GIFT . or 1 TENNESSEE l Ux"?. INSURANCE LAWS IN FORCE JULY I, l^OT REAU E. FOLK INSURANCE COMMISSIONER NASHVILLE. rOLK-KEBLIN PTS. CO. 1907 H& ^"■ C^> Insubiance Department. Nashville, Tennessee. This compilation includes all laws relating to insurance and insurance companies of all kinds upon the statute books of the State of Tennessee at this date (July i, 1907). Wherever italicized words are used in the body of the text, they are followed by the chapter and Acts from which they are taken. The next regular session of the Legislature will begin the first Monday in January, 1909. Reau E, Folk, Insurance Commissioner. July I, 1907. 329277 GENERAL INSURANCE ACT. LIFE, FIRE AND CASUALTY INSURANCE ON LEGAL RESERVE BASIS. CHAPTER i6o, ACTS OF 1895. AN ACT to govern and regulate the business of insurance, other than life and casualty insurance upon the assessment plan, and to repeal all laws or parts of laws in conflict with this Act. Section r. Be it enacted by the General Assembly of the State of Tennessee, That this Act may be cited as the Tennessee Insurance Act of 1895. When consistent with the context, and not obviously used in a different sense, the term "company" or "insurance company," as herein used, includes all corporations, associations, partnerships, or individuals engaged as principals in the business of insurance. The word "domestic" designates those com- panies incorporated or formed in this State, and the word "foreign," when used without limitation, includes all those formed by authority of any other State or government. The terms "unearned premiums" and "reinsurance re- serve," and "net value of policies" or "premium reserve," severally intend the liability of an insurance company upon its insurance contracts, other than accrued claims, computed by rules of valuation established by Section 8. By the term "net assets" is meant the funds of an insurance com- pany available for the payment of its obligations in Tennes- see, including uncollected and deferred premiums not more than three months due on policies actually in force, after de- ducting from such funds all unpaid losses and claims, and claims for losses, and all other debts and liabilities, inclu- sive of policy liability and exclusive of capital. Sec. 2. Be it further enacted, That a contract of insur- ance is an agreement by which one party, for a considera- tion, promises to pay money or its equivalent, or to do some act of value to the assured upon the destruction, injury, loss or damage [Chapter 31, z\cts of 1899] of something in which the other party has an insurable interest, and it -6— shall be unlawful for any company to make any contract of insurance upon or concerning any property or interests or lives in this State, or with any resident thereof, or for any person, as insurance agent or insurance broker, to make, negotiate, solicit, or in any manner aid in the transaction of such insurance, unless and except authorized under the provisions of this Act ; Provided, That nothing contained in this Act shall affect the rights and powers of corporations engaged in the transaction of life and casualty insurance upon the assessment plan. This Act is hereby amended so as to include within its promsions life insurance as tvell as fire insurance, provided that the provisions of this amendment shall apply only to counties having a population of not less than 24,930, and not more than 24,950, according to the Federal Census of 1900, or any subsequent Federal Census [Chapter 423, Acts of 1903]. Skc. 3. Be it further enacted, That the department of in- surance shall remain as now established. There is hereby established a bureau, in connection with the office of Treas- urer, and to be designated the "Bureau of Insurance," which shall be charged with the enforcement of the laws hereto- fore, or zi'hich may be hereafter, passed relating to insur- ance. [Section i, Chapter 58, Acts of 1873.] Its Chief officer shall be Treasurer of the State, who shall be styled the Insurance Commissioner, ex officio. The Insurance Commissioner shall exercise the powers and perform the duties conferred and imposed upon him by this Act, or by any other law of the State. The Insurance Commissioner may appoint a Deputy In- surance Commissioner to assist him in the discharge and performance of his duties, and in the event of a vacancy in the office of the Insurance Commissioner, or in his absence or disability for any reason, the said Deputy is hereby au- thorised and directed to perform all the duties required of the Insurance Commissioner. The said Deputy shall exe- cute bond with proper surety in the sum of five thousand dollars, said bond to be approved by the Insurance Commis- — 7— sioner, conditioned upon the faithful performance of his duties, and said Deputy shall be removable at the pleasure of said Insurance Commissioner. [Chapter 459, Acts of 1907.] The records of the said Insurance Bureau shall; at all times, be open to the inspection of the public, subject to such rules as may be made by the Commissioner for the safe- keeping; free from any charge ivhatever; and he shall, on demand, furnish certified copies of any paper, report or doc- ument on file in his office to any person requesting the same, upon payment of the fee allowed by law. The Commissioner, with the approval of the Governor, shall devise a seal, with suitable inscription, for the Bureau of Insurance, a description 'of which, zvith a certificate of approval by the Governor, together zuith an impression thereof, shall be filed in the office of the Secretary of State; which seal shall thereupon be and become the seal of the Insurance Bureau, and the same may be renczved whenezrr necessary. Every certificate, assignment of conveyance executed by the Commissioner, relating to the business of insurance companies, in pursuance of authority conferred by lazv, and sealed zvith said seal of office, shall be recorded in the proper recording office in the same manner, and zvith the same effect as a deed regtdarly acknozvledged or proved before an officer authorised by lazv to take the proof or acknozvlcdg- ment of deeds, and all copies of papers, in the office of said Bureau, certified by the Insurance Commissioner, and au- thenticated by the said seal, shall, in all cases, be evidence equally and in like manner with the original. If the Insurance Commissioner shall exact or receive, either directly or indirectly, any sum of money, from any insurance company doing business in this State, other than the fees allozved by lazv; or shall zvilfully issue a fraudulent or false certificate of soundness to any insurance company; or shall directly or indirectly receive any money or other valuable thing for doing or not doing any official act as such Commissioner, other than the fees allowed by law, he slwll be deemed guilty of a felony, and, upon conviction, shall be imprisoned in the State Penitentiary not less thmi one, nor more than -five years. [Sections 13 and 17, Chapter 58, Acts of 1873.] Sec. 4. Be it further enacted, That before granting cer- tificates of authority to an insurance company to issue poli- cies or make contracts of insurance, the Insurance Commis- sioner shall be satisfied, by such examination and evidence as he sees fit to make and require, that such company is duly qualified under the laws of the State to transact busi- ness herein. As often as once in three years the Insur- ance Commissioner shall, personally, or by his deputy, or some competent person appointed by him for that purpose, visit each domestic insurance company and examine its affairs, especially as to its financial condition and, ability to fulfill its obligations, and whether it has complied with the law. He shall also make an examination of any such com- pany whenever he deems it prudent to do so, or upon the re- quest of five or more of the stockholders or persons peculiar- ly [pecuniarily] interested therein, who shall make affidavit of their belief, with specifications of their reasons therefor, that such company is in an unsound condition. Whenever he deems it prudent for the protection of policy holders in this State, he shall, in like manner, visit and examine, or cause to be visited and examined by some competent person or persons he may appoint for that purpose, any foreign insurance company applying for admission or already ad- mitted to do business, by agencies, in this State. For the purpose aforesaid, the Commissioner or his deputy, or per- son making the examination, shall have free access to all the books and papers of an insurance company that relate to its business, and to the books and papers kept by any of its agents, and may summon and qualify as witnesses, under oath, and examine the directors, officers, agents and trus- tees of any such company and any other persons in rela- tion to its affairs, transactions and condition. Any insur- ance company examined under the provisions of this Act, shall pay the proper charges incurred in such examination, including the expenses of the Insurance Commissioner or his deputy, and the expenses and compensation of his assist- ants employed therein ; the compensation of no expert for examining the books or business of any local company shall exceed $io per day. Sec. 5. Be it further enacted, That if the Insurance Commissioner is of opinion, upon examination or other evi- dence, that a foreign insurance company is in an unsound condition ; or if a life insurance company, that its actual funds, exclusive of its capital, are less than its liabilities; or if a foreign insurance company has failed to comply with the law, or if it, its officers or agents, refuse to submit to examination or to perform any legal obligations in relation thereto, or fail to pay any final judgment against it by a citi- zen of the State, he shall revoke or suspend all certificates of authority granted to it or its agents, and shall cause noti- fication thereof to be published in one or more newspapers of general circulation, and no new business shall thereafter be done by it or its agents in this State while such default or disability continues, nor until its authority to do business is restored by the Insurance Commissioner; Provided, how- ever, That unless the ground for revocation or suspension relates only to the financial condition or soundness of the company, or to a deficiency in its assets, he shall notify the company not less than ten days before revoking its author- ity to do business in this State, and he shall specify in the notice the particulars of the supposed violation. If, upon examination, the Insurance Commissioner is of opinion that any domestic insurance company is insolvent, or has ex- ceeded its powers, or has failed to comply with any provis- ion of the law, or that its condition is such as to render its further proceedings hazardous to the public or to its policy holders, he shall apply to a court of competent jurisdiction, through the Attorney-General for the State, to issue an in- junction restraining it, in whole or in part, from further proceeding with its business. Such court may, in its dis- cretion, issue the injunction forthwith, or upon notice and hearing thereon, and after a full hearing of the matter, may dissolve or modify such injunction or make it perpet- ual, and may make all orders and decrees needful in the premises, and may appoint agents or receivers to take pos- session of the property and effects of the company and to settle its affairs, subject to such rules and orders as the court may from time to time prescribe, according to the course of proceeding in equity. The Attorney-General shall be allowed compensation for his services out of the assets of the delinquent company. Sec. 6. Be it further enacted, That whenever it appears to the Insurance Commissioner that the capital stock of a domestic insurance company is impaired to the extent of twenty per cent or more, he shall notify the companv that its capital is legally subject to be made good; and if such company shall not, within sixty days after such notice, satisfy him that it has fully repaired its capital, or reduced its capital as provided by law, he shall institute proceed- ings against it in acordance with the preceding section. Sec. 7. Be it further enacted. That when the actual funds of a domestic life insurance company, exclusive of its capital, are not of a net cash value equal to its liabili- ties, including the net value of its policies, computed by the rule of valuation established by Section 8, he shall notify such company and its agents to issue no new policies until its funds become equal to its liabilities. Sec. 8. Be it further enacted, That the Insurance Com- missioner shall each year compute the net value on the 31st day of December of the preceding year of all out- standing policies of life insurance in companies authorized to make insurance on lives in this State upon the basis of the "Combined Experience or Actuaries' Table," or "American Experience Table" rate of mortality, with the interest at four per cent per annum ; and the aggregate net value so ascertained of the policies of any such company shall be deemed its liability on account of its policy obliga- tions, other than accrued claims, to provide for which it shall hold funds, in secure investments, of an amount equal to such net value above all its other liabilities. Whenever — II — a foreign life insurance company shall present to the In- surance Commissioner a certificate from the Insurance Com- missioner of another State as to the value of its policies in force, the Insurance Commissioner of this State shall be allowed to accept such valuation in lieu of his own valua- . tion ; Provided, That the valuation shall be made according to the standard fixed in this section. To determine the lia- bility upon the contracts of insurance for foreign insur- ance companies other than life, the Insurance Commissioner shall require such companies to charge, as the liability for reinsurance of outstanding policies fifty per cent of the premium received on policies or risks having not more than one year to run, and a pro rata of all premiums received on policies or risks having more than one year to run. To dctcrmi)ic the liability upon the contracts of insurance of a domestic insurance company, other than life, the Insur- ance Commissioner shall require such companies to charge as the liabilities for reinsurance of its outstanding policies fifty per cent of the premiums received on policies or risks having not more than one year to run, and a pro rata of all premiums received on policies or risks having more than one year to run, after first deducting from said premiums the actual amount retained by, or paid to, the agent as com- mission on such premiums [Chapter 37, Acts of 1897]. The Insurance Commissioner shall allow the credit of an insurance company in the account of its financial condi- tion only such assets as are or can be made available for the payment of losses in Tennessee, but may credit any deposits of funds of the company set apart as security for a particular liability. He shall not allow stockholders' obligations of any description as part of the assets or capital of any insurance company, unless the same are secured by competent collateral. Sec. 9. Be it further enacted. That no foreign insurance company shall be admitted and authorized to do business in this State until — I. It shall file or deposit with the Insurance Commissioner -12 a properly certified copy of its charter, or deed of settle- ment, and a statement of its financial condition and business on the 31st day of December preceding the day on which it shall apply for permission to transact such business in such form and detail as the Insurance Commissioner may require, signed and sworn to by its president and secretary, or other proper officers, and shall pay for the filing of such copy and statement the sum of thirty ($30) dollars. 2. It shall satisfy the Insurance Commissioner that it is fully and legally organized under the laws of its State or government to do the business it proposes to transact ; that if a life insurance company, it has on deposit with the Treasurer of this State, or with the proper officer of some other State, securities to the actual cash value of at least one hundred thousand ($100,000) dollars, consisting of the bonds of this State, the United States, or the State in which such company is organized, or notes or bonds secured by mortgages on real estate for double the amount, and such companies shall file with the Insurance Commissioner the certificate of the official with whom the securities are de- posited, stating the time and amount of each of said bonds, notes or stocks, and that he is satisfied that they are worth one hundred thousand ($100,000) dollars, and that the de- posit is made with him by the company for the protection of all policy holders and creditors in the United States ; that if an insurance company other than life it has an actual paid up cash capital of not less than one hundred thousand dollars, of which at least seventy-five thousand dollars shall he invested in bonds of the United States or other good securities, to be certified as such by the Insur- ance Commissioner of the State in zvhich said company is organized, reckoning the same at their current market value, or in lieu of the cash capital stock, such company shall have and maintain a warranty capital or surplus above all liabili- ties, including the re-insurance reserve, of not less than one hundred thousand dollars [Chapter 493, Acts of 1907] ; Provided, hozvever, That companies transacting the busi- ness of plate-glass or live stock insurance exclusively shall —13— not be required to have a cash capital or surplus of more than one hundred thousand ($100,000) dollars. Provided further, That companies organised under the authority and patronage of churches or religious denominations for the exclusive purpose of insuring the property of churches against loss or damage by fire, lightning or storm, shall not be required to have a cash capital of more than $50,000, nor shall they be required to deposit more than fifty thousand ($50,000) dollars in cash or securities zvith the Treasurer of this or any other State under the provisions of the tenth section of this Act [Chapter 131, Acts of 1901]. 