oath touching any matter relating to the assessment to be made under this act. A member of the board, its secretary, or duly appointed rep- resentative is authorized to administer such oath. 6. Said board of equalization is hereby authorized and empowered to examine the books and accounts of all companies required by law to report to it and to employ an expert accountant or accountants to assist in the examination of the books and accounts of any such companies when in the judgment of said board the exigencies of the case may so require. 7. It shall be unlawful for any member or ex-member of the state board of equalization, or for any agent employed by it, or for the con- troller, or ex-controller, or for any person employed by him or for any person who may at any time have obtained such knowledge from any of the foregoing officers or persons, to divulge or make known in any manner whatever not provided by law, any of the following items of information concerning the business affairs of companies reporting to the said board : (a) Any information concerning the business affairs of any company which is gained during an examination of its books and accounts or in any other manner, and which information is not required to be reported to the state board of equalization in the reports or statements provided for in paragraphs numbered one to ten of section nine and paragraphs numbered one to ten of section fourteen of this act. (b) Any information, other than the assessment and the amount of taxes levied, obtained by the state board of equalization in accordance with the provisions of this act, from any company other than any of those enumerated in sections two, three and four of this act. (c) Any particular item or items of information relating to the disposition of its earnings contained in the report of a quasi-public corporation which any such corporation may, by written communication specifying the items and presented at the time when it files its report, request shall be treated as confidential ; provided, however, that if the governor shall direct that any of the information herein referred to be made public, then it shall no longer be unlawful to divulge or make known the same. TAXATION OF INSURANCE COMPANIES. 241 Any violation of the provisions of this subdivision shall be a misde- meanor and shall be punished by a fine not exceeding five hundred dollars, or by imprisonment not exceeding six months, or both, at the discretion of the court. County auditors to report assessments of real estate of banks. Sec. 26. On the second Monday in August of each year the auditor of each county must report to the state board of equalization, in addi- lioii to the items required to be so reported by him under section three thousand seven hundred and twenty-eight of the Political Code, the value of each piece of real estate other than mortgage interests therein belonging to each hank in his county as assessed and equalized for pur- poses of county taxation. Whenever the state board of equalization is satisfied after investigation that any county assessor, or board of equal- ization, has assessed any real estate belonging to any bank above its full ( ash value and has thereby unjustly reduced the amount of taxes due the state from said bank, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county affected thereby as the said state board shall deem reasonable, equalize the assessed value of such real estate and shall upon completion of said equalization issue an order to said assessor or board of equalization and 1o the county auditor of the county in which said real estate is located, fixing the assessed value of said real estate. The value so equalized and fixed, and no other, shall be deemed the value, assessed for county taxes, of such real estate, and the sole basis of taxation upon such real estate for county taxes. A copy of the order certified by the secretary of the state board of equalization shall be prima facie evidence of the regu- larity of all proceedings of the board resulting in the action which is the subject-matter of the order. State board to equalize assessments of real estate of insurance companies. Si-:c. 27. The state board of equalization shall immediately after the county and city assesssments have been completed, ascertain the value of any real estate belonging to any insurance company as assessed and equalized for purposes of county and of city taxation. Whenever the state board of equalization is satisfied after investigation that any county, city and county, city, or district assessor, or board of equaliza- tion, lias assessed any real estate belonging to any insurance company a hove its full cash value and has thereby unjustly reduced the amount of taxes due the state from said insurance company, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county or the proper officer of the city affected as the board shall deem reasonable, equalize the assessed value of such real estate and shall upon the completion of said equalization, issue an order to said assessor or hoard of equalization and to the county, city and county, city, or district auditor or clerk of the county, city and county, city, or district in which said real estate is located, fixing the assessed value of said real state. The value so equalized and fixed, and no other, shall be deemed Hie value, as assessed for county, city and county, city, or district taxes, of such real estate, and the sole basis of taxation upon such real estate, for county, municipal and district taxes. A copy of the order certified by the secretary of the state board of equalization shall be prima facie evidence of the regularity of all proceedings of the board resulting in the action which is the subject-matter of the order. 1; loo* is 242 INSURANCE LAWS OP CALIFORNIA. Assessors to segregate on assessment roll. Sec. 28. Each county, city and county, city, and district assessor must segregate on his assessment roll, as directed by the state board of equalization : 1. The assessments made by the state board of equalization, and ap- portioned to the county, city and county, city, town, townhsip, or dis- trict, upon the franchises, roadway, roadbed, rails and rolling stock of all railroads operated in more than one county in this state under the provisions of the Political Code as the same existed and were in force on the seventh day of November in the year one thousand nine hundred and ten ; and 2. The assessments made by said assessors of any other property enumerated in subdivisions (a), {b) and (d) of section fourteen of article thirteen of the constitution of this state, which is located in the county, or city and county, or any city, town, township, or district in which it is subject to taxation for paying the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township, or district prior to the eighth day of November in the year one thousand nine hundred and ten, as provided in subdivision (c) of section fourteen of article thirteen of the constitu- tion of this state. Immediately upon completion of the assessment and equalization of property for the purposes of taxation in each year the auditor or clerk of each county, city and county, city, town, or district must transmit to the state board of equalization a duplicate of that part of the assessment roll containing the assessments and apportionments referred to in para- graphs one and two of this section. Whenever the state board of equalization is satisfied after investiga- tion that any county, city, or other assessor, or board of equalization, has assessed for taxation to pay the principal and interest of any bonded indebtedness created and outstanding by any county, city and county, city, town, township, or district prior to the eighth day of November in the year one thousand nine hundred and ten, as provided in subdivision (e) of section fourteen of article thirteen of the constitution of this state, any of the property taxes exclusively for state purposes as pro- vided in subdivision (a), (b) and (d) of section fourteen of article thirteen of the constitution of this state, or has assessed for purposes of county, city and county, city, or district taxation the property other than the franchise of any company taxable for a franchise under sub- division (d) of said section and article of the constitution, above its full cash value and has thereby unjustly reduced the amount of taxes due the state on such property, said state board shall, under such rules of notice to the clerk of the board of supervisors of the county, or city and county, or to the city clerk of the city, affected thereby as the board shall deem reasonable, equalize the assessed value of such property, and shall issue an order to said assessor or board of equalization and to the county or city auditor or clerk of the county, city and county, or city in which the property is located, fixing the assessed value of such property. The value so equalized and assessed, and no other, shall be deemed the value of said property, and its assessment for taxes levied to pay the principal and interest of any such outstanding bonded indebtedness, and in the case of companies taxable for a franchise under said sub- TAXATION OP INSURANCE COMPANIES. 