3. It shall, by duly executed instrument filed in his office, constitute and appoint the Insurance Commissioner, or his successor, its true and lawful attorney, upon whom all law- ful processes in any action or legal proceeding against it may be served, and therein shall agree that any lawful pro- cess against it, which may be served upon its said attorney, shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force, irrevocably, as long as any liability of the company remains outstanding in this State. Any process issued by any courts of record in this State, and served upon such commissioner by the proper officer of the county in which said commissioner may have his office, shall be deemed a sufficient process on said company, and it is hereby made the duty of the Insurance Commissioner, promptly after such service of process by any claimant, to forward, by registered mail, an exact copy of such notice to the company. // any insurance company shall, zvithout the consent of the other party to any suit or proceeding brought by or against it in any court of this State, remove said suit or pro- ceedings against any citizen of this State to any Federal Court, it shall be the duty of the Insurance Commissioner to forthzvith revoke its authority to do business in this State, and to publish such order of revocation in some newspaper of general circulation published in this State [Chapter 253, Acts of 1907]. Sec. 10. Be it further enacted, That any foreign com- —14— pany. if incorporated or associated under the laws of any government or State other than the United States, shall not be admitted until, besides complying with the condi- tions of Section 9, it has made a deposit with the Treas- urer of this State, or with the financial officer of some other State of the United States, a sum of not less than two hun- dred thousand ($200,000) dollars. Such deposit must be in exclusive trust for the benefit and security of all the com- pany's policy holders and creditors in the United States, and may be made in bonds of this State or of the United States, or of some State in the United States, or other good securi- ties satisfactory to the Insurance Commissioner, and such deposit shall be deemed, for all purposes of the insurance law, the capital of the company. Sec. II. Be it further enacted, That any admitted com- pany of a foreign country may appoint trustees who are citizens of the United States and approved by the Insurance Commissioner to hold funds in trust for the benefit of its policy holders and creditors in the United States ; said trus- tees shall be named by the directors of the company and a certified copy of the record of the appointment of such trustees and of the deed of trust shall be filed in the office of the Insurance Commissioner, who may examine such trustees and the assets in trust, and all books and papers relating thereto in the same manner that he may examine the officers, agents, assets and afifairs of insurance com- panies. The funds so held by such trustee, so far as the same are in securities, money or credits, admissible as sound assets in the financial accounts of insurance companies, shall, together with its deposits made in accordance with Section 10, constitute the assets of such company as regards its policy holders and creditors in the United States. Sec. 12 Be it further enacted, That the authority of a foreign insurance company may be revoked if it shall vio- late or neglect to comply with any provision of law obliga- tory upon it, and, whenever in the opinion of the Insurance Commissioner, its condition is imsound, or its assets above its liabilities, exclusive of capital and inclusive of unearned —15— premiums as provided in Section 8, are less than the amount of its original capital or required unimpaired funds. Sec. 13. Be it further enacted, That every life insurance company doing business in Tennessee, chartered by the laws of this State, shall be required, for the better protection of the policy holders, to keep at all times the sum of one hun- dred thousand ($100,000) dollars invested in bonds, secu- rities or mortgages on real estate for double the amount loaned, to be certified as safe and worth this amount by the Insurance Commissioner. Insurance companies other than life, chartered by the laws of this State, shall not be allowed to transact business in this State, unless possessed of at least fifty thousand ($50,000) dollars paid up actual cash capital ; or in lieu of cash capital, a stock guaranty capital or surplus, above all liabilities, including reinsurance reserve of not less than fifty thousand ($50,000) dollars; it being understood that this section does not apply to companies organized under the laws of this State prior to the passage of this Act, and actually engaged in the transaction of insurance business. Sec. 14. Be it further enacted, That every insurance company licensed to do business in this State under the pro- visions of this Act, shall obtain from the Insurance Commis- sioner a certificate of authority for every agent writing or soliciting insurance for them in this State, and such certifi- cate shall be renewable in January of each year. Sec. 15. Be it further enacted. That associations of in- dividuals, citizens of the United States, whether organized within the State or elsewhere within the United States, formed upon the plan known as Lloyd's, whereby each associate underwriter becomes liable for a proportionate part of the whole amount insured by policy, may be authorized to transact insurance other than life in this State, in like manner and upon the same terms and conditions as are re- quired of and imposed upon insurance companies of the United States, or one of the United States ; Provided, how- ever, That all such Lloyd's, whether organized within this — 16— State or elsewhere in the United States, not having an actual paid up cash capital, shall make the same deposit and upon the same terms and conditions as is required by Section lO of this Act, of foreign insurance companies in- corporated or associated under the laws of any government or State other than the United States or one of the United States. Sec. 1 6. Be it further enacted, That the Insurance Com- missioner shall, in December each year, furnish to each of the insurance companies authorized to do business under the provisions of this Act two or more blanks in form adopted for their annual statement, and such companies shall, annually, on or before the ist day of February, file in the office of the Insurance Commissioner a statement which shall exhibit its financial condition on the thirty- first (31st) day of December of the previous year, and its business of that year. For good cause shown, the Commis- sioner may extend the time within which such statement may be filed, but not later than the first (ist) day of March. Every such annual statement shall be in the form and of the specifications the Insurance Commissioner may require. The assets and liabilities shall be computed and allowed in snch statement in accordance with the rules in this Act. Such statement shall be subscribed and sworn to by the presi- dent and secretary, or, in their absence, by two of its prin- cipal officers. The annual statement of a company of a foreign country shall embrace only its business and condi- tion in the United States, and shall be subscribed and sworn to by its resident manager or principal representative in charge of its American business. Sec. 17. Be it further enacted, That the Insurance Com- missioner shall keep and preserve in a permanent form a record of his proceedings, including a concise statement of the result of official examinations of insurance companies. He shall annually, and as early as consistent with full and accurate preparation, make a report to the Governor of his official transactions, and shall include in such report a state- ment of the receipts and expenditures of his department for —17— the preceding year, an exhibit of the financial condition and business transactions of the several insurance companies as disclosed by their annual statements, abstracts of which statements shall appear therein, and such other information and comments in relation to insurance and the public interest therein as he deems fit to communicate. Sec. 1 8. Be it further enacted, That when a company asking admission to the State desires to do more than one^ character or class of insurance, the Insurance Commissioner shall require said company to elect which class or kind of insurance it will write, and grant license to said com- pany to do only that class or character of business ; Pro- vided, hoivevcr, If said company's capital stock, reserve funds, or assets, when prorated between two or more classes of business the company desires to write, shall be sufficiently large, which, when divided by the number of classes of business the company proposes to transact, to give to each character of business two hundred thousand ($200,000) dol- lars of assets or capital stock, and one hundred thousand ($100,000) dollars, invested as the law requires of a com- pany doing only one class of business, said Commissioner shall then grant license to said company to transact the sev- eral kinds of insurance provided for by this Act. Sec. 19. Be it further enacted, That each and every for- eign insurance company doing business under the provisions of this Act, shall, in January and July of each year, report, under oath of the President and Secretary, or other chief officer of such company, to the Insurance Commis- sioner, the total amount of gross premiums received in this State within the six months next preceding the first of Jan- uary and July, or since the last return of such premiums were made by such company; and shall, at the same time, pay into the treasury of the State the sum of two dollars and fifty cents ($2.50) upon each one hundred dollars of said gross premiums so ascertained, which shall be in lieu of all other taxes. And any company failing or neglecting^ to make such returns and payments promptly and correctly. shall forfeit and pay to the State, in addition to the amount of said taxes, the sum of five hundred ($500) dollars; and the company so failing or neglecting for sixty (60) days shall thereafter be debarred from transacting any business of insurance in this State, until said taxes and penalties are fully paid, and the Insurance Commissioner shall revoke the certificate of authority granted to the agent or agents of that company to transact business in the State. Domestic in- surance companies shall, at the same time, and in the same manner, pay one dollar and fifty cents ($1.50) on each one hundred ($100) dollars of gross premiums received on poli- cies issued in this State, and be subjected to the penalties provided for foreign companies. Sec. 20. Be it further enacted. That whenever the exist- ing or future laws of any other State of the United States shall require insurance companies incorporated by or organ- ized under the laws of this State, or the agents thereof, any deposit of securities in such State for the protection of policy holders, or otherwise, greater than the amount re- quired for similar purposes from similar companies of other States by the then existing laws of this State, then in every such case all companies of such States establishing, or hav- ing heretofore established, an agency, or agencies, in this State, shall be, and are hereby required, to make the same deposit for a like purpose with the Treasurer of the State, and to pay into the treasury of this State the taxes, fines, penalties, license fees, or otherwise, an amount equal to the amount of such charges and payments imposed by law of such State upon companies of this State and the agents thereof. Sec. 21. Be it further enacted, That whenever any 'in- surance company publishes its assets it shall, in the same connection and with equal conspicuousness, publish its lia- bilities, computed on the basis allowed for its annual state- ments, and any publication purporting to show its capital shall exhibit the amount of such capital as has been paid in cash. Such publication shall be held to include all policies, —19— renewals, signs, circulars, cards, or other means by which public announcements are made. Sec. 22. Be it further enacted, That no written or oral misrepresentation or warranty therein made in the nego- tiations of a contract or policy of insurance, or in the application therefor, by the assured or in his behalf, shall be deemed material or defeat or void the policy or prevent its attaching, unless such misrepresentation is made with actual intent to deceive, or unless the matter represented increase the risk of loss. Sec. 23. Be it further enacted, ThsLt no policy of insur- ance issued to a citizen of this State by an authorized com- pany organized under the laws of a foreign country shall be invalidated by the occurrence of hostilities between such foreign country and the United States. Sec. 24 Be it further enacted, That the Treasurer of the State, in his official capacity, shall take and hold in trust deposits made by any domestic insurance company for the purpose of complying with the laws of any other State, to enable such company to do business in such State ; and shall also, in a like manner, take and hold any deposits made by a foreign insurance company under any law of the State. The company making such deposits shall be entitled to the income thereof, and may, from time to time, with the con- sent of the Treasurer, when not forbidden by the law under which the deposits are made, change in whole, or in part, the securities which compose the deposit for other competent securities of equal value. Upon request of any domestic insurance company, said Treasurer may return to such com- pany the whole or any portion of the securities of such com- pany, when he shall be satisfied that the securities so a.'^ ■ ■! to be returned are subject to no liability, and not required to be longer held by any provision of law or purpose of the original deposit; and he may return to the trustees or other representatives authorized for that purpose, of a for- eign insurance company, any deposit made by such company, when it shall appear that such company has ceased to do -20- business in the State, and is under no obligations to policy holders or other persons in the State, or in the United States, for whose benefit such deposit was made. Sec. 25. Be it further enacted, That it shall not be law- ful for the directors, trustees or managers of any insur- ance company incorporated by the laws of this State, to make any dividend except from the surplus profits. Any dividend made contrary to this Act shall subject the com- pany making the same to a forfeiture of its charter, and each stockholder receiving it, to a liability to the creditors of such company to the extent of double the amount of the dividend declared. Sec. 26. Be it further enacted. That no domestic insur- ance company shall commence business until it has filed with the Insurance Commissioner a properly certified copy of its charter, and a statement of its financial condition, in such form and detail as the Commissioner may require, and received from the said Commissioner a certificate of authority to do business. Sec. 27. Be it further enacted, That the Insurance Com- missioner shall collect and pay into the treasury the fol- lowing fees : For each company filing copy of charter or deed of settlement and financial statement, thirty ($30) dollars ; for each life insurance company's annual state- ment, twenty-five ($25) dollars; for each insurance com- pany's, other than life, annual statement, fifteen ($15) dol- lars; for each certificate or renewal thereof, to an insur- ance agent, two ($2) dollars; for valuation of life poli- cies, two (2) cents for each thousand ($1,000) dollars in- surance; for each seal of office, with certificate, one ($1) dollar; for copies of any paper on file or deposit with the Insurance Commissioner or in his office, twenty (20) cents per folio. Sec. 28. Be it further enacted, That no life insurance company doing business in Tennessee shall make or per- mit any distinction or discrimination between insurants of the same class and equal expectation of life in the amount 21 — or payment of premiums, or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or any other of the terms and con- ditions of the contracts it makes; nor shall any such com- pany, or any agent thereof, make any contract of insurance or agreement as to such contract other than is plainly ex- pressed in the policy issued thereon ; nor shall any such company or agent pay or allow, or offer to pay or allow as an inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the divi- dends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy contract of insurance. Sec. 29. Be it further enacted. That any life insurance company* which shall violate any of the provisions of Sec- tion 28 shall be fined in a sum not less than one hundred ($100) dollars, nor exceeding five hundred ($500) dollars, to be recovered by action by the Insurance Commissioner in the name of the State, and the amount so recovered shall be paid into the State Treasury. An officer or agent of any such company who shall violate any of the provisions of said section shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be fined in any sum not less than one hundred ($100) dollars nor exceeding two hun- dred ($200) dollars, or imprisonment in the county jail not exceeding thirty (30) days, or both, at the discretion of the court. Sec. 30. Be it further enacted, That any person who solicits insurance on behalf of any insurance company not organized under or incorporated by the laws of this State until such company has fully complied with all the require- ments of this Act, and until such company has received from the Insurance Commissioner the certificate of authority to transact the business of insurance in this State, or