243 division (d) of said section and article of the constitution shall be deemed the value of the said property, and its assessment for taxes for county, city and county, municipal and district purposes. When making the tax levy and fixing the rates of taxation for county, city and county, city, town, township, or district purposes, the board of supervisors of any county, or city and county, and the corresponding authority in any city, having bonded indebtedness issued and outstand- ing on the eighth day of November in the year one thousand nine hundred and ten, shall fix the tax rate for such bonded indebtedness separate and apart from all other tax rates, whether for subsequent bonded indebtedness or for other purposes. The county, city and county, or city auditor or clerk shall extend on the assessment roll against the assessments segregated as herein pro- vided, the taxes necessary to pay the principal and interest of said bonded indebtedness at the same rate as said taxes for payment of prin- cipal and interest of said outstanding bonded indebtedness shall be levied upon the other classes of property within the same county, city and county, city, town, township, or district, and the amount of each such taxes shall be certified by said auditor or clerk to the controller and the amount so certified shall then be credited by the controller to the county, city and county, city, town, township, or district to which it is due ; and said amount shall be paid by said controller to the treasurer of such county, or city and county as provided in section twenty-nine of this act, and upon such payment said treasurer shall forthwith certify such fact to the tax collector who shall thereupon mark upon the assess- ment roll the date of payment and the words "paid by the state treas- urer.' ' The city clerk or auditor shall in the certificate mentioned in this paragraph also state the date when taxes in such city shall become delinquent.* State to pay part of principal and interest of outstanding bond debts. Sec. 29. The controller shall out of the taxes collected by him as provided in this act credit to the fund created by an act of the thirty- ninth session of the legislature entitled: "An act appropriating money for the purpose of payment of that part of the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township or district on the eighth day of Novem- ber in the year one thousand nine hundred and ten, which is provided for in section fourteen of article thirteen of the constitution of this state, and as provided in an act of the thirty-ninth session of the legisla- ture entitled 'An act to carry into effect the provisions of section four- teen of article thirteen of the constitution of the State of California as said constitution was amended November 8, 1910, providing for the separation of state from local taxation, and providing for the taxation of public service and other corporations for the benefit of the state, all relating to revenue and taxation V' the money due to each county, city and county, city, town, township, or district on account of taxes to pay the principal and interest of any bonded indebtedness created and outstanding by any city, city and county, county, town, township or district, on the eighth day of November in the year one thousand nine hundred and ten. The controller shall in the months of October and 244 INSURANCE LAWS OP CALIFORNIA. March in each year settle with the treasurer of each county and city and county for the money collected by said controller under this section, for the moneys due said county or city and county and the townships and districts within such county or city and county, in the same manner as settlements are made between the county or city and county treasurers and the controller as provided for in section three thousand eight hun- dred and sixty-six of the Political Code. The controller shall at the same times, settle with each city and town for the moneys due such city or town for the purposes mentioned in this section, and when ready for such settlement shall notify the city or town treasurer of the amount of money due the city or town for said purposes, and that upon receipt of proper authority so to do, he will forward to said city or town treas- urer a warrant for the amount thereof; provided, however, that upon receipt of notice from any such city or town treasurer that any bond issue matures for principal or interest before the date of such settle- in cut, which notice shall state the amount thereof due from the state and the date of maturity, and that said amount due from the state is required in order to pay the same, the said controller must, before said date of maturity, forward his warrant to such city or town treasurer in the manner above provided for the amount ascertained by him to be due. The treasurer of the county or city and county shall forthwith, upon receipt by him of the moneys so hereinbefore directed to be paid by said controller, credit the amount so received by him to the county, city and county, township or district, respectively entitled thereto, and pay the same in the manner provided by law. Any excess paid by the controller to a county, city and county, city, town, or to a county or city and county or any township or district, over and above the state's share of the amount actually expended by such county, city and county, city, town, township or district, to pay the interest and principal of said bonded indebtedness in any year, shall be repaid to the state in such manner as the controller shall direct. State to reimburse counties. Sec. 30. Until the year one thousand nine hundred and eighteen the state shall reimburse any and all counties which sustain loss of revenue by the withdrawal of railroad property from county taxation for the net loss in county revenue occasioned by the withdrawal of railroad property from county taxation in the manner, at the times, and in the amounts specified in an act of the thirty-ninth session of the legislature entitled "An act to provide for the reimbursement of counties in this state which sustain net loss of revenue by the withdrawal of railroad property from county taxation, under the provisions of section fourteen of article thirteen of the constitution of this state.' ' State not to pay county treasurers' expenses. Sec. 31. The provisions of section three thousand eight hundred and seventy-six of the Political Code shall not apply to the settlements made with the state treasurer under sections twenty -nine and thirty of this act, but the county board of supervisors may if it deem necessary allow the county treasurer the actual expenses incurred in collecting the money due the county from the state. * TAXATION OF INSURANCE COMPANIES. 245 Counties to reimburse loss to districts. Sec. 32. The board of supervisors of each county shall in the month of September of each year determine the amount of loss to each district in the county where loss is occasioned in such district by the withdrawal from local taxation of property taxed for state purposes only, and in tlir month of December next thereafter shall reimburse such district t'ronfthe general fund of the'connty for one half of such loss, and in the month of May next thereafter shall reimburse such district from the general fund of the county for the remaining one half of such loss. All property in state subject to deficiency tax. Sec. 33. Any tax required to be levied for state purposes as pro- vided in subdivision (< | of section fourteen of article thirteen of the constitution as amended the eighth day of November in the year one thousand nine hundred and ten, to meet any deficiency in the state revenue shall be assessed, levied and collected on all property in the state, n<>t exempt from taxation including the classes of property enu- merated in this act, under the provisions of the Political Code relating to the assessment, levy and collection of state and county taxes as said provisions were in force on the seventh day of November in the year One thousand nine hundred and ten. Prior laws not repealed for certain purposes. Sec. 34. Nothing in this act shall be construed as repealing any laws in force prior to the eighth day of November in the year one thousand nine hundred and ten, relating to taxation, in so far as said laws may be necessary for the assessment, levy, and collection of state, county, city and county, municipal or district taxes, or in so far as said laws may he necessary for the assessment, levy and collection of the taxes provided for in section twenty-two of article four of the constitution as amended on the eighth day of November in the year one thousand nine hundred and ten; or in bo far as said laws may be necessary for the Mticnt. levy and collection of the taxes for state purposes, on all the property in the state, not exempt from taxation, to meet a deficiency in the revenues for the support of the state government, or to pay the principal and interest of any bonded indebtedness created and out- standing by any city, city and county, county, town, township, or dis- trict, both as provided in subdivision (c) of section fourteen of article thirteen of the constitution as amended on the eighth day of November in the year one thousand nine hundred and ten. Sec. 35. In so far as the rates of taxation upon the property and franchises described and enumerated in section fourteen of article XIII of the constitution of the State of California and in section one of the act of which this act is in part amendatory, differ from the rates of taxation upon such property and franchises as fixed and defined by this act, it is hereby declared to be the intent and purpose of the legislature, two thirds of all the members elected to each of the two houses voting in favor thereof, by virtue of the authority conferred upon the legis- lature by subdivision / of section fourteen of article XIII of the con- stitution to change the rates of taxation heretofore fixed and imposed by s;iid section of the constitution