who takes or transmits, other than for himself, any application for insurance, or any policy for insurance to or from such com- pany, or who advertises or otherwise gives notice that he will receive or transmit the same, or who shall receive or — 22 — deliver a policy of insurance of any such company, ,or who shall examine or inspect a risk, or receive, collect or trans- mit any premium or insurance, or make or form any dia- gram of any building or buildings, or do or perform any other act or thing in the making with or for any insurances, or consummating of any, contract of insurance companies, other than for himself, or who shall examine into or adjust, or aid in adjusting, any loss for or on behalf of any such insurance company, whether any such acts shall be done at the request or instance or by the employment of such in- surance company, or of or by any broker or other person, shall be held guilty of a misdemeanor ; and, upon convic- tion by a court having jurisdiction, shall be fined not less than one hundred ($ioo) dollars nor more than two hun- dred ($200) dollars, or shall be imprisoned in the county jail not more than thirty (30) days, or both, in the discre- tion of the court ; Provided, hozvevcr, That nothing con- tained in this section shall be applicable to parties placing insurance in accordance with the provisions of this Act authorizing insurance brokers to place insurance in foreign companies. Provided, ivhenever miy citizen shall file an affidavit zvith the Insurance Couimissioncr, that he is unable to pro- cure adequate fire insurance from licensed compani':-s, and shall file an application for permission for a representative of any designated unlicensed company to come info the State for the purpose of inspecting [his] this risk, or in the event of loss, to adjust such loss, it shall he the duty of the Insurance Commissioner to issue such permit, and it shall be lawful for such representative of such unlicensed company to conic into the State for the purposes specified in the appli- cation, but if such representative of an unlicensed company shall make or attempt to make any diagrams or maps of property other tJian the property of the citizen upon ivhose application the permit is granted, or shall examine a risk or do any other thing prohibited in the foregoing part of this section, he shall be guilty of a misdemeanor and upon convic- tion punished as above provided. —23— Provided further. That os a eoiidition to granting the above permit the applicant shall be required to pay to the State two and one-half per eent of all premiums paid by him to any unlicensed company with which he shall place a policy of insurance [Chapter 492, Acts of 1907]. Sec. 31. Be it further enacted. That it shall not be law- ful for any person or persons to act as agent or solicit risks, or in any way, directly or indirectly, to transact the business of insurance for and in behalf of any company, whether organized under and incorporated by the laws of this State or not, without obtaining a certificate of authority from the Insurance Commissioner of the State so to do, which cer- tificate shall state that said company has fully complied with all the requirements of this Act applicable to such company. Whoever shall directly or indirectly aid in transacting insur- ance business in any such company without first receiving such certificate of authority, or having received such cer- tificate of authority, shall, after receiving from such Insur- ance Commissioner notice of the revocation thereof, con- tinue to act as an agent for any such company, shall be deemed to be guilty of a misdemeanor, and upon convic- tion by a court having jurisdiction, shall be fined not less than fifty ($50) dollars nor more than one hundred ($100) dollars ; Provided, That nothing herein contained shall ap- ply to insurance brokers doing business in this State for for- eign insurance companies, as provided in this Act. Sec. 32. Be it further enacted, That an agent or person shall be personally liable on all contracts of insurance un- lawfully made by or through him, directly or indirectly, for or in behalf of any insurance company not authorized to do business in this State. Sec. 33. Be it further enacted. That any insurance com- pany or agent thereof, issuing or circulating advertisements in violation of Section 20 [21], shall be punished by a fine of not less than one hundred ($100) dollars nor more than five hundred ($500) dollars. Sec 34. Be it further enacted. That any insurance com- —24— pany that neglects to make and file its annual state lient in the form and within the time provided by Section i6, shall forfeit one hundred ($ioo) dollars for each duy neglected, and upon notice by the Insurance Commissioner to that effect, its authority to do new business shall cease while each such default continues. For wilfiiMy making a false annual or other statement it is required by law to make, an insurance company and persons making oath to or subscribing to the same, shall be severally punished by a fine of not less than five hundred ($500) dollars nor more than one thousand ($1,000) dollars. Any person making oath to such false statement shall be deemed guilty of the crime of perjury. Sec. 35. Be it further enacted, That whoever, without justifiable cause, neglects, upon due summons, to appear and testify before the Insurance Commissioner, or deputy or person appointed by him, as provided in Section 4, and whoever obstructs the Insurance Commissioner, his deputy or examiner, in his examination of insurance companies, shall be guilty of a misdemeanor, and punished by a fine of not more than five hundred ($500) dollars. Sec. 36. Be it further enacted, That for violation of any provision of this Act, the penalty whereof is not specifically provided herein, the offender shall be punished by a fine of not more than five hundred ($500) dollars. Sec. 37. Be it further enacted, That every penalty fixed in this Act, unless otherwise provided for, shall be sued for and recovered in the name of the State of Tennessee by the District Attorney of the district in which such delin- quency occurs, and, when sued for by him, shall be paid into the State Treasury, less thirty per cent, to be paid for his services; and in case of non-payment of such penalties, the party so offending shall be liable to imprisonment for a period not exceeding six (6) months, in the discretion of any court having cognizance thereof. Sec. 38. Be it further enacted, That inquisitorial power be, and the same is hereby, given the grand juries of this —25— State to inquire into any violation of this Act, and present or indict such person or persons violating the same, and that the Judges of the courts of this State, having proper jurisdiction, shall give this in charge to the grand juries of their respective courts. Sec. 39. Be it further enacted, That the Insurance Com- missioner shall pay out of the fees of his ofifice the neces- sary expenses of the insurance department, including the salary of his deputy, as stated in Section 3 of this Act, and shall keep an accurate record of all receipts and expendi- tures, and shall require and preserve sworn vouchers for each payment, and the excess of fees, after paying neces- sary expenses, shall be turned into the State Treasury. Sec. 40. Be it further enacted, That any person owning property in this State, or having an insurable interest in the same, may procure fire insurance thereon through any insurance brokers, duly licensed under this Act. To render insurance so obtained valid, it shall not be necessary that the insurance company with which the contract is made shall be doing business in this State, or be authorized to do business therein by the Legislature or any law of this State, but only that such company have the power by its charter and the laws of the State or country in which the contract is made to bind itself by such contract. Sec. 41. Be it further enacted, That none but bona fide residents of this State, of good moral character and com- petent business qualifications, shall be licensed as insurance brokers, and who shall take and subscribe the following oath : 'T do swear that I will justly and uprightly demean myself as an insurance broker, and will explain fully the character, residence and solvency of any company with which I shall negotiate for insurance on property in this State, and will not deceive, or attempt to deceive, any who come to me for such insurance, in any way whatsoever, so help me God." And before any license shall issue the appli- cant shall file with the Insurance Commissioner a properly certified copy of the charter of each company with which —26— he proposes to do business in behalf of his principals or employes, together with a statement, under oath, of the president and secretary of every such company in such form and detail as the Insurance Commissioner may require. For filing certificates, copies of charter, and for all other services rendered by the Insurance Commissioner under this Act, the broker shall pay the same fees as are required of insurance companies regularly authorized to do business in this State. It shall be the duty of the Insurance Com- missioner to examine the statements, and, if satisfied that the same are correct, that the company is solvent, reliable and in good standing, and that the applicant is not only a bona iide resident of this State, but a fit and proper person to exercise the calling of an insurance broker, shall license him as such, designating in the license each and every insurance company with which he is authorized to con- tract beyond the limits of this State. Should the fact at any time come to the knowledge of the Insurance Commis- sioner that any insurance company designated in any license issued by him is not solvent, he shall revoke and cancel the license in so far as it authorizes the broker to contract with that company ; and, on notice from the Commissioner, it shall be the duty of the broker to whom it was issued to pre- sent it forthwith for such cancellation. Sec. 42. Be it further enacted, That it shall be lawful for every duly licensed insurance broker, from time to time, so long as his license is in force, to make, or cause to be made, inspections, surveys, diagrams and descriptions of property in Tennessee which he may be employed to have insured beyond the limits of this State, and to forward the same to any insurance company specified in his license, as a basis for contracting with such company for insuring the property; and in case of loss or damage after the insurance is efifected, it shall be lawful for such loss or damage to be adjusted and paid in the manner and by the means usual with insurers and the assured for so doing. No penalty whatever shall be incurred by any inspector or adjuster, or other person, for participating bona -fide in these transac- —27— tions. It shall also be lawful for any such broker to for- ward cash premiums or installments, premium notes, and all documents whatsoever requisite to procure and keep up the insurance for which he may contract under the author- ity of his license, and he shall incur no penalty for so doing ; but he shall do nothing as the agent or representative of any insurance company, nor shall any insurance company be bound by his acts, the true intent and meaning of this law being that he shall act alone in behalf of such persons as may employ him to procure insurance or to renew and keep up the same, to afford aid in collecting loss or damage covered thereby. Sec. 43. Be it further enacted, That every insurance broker shall file with the Insurance Commissioner annual statements, on or before the first day of February in each year. These statements shall contain a full and accurate report of the condition on the 31st day of December then next preceding of each company specified in the broker's license. They shall be made in such manner and detail as the Insurance Commissioner may require, and shall be sworn to by the president and secretary of the company to which they relate. Failure to file a statement within due time shall work a forfeiture of the broker's license, in so far as it relates to contracting with that company, and the Insurance Commissioner shall revoke and cancel it accordingly. Sec. 44. Be it further enacted, That whenever any licensed broker shall obtain any insurance, he shall at once make to the Insurance Commissioner a sworn state- ment of the same. His books shall be at all times open to the inspection of that officer, and shall be produced and shown to him whenever required. His books shall set forth the following facts : ( i ) The exact amount of insurance procured for each and every person, giving the name of the person; (2) the gross premium charged thereon; (3) the name of the insurance company; (4) the date and duration of the policy. —28— Sec. 45. Be it further enacted, That each and every licensed broker shall pay into the treasury of this State the same tax on the gross premiums upon all policies procured by him, and in the same manner and time as insurance com- panies authorized to do business here are required to pay; and each broker, before being licensed, shall execute satis- factory bond to the Insurance Commissioner in the penal sum of two thousand dollars for the faithful performance of his duties and prompt payment of all taxes. Sec. 46. Be it further enacted, That any person who shall do or attempt to do, the kind of business provided for as insurance broker by this Act, without being duly licensed, or who shall continue or attempt to continue after his license has been forfeited or revoked ; and any licensed insurance broker who, after failing to comply with any re- quirement made of him by this Act, shall apply for or pro- cure, in behalf of any person whatever, any insurance on property in this State other than his own, or that in which he has some insurable interest, shall be guilty of a misde- meanor, and, on conviction, shall be punished by a fine of not less than one hundred dollars, or by imprisonment in the county jail for not less than thirty days, or both, in the discretion of the court. Sec. 47. Be it further enacted, That before any insur- ance broker shall be licensed to do business with any insur- ance company not authorized to do business in this State, the broker so applying for license shall file with the Insur- ance Commissioner a statement signed by the president of such insurance company, agreeing, in case any default is made in the payment of any loss on any policy issued by such company on property located in this State, and suit is desired to be instituted by the policy holder to force the collection on said policy, the company will indicate an attor- ney at law to acknowledge service on any writ that may be filed in the county of the insurer's residence ; or, if the insurer resides out of the State, then in the county where the loss occurs, [to] collect the same, and will submit itself to the jurisdiction of said court; Provided, hozvever. That —29— notice of loss under any policy contemplated under this Act shall be mailed by registered letter to home office of com- pany in which loss occurs, and in case said company fails to desginate its attorney, upon whom service shall be per- fected in case suit on said loss is brought within ten days after reception of said registered letter, then service shall be perfected on said company by publication, as prescribed by the general laws of the State, when service by publica- tion is necessary ; and said company shall file with the Insurance Commissioner an agreement to abide by and accept said service as final before being allowed to place a policy in this State. Sec. 48. Be it further enacted, That should any com- pany have issued an insurance policy or policies under this Act fail to pay any final judgment obtained in this State upon any loss or damage sustained by the insured within thirty days after rendition thereof, it shall be the duty of the Insurance Commissioner to recall and cancel the licenses of all brokers to negotiate and place insurance with such com- pany on property in this State. All insurance brokers doing business in this State under the provisions of this Act shall have printed in large letters across the face of each policy the following words : "This company has no deposit and no agents in Tennessee." Any insurance broker violating this provision shall have [his] license to do business in this State revoked by the Insurance Commissioner. Sec. 49. Be it further enacted, That Chapter 66 of the Acts of 1875, Chapter 108 of the Acts of 1877, Chapter 176 of the Acts of 1889, Chapter 47 of the Acts of 1891, and Chapter 265 of the Acts of 1891, and all other laws or parts of laws in conflict with this Act be and the same are hereby repealed. Sec. 50. Be it further enacted, That this Act take eflfect from and after its passage, the public welfare requiring it. Passed May 11, 1895. Approved May 13, 1895. -30— ASSESSMENT LIFE AND ACCIDENT INSURANCE. CHAPTER 127, ACTS OF 1897. AN ACT to govern and regulate the business of life and casualty insurance on the assessment plan, and to repeal all laws or parts of laws in conflict with this Act. Section i. Be it enacted by the General Assembly of the State of Tennessee, That it shall not be lawful for any corporation transacting the business of life and casualty insurance on the assessment plan, whether organized under the laws of this State or of some other State or foreign country, to transact such business in this State, until it has first complied with the provisions of this Act, and obtained a hcense from the Insurance Commissioner; Provided, hozv- cver, That nothing herein contained shall be construed as applicable to organizations which conduct their business as fraternal societies on the lodge plan, with representative form of government, or to purely fraternal orders or asso- ciations which limit their certificate holders to a particular fraternity or avocation, and which do not employ paid agents to solicit business. That no life or casualty insurance company or association, other than fraternal