and enumerated and specified in the act of which this act is amendatory to the rates fixed, determined, estab- lished and set forth by and in this act. 246 INSURANCE LAWS OF CALIFORNIA. This tax levy, and each and every of the percentages or rates of taxation herein and hereby determined, made, fixed and established to be paid by the persons, firms, companies and corporations specified, described or included in section 14 of article XIII of the constitution, are and have been determined, made, fixed and established after a full, complete, open and public investigation and hearing by and before this legislature upon and respecting the value of each and all of the prop- erties and franchises included within or enumerated in section 14 of article XIII of the constitution, and of all other and different property subject to taxation of any kind within the State of California, of which investigation and hearing every and all persons, firms, companies and corporations concerned therein or affected thereby had due notice; and at which investigation and hearing the legislature took oral and written evidence and at which hearing every and all persons, firms, companies and corporations concerned therein or affected thereby and who desired so to do, were given an opportunity to and did appear and were heard and introduced evidence before this legislature respecting and showing the value of said properties and franchises included within or enumer- ated in said section 14 of article XIII of the constitution and also respecting and showing the value of all other and different property subject to taxation of any kind within the State of California, and after the due consideration of all of said evidence by this legislature and its ascertainment and determination therefrom and thereon of the value of said and all of said hereinbefore mentioned properties and franchises ; and the percentages or rates of taxation herein and hereby determined, fixed and established have been and are determined, fixed and established and have been and are based, upon the value of each, all and every of the properties and franchises included within or enu- merated in said section 14 of article XIII of the constitution as ascer- tained and determined as aforesaid by this legislature and constitute and are the percentages or rates of taxation ascertained and determined by this legislature which when applied in the manner provided and required by law, do and will levy a tax upon said properties and fran- chises included within or enumerated in said section 14 of article XIII of the constitution in proportion to the value of the same and in proportion to the value of every and all other and different property subject to taxation of any kind within the State of California as ascer- tained and determined as aforesaid by this legislature. Amended, Stats. 1913, p. 9. INDEX. A Abandonment. (See Marine insurance.) Accident. Page. Time for giving notice of. 2633a, Civ. Code 89 Accident insurance companies doing business on the assessment plan. (See Life, health, Accident and annuity or endowment insurance companies doing business on the assessment plan. Accident and sick benefit associations. (See Fraternal benefit societies.) Accident and health insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Accumulations. How may be invested. 421, Civ. Code 46 Acknowledgment. (See Agent; Process.) Actions. Not to be transferred to federal courts. 608, Pol. Code 26 For rcovery of fines, taxes, assessments and penalties. 6346, Pol. Code__ 41 Plaintiff may join different parties. 383, Code Civ. Pro 107 To recover insurance, what defendant claiming exemption must plead. 437a, Code Civ. Pro 107 Acts. (See Statutes.) Of insurance commissioner may be reviewed by court. 631, Pol. Code 39 Actuary. Commissioner may employ. 601, 629, Pol. Code 19, 38 Compensation of. 601, 629, Pol. Code 19, 38 Must certify valuation of policies of fraternal benefit societies. 23, Act___ 138 Agents, general. Appointment of. 616, Pol. Code 31 Filing fee of appointment of. 605, Pol. Code 25 Service of process on. 616, Fol. Code 31 Appointment may be revoked. 616, Pol. Code (note) 32 Insurance by. 2589, Civ. Code 82 Agents and solicitors. License of. 633, Pol. Code 40 Fee. 605, Pol. Code 25 Alphabetical list of. 633, Pol. Code 40 Annuity report. (See Annual statement.) Insurance commissioner. 595, Pol. Code 12 Distribution of. 337, Pol. Code (note) 1_ 14 Annual statement. Filing fee. 605, Pol. Code 25 Must be filed before engaging in business. 607, Pol. Code 26 How verified. 610, Pol. Code 27 When to be filed. 611, Pol. Code 27 Publication of synopsis of. 611, Pol. Code 27 By companies other than life, must show. 612, Pol. Code 28 By life, health and accident companies. 613, Pol. Code 2!) Insurance commissioner must furnish printed forms for. 615, Pol. Code 31 Penalty for failure to file. 617, Pol. Code ^ 33 Of fraternal benefit societies. 23, Act 138 Annuity insurance on the assessment plan. (See Life, health, accident and annuity or endowment insurance companies doing business on the assess- ment plan.) Arson. (See Crimes.) Defined. 447, Pen. Code 111 Degrees of. 453, Pen. Code 112 First degree. 454, Pen. Code 113 Second degree. 454, Pen. Code 113 Punishment of. 455, Pen. Code 113 248 INDEX. Articles of Incorporation. Filing fee. 605, Pol. Code 25 Changes in, filing fee. 605, Pol. Code 25 Must be filed before engaging in business. 607, Pol. Code __^ 26 Of mutual benefit and life associations. 452a, Civ. Code 54 Assessment. Of companies for expenses commissioner's office. 606, Pol. Code 25 Payable on demand. 634b, Pol. Code .. 41 When directors may assess capital stock. 331, Civ. Code 44 Limitations on. 332, Civ. Code II Of mutual benefit and life associations. 453, Civ. Code 54 Act providing for printed notice on cover of policy 158 Of real estate of insurance companies, state board to equalize 241 Assessment associations. (See Life, health, accident and annuity or endow- ment Insurance companies doing business on the assessment plan.) Assessment live stock associations, or corporations. Contract defined. 1, Act 126 How may be formed. 2, Act 127 Investments. 2, Act ^ 127 Condition precedent to issuing insurance. 2, Act 127 What contracts shall specify. 3, Act 127 Reserve fund required. 4, Act 127 Foreign corporation, conditions required. 5, Act 128 Limitations of contract. 6, Act L29 Applications for insurance. 6, Act 12! Penalty for false statements. 6, Act Benefit not liable to attachment. 7, Act 129 Annual statement to be filed. 8, Act 139 When license may be revoked. 9, Act 129 Assessments, notice of to be mailed. 10, Act LS0 Fees, for filing statement, etc. 12, Act 130 Expenses of insurance commissioner, how paid. 13, Act 130 . Time act shall take effect. 14, Act : 1 ISO Assets. (See Capital; Capital stock.) Attorney in fact. (See Interinsurance associations.) Attorneys. (See Agents; Process; Service of process.) Attorney General. Must examine all documents. 596a, Pol. Code IT Opinion of, governs commissioner. 596a, Pol. Code IT Proceedings against fraternal benefit societies. 25, Act : 111 Authority. (See Certificate; Certificate of authority.) Automobile insurance. (See Insurance companies.) How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do what other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 B Beneficiary associations. (See Fraternal benefit societies.) Exempt from insurance laws. 630, Pol. Code 39 Boiler and machinery insurance. (See Insurance companies.) How classified. 594, Pol. Code Capital, amount of. 594, Pol. Code Insolvent, when. 602, Pol. Code *. 19 Bond. (See Sureties and surety corporations; Surplus line brokers.) Of insurance commissioner. 593, Pol. Code 7 Surplus line broker. 596, Pol. Code 14 Of insurance company. 623, Pol. Code 36 Fee for filing. 605, Pol. Code 25 Renewal of. 623, Pol. Code 36 When separate bonds must be given. 624, Pol. Code ^__ 36 Justification of sureties. 955, Pol. Code 41 Surety company may be accepted as sole surety. 955, Pol. Code 41 Surety may become liable for less than full penal sum. 956, Pol. Code 11 An act to facilitate the giving of, required by law. 1 to 4, Act 117 INDEX. 249 Bonds. Page. Report on stocks and bonds held. 422, Civ. Code 47 Broker. (See Surplus line broker; Licenses; Bond; Surety corporations.) Building. Defined. 448, Pen. Code 112 Inhabited, defined. 449, Pen. Code 112 Burglary insurance companies. (See Insurance companies.) How classified. 594, Pol. Code :___ S Capital, amount of. 594, Pol. Code S By-laws. Of mutual benefit and life associations. 453, Civ. Code 54 Amendments to, of fraternal benefit societies. 22, Act 138 C Capital. (See Capital stock.) How to be invested. 421, Civ. Code 46 Time to be paid in. 424, Civ. Code 48 Fixed, what constitutes a deficiency in. 439, Civ. Code 51 Declaration of fixed, to be filed. 440, Civ. Code 51 Capital Stock. (See Capital.) Amount required of insurance company. 594, Pol. Code 7 Must be fully paid up. 594, Pol. Code 7 Must be exclusive of liabilities. 594, Pol. Code 7 Bonds can not be held in lieu of capital stock. 594, Pol. Code (note) 11 Impairment of. 602, Pol. Code 19 Assessment of, on insolvency. 604, Pol. Code 24 Assessment of, when directors may levy. 331, Civ. Code 41 Limitation on assessment of. 332, Civ. Code 44 Subscription to and how collected. 414, Civ. Code 44 Certificate of paid up, to be filed and when. 425, Civ. Code 48 Amount of, of mutual life, health and accident insurance companies. 437, Civ. Code 50 Certificate of increase of, to be filed with commissioner. 607, Pol. Code 26 Cash premiums. Mutual fire insurance company. 8, Act 124 Casualty insurance companies. (See Insurance companies; Miscellaneous in- surance companies.) Certificate. (See Licenses.) Fee for issuing. 605, Pol. Code 25 Of unincorporated companies. 607, Pol. Code 26 Of deposit. 619, Pol. Code 34 Of paid up capital stock, to be filed when. 425, Civ. Code 37 < f proof of loss, when dispensed with. 2637, Civ. Code 90 Certificate of authority. (See Licenses.) Company must procure. 596, Pol. Code 14 Expires when. 596, Pol. Code 14 When can not be granted or renewed. 596, Pol. Code 14 Revocation for insolvency. 603, Pol. Code 19 Commissioner may issue new, on restoration. 603a, Pol. Code 23 Fee for issuing annual. 605, Pol. Code 25 Certificate of compliance. Must be filed when. 607, Pol. Code 1 26 Certified copies. (See Copies.) Fee for making. 605, Pol. Code 25 Charter. Copy must be filed. 607, Pol. Code 26 Civil actions. (See Actions.) Parties to. 383, Code Civ. Pro 107 Pleadings in. 437a, Code Civ. Pro 107 Compensation. Of insurance commissioner and deputy. 589, Pol. Code 6 Compliance. (See Certificate of compliance.) 250 INDEX. Concealment and representations. Page. What is. 2561, Civ. Code 77 Effect of. 2562, Civ. Code I 78 What must be disclosed. 2563, Civ. Code 78 Matters of opinion need not be communicated. 2564, Civ. Code 78 Materiality, test of. 2565, Civ. Code 78 Matters each party is bound to know. 2566, Civ. Code 78 Waiver of communication of facts. 2567, Civ. Code 78 Interest of insured. 2568, Civ. Code 79 Intentional omission, fraudulent. 2569, Civ. Code 79 Matters of opinion. 2570, Civ. Code 79 Representation, oral or written. 2571, Civ. Code 79 Representation, when made. 2572, Civ. Code 79 Representation, how interpreted. 2573, Civ. Code 79 Representation, as to future. 2574, Civ. Code 79 Representation, how may affect policy. 2575, Civ. Code 79 Representation, may be withdrawn. 2576, Civ. Code 80 Representation, time intended by. 2577, Civ. Code 80 Representation, of information. 2578, Civ. Code 80 Representation, when deemed false. 2579, Civ. Code 80 Representation, effect of falsity. 2580, Civ. Code 80 Representation, materiality of, how determined. 2581, Civ. Code 80 Provisions as to modification. 2582, Civ. Code 80 When right to rescind may be exercised. 2583, Civ. Code 80 When intentionally false insurer may rescind. 2676, Civ. Code 94 Eventual falsity of, as to expectation. 2677, Civ. Code 94 Constitution. (See By-laws.) Contracts. (See Policy.) Of life, health, accident and annuity or endowment insurance on the assessment plan, defined. 453d, e, g, Civ. Code 57, 58, 59 Of insurance. 2527, Civ. Code 71 Designation of parties in. 2538, Civ. Code 74 Who may make. 2539, Civ. Code 74 Who may be insured under. 2540, Civ. Code 74 Assignment of mortgage, under. 2541, Civ. Code 74 Transfer of insurance from a mortgagor to a mortgagee. 2542, Civ. Code 75 Right to rescind. 2583, Civ. Code 80 Contingent liability. Of members in mutual fire insurance companies. 4, Act 123 Copies. Fee for furnishing copies of papers. 605, Pol. Code 25 Fee for certifying to copies of papers. 605, Pol. Code 25 Costs. (See Fees and costs.) County clerks. Insurance commissioner must certify to. 625a, Pol. Code 37 County fire insurance companies. Incorporation. 1, Act 118 Articles of incorporation. 2, Act 118 Certificate. 2, Act 118 Directors, number of. 3, Act 119 Officers. 4, Act 119 Bonds and officers. . 5, Act 119 By-laws and powers. 6, Act 119 Membership. 7, Act 119 Risks. 8, Act 120 Risks, classification of. 9, Act 120 Risks, limitation upon. 10, Act 120 Losses, adjustment of. 11, Act 120 Deficiency, assessment for. 12, Act 121 Assessment, notice of. 13, Act 121 Assessment, neglect or refusal to pay. 14, Act 122 Annual statement. 15, Act 122 Withdrawal of member. 16, Act 122 Report of officer. 17, Act 122 Dissolution. 18, Act 122 Conflicting laws repealed. 19, Act _ 122 INDEX. 251 Credit insurance companies. (See Insurance companies.) Page. How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Crimes. (See Penalty; Arson.) Commissioner must certify facts to district attorney. 632, Pol. Code 39 Against property. 447 to 455 and 548, 549, Pen. Code - 111, 112, 113 Carrying on business without license. 435, Pen. Code . Ill Insurance in unauthorized companies. 439, Pen. Code 111 Arson, defined. 447, Pen. Code 111 Cyclone insurance. (See Miscellaneous insurance companies.) D Definition. Of authorized companies. 596, Pol. Code 14 Of word "company." 634a, Pol. Code 41 Of building. 448, Pen. Code 112 Of inhabited building. 449, Pen. Code 112 Of nighttime. 450, Pen. Code 112 Of burning. 451, Pen. Code 112 Of insured. 1, Act 151 Of loss. 1, Act 151 Of time of loss or damage. 1, Act 151 Deposit by foreign companies. Amount required. 594, Pol. Code 7 Kind of securities. 594a, Pol. Code, 421, Civ. Code 11, 46 With what official. 594a, Pol. Code 11 Existence, how certified. 594, Pol Code 10 Value of securities. 594a, Pol. Code 12 For whose benefit. 594a, Pol. Code 12 How deposited with insurance commissioner. 594a, Pol. Code 12 How withdrawn. 594a, Pol. Code 12 Certificate of deposit. 594a, Pol. Code 12 Fee for issuing certificate of. 605, Pol. Code 25 Fee for filing certificate. 605, Pol. Code 25 Deposit. Fee for issuing, certificate of. 605, Pol. Code 25 Fee for filing certificate of. 605, Pol. Code 25 General provisions as to. 618, Pol. Code 33 Of mortgages, how made. 618, Pol. Code 33 Of stocks and bonds, fees for appraisal of. 618, Pol. Code 33 Certificate of. 619, Pol. Code 34 Withdrawal of, how made. 620, Pol. Code 34 Under retaliatory law. 622, Pol. Code 35 For benefit of registered policies. 634, Pol. Code 40 Deputy insurance commissioner. Salary of. 589, Pol. Code 6 Deviation. (See Voyage; Marine insurance.) Is proper when. 2695, Civ. Code 96 Is improper when. 2696, Civ. Code 96 Insurer is exonerated by improper. 2697, Civ. Code 96 From standard form of policy. 12, Act 153 Notwithstanding, policy valid. 12, Act 153 Directors. Liable for loss on insurance when. 418, Civ. Code 45 Liable on what policies. 418, Civ. Code 45 Distribution. Of annual report. 595, Pol. Code (note) 12 District attorney. Commissioner must certify violations of law to. 632, Pol. Code 39 Dividends. Directors must make, when. 417, Civ. Code 45 What not to be treated as. 417, Civ. Code 45 Amounts to be reserved before making. 429, 430, Civ. Code 49 Of mutual life, health and accident insurance companies. 452, Civ. Code 54 252 INDEX. Double insurance. Page. What is. 2641, Civ. Code 90 Contribution in case of. 2642, Civ. Code 90 E Employers' liability. Acts of 1911 and 1913 1 166, 177 Endowment insurance companies doing business on the assessment plan. (See Life, health, accident and annuity insurance companies doing business on the assessment plan.) Equalization, state board of. Insurance commissioner must report to. 11, Act 227 Time of meeting of. 18, Act 1 232 Protest of taxes to. 23, Act 236 Powers and duties of. 25, Act 239 Must equalize assessments of real estate of insurance companies. 27, Act 241 Examination. Commissioner must make. 595, 597, Pol. Code 12, 17 Expenses of, how paid. 597, Pol. Code 17 Commissioner must keep statement. 600, Pol. Code 19 Annual, of securities deposited. 621, Pol. Code 34 Of domestic fraternal benefit societies. 24, Act 140 Of foreign fraternal benefit societies. 25, Act 141 Examining physician. (See Physician.) Exchange of indemnity. Act 143 Expense. (See Insurance commissioner.) Of examinations, how paid. 597, Pol. Code 17 Of insurance commissioner to be paid by companies, when. 5 606, Pol. Code 25 Experts. Commissioner may employ, when. 597, Pol. Code 17 F Federal courts. Actions not to be transferred to. 608, Pol. Code 26 Fees and costs. Surplus line brokers. 596, Pol. Code 14 For filing annual statement. 605, Pol. Code 25 For filing articles of incorporation. 605, Pol. Code 25 For filing changes in articles of incorporation. 605, Pol. Code 25 For filing bond of company. 605, Pol. Code 25 For filing appointment of agent and stipulation. 605, Pol. Code' 25 For filing stipulation. 605, Pol. Code 25 For filing certificate of deposit of securities. 605, Pol. Code 25 For furnishing copies of papers. 605, Pol. Code 25 For certifying copies. 605, Pol. Code * 25 For issuing certificate of deposit of securities. 605, Pol. Code 25 For registering policies of life insurance. 605, Pol. Code 25 For issuing annual certificate of authority. 605, Pol. Code 25 For issuing annual license to agents. 605, Pol. Code 25 For attaching seal to paper not specified. 605, Pol. Code 26 For issuing other certificates. 605, Pol. Code 25 Of secretary of state. 409, Pol. Code 155 Payments must be made on basis of gold coin. 627, Pol. Code 37 Fidelity insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Financial statement. (See Annual statement.) Fine. (See Penalty.) For failure to file annual statement. 617, Pol. Code 33 Fire insurance. Alteration without consent. 2753, Civ. Code 103 Alteration not increasing risk. 2754, Civ. Code 104 INDEX. 253 Fire insurance Continued. Page. Subsequent acts of insured. 2755, Civ. Code 104 Measure of indemnity defined. 2756, Civ. Code 104 Policy, value of interest in. 2757, Civ. Code 104 Value of insured's interest, how may be fixed. 2757, Civ. Code 104 Fire insurance companies. (See Insurance companies; Mutual fire insurance companies; Foreign insurance companies; Standard policy of.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Capital to be paid up, how and when. 424, Civ. Code 48 Property which may be insured. 426, Civ. Code -19 Limitation on risks. 428, Civ. Code 19 Dividends, amount to be reserved before making. 