beneficiary associations, tvhich issues contracts, the performance of ivliich is contingent upon the payment of assessments or calls made upon its members, shall do business ivithin this State except such companies or associations as are noiv authorised to do business zvithin this State, until it shall have deposited with the Treasurer of this or some other State the sum of one hundred thousand dollars in securities approved by the Insurance Commis- sioner of this State for the better protection of its policy holders [Chapter 450. Acts of 1907]. Sec. 2. Be it further enacted. That any corporation or- ganized to insure lives which provides for the payment of —31— policy claims, the accumulation of reserve or emergency funds, and the expenses of the management and prosecu- tion of the business by payments to be made either at periods named in the contract, or upon assessments as required by persons holding similar contracts, and wherein the insured's liability to contribute to the payment of policy claims, accrued or to accrue, is not limited to a fixed sum shall be deemed to be engaged in the business of life insurance on the assessment plan. Any corporation organized to insure against the contingency of death or other physical disability of the assured thereunder, resulting from accidental injury, and which provides for the payment of policy claims, the accumulation of reserve or emergency funds, and the ex- penses of the management and prosecution of the business by payments to be made either at periods named in the contract, or upon assessments as required by persons hold- ing similar contracts, and wherein the insured's liability to contribute to the payment of benefits, accrued or to accrue, is not limited to a fixed sum, shall be deemed to be engaged in the business of casualty or accident insurance on the assessment plan. Sec. 3. Be it further enacted, That any corporation or- ganized under the laws of this State for the purpose of transacting the business of life or accident insurance on the assessment plan, shall, before commencing the trans- action of business, file with the Insurance Commissioner a properly certified copy of its charter, shall satisfy the Insurance Commissioner by such evidence as he sees fit to make and require, that it has secured applications for not less than $1,000,000 [Chapter 574, Acts of 1903] insur- ance by not less than three hundred persons, and that two per centum, if a life corporation, and one per centum if an accident corporation, of the insurance applied for has been deposited in bank to the credit of the mortuary guarantee, or disability fund of the corporation, and a copy of the policy or certificate it proposes to issue, with application and by-laws, which must show that the insured's liability to contribute to the payment of benefits is not limited to the —32— payment of a fixed periodical sum. Upon a compliance with the provisions of this section and other parts of this Act applicable thereto, it shall be the duty of the Insurance Commissioner to issue to such corporation a license, which shall extend to the end of the calendar year, and be subject to renewal from year to year upon compliance with the pro- visions prescribed in this Act. Sec. 4. Be it further enacted, That any corporation or- ganized under authority of another State or government to issue, or which is engaged in the business of issuing policies or certificates of life or accident insurance on the assess- ment plan, as a condition precedent to the transaction of business in this State, shall deposit with the Insurance Com- missioner a certified copy of its charter or articles of incor- poration a statement, under oath, of its president and sec- retary, in the form by the Insurance Commissioner required, of its business for the preceding year; a certificate under oath of its president and secretary, that it is paying, and for the twelve months then next preceding, has paid the maxi- mum amounts named in its policies or certificate in full, a certificate from the proper authority of its home State that corporations of this State engaged according to the provi- sions of this Act in life or accident insurance on the assess- ment plan are legally entitled to do business in such State, a copy of its policy or certificate, with application and by- laws, which must show that the insured's liability to con- tribute to the payment of benefits is not limited to the pay- ment of a fixed periodical sum ; evidence satisfactory to the Insurance Commissioner that the corporation accumulates and maintains assets in excess of liabilities other than capital stock, equal to tii^'O per cent, of all instirance said corpora- tion has in force, and the amount of instirance in force shall not be less than that required of similar corporations of this State [Chapter 574, Acts of 1903], and that such accumula- tion is permitted by law, and is for the benefit of policy and certificate holders only, and is invested in acceptable securi- ties. Upon a compliance with the provisions of this section and other parts of this Act applicable thereto, it shall be the —33— duty of the Insurance Commissioner to issue to such cor- poration a license, which shall extend to the end of the calendar year, and be subject to renewal from year to year upon compliance with the provisions prescribed in this Act. Sec. 5. Be it further enacted, That every corporation organized under the laws of another State or foreign coun- try, and transacting the business of life or accident insur- ance on the assessment plan, shall, before doing business in this State, appoint in writing, the Insurance Commis- sioner or successor in office, to be its true and lawful at- torney, upon whom all process in any action or proceeding against it may be served, and in such writing, shall agree that any lawful process against it which is served on said attorney, shall be of the same legal force and validity as if served on the corporation, and that the authority shall con- tinue in force so long as any liability remains outstanding against the corporation in this State. Service upon such attorney shall be deemed sufficient service upon the prin- cipal ; when legal process against any such corporation is served upon the Insurance Commissioner, he shall imme- diately notify the corporation of such service, by registered letter. Sec. 6. Be it further enacted, That every corporation transacting the business of life insurance on the assessment plan, and doing business under the provisions of this Act, shall accumulate and maintain a reserve or emergency fund equal to such sum as might be realized from one assess- ment on, or periodical payment by policy, or certificate holders thereof, and in no event less than the amount of its maximum policy or certificate. In case such funds, or any portion thereof, shall have been used by the corporation for the purpose or purposes for which the same was created or accumulated, and the amount thereof reduced to less than the amount of one death assessment or periodical pay- ment, the amount of such reduction below the amount of one death assessment, or periodical payment, shall be made 3 —34— up and restored to such fund within six months thereafter ; such fund may be held in cash, or invested in the same class of securities required by law for the investment of funds by insurance corporations, and nothing herem con- tained shall prevent the accumulation of other funds in excess of the amount herein required, to provide for the purposes of such corporation. If such fund is in excess of the amount of one death assessment or periodical payment by all policy or certificate holders, and not less than the sum of $50,000, the excess of any portion thereof, may be used in the reduction of assessments or periodical payments by certificate or policy holders by ratable cash dividends or credits, or in such other equitable division or appoint- ment [apportionment] thereof as the rules or contracts of the corporation may provide. Corporations organized under the laws of this State at the time of the passage of this Act may have six months from the date hereof, in which to ac- cumulate the reserve or emergency fund herein required, and corporations hereafter organized under the laws of this State, may have six months from the date of organization in which to accumulate such funds. Sec. 7. Be it further enacted, That every corporation transacting the business of accident insurance on the assess- ment plan, and doing business under the provisions of this Act, shall accumulate and maintain a reserve or emergency fund of at least $5,000, and every such corporation shall add to such emergency fund thereafter two and one-half per cent, of the amount realized from every premium assess- ment or periodical call until such fund shall be equal to the amount of two dollars for every $5,000 of insurance in force ; such emergency fund or any part thereof may be used for the payment of death and indemnity claims ; Pro- vided, That if the amount of such funds be thereby reduced below the amount contemplated by this Act, the amount by which such fund is reduced be made up and' restored within six months thereafter ; such fund may be held in cash or invested in the same class of securities required by law for the investment of funds by insurance corporations, —35— and nothing herein contained shall prevent the creation and accumulation of other funds in excess of the amount herein required to provide for the purposes of such corporation. Corporations organized under the laws of this State at the time of the passage of this Act may have six months from the date hereof in which to accumulate such reserve or emergency fund, and corporations hereafter organized un- der the laws of this State may have six months from the date of organization in which to accumulate such funds. Sec. 8. Be it further enacted, That no corporation trans- acting the business of life insurance on the assessment plan, under the provisions of this Act, shall issue a certificate or policy upon the life of any person less than fifteen or more than sixty-five years of age, excepting in case of transfer of policy holders, as provided herein, nor upon a life in which the beneficiary named has no insurable interest, nor as an endowment to any insured person while living, and every call for payments by the policy or certificate holders shall distinctly state the purposes of the same, nor shall any such corporation make or permit any distinction or discrimination between insurants of the same class and equal expectation of life in the amount of premium pay- ments or assessments for policies or certificates of life in- surance, or in the dividends or other benefits payable thereon. Any assignment of a policy or certificate to a per- son have no insurable interest in the insured's life, shall render such policy or certificate void. Provided, That the age limit fixed in this section shall not apply to associations or companies doing business under this Act on the indus- trial or zveekiy payment plan of insurance; provided such company shall not write more than tzvelve [12] dollars of insurance on children two years old and under, and on chil- dren between two and ten years, not more than $25, and on children under eighteen years, $50 [Chapter 164, Acts of 1901]. Sec. 9. Be it further enacted, That every policy or cer- tificate hereafter issued by any corporation doing business under the provisions of this Act, and promising payment -36- to be made upon a contingency of death or physical dis- ability, shall specify the sum of money which it promises to pav under such contingency, and the number of days after satisfactory proof of the happening thereof on which such payment shall be made. Upon the occurrence of such contingency, unless the contract shall have been voided by fraud, or by breach of its conditions, the corporation shall be obligated to the beneficiary for such payment at the time and to the amount specified in the policy or certificate. If such corporation shall refuse or fail to make such pay- ment after final judgment has been obtained upon such claim, the Insurance Commissioner shall notify the corpora- tion not to issue any new policies or certificates until such indebtedness is fully paid, and no officer or agent of the cor- poration shall make, sign, or issue any policy or certificate of insurance while such notice is in force. Sec. io. Be it further enacted, That no corporation or- ganized under the laws of this State and doing business under the provisions of this Act shall transfer its risks to, or reinsure them in any other corporation, unless the con- tract of transfer or reinsurance is first submitted to and approved by a two-thirds vote of the meeting of the in- sured, called to consider the same, of which meeting a written or printed notice shall be mailed to each member, certificate or policy holder, at least thirty days before the day fixed for such meeting. If such transfer or reinsurance shall be approved, every member, certificate or policy holder of the corporation, who shall file with the Secretary thereof, within ten days after the meeting, a written notice of his preference to be transferred to some other corpora- tion than that named in the contract, shall be accorded all the rights and privileges, if any, in aid of such transfer as would have been accorded under the terms of such con- tract had he been transferred to the corporation named therein. No such corporation organized under the laws of this State shall transfer its risks or assets, or any part thereof, to, or reinsure its risks or any part thereof, in any insurance corporation of any other State or county which —37— is not, at the time of such transfer or reinsurance, author- ized to do business in this State under the laws thereof. Nothing herein contained shall prevent the officers of any corporation from reinsuring a portion of individual risks in other corporations authorized to transact business in the State. Sec. II. Be it further enacted, That every corporation doing business under the provisions of this Act shall, on or before the first day of February in each year, make and file with the Insurance Commissioner, a report of its aflfairs and operations during the year ending on the 31st day of December, immediately preceding, which report shall be in such form and verified by such officers as the Insurance Commissioner may require ; Provided, That the Insurance Commissioner may, for good cause shown, extend the time for filing such report to a date not later than March i. The Insurance Commissioner shall cause an abstract of such report to be published in his annual report. Any corpora- tion refusing or neglecting to make such report, or to make payment of any of the fees required by law, shall, upon the order of the Insurance Commissioner, cease to do business in this State until such report and payment be made, and until it shall have, in addition, paid a penalty of $25 for each day neglected. Sec. 12. Be it further enacted, That every corporation transacting business under the provisions of this Act shall obtain from the Insurance Commissioner a certificate of authority for each agent writing or soliciting insurance for it in this State, which certificate shall show that such cor- poration has complied with the provisions of this Act, and such certificate, unless sooner revoked, shall expire with the end of each calendar year, and be renewed within thirty days thereafter. Any corporation that shall neglect or fail to make application for certificates of authority for its agents or any one of its agents, and any agent who shall transact any business for such corporation without first re- ceiving the certificate herein required, shall be liable to a fine of $100. -38- Sec. 13. Be it further enacted, That all corporations organized under the laws of this State to which this Act is applicable, with their books, papers and vouchers, shall be subject to visitation and inspection by the Insurance Commissioner or such person as he may designate. The Insurance Commissioner may address any inquiries to such corporation in relation to its doings or condition or any other matter connected with its transactions relative to the business contemplated by this Act. All officers of such cor- poration shall promptly reply in writing to all such inquiries under oath of its president, secretary or other officers, if required. When the Insurance Commissioner, on investiga- tion, shall be satisfied that any corporation organized under the laws of this State, and doing business under the provi- sions of this Act. is insolvent because of matured death claims or other obligations due and unpaid exceeding its assets and death assessments or periodical payments called or in process of collection, or has exceeded its powers, failed to comply with any provision of law, or is not carry- ing out its contracts with members in good faith, he shall report the facts to the Attorney-General of the State, who, if he shall be of the opinion that the facts require such action, may thereupon apply to any court having jurisdic- tion thereof for an order requiring the officers of such cor- poration to show cause within a reasonable time why such corporation should not be restrained from continuing to transact business. Such court may, in its discretion, appoint agents or receivers to take charge of the effects and wind up the business of the corporation, subject to such rules and orders as the court may from time to time prescribe, according to the course of proceedings in equity, or the court may, if it deems that the best interests of the corpora- tion will be served thereby, decree a removal from office of the officers or any number thereof, and substitute suitable persons to serve until the regular annual election, or until a successor is regularly chosen. Sec. 14. Be it further enacted, That all corporations organized under the laws of another State or country, and —39— doing business under the provisions of this Act, with their books, papers, and vouchers, shall be subject to visitation and inspection by the Insurance Commissioner