429, 430, Civ. Code 49 Fire patrol Dutiefl and powers of underwriters. 453, Civ. Code 55 Rights of way of and its officers. 453b, Civ. Code '. 55 Abandonment of building. 453a, Civ. Code 55 Assessment to maintain. 453c, Civ. Code 56 Kxpenses of, limit upon. 453c, Civ. Code 56 Fire insurance companies, may maintain. 453a, Civ. Code 55 Injuries to property of. 453b, Civ. Code ' 55 1 iws affecting fire department apply to. 453b, Civ. Code 56 Maintenance of, statement of premiums. 453c, Civ. Code 56 Meeting of. I 163c, Civ. Code 56 Obstruction of, on \va\ to fire, punishment. 453b, Civ. Code - 55 J'ower to enter building and take property. 453a, Civ. Code 55 Regular fire department not to be interfered with. 453a, Civ. Code 55 Right Of way while running to fires. 453b, Civ. Code 55 Underwriters may maintain. 453a, Civ. Code 55 Fire underwriters. (See Fire patrol.) Fly wheel insurance. (See Insurance companies.) Foreign insurance companies. (See Taxes; Deposit; and Insurance companies.) Deposits by. 594a, Pol. Code 11 Examination of. 597, Pol. Code 1 17 "V\ ithdrawal of. 595, Pol. Code 12 statement of, how verified. 610, Pol. Code 28 Forfeiture. (See Penalty.) Forms. Commissioner must prepare and furnish. 615, Pol. Code 3.1 Fraternal benefit societies. Exempt from insurance laws. 630, Pol. Code, 4, Act 39, 131 Exempt from taxation. 30, Act 14a Defined. 1, Act l 131 Lodge system, defined. 2, Act , 131 Representative form of government defined. 3, Act 131 Benefits of. 5, Act 131 Beneficiaries. 6, Act 132 Membership, qualifications for. 7, Act 132 Certificates of membership. 8, Act 132 Funds of. 9, Act 133 Investment of. 10, Act 133 Distribution of. 11, Act ___^ - 133 Organization of. 12, Act 133 Powers retained by societies now in business. 13, Act 135 Mergers and transfers. 14, Act 136 Licenses, annual. 15, Act \ 136 Admission of foreign societies. 16, Act 136 Power of attorney to insurance commissioner. 17, Act 137 Service of process on. 17, Act 137 Place of meeting of. 18, Act 138 No personal liability of officers or members. 19, Act 138 Subordinate lodge can not waive laws. 20, Act 138 254 INDEX. I Fraternal benefit societies Continued. Page. Benefits not attachable. 21, Act 138 Amendments to constitution and laws. 22, Act 138 Reports of. 23, Act 138 1 Valuation of policies of. 23a, Act 139 Examinations of. 24, 26, Act 140, 141 Publication of findings. 27, Act '. 141 Revocation of license of. 28, Act 141 What societies are exempt. 29, Act 142 Taxation of. 30, Act 142 Penalties for violation of laws relating to. 31, Act 143 Fraternal insurance companies. Act to regulate organization of 156 Fraud. Breach of warranty without. 2612, Civ. Code 86 Premiums returned for. 2619, Civ. Code 87 Relieves insurer. 2629, Civ. Code 88 Freightage. (See Marine insurance.) What is. 2661, Civ. Code 92 Expected. 2662, Civ. Code 93 Interest in, what. 2663, Civ. Code 93 How affected by abandonment of ship. 2730, Civ. Code 100 Funds. (See Investments.) G General agents. (See Agents, general.) Appointment of, to be filed. 616, Pol. Code 31 Governor of state. Insurance commissioner is appointed by. 368, Pol. Code S Term of office of appointees of. 369, Pol. Code 5 Insurance commissioner must make annual report to. 595, Pol. Code 12 H Health, accident and annuity or endowment insurance companies doing business on the assessment plan. (See Life, health and accident and annuity or endowment insurance companies doing business on the assessment plan.) Health insurance companies. (See Accident and health insurance companies; Mutual life insurance companies.) I Implied warranties. (See Warranties.) Increase. (See Capital stock.) Indemnity. (See Measure of indemnity.) Information. (See Marine insurance.) Must be communicated. 2669, Civ. Code , 93 Material. 2670, Civ. Code 93 Presumed to have had knowledge. 2671, Civ. Code 93 Injunction. Attorney general must bring suit for. 25, Act 141 Inland navigation insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 When insolvent. 602, Pol. Code 19 Insolvency. Commissioner must examine companies. 597, Pol. Code 17 When companies are. 602, Pol. Code 19 Revocation of certificate of authority. 603, Pol. Code 23 Company may repair capital. 603a, Pol. Code 24 Commissioner must certify to attorney general. 604, Pol. Code 24 Proceedings on. 604, 604a, Pol. Code 24, 25 Receiver may reinsure business. 604, Pol. Code 24 Who may commence proceedings. 604, Pol. Code 24 Laws applicable. 604a, Pol. Code 25 Of fraternal benefit societies. 24, Act 140 INDEX. 255 Page. Insurance in general. (See Concealment; Representation; Policy; Warranties; Premium; Loss; Notice of loss; Reinsurance; Double insurance; Insur- ance companies.) What is. 2527, Civ. Code 71 What may be insured. 2531, Civ. Code 73 Of lottery unauthorized. 2532, Civ. Code 1 73 Usual kinds of. 2533, Civ. Code 74 Code provisions govern all kinds of. 2534, Civ. Code 74 Defining insurer of. 2538, Civ. Code 74 Who may insure. 2539, Civ. Code 74 Who may be insured. 2540, Civ. Code 74 . On mortgaged property. 2541, Civ. Code 74 By mortgagor. 2542, Civ. Code 75 Insurance commissioner. How appointed. 368, Pol. Code 5 Term of office. 369, Pol. Code 1 5 Who are eligible. 588, Pol. Code 6 Salary of, and deputy. 589, Pol. Code 6 Rooms and expense. 591, Pol. Code 6 Location of office. 592, Pol. Code 7 Bond of. 593, Pol. Code 7 Duties of. 595, Pol. Code 12 Annual report of. 595, Pol. Code 12 How distributed. 595, Pol. Code -12 Examination of companies. 595, 597, Pol. Code 12, 17 Where conducted. 597, Pol. Code 17 May employ experts to rewrite books. 597, Pol. Code 17 Must furnish information to policyholder. 598, Pol. Code 18 May subpoena witnesses. 599, Pol. Code 19 Must keep record of proceedings. 600, Pol. Code 19 May employ actuary. 601, Pol. Code 19 Must revoke certificate of insolvent companies. 603, Pol. Code 23 Must report insolvency to attorney general. 604, Pol. Code 24 May assess companies. 606, Pol. Code 25 May reject name of company. 609, Pol. Code 27 Must furnish printed forms of annual statement. 615, Pol. Code 31 Service of process upon. 616, Pol. Code 31 Must deposit securities in state treasury. 618, Pol. Code 33 Must issue certificate of deposit. 619, Pol. Code 34 Must furnish information to assessors. 625, Pol. Code 37 Must certify list of surety companies to county clerk. 625a, Pol. Code 37 Must require compliance with general corporation laws. 626, Pol. Code__ 37 Arts may be reviewed by court. 631, Pol. Code 3!) Must publish notice of withdrawal of companies. 631a, Pol. Code 39 Must certify violations of law to district attorney. 632, Pol. Code 39 Must keep alphabetical list of agents and solicitors. 633, Pol. Code 40 May commence actions for recovery of fines. 634&, Pol. Code 41 What must report to state board of equalization. 11, Act 227 Insurance companies. (See under appropriate titles.) Classification of. 594, Pol. Code 7 Certificate of authority of. 596, Pol. Code 14 Withdrawal of, from state. 595, Pol. Code 12 Examination of. 595, 597, Pol. Code 12, 17 Authorized, defined. 596, Pol. Code 14 Expense of organizing. 597, Pol. Code _ 17 Must furnish information to policyholder. 598, Pol. Code 18 Insolvency of. 602, Pol. Code i 19 Revocation of certificate of authority. 603, Pol. Code 23 May repair capital. 603a, Pol. Code 24 Proceedings before judgment. 604, Pol. Code 24 Assessment for expenses by commissioner. 606, Pol. Code 25 Certificate by unincorporated companies. 607, Pol. Code 26 Must submit name to commissioner. 609, Pol. Code 27 How statements and reports are verified. 610, Pol. Code 27 256 INDEX. Insurance companies Continued. Page. Must file annual statements. 611, Pol. Code 27 What annual statement of companies other than life must show. 612, Pol. Code 28 What annual statement of life companies must show. 613, Pol. Code 29 Mutual, under act of 1851, may report how. 614, Pol. Code 31 Must appoint general agent. 616, Pol. Code 31 Must file stipulation for service of papers. 616, Pol. Code 31 Deposit of securities by. 618, Pol. Code ^___1 33 Withdrawal of deposit by. 620, Pol. Code 34 Deposits under retaliatory law. 622, Pol. Code 35 Taxation of. 622a, Pol. Code 35 Bond to be filed by. 623, Pol. Code 36 Must give separate bonds, when. 624, Pol. Code 36 Companies must comply with general corporation laws. 626, Pol. Code 37 Companies must furnish data for violation of life policies. 629, Pol. Code 38 Publication of notice of withdrawal. 631a, Pol. Code SI Deposits for registered policies. 634, Pol. Code 40 Rate of taxes. 3, Act 136 Policies of, how issued and by whom signed. 416, Civ. Code 46 How capital and accumulations may be invested. 421, Civ. Code 46 Insurance companies other than life. (See Insurance companies.) What annual statement must show. 612. Pol. Code 28 Insurance corporations. (See Insurance companies.) Insurable interest. (See Insurance in general.) What is. 2546, Civ. Code - 78 What may consist. 2547, Civ. Code 76 Of carrier or depositary. jj 2548, Civ. Code 76 Mere expectancies. 2549, Civ. Code 76 Measure of, in property. 2550, Civ. Code 76 Insurance without, illegal. 2551, Civ. Code 76 When must exist. 2552, Civ. Code 76 Effect of transfer. 2553, Civ. Code 76 Transfer of, after loss. 2554, Civ. Code ___ 76 Exception in case of several subjects in one policy. 2555, Civ. Code_ 77 In case of death of insurer. 2556, Civ. Code 77 In case of, between co-tenants. 2556, Civ. Code 77 Policy when void. 2558, Civ. Code 77 Interinsurance associations. Who may exchange indemnity. 1, Act 143 Dimit of liability on risk. 1, Act 143 May appoint attorney in fact. 2, Act 143 Papers to be filed by attorney in fact. 2, Act 143 Stipulation, form of. 2, Act 145 Statement to be filed. 2, Act 144 Certificate of authority. 3, Act 145 Fee for issuance and renewal. 3, Act 145 Annual statement. 4, Act 14r Commissioner must examine association. 5, Act 145 Unauthorized contract void. 7, Act 146 Taxation of. 8, Act 146 Exempt from other insurance laws. 9,Act 146 Investments. (See Capital.) To be reported to commissioner. 421, Civ. Code 46 Irrigation districts. Act relating to bonds of 139 J Joint stock and mutual insurance companies. Must have assets in lieu of capital stock. 594, Pol. Code 7 INDEX. 257 L Liability insurance companies. (See Insurance companies.) Page. How classified. 8 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Reserve required. 8 602a, Pol. Code 20 Licenses. (See Certificate of authority; License periods.) Surplus line broker. 8 596, Pol. Code 14 Surpjlua line broker, revocation of. 596, Pol. Code 14 Of surplus line broker, can not issue when. 596, Pol. Code 14 I >f agents and solicitors. 8 633, Pol. Code " 40 Fee for annual license to agents and solicitors. 605, Pol. Code 25 Transaction of business without. 8 435, Pen. Code 111 I'rocurement of business for unlicensed foreign companies unlawful. 8 439, Pen. Code 111 License periods. Of broker, from July 1st to July 1st. 8 596, Pol. Code 14 m Insurance companies, from July 1st to July 1st. 8 596, Pol. Code 14 Of agents and solicitors, from July 1st to July 1st. | f;:, Pol. Code 40 is( ontinuance of business. 453ft, Civ. Code 59 Exempt, money obtained from corporation is. 8 453Jc Civ. Code 61 False statements to, punishment for. 453./, Civ. Code . 60 Fees, amount and disposition of. 8 453n, Civ. Code : 62 Foreign corporations, conditions of doing business, 453i, Civ. Code ,__ 60 Foreign corporations, license to issue when. 8 453/, Civ. Code 60 Fraternal societies exempt from provisions of. 453p, Civ. Code 62 Insurance commissioner, duty to examine into. $ 4532, Civ. Code 61 Insurance commissioner, expenses, allowance and payment of. 453o, Civ. Code 62 Insurance commissioner, proceedings by against. 453Z, Civ. Code 61 Investment of funds. 453e, Civ. Code 58 Lapsing of policies, notices. 8 453w, Civ. Code . 61 Lien on property of, indebtedness on contract is. 453ft, Civ. Code 59 Name of. 8 453e, Civ. Code 58 Organisation within one year. 453e, Civ. Code 58 Payment, time and effect of failure to pay. 8 453a, Civ. Code 59 Penalties, disposition of. 8 453n, Civ. Code 62 Pre-existing corporations, rights of. 8 453f, Civ. Code 59 Priority of indebtedness under contract. 453a, Civ. Code 59 Reserve and emergency fund, disposition of. 453ft, Civ. Code 59 Reserve and emergency fund to be created. 453ft, Civ. Code 59 Revocation of power to do business. 8 4532, Civ. Code 61 Secret societies exempt from statute. 453p, Civ. Code 62 Statements to be filed annually. 8 4532, Civ. Code 61 Life and health insurance. (See Insurance in general.) Upon life, when payable. 2762, Civ. Code 105 insurable interest, extent of. 8 2763, Civ. Code 105 Assignee, interest of. 2764, Civ. Code 105 Transfer of policy. 8 2765, Civ. Code 106 Defining measure of indemnity. 2766, Civ. Code 106 IT 10008 258 INDEX. Life insurance companies. (See Insurance companies.) Page. How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 What annual statement must show. 613. Pol. Code 29 Lightning insurance companies. (See Insurance companies.) How classified. 594, Pol. Code *. 7 Capital, amount of. 594, Pol Code 7 Insolvent, when. 602, Pol. Code 19 Limitations. (See Risk.) On risk of fire and marine insurance companies. 428, Civ. Code 49 On risk taken by county fire insurance companies. S 8, 10, Act 120 Live stock insurance companies. (See Miscellaneous insurance companies.) Lodge system. (See Fraternal benefit societies.) Loans. On policies. 421, Civ. Code __ 46 To officers or employees, unlawful. 4532, 453rfd, Civ. Code 66. 67 Act prohibiting borrowing- by an officer 158 Loss. (See Notice of loss.) What perils are insured against. 2626, Civ. Code 87 Incurred in rescuing from peril. 2627, Civ. Code 88 Perils excepted. 2628, Civ. Code 88 Negligence does not exonerate insurer. 2629, Civ. Code 88 May be total or partial. 2701, Civ. Code 97 When not total is partial. 2702, Civ. Code , 97 May be actual or constructive. 2703, Civ. Code 97 Actual total. 2704, Civ. Code _ 97 Constructive total. 2705, Civ. Code 07 Presumed. 2706, Civ. Code 97 Upon actual total insured entitled to payment without notice of abandon- ment. 2709, Civ. Code 98 Average. 2711, Civ. Code 98 Insurance against total. 2712, Civ. Code 98 How marine insurer is liable upon partial. S 2737, Civ. Code 101 Estimating, under open policy. 2741, Civ. Code 102 When vessel is insure* against partial. 2742, Civ. Code 102 General average. 2744, Civ. Code 102 In case of a partial. 2746, Civ. Code 103 Total or -partial. 2757, Civ. Code 104 Adjustment of, county fire insurance companies. 11, Act 120 M Machinery insurance. (See Boiler and machinery insurance companies.) Marine insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Capital to be paid up, how and when. 424, Civ. Code 48 Property which may be insured. 426, Civ. Code 49 Limitation on risks. 428, Civ. Code 49 Dividends, amounts to be reserved before making. 429, 430, Civ. Code 49 What is. 2655, Civ. Code 92 Owner of ship has insurable interest at all times. 2659, Civ. Code 92 Insurable interest of owner reduced by bottomry. 2660, Civ. Code 92 Freightage, what is. 2661, Civ. Code 92 Owner has insurable interest in expected freightage. 2662, Civ. Code 93 Interest in expected freightage, what is. 2663, Civ. Code 93 Insurable interest in profits, what is. 2664, Civ. Code 93 Insurable interest of charterer. 2665, Civ. Code 93 Information by each party must be communicated. 2669, Civ. Code 93 Information of the belief or expectation of a third person. 2670, Civ. Code 93 INDEX. 259 Marine insurance companies Continued. Page. Presumption of knowledge of loss. 2671, Civ. Code J 93 Concealment, effect of. 2672, Civ. Code 93 Concealments, various kinds. 2672, Civ. Code L 93 Representation intentionally. 2676. Civ. Code : 94 Eventual falsity of representation as to expectation. 2677, Civ. Code 84 Implied warranty that ship is seaworthy. 2681, Civ. Code 94 Seaworthiness, what is. 2682, Civ. Code 94 Seaworthiness, exists when. 2683, Civ. Code 94 Seaworthiness, requisites. 2684, Civ. Code 95 Seaworthiness, degrees of at different states of. 2685, Civ. Code 95 Unseaworthiness during voyage. 26S6, Civ. Code 95 Ship seaworthy may at times be unseaworthy. 2687, Civ. Code 95 Ship to carry requisite documents. 2688, Civ. Code 95 Voyage must conform to course fixed by mercantile usage. 2692, Civ. Code 96 Course when not fixed by mercantile usage. 2693, Civ. Code 96 Course of voyage, deviation in. 2694, Civ. Code - 96 Course, when proper. 2695, Civ. Code 96 Course, when improper. 2696, Civ. Code 96 Insurer, exonerated when. 2697, Civ. Code 96 Total and partial loss. 2701. Civ. Code 97 Partial loss, what is. 2702, Civ. Code 97 Actual and constructive total loss. 2703, Civ. Code 97 Actual total loss, what is. 2704, Civ. Code 97 Constructive total loss, what is. 2705, Civ. Code^ 97 Presumed total loss, what is. 2706, Civ. Code 97 When master must transfer cargo. 2707, Civ. Code 98 Insurer bound for damages when cargo is transferred. 2708, Civ. Code__ 98 Insurer is entitled to payment upon actual total loss. 2709, Civ. Code 98 Average loss. 2711, Civ. Code 98 When confined in terms to an actual total loss. 2712, Civ. Code 98 Abandonment, what is. 2716, Civ. Code 99 Insured may abandon, when. 2717, Civ. Code 99 Abandonment must neither be partial nor conditional. 2718, Civ. Code 99 Abandonment, when it may be made. 2719, Civ. Code 99 Abandonment, how becomes ineffectual. 2720, Civ. Code 99 Abandonment, how made. 2721, Civ. Code 99 Abandonment, requisites of notices of. 2722, Civ. Code 100 Sustained only upon cause specified. 2723, Civ. Code 100 Abandonment equivalent to transfer. 2724, Civ. Code 100 Insurer entitled to salvage, when. 2725, Civ. Code 100 Agents of the insured become agents of the insurer. 2726, Civ. Code 100 Abandonment, acceptance of not necessary. 2727, Civ. Code 100 Abandonment, acceptance when conclusive. 2728, Civ. Code 100 Abandonment accepted, irrevocable. 2729, Civ. Code 100 Abandonment of ship affects freightage, how. 2730, Civ. Code 100 Insurer liable when refuses to accept valid abandonment. 2731, Civ. Code 100 Loss may be recovered if insured omits to abandon. 2732, Civ. Code 101 Valuation, when conclusive. 2736, Civ. Code 101 Insurer is liable for partial loss, when. 2737, Civ. Code 101 Insured is entitled to profits, when. 2738, Civ. Code 101 Valuation in policy apportioned when part only is exposed. 2739, Civ. Code 101 Loss of profits insured and valuation fixes their amount, when presumed. 2740, Civ. Code 102 Estimating loss under an open policy, rules of. 2741, Civ. Code 102 Cargo, when damaged. 2742, Civ. Code 102 Liability of insurer for expenses and labor. 2743, Civ. Code 102 Liability of insurer on contribution. 2744, Civ. Code , , 102 Contribution, demand against others for. 2745, Civ. Code 102 Partial loss of ship or equipment, depreciation. 2746, Civ. Code 103 Medical examinations. Of members of fraternal benefit society. 7, Act 132 260 INDEX. Measure of indemnity. Page. Valuation in policy of marine insurance, when conclusive. 2736, Civ. Code 101 Marine insurer upon partial loss. 2737, Civ. Code 101 Profits. 2738, Civ. Code 101 Valuation apportioned. 2739, Civ. Code 101 Valuation applied to profits. 2740, Civ. Code 102 Estimating loss under open policy. 2741, Civ. Code 102 Arrival of thing damaged. 