or such per- son as he may designate. The Insurance Commissioner may address any inquiries to such corporation in relation to its doings or condition, or any other matter connected with its transactions relative to the business contemplated by this Act. All officers of such corporation shall promptly reply to such inquiries under oath of its president, secre- tary or other officers, if required. When the Insurance Commissioner shall be satisfied, on investigation, that any corporation organized under the laws of another State or country, and doing business under the provisions of this Act, is insolvent because of matured death claims or other obligations due and unpaid exceeding its assets, and death assessments or periodical payments called or in process of collection, or has exceeded its powers, failed to comply with any provision of law, or is not carrying out its contract with members in good faith, he may revoke the authority of such corporation to do business in this State, and cause a notice thereof to be published in one or more newspapers of gen- eral circulation ; and thereafter such corporation shall cease to transact any new business in this State, while such re- vocation is in force ; Provided, hozvever, That unless the grounds for revocation relate to the insolvency of the cor- poration, he shall give it ten days notice as to such revoca- tion, specifying wherein such corporation has failed to com- ply with any provision of law, or has exceeded its powers, or is not carrying out its contract with members in good faith. Sec. 15. Be it further enacted, That the Insurance Com- missioner shall collect and pay into the treasury the follow- ing fees : For each corporation filing preliminary papers and receiving license, $25 ; for each corporation's annual statement, $15 ; for each certificate to an agent or renewal thereof, $2. The necessary expenses of any visitation or examination made under the provisions of this Act, shall be paid by the corporation visited or examined, and in no — 40— case shall the Insurance Commissioner or his deputy be paid more than actual expenses. Sec. i6. Be it further enacted, That any officer of a corporation subject to the provisions of this Act, and any person or agent representing such corporation who shall transact, or attempt to transact in any manner whatever, any business in this State until such corporation has com- plied with the provisions of this Act, shall be deemed guilty of a misdemeanor, and, on conviction, shall be fined not less than two hundred ($200) dollars, or imprisoned not more tha*' sixty [days], or both, in the discretion of the court. IbtC. 17. Be it further enacted, That every corporation transacting business under the provisions of this Act shall, in addition to the requirements contained herein, pay such tax as may be assessed or levied against such corporation by any law of this State. Sec. 18. Be it further enacted, That the business of assessment life or accident insurance, as provided for and permitted by this Act shall only be carried on by duly or- ganized corporations. Sec. 19. Be it further enacted. That Chapter 179 of the Acts of 1887, entitled "An Act to amend the law estab- lishing a bureau of insurance, and to regulate the business of mutual or assessment insurance in the State of Tennes- see," and all other laws or parts of laws in conflict with the provisions of this Act, be and the same are hereby repealed. Sec. 20. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 3, 1897. Approved April 10, 1897. —41— STANDARD PROVISIONS OF LIFE INSURANCE POLICIES. CHAPTER 457, ACTS OF 1967. A BILL to be entitled An Act establishing standard pro- visions and conditions to be contained in policies of life insurance issued by companies organized under the laws of this State and companies licensed to do business in this State. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no policy of life insurance shall be issued in this State, or be issued by a life insurance company organized under the laws of this State unless the same shall contain the following provisions : (i) A provision that all premiums shall be payable in advance, either at the home office of the company or to an agent of the company, upon delivery of a receipt signed by one or more of the officers who shall be named in the policy. (2) A provision for a grace of one month for the pay- ment of every premium after the first year, which may be subject to an interest charge, during which month the insurance shall continue in force, which provision may con- tain a stipulation that if the insured shall die during the month of grace the overdue premium will be deducted in any settlement under the policy. (3) A provision that the policy shall constitute the en- tire contract between the parties and shall be incontestable after two years from its date, except for non-payment of premiums and except for violations of the conditions of the policy relating to naval and military services in time of war. (4) A provision that all statements made by the in- —42— sured shall, in the absence of fraud, be deemed representa- tions and not warranties, and that no such statement shall avoid the policy unless it is contained in a written applica- tion, and a copy of such application shall be endorsed upon or attached to the policy when issued. (5) A provision that if the age of the insured is under- stated the amount payable under the policy shall be such as the premium would have purchased at the correct age. (6) A provision that the policy shall participate in the surplus of the company, and that, beginning not later than the end of the fifth policy year, the company will determine and account for the portion of the divisible surplus accru- ing on the policy, and that the owner of the policy shall have the right to have the current dividend arising from such participation paid in cash, and that at periods of not more than five years such accounting and payment at the option of the policyholder shall be had. This provision shall not be required in non-participating policies. (7) A provision that after three full years premiums have been paid the company at any time, while the policy is in force, will advance, on proper assignment of the policy and on the sole security thereof, at a specified rate of in- terest, a sum equal to, or at the option of the owner of the policy, less than the reserve at the end of the current policy year on the policy and on any dividend additions thereto, specifying the mortality table and rate of interest adopted for computing such reserve, less a sum not more than two and one-half per centum of the amount insured by the policy and of any dividend additions thereto ; and that the company will deduct from such loan value any existing in- debtedness on the policy and any unpaid balance of the premium for the current policy year, and may collect inter- est in advance on the loan to the end of the current policy year which provision may further provide that such loan may be deferred for not exceeding six months after the application therefor is made. It shall be further stipulated in the policy that failure to repay any such advance or to —43— pay interest shall not avoid the policy unless the total in- debtedness thereon to the company shall equal or exceed such loan value at the time of such failure, nor until one month after notice shall have been mailed by the company to the last known address of the insured and of the assignee, if any. No condition other than as herein provided shall be ex- acted as a prerequisite to any such advance. This provision shall not be required in term insurances. (8) A provision which, in event of default in premium payments, after premiums shall have been paid for three years, shall secure to the owner of the policy a stipulated form of insurance, the net value of which shall be at least equal to the reserve at the date of default on the policy and on any dividend additions thereto, specifying the mor- tality table and rate of interest adopted for computing such reserves, less a sum not more than two and one-half per centum of the amount insured by the policy and of any existing dividend additions thereto, and less any existing indebtedness to the company on the policy. Such provision shall stipulate that the policy may be surrendered to the company at its home office within one month from date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid, and may stipulate that the company may defer payment for not more than six (6) months after the application therefor is made. This provision shall not be required in term insurances of twenty years or less. (9) A table showing in figures the loan values and the options available under the policies each year upon default in premium payments during at least the first twenty years of the policy, beginning with the year in which such values and options become available, (10) A provision that if, in event of default in premium payments, the value of the policy shall be applied to the purchase of other insurance, and if such insurance shall —44— be in force and the original policy shall not have been sur- rendered to the company and canceled, the policy may be reinstated within three years from such default upon evi- dence of insurability satisfactory to the company and pay- ment of arrears of premiums with interest. ( 1 1 ) A provision that when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death, or not later than two months after receipt of such proof. (12) A table showing the amounts of installments in which the policy may provide its proceeds may be payable. (13) A title on the face and on the back of the policy correctly describing the same. Any of the foregoing provisions or portions thereof relat- ing to premiums not applicable to single premium policies shall to that extent not be incorporated therein. Sec. 2, Be it further enacted. That no policy of life insur- ance* in form other than as prescribed in Section i shall be issued or delivered in this State or be issued by a life insur- ance company organized under the laws of this State, if it contain any of the following provisions : (i) A provision for forfeiture of the policy for failure to repay any loan on the policy or to pay interest on such loan while the total indebtedness on the policy is less than the loan value thereof, or any provision for forfeiture for failure to repay any such loan or to pay interest thereon, unless such provision contain a stipulation that np such for- feiture shall occur until at least one month after notice shall have been mailed by the company to the last known address of the insured and of the assignee, if any; or a provision contemplating any proposed benefit not essentially a part of the insurance contract or any connection of the assured with the company other than that of policyholder. (2) A provision limiting the time within which any action at law or in equity may be commenced to less than five years after the cause of action shall accrue. ♦Words in italics should have been omitted in amendment to original bill. —45— (3) A provision by which the policy shall purport to be issued or to take effect before the original application for insurance was made, if thereby the insured would rate at an age younger than his age at date when the application was made, according to his age at last birthday. (4) A provision for any mode of settlement at maturity of less value than the amount insured by the policy, plus dividend additions, if any, less any indebtedness to the com- pany on the policy and less any premium that may by the terms of the policy be deducted, payments to be made in accordance with the terms of the policy. Sec. 3. Be it further enacted. That policies may be issued in this State providing for not more than one year preliminary term insurance by the incorporation therein of a clause on the face of the policy distinctly specifying that the first year's insurance is term insurance. If the premium charged for term insurance under a limited payment life or endowment preliminary term policy providing for the payment of all premiums thereon in less than twenty years from the date of the policy, exceeds that charged for like insurance under twenty pay life preliminary term policies of the same company at the same age, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty pay life pre- liminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to pro- vide for a pure endowment at the end of the premium pay- ment period equal to the difference between the value at the end of such period for such twenty pay life preliminary term policy and the full reserve at such time of such a limited payment life or endowment policy ; provided this shall not take effect until January i, 1908. Sec. 4. Be it further enacted. That no policy of life in- surance shall be issued or delivered in this State, or be issued by a life insurance company organized under the laws of this State, until the form of the same has been filed with the In- surance Commissioner and after the Insurance Commission- -46- er shall have notified any company of his disapproval of any form, it shall be unlawful for such company to issue any pol- icy in the form so disapproved. The Commissioner's action shall be subject to review by any court of competent juris- diction. Sec. 5. Be it further enacted, That the policies of a life insurance company, not organized under the laws of this State, may, if approved by the Insurance Commissioner of this State, contain any provision which the law of the State, Territory, District or Country under which the com- pany is organized prescribes shall be in such policies when issued in this State, and the policies of a life insurance com- pany organized under the laws of this State may, when is- sued or delivered in any other State, Territory, District or Country, contain any provision required by the laws of the State, Territory, District or Country in which the same are issued, anything in this Act to the contrary notwithstanding. Sec, 6. Be it further enacted. That this Act shall not apply to annuities, industrial policies, or to corporations or associations operating on the assessment or fraternal plan. Sec. 7. Be it further enacted. That wherever the word "company" is used in this Act, it shall be held to include corporations and associations. Sec. 8. Be it further enacted. That this Act shall take effect from and after January i, 1908, the public welfare requiring it. Passed April 10, 1907. Approved April 15, 1907. —47— SURPLUS APPORTIONMENT AND AC- COUNTING OF LIFE INSUR- ANCE COMPANIES. CHAPTER 454, ACTS OF 1907. AN ACT to require Life Insurance Companies operating on the mutual plan to make at fixed periods an appor- tionment and accounting of surplus on all policies here- after issued on the participating plan, and to charge as a liability such apportionments when left with the Com- pany. Section i. Be it enacted by the General Assembly of the State of Tennessee^ That every life insurance company do- ing business in this State, operated on the mutual plan or [a plan] in which policyholders are entitled to share in the prof- its or surplus shall on all participating policies hereafter is- sued, beginning not later than the end of the fifth policy year and thereafter at the end of periods of not more than five years, determine and account for the portion of the di- visible surplus accruing on the policy, and the owner of the policy shall have the right at his option to have the current dividend arising from such apportionment paid in cash. Whenever such apportionment has been made and credited to a policyholder and left with the company, the amount thereof shall be reported as a separate item under the head of liabilities in each annual statement made to the Insurance Department of this State. The term "divisible surplus" herein used, is defined to mean the excess of admitted assets over and above the total amount of all liabilities, including legal reserve, paid- up or guaranty capital stock and any surplus set aside for the specific purpose of retiring said guaranty capital stock, or one hundred thousand dollars of required surplus if there be no capital stock and the contingency reserve. —48— Sec. 2. Be it further enacted. That any life insurance company doing business in this State may accumulate and maintain, in addition to the amount of capital and surplus contributed by stockholders, or if there be no capital stock, in addition to one hundred thousand dollars of required surplus, and in addition to the amount of the net values of its policies, computed according to the laws of the jurisdic- tion under which it is organized, and in addition to the amount of the temporary capital stock, if such there be, a contingency reserve not exceeding the following respective percentages of the amount of the said net values, to wit : When the amount of said net values is less than one hundred thousand dollars, 20 per centum thereof, or the sum of ten thousand dollars, whichever is the greater ; when the amount of said net values is more than one hundred thousand dollars, the percentage thereof, measuring the con- tingency reserve, shall decrease one-half of one per centum for each one hundred thousand dollars of the amount of said net values up to one million dollars; one-half of one per centum of each additional one million dollars up to ten million dollars; one-half of one per centum for each addi- tional two million five hundred thousand dollars up to twenty million dollars ; one-half of one per centum for each addi- tional five million dollars up to fifty million dollars ; one- half of one per centum for each additional twenty-five mil- lion dollars up to seventy-five million dollars ; and if the amount of said net values equal or exceed the last men- tioned amount, the contingency reserve shall not exceed five per centum thereof; provided, that as the amount of the net values of said policies increase and the maxi- mum percentage measuring the contingency reserve de- creases, such corporation may maintain the contingency re- serve already accumulated hereunder, although for the time