2742, Civ. Code 102 Labor and expenses. $ 2743, Civ. Code 102 General average. 2744, Civ. Code 102 Contribution. 2745, Civ. Code 102 One third new for old. 2746, Civ. Code 103 In fire insurance policy. 2756, Civ. Code 104 Under policy of life or health insurance. 2766, Civ. Code 104 Miscellaneous insurance companies. How classified. 594, Pol. Code 9 Capital, amount of. 594, Pol. Code 9 May do what other kind of insurance. 594, Pol. Code 9 Includes cyclone, tornado, windstorm and lightning insurance. 594, Pol. Code 9 Insolvent, when. 602, Pol. Code 19 Mortgage insurance companies. How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do what other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Subject to insurance laws and insurance commissioner. 453ao. Civ. Code 66 Policy of mortgage insurance defined. $ 453bb, Civ. Code 66 Capital stock. 453cc, Civ. Code 67 Kind and amount of securities that may be guaranteed 453rfd, Civ. Code 67 Legal investments for trust funds. 453ee, Civ. Code 67 Certificate of insurance commissioner necessary. $ 453/7, Civ. Code 68 Loans and investments. 453o<7, Civ. Code 68 Quarterly reports. 453/i/i, Civ. Code : 69 Mortuary fund. (See Reserve fund; Fraternal benefit societies.) Mutual benefit and life associations. Formation of a. 452a, Civ. Code 54 Levying of assessments of and limits thereon. 453, Civ. Code 54 Annual payments. 453, Civ. Code 54 Articles of incorporation of. 452a, Civ. Code 54 By-laws of. 453, Civ. Code 54 Members, number of. 452a, Civ. Code 54 Powers and liabilities. 453, Civ. Code 54 Purpose of. 452a, Civ. Code 54 Mutual fire insurance companies. (See Insurance companies.) May adopt by-laws. 2, Act 123 Policyholder becomes member of corporation. 3, Act 123 Assets of an organization. 4, Act 123 Expenses, limitation of. 5, Act 123 Amount of single risk. 6, Act 124 Admission of foreign companies. 7, Act 124 May issue non-assessable policies, when. 8, Act 124 Premiums to be paid in cash. 8, Act 124 Assessment by. 9, Act _ 125 Withdrawal or cancellation of policy. 10, Act 125 Dividends, when declared. 11, Act 125 Statement, annual, must be filed. 12, Act 126 Insolvent, when. 13, Act 126 Organization of. 13, Act .___ 126 Laws applicable to. 14, Act 126 Taxation of. 14, Act 126 Mutual insurance companies. (See Mutual fire insurance companies; Mutual life insurance companies.) Assets required in lieu of capital stock. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Organized under act of 1851, may report how. 614, Pol. Code 31 INDEX. 261 Mutual life insurance companies. (See Life insurance companies.) Page. Assets required. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Capital stock,, amount of. 437, Civ. Code 50 Guarantee, fund of. 437, Civ. Code 50 Guarantee, fund of, shall consist of. 438, Civ. Code 50 Fixed capital. 439, Civ. Code 51 Declaration of fixed capital. 440, Civ. Code^ ! 51 Guarantee notes and interest, how disposed of. 441, Civ. Code 51 Insured to be entitled to note, when. 442, Civ. Code 52 Number of directors may be altered, how. 443, Civ. Code 52 By-laws of may provide protection of stockholders. 445, Civ. Code 52 Premiums of, how payable. 446, Civ. Code 52 Policy of to contain, what provisions. 450, Civ. Code 52 Dividends of, how made. 452, Civ. Code 54 Mutual workmen's compensation insurance companies. Act providing for organization and management 162 N Name. Of company, commissioner may reject. 609, Pol. Code 27 Nationality. (See Neutrality.) Neutrality. Shipment must carry papers of. 2688, Civ. Code 95 Newspaper. Publication of statement in. 611, Pol. Code 27 Of general circulation. 611, Pol. Code 27 Weekly. 611, Pol. Code 27 Notice. (See Publication; Newspapers.) Commissioner must give on insolvency. 8 603, Pol. Code 23 Service on general agent. 616, Pol. Code 31 Notice of accident. Time in which may be given. 2633, Civ. Code 89 Notice of loss. (See Loss.) Insurer exonerated, when. 2633, Civ. Code 89 Preliminary proofs. 2634, Civ. Code 89 Waivers of, defects in. 2635, Civ. Code 89 Waivers of, delay in presentation of. 2636, Civ. Code 90 Certificate of, when dispensed with. 2637, Civ. Code 90 O Office. Expenses of. 591, Pol. Code 6 Office of insurance commissioner must be located in San Francisco. 592, Pol. Code 7 Organization of insurance companies. Limit of expenses on. 597, Pol. Code 17 Over-insurance. (See Premiums; Marine insurance.) Owner. Partner or part. 2590, Civ. Code 82 Successive. 2592, Civ. Code 82 Transfer. 2593, Civ. Code 83 P Penalty. (See Arson; Crimes; Fines.) For disobedience to order of commissioner. 599, Pol. Code 19 For failure to file annual statement. 617, Pol. Code 33 Payable on demand of insurance commissioner. 634b, Pol. Code 41 Arson. 455, Pen. Code 113 Burning or destroying property insured. 548, Pen. Code 113 Presenting false proofs upon policy. 549, Pen. Code 113 Performance. (See Warranties.) When breach of future does not avoid policy. 2609, Civ. Code 85 Permit. (See Certificate of authority; Licenses.) 262 INDEX. Physician. Page. Must examine applicants for membership to fraternal benefit societies. 7, Act 132 Plate glass insurance companies. How classified. 594, Pol. Code " 8 Capital, amount of. 594, Pol. Code S May do other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Policy. (See Policies; Policyholder.) Lost. 598, Pol. Code 1 '_ 18 How issued and by whom signed. 416, Civ. Code 45 Of life insurance corporations to contain what provisions. 450, Civ. Code 52 Defined. 2586, Civ. Code 81 What must be stated in. 2587, Civ. Code 81 Whose interest covered by. 2588, Civ. Code 82 By agent or trustee, insurance. 2589, Civ. Code 82 By part owner, insurance. 2590, Civ. Code 82 General terms. 2591, Civ. Code 82 Successive owners. 2592, Civ. Code 82 Transfer of. 2593, Civ. Code 82 Is opened or valued. 2594, Civ. Code 83 Open, defined. 2595, Civ. Code 83 Value, defined. 2596, Civ. Code 83 Running, defined. 2597, Civ. Code 83 Effect of receipt in. 2598, Civ. Code 83 Agreement not to transfer, when void. 2599,' Civ. Code 83 Earned premium on, when. 2616, Civ. Code 86 When entitled to return of premium. 2617, Civ. Code 86 When not entitled to return of premium. 2618, Civ. Code 87 Premium returnable, when. 2619, Civ. Code 87 Policy of insurance. Insurer must exhibit to commissioner, lost policy. 598, Pol. Code 18 Registration of life. 634, Pol. Code 40 Fee for registration of. 605, Pol. Code , 25' Life, must contain what provisions. 450, Civ. Code . 52 Policyholder. May obtain information. 598, Pol. Code 18 Port Wardens. Sales of wrecks and merchandise for foreign underwriters. 2507, Pol. Code 42 Notice of sale, how given. 2508, Pol. Code 42 Must not be interested in insurance. 2509, Pol. Code 43 Premiums. Company collecting for more than one company must give separate bond for each company. 624, Pol. Code 36 When earned, defined. 2616, Civ. Code 86 Return, defined. 2617, Civ. Code 86 Not allowed, when. 2618, Civ. Code 87 Return of for fraud. 2619, Civ. Code 87 Return of over-insurance by several insurers, f 2620, Civ. Code 87 Contributions to, on over-insurance by simultaneous policies. 2621, Civ. Code 87 Contribution to, returned on successive policies. 2622, Civ. Code 87 Principal agent. (See Agent, general.) Process. (See Agent, general; Service of process.) Service on general agent. 616, Pol. Code 31 Profits. What not to be treated as. 417, Civ. Code , 45 When separately insured what portion recoverable. 2738, Civ. Code 101 Valuation applied to. 2740, Civ. Code 102 Property. (See Real estate; Investments.) Proofs. Preliminary of loss. 2634, Civ. Code 89 Waivers of defects in notice. 2635, Civ. Code 89 Delay in presentation of. 2636, Civ. Code 90 Publication. (See Newspapers.) Of synopsis of annual statement. 611, Pol. Code 27 INDEX. 263 Q Qualifications. Page. Of insurance company to obtain certificate of authority. 607, Pol. Code 26 R Real estate. (See Property; Investments.) What a company may purchase. 415, Civ. Code 1 45 State board to equalize assessments of. 27, Act 241 Receipt. Acknowledgment of evidence of payment of premium. 2598, Civ. Code 83 Receiver. Appointment of. 604, Pol. Code 24 Powers of. 604, Pol. Code 24 For fraternal benefit societies. 25, Act 141 Record. Insurance commissioner must keep. 600, Pol. Code 19 Registration of life policies. How registered. 634, Pol. Code 40 Fee for registering. 605, Pol. Code 25 Deposit of securities for benefit of. 634, Pol. Code 40 Reinsurance. Of business by receiver. 604, Pol. Code 24 What is. 2646, Civ. Code 91 Information must be communicated. 2647, Civ. Code 91 Presumed to be a contract of indemnity against liability. 2648, Civ. Code 91 Original insured has no interest in. 2649, Civ. Code 91 Renewal. (See Certificate of authority; Certificate of compliance; Licenses.) Representation. (See Concealment and representation; Marine insurance.) Report. (See Annual report; Annual statement.) Surplus line broker. 596, Pol. Code r 14 Of company, how verified. 610, Pol. Code 27 Of mutual companies organized under act of 1851. 614, Pol. Code 31 On stocks and bonds held by insurance companies. 422, Civ. Code 47 Insurance commissioner to board of equalization 227 Reserve. (See Reinsurance reserve.) Required of liability insurance companies. 602a, Pol. Code 20 Required of other companies. 602, Pol. Code 19 Retaliatory law. (See Taxation.) Applying foreign discriminatory law. 622, Pol. Code 35 Valuation of policies of life insurance. 628, Pol. Code 38 When appliable to companies of other states. 3, Act 136 Revocation. (See Licenses; Certificates of authority.) Risk. Limitation on. 428, Civ. Code ^ ; 49 When alteration increases. 2753, Civ. Code 103 When alteration does not increase. 2754, Civ. Code ' 104 May be issued upon what by county fire insurance companies. 8, Act___ 120 When acts of insured do not increase. 2755, Civ. Code 104 County fire insurance companies must classify. 9, Act 120 Limitations upon, by county fire insurance companies. 10, Act 120 S Seaworthiness. (See Marine insurance; Voyage.) Warranty of. 2681, Civ. Code 94 What is. 2682, Civ. Code '____ 94 At what time must exist. 2683, Civ. Code 94 What things are required to constitute. 2684, Civ. Code 95 When a ship becomes unseaworthy. 2686, Civ. Code 95 Different degrees of on voyage. 2685, Civ. Code 95 For purposes of insurance on cargo. 2687, Civ. Code 95 Salary. (See Compensation.) Seal of office. Fee for attaching. 605, Pol. Code 25 Secret benevolent associations. (See Fraternal benefit societies.) Exempt from insurance. 630, Pol. Code 39 264 INDEX. Secretary of state. Page. Fees of. 409, Pol. Code 155 Foreign corporations. 408, 409, Civ. Code 154 Service on, when valid. 405, Civ. Code 154 Securities. (See Deposit.) Annual examination of. 621, Pol. Code 34 Service of process. (See Agents; Process.) How made on insurance commissioner. 616, Pol. Code 31 When deemed complete. 616, Pol. Code 31 How made on general agent. 616, Pol. Code 31 Sprinkler insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do what other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Standard form of fire insurance policy. Liability limited. 1, Act 147 Policy must be countersigned by agent. 1, Act 147 What property not covered. 1, Act 147 What hazards not covered. 1, Act 147 Policy void, when. 1, Act 148 Policy suspended, when. 1, Act 148 Insurer not liable, when. 1, Act 148 Deduction for removal when endangered by fire. 1, Act 149 Policy may be canceled, when. 1, Act 149 Duty of insured in case of loss. 1, Act 149 Ascertainment of amount of loss. 1, Act 150 Options of company in case of loss. 1, Act 150 Apportionment of loss. 1, Act 151 Loss, when payable. 1, Act 151 Non-waiver of* appraisal or examination. 1, Act 151 Subrogation. 1, Act 151 Time for commencement of action. 1, Act 151 Insured, defined. 1, Act 151 Loss, defined. 1, Act 151 Time of loss or damage, defined. 1, Act 151 What shall be printed on outside of policy. 2, Act 151 Apportionment of loss may be waived, when. 3, Act 152 Size of type to be used. 4, Act 152 County mutuals need not use standard form. 4, Act 152 What may be added to policy. 6, 7, 9, 10, Act ^ 152 Rider affecting standard form. 8, Act 152 Change in wording may be made, when. 11, Act 153 Deviation from standard form. 12, Act 153 Punishment for violation of. 12, Act 153 Policy violating standard form valid against company. 12, Act 153 Act effective, when. 13, Act 153 Statement. (See Annual statement; Annual report.) Must be made on basis of gold coin. 627, Pol. Code 37 State insurance. (See Workmen's compensation.) State treasurer. (See Treasury of state.) Statutes. Act of March 26, 1868 114 Act to facilitate the giving of bonds required by law 117 Act to require payment of certain premiums to counties by fire insurance companies not organized under laws of state 118 Act to provide for the organization and management of county fy*e insur- ance companies 118 Act providing for the organization and management of mutual fire insur- ance companies 123 Act providing for the insuring of livestock on the assessment plan 126 An act for the regulation and control of fraternal benefit societies 131 An act defining certain classes of contracts for the exchange of indemnity, prescribing regulations therefor and fixing license fee 143 INDEX. 265 Statutes Continued. Page. Act to establish standard form of fire insurance policy, etc 146 Act to regulate the organization of fraternal insurance companies 156 Act prohibiting borrowing of money from an insurance company by an officer of company 158 Act providing for notice printed on cover of policies relating to future assessments 15S Act relating to bonds of irrigation districts _ 159 Act providing for organization and management of mutual workmen's compensation insurance companies 162 Employers' liability act of 1911 166 Workmen's compensation, insurance and safety act 177 An act taxing corporations 135 Steam boiler insurance. (See Boiler and machinery insurance companies.) Stipulation for service of papers. Fee for filing. 605, Pol. Code 25 Companies must file. 616, Pol. Code 31 Is irrevocable (note). 616, Pol. Code 31 Stock. (See Capital stock.) Directors may assess, when. 331, Civ. Code 1 44 Limitation on account of assessment. 332, Civ. Code 44 Stocks. Report on stocks and bonds held. 422, Civ. Code 47 Subscriptions. To capital stock, opened and how collected. 414, Civ. Code 44 Payment of. 424, Civ. Code 48 Summons. (See Service of process; Process.) Sureties. (See Bond.) Of surplus line broker. 596, Pol. Code 14 Surety company may be accepted as sole surety. 955, Pol. Code 41 May become liable for less than full penal sum. 956, Pol. Code 41 Surety corporations. May become sureties on undertakings and bonds. 1056, C. C. P 108 Not required to justify. 1057, C. C. P.' 108 May justify, how. 1057, C. C. P 108 Surety companies. (See Surety corporations; Fidelity and surety companies; Insurance companies.) Commissioner must certify list of to county clerks. 625a, Pol. Code 37 May be sole surety. 955, Pol. Code 41 Surplus. (See Profits.) Surplus line broker. Who is. S 596, Pol. Code 14 How licensed. 596, Pol. Code 14 Fee. 596, Pol. Code 14 Bond of. 596, Pol. Code 14 Report of insurance procured, canceled, etc. 596, Pol. Code 14 Annual report. 596, Pol. Code 14 Tax on premiums. 596, Pol. Code 14 Revocation of license of. 596, Pol. Code 14 New licenses can not be issued, when. 596, Pol. Code 14 Surplus line law. (See Surplus line broker.) T Tables of mortality. In determining solvency of life company. 602, Pol. Code 19 Valuation of policies of life insurance. 629, Pol. Code 38 Of fraternal benefit societies. 5, Act 131 Rates of fraternal benefit societies must be based on what. 12, Act 133 Taxation. (See Taxes.) Of insurance companies. 622, Pol. Code 35 What are subject to. 1, Act 219 Of insurance companies. 3, Act 220 Rate of. 3, Act 220 Retaliatory provision. 3, Act 220 is -10098 266 INDEX. Taxation Continued. Page. Deductions allowed. 3, Act 220 Insurance commissioner must report, what. 11, Act 227 To be paid to state treasurer. 22, Act 235 Protest of. 23, Act 236 Controller to send notice of. 24, Act 237 Of inter-insurance associations. 8, Act 223 Taxes. (See Taxation.) Surplus line. 596, Pol. Code 14 Must be paid on basis of gold coin. 627, Pol. Code 37 Payable on demand of insurance commissioner. 634b, Pol. Code 41 Commissioner may commence action for. 634&, Pol. Code 41 Rate of. 3, Act 220 Application of retaliatory law. 3, Act 220 When a lien, and when attach 235 Penalty for continuing business, on nonpayment of, a misdemeanor 238 Team and vehicle insurance companies. (See Insurance companies.) How classified. 594, Pol. Code 8 Capital, amount of. 594, Pol. Code 8 May do what other kinds of insurance. 594, Pol. Code 8 Insolvent, when. 602, Pol. Code 19 Term of office. (See Insurance commissioner.) Title insurance companies. How classified. 594, Pol. Code 7 Capital, amount of. 594, Pol. Code 7 May do other kinds of insurance. 594, Pol. Code 7 Insolvent, when. 602, Pol. Code 19 Title insurance corporations. Subject to insurance laws and to insurance commissioner. 453s, Civ. Code 62 Guarantee fund and investments. 453f, Civ. Code 63 Title insurance surplus fund. 453w, Civ. Code 64 Policy of title insurance defined. 453v, Civ. Code 64 May guarantee notes and bonds. 453u>, Civ. Code 64 Combined title insurance and trust company. 453ar, Civ. Code 65 Certificate of insurance commissioner necessary. 453j/, Civ. Code 65 Loans to officers or employees unlawful. 4532, Civ. Code 66 Tornado insurance. (See Miscellaneous insurance companies.) Treasurer. (See Treasury of state.) Treasury of state. Secxirities must be deposited in. 594a, Pol. Code 11 Taxes payable to. 22, Act 235 Trustees. Insurance by agent or. 2589, Civ. Code 82 U Undertaking. (See Bond; Surety corporations.) Underwriters. (See Fire patrol.) Unseaworthy. (See Seaworthy; Marine insurance.) Unreasonable delay in repairing exonerates insurer. 2686, Civ. Code 95 V Valuations. Commissioner may employ actuary to make. 601, Pol. Code 19 Retaliatory provisions as to. 628, Pol. Code 38 Companies must furnish data for. 629, Pol. Code 38 Upon what tables of mortality. 629, Pol. Code 38 Of stocks and bonds held by insurance companies. 422, Civ. Code 47 Of policies of fraternal benefit societies. 23, Act 138 Voyage. (See Marine insurance; Deviation.) INDEX. 267 w Warranties. Page. Is expressed or implied. 2603, Civ. Code 84 Form of. 2604, Civ. Code 84 Express, must be in policy. 2605, Civ. Code 84 May relate to past, present or future. 2606, Civ. Code 84 Past or present, defined. 2607, Civ. Code 84 Future, defined. 2608, Civ. Code 85 Breach of future. 2609, Civ. Code 85 Breach of, avoids policy. 2610, Civ. Code 85 Breach of immaterial provision. 2611, Civ. Code 85 Warden. (See Port warden.) Wind storm insurance. (See Miscellaneous insurance companies.) Withdrawal of companies. Proceedings on. 595, Pol. Code '. 12 Publication of notice of. 631a, Pol. Code 39 Workmen's collective insurance. (See Miscellaneous insurance.) Workmen's compensation. Acts of 1911 and 1913 166,177 Workmen's compensation insurance companies. (See Mutual workmen's com- pensation insurance companies.) Wrecks. (See Marine insurance.) Sale of, by port wardens. 2507, Pol. Code - 42 Notice of sale, how given. 2508, Pol. Code 42