being it may exceed the maximum percentage herein pre- scribed, but may not add to the contingency reserve when the addition will bring it beyond the maximum percentage; Provided, further, that for cause shown the Commissioner of Insurance may at any time and from time to time permit —49— any corporation to accumulate and maintain a contingency reserve in excess of the limit above mentioned for a pre- scribed period, not exceeding one year under any one per- mission, by filing in his office a decision stating his reasons therefor and causing the same to be published in his next annual report. This section shall not apply to any company doing exclu- sively a non-participating business. Sec. 3. Be it further enacted, That in the event of de- fault in the payment of any premium due on any policy, provided that not less than three full years' premiums shall have been paid, and provided further, such policy shall not be continued in force by virtue of any automatic loan pro- vision therein, that there shall be secured to the owner of the policy a stipulated form of insurance as may be specified therein, the net value of which shall be at least equal to the reserve at the date of default on the policy and on any dividend additions thereto, according to the mortality table and the rate of interest for computing such reserve as specified in said policy, less a sum not more than two and one-half per centum of the amount insured by the policy and of any existing dividend additions thereto and less any existing indebtedness to the company on the policy at the time of default. There shall also be secured to the owner of the policy the right to surrender the same to the company at its home office within one month from date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid, and the payment of which cash value by the said company shall not be deferred for more than six (6) months after appli- cation therefor is made. Sec. 4. Be it further enacted, That no agreement between the company and the policyholder or applicant for insurance shall be held to waive any of the provisions of this Act. —so- Sec. 5. Be it further enacted. That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act shall take effect from and after January i, 1908, the public welfare requiring it. Passed April 12, 1907. Approved April 15, 1907. —SI- SPECIAL BOARD CONTRACTS AND SALE OF AGENCY STOCK PROHIBITED. CHAPTER 456, ACTS OF 1907. AN ACT to prohibit Life Insurance Companies, their offi- cers, agents, solicitors and representatives from making contracts for employment or services and from giving, selling or purchasing stocks, bonds and other securities of any corporations, associations or partnerships and dividends and profits to accrue theron, as an inducement to insurance or in connection therewith. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no life insurance company doing business in this State and no officer, agent, solicitor or representative of such company shall make or offer to make, directly or indirectly, as an inducement to insurance or in connection therewith any contract for employment or ser- vices of any kind, and no such company, officer, agent, solici- tor or representative, shall, directly or indirectly, give, sell or purchase, or offer to give, sell or purchase, as an induce- ment to insurance or in connection therewith, any stock, bonds or other securities of any insurance company or other corporation, association or partnership, or any dividends or profits to accrue thereon. Sec. 2. Be it further enacted, That any life insurance company or any officer, agent, solicitor or representative of any life insurance company who shall violate any of the provisions of this Act, shall be guilty of a misdemeanor and upon conviction thereof, shall be fined not less than one hundred dollars and not more than two hundred dollars. Sec. 3. Be it further enacted. That all laws and parts of laws in conflict with this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 12, 1907. Approved April 15, 1907. CORPORATIONS AND STOCK COMPAN- IES PROHIBITED FROM ACTING AS AGENTS OF LIFE INSUR- ANCE COMPANIES. CHAPTER 444, ACTS OF 1907. AN ACT to prohibit Corporations and Stock Companies from acting as agents or representatives of Life Insur- ance Companies. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no corporation or stock company shall act, or be licensed to act, as an agent or representative of any life insurance company or association in soliciting, selling, delivering, writing, or in any manner placing or causing to be placed any life insurance policy or contract in this State. Sec. 2. Be it further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 12, 1907. —53— MISREPRESENTATIONS OF LIFE INSURANCE POLICIES. CHAPTER 455, ACTS OF 1907. AN ACT to prohibit misrepresentation of Life Insurance Policies and to repeal Chapter 25, Acts of 1899, ap- proved March 27, 1899, t;ntitled "An Act seeking to pre- vent misrepresentation on the part of agents in the sale of life insurance policies," Section i. Be it enacted by the General Assembly of the State of Tennessee, That no life insurance company doing business in this State, and no officer, director or agents thereof, shall issue or circulate, or cause or permit to be is- sued or circulated, any estimate, illustration, circular or statement of any sort misrepresenting the terms, conditions or character of any policy issued by it or the benefits or ad- vantages promised thereby, or the dividends or shares of surplus to [be] received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof. Sec. 2. Be it further enacted, That no agent or solicitor of any life insurance company shall misrepresent, orally or otherwise, any of the terms, conditions or character of any life insurance policy sold to a citizen of this State, or the benefits or advantages promised thereby, or the dividends or shares of surplus to be received thereon. Sec. 3. Be it further enacted. That the Insurance Com- missioner of this State is hereby authorized to revoke, for a period of one year, the license of any life insurance com- pany that violates, or permits any of its officers, directors or agents to violate, any of the provisions of Section i of this Act, and to revoke for a period of one year the license of any agent or solicitor who violates any of the provisions of Sec- tion 2 of this Act. —54— Sec. 4. Be it further enacted, That whenever the Insur- ance Commissioner believes or has good reason to believe that any of the provisions of this Act have been violated, it is hereby made his duty to give notice in writing to the company or person believed to be guilty of such violation, specifying the charges and citing him or it to appear before him at a certain date and show cause why the penalty here- in provided should not be imposed. If, after a thorough investigation, the Insurance Commissioner is satisfied that any of the provisions of this law have been violated, he may impose the penalty herein provided upon the company or person guilty of such violation ; Provided, however, that an appeal may be taken within thirty days from his decision, to the Circuit Court of the county in which the offense was committed and the cause there heard de novo. Sec. 5. Be it further enacted. That all laws and parts of laws in conflict with this Act, including Chapter 25, Acts of 1899, approved March 27, 1899, are hereby repealed, and that this Act take effect from and after its passage, the pub- lic welfare requiring it. Passed April 11, 1907. Approved April 15, 1907. —55— REGULATION OF SALARIES AND COM- PENSATION PAID TO OFFICERS AND AGENTS OF LIFE IN- SURANCE COMPANIES. CHAPTER 440, ACTS OF 1907. AN ACT to regulate and limit the salaries and compensa- tions of officers, trustees, agents and employes of Life Insurance Companies, and to prohibit the granting of pensions by Life Insurance Companies. Section i. Be it enacted by the General Assembly of the State of Tennessee^ That no life insurance company or association doing business in this State shall pay any salary, compensation or emolument to any officer, trustee or direc- tor thereof or any salary, compensation or emolument amounting in any one year to more than five thousand dollars to any one person, firm or corporation, unless such payment be first authorized by a vote of the Board of Directors of such life insurance company or association; nor shall any such life insurance company or association make any agreement with any of its officers, trustees or sal- aried employes whereby it agrees that for any services ren- dered or to be rendered he shall receive any salary, com- pensation or emolument that will extend beyond a period of twelve months from the date of such agreement; nor shall any officer, director or trustee, who is paid a salary for his services of more than one hundred dollars per month, receive any other compensation or emolument ; Provided, however, that the requirements of this Act shall not apply to the amount paid to general agents in commissions under their contract made on the regular commission basis; that the limitation as to time contained herein, shall not be con- strued as preventing a life insurance company from enter- ing into contracts with its agents for the payment of renewal commissions. -56- Sec. 2. Be it fuj-ther enacted, That no life insurance com- pany doing business in this State shall grant any pension to any officer, director or trustee thereof, or to any member of his family after his death, or to any other person whomso- ever. Sec. 3. Be It further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 12, 1907. —57- THE FUNDS OF AN INSURANCE COM- PANY CANNOT BE USED FOR POLITICAL PURPOSES. CHAPTER 443, ACTS OF 1907. AN ACT to prohibit the use of the funds of any Insurance Company for political purposes. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no officer, trustee, director, stock- holder, attorney, agent or representative of any insurance company or association, including fraternal beneficiary asso- ciations, doing business in this State, shall, directly or in- directly, pay or use or offer, consent or agree to pay or use any of the funds of such insurance company or association for or in aid of any political party, committee or organiza- tion, or for [or] in aid of any corporation, joint stock or other association organized or maintained for political pur- poses, or for or in aid of any candidate for political office, or for nomination for such office, or for any political purpose whatsoever, or for the reimbursement or indemnification of any person for money or property so used ; nor shall any person solicit or knowingly receive any money or property of any insurance company or association to be used for or in aid of any political party, committee or organization, or for or in aid of any corporation, joint stock or other association or- ganized or maintained for political purposes, or for or in aid of any candidate for political office or for nomination for such office, or for any political purpose whatsoever, or for the reimbursement or indemnification of any person for money or property so used. Sec. 2. Be it further enacted, That any officer, trustee, director, stockholder, attorney, agent or representative of any insurance company or association or fraternal benefi- ciary association who violates any of the provisions of this -5^ Act, or who participates in, aids, abets, or advises or consents to any such violation, and any person v^^ho soUcits or know- ingly receives any money or property in violation of this Act shall be guilty of a misdemeanor and be punished by imprisonment for not more than one year and a fine of not more than one thousand dollars. The Insurance Commis- sioner of this State is hereby authorized to revoke the license of any insurance company, the funds of which have been used in violation of the provisions of this Act. Sec. 3. Be it further enacted, That any officer, trustee, director, stockholder, agent or representative of any insur- ance company, or any other person who shall make or cause to be made or solicit or receive any contribution in violation of this Act, shall be liable to the company or asso- ciation for the amount so contributed. Sec. 4. Be it further enacted. That no person shall be excused from attending and testifying or producing any papers, books or other documents before any court or magis- trate, upon any investigation, proceeding or trial, for a viola- tion of any of the provisions of this Act, upon the ground or for the reason that the testimony or evidence, documen- tary or otherwise, required of him may tend to incriminate or degrade him ; but no person shall be prosecuted or sub- jected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may so testify or produce evidence, documentary or otherwise ; and no testimony so given or produced shall be used against him upon any criminal investigation or proceeding. Sec. 5. Be it further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 12, 1907. —59— DISBURSEMENTS OF LIFE INSUR- ANCE COMPANIES. CHAPTER 439, ACTS OF 1907. AN ACT to regulate disbursements by Life Insurance Com- panies. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no life insurance company do- ing business in this State shall make any payment out of its funds amounting to one hundred dollars or more unless the same be evidenced by a voucher signed by or on behalf of the person, firm or corporation receiving the money and cor- rectly describing the consideration for the payment. If the payment be for both services and other purposes, the vouch- er shall set forth an itemized statement of the specific ser- vices rendered and of all other expenditures. If the expen- diture be in connection with any matter pending before any legislative or public body, or before any department or offi- cer of any State or Government, the voucher shall correctly describe, in addition, the nature of the matter and the inter- est of such company therein. When such voucher cannot be obtained, the expenditure shall be evidenced by an affidavit describing the character and object of the expenditure and stating the reason for not obtaining such voucher. Sec. 2. Be it further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 12, 1907. INVESTMENT OF FUNDS OF DO- MESTIC LIFE INSURANCE COMPANIES. CHAPTER 458, ACTS OF 1907. AN ACT to regulate the investment of the funds of domes- tic Life Insurance Companies. Section i. Be it enacted by the General Assembly of the State of Tennessee, That no domestic life insurance com- pany, whether incorporated by special Act or under a gen- eral law of this State, shall subscribe to or participate in any underwriting of the purchase or sale of securities or prop- erty or enter into any transaction for such purchase or sale on account of said company jointly with any other person, firm or corporation; nor shall any such company enter into any agreement to withhold from sale any of its property, but the disposition of its property shall be at all times with- in the control of its Board of Directors. No investment or loan, except policy loans, shall be made by any such life in- surance company, unless the same shall first have been au- thorized by the Board of Trustees or by a committee there- of charged with the duty of supervising such investment or loan. Sec. 2. Be it further enacted. That domestic life insur- ance companies may invest their funds and accumulations in bonds of the United States, or of this State, or of any other State, or of any county of this or any other State, or of any incorporated city or town of this or any other State, or in the mortgage bonds of any dividend-paying railway or street railway company duly incorporated and organized under the authority of this State or any other State, or in other good and solvent securities subject to the approval of the Insurance Commissioner of this State; and such com- — 6i— panics may loan their funds upon improved, unincumbered real property in any State, not exceeding, however, fifty per centum of the value of such property, or upon security or promissory notes amply secured by pledge of any bonds or other securities in which such companies are hereby authorized to invest their funds, or upon the security of their own policies ; provided the loan upon any policy shall not exceed the reserve -value thereof. Sec. 3. Be it further enacted, That domestic life insur- ance companies may acquire, hold and convey real property only for the following purposes and in the following man- ner: 1. Such as shall be requisite for convenient accommoda- tion in the transaction of its business, 2. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted, or for moneys due. 3. Such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings. 4. Such as shall have been purchased at sales on judg- ments, decrees or mortgages obtained or made for such debts. All such real property specified in Sub-sections 2, 3 and 4 of this section, which shall not be necessary for its accom- modation in the convenient transaction of its business, shall be sold and disposed of within two years after the company shall have acquired title to the same, or within two years after the same shall have ceased to be necessary for the accommodation of its business; and it shall not hold such property for a longer period unless it shall procure a certifi- cate from the Insurance Commissioner authorizing an exten- sion of time for the sale of such property. The Insurance Commissioner is hereby authorized to issue such a certifi- cate extending the time for the sale of such property, if in his judgment it appears that the interest of the company will suffer materiallv bv a forced sale of such property. —62— Sec. 4. Be it further enacted, That no domestic life in- surance company shall invest or loan its funds in any man- ner except as provided in this Act. Sec. 5. Be it further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 12, 1907. Approved April 15, 1907. "63- INSURANCE AGENTS ARE AGENTS OF THE COMPANIES. CHAPTER 442, ACTS OF 1907. AN ACT to define the status of persons soliciting insur- ance. Section i. Be it enacted by the General Assembly of the State of Tennessee, That any person who shall solicit an application for insurance, shall in all matters relating to such application, and the policy issued in consequence thereof, be regarded as an agent of the company issuing the policy and not the agent of the insured, and all provisons in the appli- cation and policy to the contrary are void and of no effect whatever ; Provided, this Act shall not apply to licensed fire insurance brokers. Sec. 2. Be it further enacted. That all laws and parts of laws in conflict with the provisions of this Act are herebv repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 12, 1907. -6a- THE POLICY IS THE ENTIRE INSUR- ANCE CONTRACT. CHAPTER 441, ACTS OF 1907. AN ACT to define and limit the provisions of an Insurance Contract and to determine the place where such contract was made. Section i. Be it enacted by the General Assembly of the State of Tennessee, That every policy of insurance issued to or for the benefit of any citizen or resident of this State on or after the first day of July, 1907, by any insurance com- pany or association doing business in this State, except fra- ternal beneficiary associations and mutual insurance com- panies or associations operating on the assessment plan, shall contain the entire contract of insurance between the parties, to said contract, and every such contract so issued shall be held as made in this State and construed solely according to the laws of this State. Sec. 2. Be it further enacted, That all laws and parts of laws in conflict with the provisions of this Act are hereby re- pealed and that this Act shall take efifect on the first day of July, 1907, and be in force thereafter, the public welfare re- quiring it. Passed April 10, 1907. Approved April 12, 1907, -65- FIRE MARSHAL LAW. CHAPTER 460, ACTS OF 1907. AN ACT to reduce the fire waste in Tennessee by providing for the investigation of fires, and to provide for the ex- pense of said investigations. Section i. Be it enacted by the General Assembly of the State of Tennessee, That the Insurance Commissioner and the Sheriffs are hereby authorized to investigate the cause, origin and circumstances of every fire occurring in the State, by which property has been destroyed or damaged, and shall specially make investigation as to whether such fire was the result of carelessness or design. Whenever such fire occurs it shall be the duty of the Sheriff to notify the Insurance Commissioner as early as practicable thereafter of the occurrence of such fire. It shall be a sufficient compliance with this requirement to send said notice as aforesaid by registered mail, addressed to the Insurance Commissioner at Nashville. A preliminary investigation of all fires shall be made by the Sheriff, and shall be begun within three days, not in- cluding Sunday, of the occurrence of such fire, if he is iriformed of the occurrence of such fire within three days thereafter, and, if not, then as soon as practi- cable after he has such information ; and the Insur- ance Commissioner shall have the right to supervise and direct such investigation whenever he deems it necessary or expedient. The officer making such investigation of fires shall within one week of the occurrence of the fire (if the preliminary investigation can be concluded in that time, if not, then as soon thereafter as such investigation is con- cluded) furnish to the said Insurance Commissioner a writ- ten statement of all the facts relating to the cause and origin of the fire, the kind, and ownership of the property 5 -66— destroyed, and such other mformation as may be called for by the blanks provided by the Insurance Commissioner. The Insurance Commissioner shall keep in his of^ce a record of all fires occurring in the State, together with all facts,, statistics and circumstances, including the origin of the fires, which may be developed by the investigations provided for by this Act. Sec. 2. Be it further enacted, That the Insurance Com- missioner shall have power, and it shall be his duty, eithei in person or by deput} , or by the officers' provided in Section I of this Act, to examine, or cause examination to be made, into the cause, circumstances and origin of all fires occurring within the State to which his attention has been called in accordance with the provisions of Section i, or otherwise, by which property is accidentally or unlawfully destroyed or damaged by fire, and to specially examine and decide whether said fire was the result of carelessness, or was the act of an incendiary. The Insurance Commissioner shall in person, by deputy, or by an officer named for the purpose in Section i herein, fully investigate all the circumstances surrounding such fire, and when, in the opinion of the officer making such examination, such proceedings are necessary, take or cause to be taken the testimony on oath of all persons supposed to be cognizant of any of the facts, or to have means of knowledge in relation to the matters as to which an examination is hereby required to be made, and shall cause the same to be reduced to writing. If the In- surance Commissioner shall be of the opinion that there is evidence sufficient to charge any person with the crime of arson, or other wilful burning, he shall cause such person to be arrested and charged with such offense, prosecuted and bound over to the Circuit or Criminal Court of the county where such fire occurred, and shall furnish to the Attorney General of the district all such evidence, together with the names of the witnesses, and all information obtained by him, including a copy of all pertinent and material tes- timony taken in the case. Sec. 3. Be it further enacted, That when conducting an -67- examination or investigation provided for in this Act, the Insurance Commissioner or his deputy, or any other officer authorized by this Act to conduct such investigation, shall have all the power of a trial justice in this State for the purpose of summoning and compelling the attendance of witnesses to testify in relation to any matter which is by the provisions of this Act a subject of inquiry and investigation, and may administer oaths and affirmations to persons appear- ing as witnesses before them ; and false swearing by any witness in any matter or proceeding aforesaid shall be deemed perjury and punished as such. Sec. 4. Be it further enacted. That the Insurance Com- missioner or his deputy, or any of the officers authorized by this Act to investigate fires, shall have the right and au- thority, at all times of the day or night, in performance of the duties imposed by the provisions of this Act, to enter upon and examine any building or premises where a fire has occurred, and any other building or premises adjoining the same. Any investigation held under the provisions of this Act may, in the discretion of the officer holding same, be private, and persons other than those required to be present may be excluded from the place where such investigation is held, and witnesses may be kept separate and apart from each other, and not allowed to communicate* with each other until they have been examined. Sec. 5. Be it further enaetcd, That any officer referred to in this Act who neglects or refuses to comply with any of the requirements of this Act shall be guilty of a misde- meanor, and upon a conviction shall be punished by a fine of not less than fifty, nor more than two hundred and fifty dollars. Sec. 6. Be it further enaeted, That a tax of one-fifth of one per centum on the gross premium receipts of the fire insurance companies doing business in this State shall be, and it is hereby, levied for the purpose of providing a fund for defraying the cost of the enforcement of this Act, to be collected by the Insurance Commissioner as other taxes —68— on fire insurance companies are now collected in this State ; and the Insurance Commissioner shall keep a separate ac- count of all moneys received and disbursed under this Act, and shall include same in his annual report. The Insurance Commissioner shall pay all necessary expenses, including counsel, expenses of deputy, detectives and officers, incurred in the performance of the duties imposed by this Act out of said fund hereinbefore provided, and any surplus of said fund remaining at the end of any year shall be turned into the State Treasury. Sec. 7. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 15, 1907. -69- COUNTY MUTUAL FIRE INSURANCE COMPANIES. CHAPTER 463, ACTS OF 1907. AN ACT to govern and regulate the business of county mutual fire insurance companies incorporated under the laws of this State and operating on the assessment plan, and to repeal Chapter 220 of the Acts of 1895. Section i. Be it enacted by the General Assembly of the State of Tennessee, That a county mutual fire insurance company is hereby defined to mean a company incorporated under the laws of Tennessee for the purpose of insuring property against damage by fire, lightning and tornadoes, without capital stock or guaranteed capital, and which ope- rates on the assessment plan and is limited to one or more counties, as hereinafter provided, in the transaction of its business. Sec. 2. Be it further enacted, That no county mutual fire insurance company shall commence the transaction of business until it receives from the Insurance Commissioner a certificate of authority, which certificate shall state that such company has complied with the provisions of this Act. Sec. 3. Be it further enacted. That every such insurance company shall file with the Insurance Commissioner a cer- tified copy of its charter or articles of incorporation, together with a sworn statement of three of the incorporators, that bona fide applications have been made by not less than twenty-five citizens, for not less than fifty thousand dollars of insurance, of which amount no one or more risks subject to one fire shall exceed one thousand dollars, said risks to be located in the county in which such company has its domicile. Sec. 4. Be it further enacted. That every such corpora- tion may then be authorized to issue policies of insurance, — 70— signed by its president and secretary, agreeing, in the name of the corporation, to pay all damages caused by fire, light- ning or tornado done to the property insured during the life of the policy. There shall be a clause plainly printed in each policy that the holder thereof, or the insured, is liable for such assessments as may be necessary to pay in full all losses and expenses incurred by the corporation. Sec. 5. Be it further enacted, That every person insured by or in any such corporation shall first give his undertaking, in such form as the corporation may prescribe, which form shall be uniform by and between all the insured, to pay their pro rata share of all losses or damages sustained by any mem.ber thereof from any cause specified in the policy, and any expenses incurred by the company and for the cre- ation of a surplus fund. All dues, premiums or assess- ments shall be made pro rata upon all property insured, according to its classification and according to the amount insured. The corporation is authorized to borrow money for the purpose of paying losses, and no assessment shall be invalid because made in whole or in part for the purpose of paying any money borrowed by the corporation which has been used in the payment of any claim for loss, damage or expenses against the corporation. Sec. 6. Be it further enacted. That the officers of the corporation shall not enter into any contract or agreement or make any debt of any kind, except for the payment of losses. Sec. 7. Be it further enacted, That the secretary of any such company shall notify every member of the corporation, by written or printed notice signed by him, stating the amount due the corporation from the members, and the time when, place where, and to whom it shall be paid. Such pay- ment shall be made by the member within sixty days from the delivery of the notice, which notice may be delivered personally or by mail; and if by mail delivery shall be deemed complete on each member when deposited in the postoffice at the place where the principal office of the cor- —71— poration is located, directed to each member at the last postoffice address given on the company's books of record, postage prepaid. Sec. 8. Be it further enacted^ That the corporation shall have a lien upon the property insured to secure the payment of all such assessments and calls as may be legally made under the contract of insurance or by-laws of the company, and that it may maintain an action against any member thereof to recover all assessments which he may neglect or refuse to pay when due, made upon him under the provi- sions of this Act or the by-laws- of the corporation. If the corporation is compelled to bring such action to collect any such assessment, it may recover the amount so assessed, to- gether with reasonable attorney's fees and all other costs of collection. Sec. 9. Be it further enacted, That any member who re- fuses or neglects to pay his assessment may, for such rea- son, or for any other reason satisfactory to the directors or executive committee, be excluded by a majority of the di- rectors or executive committee, or as the by-laws may pre- scribe, from the corporation; and when thus excluded the secretary shall cancel or withdraw his policy or policies, which shall prevent his recovering from any loss or damage sustained after such exclusion. Such member shall remain liable for the payment of any assessment made prior to his exclusion and for the penalty above provided, in case such action has been or shall be brought against him there- for within twelve months after the time it was due. If any member of the corporation shall be excluded therefrom as herein provided, and his insurance cancelled, the secretary shall at once enter the same, with the date thereof, upon the records of the corporation, and either in person or by mail notify the member of such exclusion and cancellation of his insurance; and, if by mail, the postage shall be pre- paid and the notice addressed to him at his last postoffice address given on the company's books of record. Sec. 10. Be it further enacted. That no such company shall issue policies of insurance on property located in any county in this Stale oilier ti'.aii the county in which il has its home office until it has at least $300,000.00 of insurance in force; provided, that whenever any such company has as much as $300,000.00 of insurance in force in its home coun- ty, it may be authorized by the Insurance Commissioner to extend its operations to all counties contiguous thereto ; and whenever the amount of insurance in force equals $1,500,000.00 he may authorize such company to extend its operations to counties contiguous to its home county in the second degree; and w^henever the amount of insurance in force equals $2,500,000.00 he may authorize said company to extend its operations to such other counties in the State as he may designate; provided, nothing in this Act shall pre- vent any such existing company from continuing its opera- tions in an}^ county in which it is now doing business. Sec. II. Be it fiirflier eiiaetcd, That such companies are authorized to accumulate' a surplus or emergency fund in such amount as may be deemed advisable by its board of directors. Sec. 12. Be it further enacted, That it shall be the duty of the board of directors to notify all policyholders of the time and place of the annual meeting of said policyholders, either by printing same on their policies or by special notice, and to report to such annual meeting all matters pertaining to the operation of the company, and at said annual meet- ing the board of directors shall be elected, and such other business may be transacted by the policyholders as may le- gally come before them. Every policyholder in good stand- ing shall be entitled to one vote, in person or by ballot trans- mitted by mail, as may be provided by by-law, in any elec- tion for directors or upon any other question. Xo member shall be allowed to vote by proxy. Sec. 13. Be it further enacted. That immediately after the annual meeting of the policyholders the board of direc- tors shall meet and transact any business coming before it and shall elect a president, vice-president, secretary and treasurer and such other officers and employes as they may —73— deem necessary. Regular meetings of the board may be held as often as the by-laws may provide, and special meetings may be held at the call of the president, secretary or a majority of the board of directors. The board of direc- tors shall consist of not less than six and not more than fifteen policyholders, the first board to be elected one-third for one year, one-third for two years, one-third for three years; thereafter one-third to be elected each year for a pe- riod of three years. The president, vice-president and sec- retary shall be members of the board of directors and also members of the executive committee, which committee is authorized to conduct the business of the company under the authority of the board of directors. Sec. 14. Be if further enacted, That no officer or other person whose duty it is to determine the character of risk and upon whose decision the application shall finally be ac- cepted or rejected shall receive as any part of his compensa- tion a commission upon the premium, but his compensation shall be a fixed salary, or such share of the net profits of the corporation as the directors may determine. Sec. 15. Be it further enacted, That the maximum amount carried on any one risk or hazard subject to one fire by any company shall not exceed the amount pre- scribed in the following schedule: Amount of Insurance in Force. Maximum Risk. When under $100,000 00 $ 1,000 00 When $100,000 00 and under $250,000 00. . . . 1.500 00 When 250,000 00 and under 400,000 00. . . . 2,000 00 When 400.000 00 and under 600.000 00. . . . 3.000 00 When 600,000 00 and under 900.000 00. . . . 4.000 00 When 900.000 00 and under 1.200,000 00. . . . 5.000 00 When 1.200,000 00 and under 1,500,000 00. . . . 5.500 00 When 1,500.000 00 and under 2.000.000 00. . . . 6.000 00 When 2,000,000 00 and under 2,500,000 00. . . . 7,000 00 When 2,500,000 00 and under 3,000,000 00. . . . 8,000 00 When 3,000,000 00 and under 3.500,000 00. . . . 9.000 00 When 3,500,000 00 and over 10,000 00 —74— The insurance contracts of all such companies shall be made to conform to the provisions of this Act, and shall con- sist of the policy proper, constitution and by-laws of the company (which must be attached to or incorporated in the policy), all endorsements made on or attached to the policy, such parts of the application as are attached to or incorpo- rated in the insurance contract, and any premium note or other policy obligation given by a member, all of which shall be binding on the assured as long as he remains a member or policyholder in the company. Sec. i6. Be it further enacted. That the dividends to policyholders may be paid annually, or as the directors may determine, but the per cent of dividends shall not be so large as to require the payment during any calendar year of more than fifty per cent of the net cash surplus at the be- ginning of that year. Sec. 17. Be it further enacted. That no policyholder shall be liable to assessments to pay losses and expenses accruing previous to the time his policy takes effect, nor for losses and expenses accruing after his policy terminates. Sec. 18. Be it further enacted, That every such company shall be examined by the Insurance Commissioner or some other person appointed by him at least once in three years, and oftener if he deems it necessary, at the company's ex- pense. He shall have free access to the books, papers and records of the corporation, and is authorized to examine members, officers and employes of the corporation under oath touching any matters pertaining to the operation of the corporation. Sec. 19. Be it further enacted. That every company operating under this Act shall make an annual report to the Insurance Commissioner on December 31 of each year, on such form as he shall prescribe, and under the same re- quirements as are made of stock fire insurance companies doing business in this State, and shall pay the Insurance Commissioner a fee of $10.00 at the time of filing its annual statement. —75— Sec. 20. Be it further enacted. That Chapter 220, Acts of 1895, passed May 13 and approved May 14, 1895, entitled "An Act to govern and regulate the business of mutual or assessment fire insurance companies organized or incorpo- rated under the laws of this State," be, and the same is here- by, repealed, and all other laws in conflict with this Act be, and the same are hereby, repealed in so far as they relate to this class of companies. Sec. 21. Be it further enacted. That this Act shall take effect from and after its passage, the public welfare requir- ing it. Passed April 10, 1907. Approved April 15, 1907. -76- STATE MUTUAL FIRE INSURANCE COMPANIES. CHAPTER 461, ACTS OF 1907. AN ACT to authorize the organization and regulation of State Mutual Fire Insurance Companies to be operated on the mutual plan, and to repeal Chapter 220 of the Acts of 1895. Section i. Be if enacted by the General Assembly of the State of Tennessee, That every Mutual Fire Insurance Company organized and incorporated under the laws of this State and operating under the provisions of this Act, before commencing business, must file with the Insurance Commissioner a statement signed and sworn to by three of its incorporators, that it has bona Ude applications for not less than two hundred and fifty thousand dollars ($250,- 000.00) of insurance on not less than two hundred and fifty separate risks in this State, to be bound simultaneously, before [upon] the filing of said sworn statement, if the In- surance Commissioner is satisfied with the bona fides of the application, he shall then issue the company a certificate of authority to do a fire, lightning and tornado insurance busi- ness under the provisions of this Act. False swearing to the above statement shall be deemed perjury and upon conviction thereof, those who committed it shall be punished as in other cases of perjury, and the company in whose interest the false statement is made shall be denied the right to do business for twelve months there- after ; and if a certificate of authority be obtained thereby for such company, it shall be revoked by the Insurance Commissioner and the company prohibited from doing busi- ness for twelve months next after the discovery of said false statement. Sec. 2. Be it further enacted, That in lieu of the amount —77— of applications and insurance applied for, mentioned in the foregoing section, any mutual fire insurance company or- ganized under the laws of this State may have a paid-up guaranty capital of not less than twenty-five thousand dol- lars ($25,000.00), divided into shares of not exceeding one hundred dollars ($100.00) each. This capital and the other invested aesets of the company shall be invested in real estate mortgages or mortgage notes, not exceeding one-half of the value of the property, or in such other secu- rities as domestic stock fire insurance companies are per- mitted to invest their funds in. Said guaranty capital securities must be deposited with the Insurance Commissioner, or with some trust company or bank in the company's home county authorized to act as trustee, under the direction and control of the Insurance Commissioner, in trust for the protection of the policy- holders of such company and for the payment of its losses and policy liabilities. When said guaranty capital securi- ties have been so deposited, the Insurance Commissioner shall authorize such company to do a fire, lightning and tornado insurance business under the provisions of this Act. Sec. 3. Be it further enacted. That every such company organized with a guaranty capital may allow the subscribers thereto all the interest and dividends accruing from the guaranty capital securities, according to the amount paid in or deposited by the respective guarantors, and in addi- tion thereto may pay such guarantors dividends of not exceeding 6 per cent per annum on their respective paid up shares ; provided that the surplus at the end of each year, over and above all liabilities, including reinsurance reserve and guaranty capital, is sufficient to pay the said dividends. Sec. 4. Be it further enacted, That all such companies operating under the guaranty capital provisions of this Act and levying advance premiums and maintaining a full legal reinsurance reserve, may limit their policyholders' liability to the amount of premiums stated in the policy or insurance contract, and collect the same as set out therein. -78- Should the guaranty capital of any such company at any time become impaired and remain so for sixty days, the company shall cease issuing policies until said impair- ment is made good by either replacing the funds due said guaranty capital, or by reducing the authorized amount of same by written notice to the Insurance Commissioner by an amount equal to the impairment, but* in no event to less than twenty-five thousand dollars ($25,000.00), but the company may continue to collect premiums that are due or [to be] become due on policies already in force while the impairment exists and until it is made good. Such com- pany may at any time use any surplus over and above all liabilities, including reinsurance reserve, for the purpose of retiring or liquidating any part of its guaranty capital. All of said guaranty capital shall be retired when an equal amount of net surplus shall have been accumulated. If a guarantor desires to surrender his shares and with- draw his guaranty capital or securities, he may do so in giving the company ninety days written notice to that effect ; provided such v/ithdrawal does not impair the com- pany's guaranty capital below $25,000.00. When said guaranty capital is being retired or liquidated, if the guarantors have made their contributions in cash, a like amount of cash shall be repaid them, but if the same has been made in securities, said securities, if undisposed of or their cash value at the time of their sale if disposed of, shall be returned to the guarantor contributing same, or the return of the guaranty capital shall be made on such other terms as are agreed upon when the securities are de- posited by the guarantor. When computing reinsurance re- serve, policy fees, membership and endorsement fees, all agents commissions, and salaries of all agents required to have a certificate of authority from the Insurance Depart- ment, shall be excluded as a part of the premiums receipts. The unpaid premiums in course of collection and unpaid premium notes of the policyholders, not over twelve months due, shall be treated as ledger assets. Sec. 5. Be it further enacted, That all companies oper- —79— ating under this Act, and not maintaining a twenty-five thousand dollar ($25,000.00) guaranty capital or more, and a full legal reinsurance reserve, exclusive of all other lia- bilities, shall charge one full regular annual or term pre- mium for each policy issued and collect the same at such times and under such conditions as the insurance contract provides for; and the assured or policyholders shall be liable for a contingent premium equal to and in addition to the regular premium, if needed by the company for the purpose of paying its losses and other liabilities. If any such company so desire it may make provisions in its in- surance contract for assessments in addition to the one contingent premium, which is herein made mandatory. The amount of the regular premium and the contingent premium shall be plainly written on the outside or title page of the policy, and it shall be plainly stated in the policy or insurance contract that it is issued in consideration of the regular premium and the further contingent premium of not less than the same amount in addition thereto. The contingent liabilities of the policyholders shall be computed as contingent assets of the company. The unpaid regular premium and premium notes of the policyholders not over twelve months due shall be computed as ledger assets of the company. No policyholder shall be liable for any amount in ex- cess of the regular premium and contingent premium as herein provided for and required to be stated in the policy or insurance contract, nor shall any policyholder be liable for losses or expenses accruing before his policy was issued, nor for losses or expenses accruing after the termination of his insurance. Every company operating under the provisions of this Act shall have a lien upon the property insured to secure the payment of all regular premiums, contingent premiums and other policy obligations, due the company; and if the company be compelled to collect such premium or obligation by suit, or through a collecting attorney, the assured shall — 8o— be liable for all costs incident to such proceeding, includ- ing reasonable attorney's fee. Sec. 6. Be it further enacted. That every policyholder in good standing, of any company doing business under this Act, shall have one vote at the election of the Board of Direc- tors. They may vote either in person or by prox3\ Guar- antors in a guaranty capital company shall have one vote each for each of their respective paid-up shares. They may vote either in person or by proxy. Not less than two- thirds of the directors in any such company shall be resi- dents of Tennessee. No person not a policyholder or guar- antor shall be eligible to hold any principal office or be a director in any such company. Sec. 7. Be it further enacted, That no officer or other person, whose duty it is to determine the character of the risk and upon whose decision the application for insurance thereon shall finally be accepted or rejected, shall receive as any part of his compensation any commission upon the premium, but his compensation shall be a fixed salary, fee, or such part of the net profits of the company as the Board of Directors may determine. Sec. 8. Be it further enacted, That the maximum amount carried by any such company or [on] any one or more risks reasonably subject to one fire, shall not exceed the amounts prescribed in the following schedule, when under the pro- tection of a full paid fire department, [but] not exceeding three-fifths that amount [when] not under the protection of a full paid fire department : Amount of insurance in force. Maximum line (amount). When under $400,000 $ 2,000 $400,000 and under $600,000 3,ooo $600,000 and under $900,000 4,000 $900,000 and under $1,200,000 5.000 $1,200,000 and under $1,500,000 5>5CO $1,500,000 and under $2,000,000 6,000 $2,000,000 and under $2,500,000 7,000 $2,500,000 and under $3,000 000 8,000 — 8i— $3,000 ,('0C and under $3,500,000 9,000 $3,500,000 and under $5,000,000 10,000 $5,000,000 and over J2.5'.xd All amounts in excess of the above shall be reinsured concurrently with its writing. No company doing business under this Act shall reinsure any of its business in any un- authorized company except upon the written approval of the Insurance Commissioner of this State. Such company shall pay 2^ per cent tax on the premium on all business it reinsures in companies not having their domicile in this State, at the same time foreign fire insurance companies are required to pay the tax on their premium. The insurance contracts of all such companies shall be made to conform to the provisions of this Act, and shall consist of the policy "proper; the constitution and by-laws of the company, which must be attached to or printed on the policy; all endorsements made on or attached to the policy; such parts of the application as are attached to or incor- ported in the insurance contract; and any premium note or other policy obligation given by the assured; all of which shall be binding on the assured as long as he remains a member of or policyholder in the company. Sec. 9. Be it further enaetcd, That dividends in cash, or otherwise, may be paid to policyholders annually, or at such times as the directors may decide upon, the per cent of divi- dend to be paid shall be fixed from time to time by the Board of Directors, and their action shall be final both as to the per cent of dividend and the time when it shall be paid to the policyholder. The per cent of dividend shall be the same to all* in each class of policyholders, but shall not be so large as to require the payment for any calendar year of more than 50 per cent of the company's net cash surplus at the close of that year. Sec. 10. Be it further enacted, That the deposits and investments of every such company shall be made in its 6 —82- corporate name; and no officer of the company, or member of any committee thereof charged with the investment of funds, shall borrow the same, or be directly or indirectly liable therefor, for or on account of loans made to others, nor shall any director or any officer take or receive to his use any fee, brokerage, commission, gift or other considera- tion on account of any loan made by or on behalf of any such company; provided this does not prevent such persons subscribing for or securing shares of guaranty capital in any company operating on the guaranty capital plan, on equal terms and conditions with other guarantors. The violation of this section shall be a misdemeanor and any one convicted thereof shall be fined not less than $50,00 nor more than $200.00. Sec. II. Be it further enacted, That every such com- pany shall be required to obtain from the Insurance Com- missioner a certificate of authority for each of its agents who solicit or write insurance in this State the fee for which shall be $2.00. Every such company shall make an annual report to the Insurance Commissioner by February ist of each year, as of December 31st of the preceding year, on blank forms pre- pared and furnished by him for that purpose, setting forth the transactions of the company during the previous year, showing its condition at the close of the year, and shall pay to the Insurance Commissioner a fee of $10.00 there- for at the time of filing the statement. Sec. 12. Be it further enacted, That when the Insurance Commissioner is satisfied that any such company has ex- ceeded its powers, or has failed to comply with the pro- visions of this law, or is conducting its business fraudu- lently, or in his judgment its financial condition is unsound, or that it is not maintaining the required amount of net surplus or unimpaired guaranty capital and reserve, it shall be his duty to present the facts relating thereto to the State Attorney General, who shall, if he deems the circumstances -83- warrant, commence an action in quo zvarranto or an action of that nature, in any court of competent jurisdiction near- est to the company's domicile; and, if upon the trial, such court shall find that the allegations in the petition are true, and that legal grounds exist therefor, such company shall be enjoined from doing further business; provided that such company shall have reasonable notice served upon it by the Insurance Commissioner and given reasonable oppor- tunity and time to show cause why such proceedings should not be commenced and to make good any impairment in its guaranty capital, or reserve. And whenever, in the opinion of such court, such company should not be per- mitted longer to transact business, it shall appoint a re- ceiver for the purpose of winding up its business, as in other cases of receivership in this State. Sec. 13. Be it further enacted. That any company organ- ized and now operating under Chapter 220 of the Acts of 1895, which desires to do so, may accept and operate under the provisions of this Act, and such company shall have until January i, 1908, in which to avail itself of this privi- lege. Sec. 14. Be it further enacted, That Chapter 220 of the Acts of 1895, entitled "An Act to govern and regulate the business of mutual or assessment and fire insurance com- panies organized or incorporated under the laws of this State," be and the same is hereby repealed in so far as it applies to this class of companies, and that all other laws or parts of laws in so far as they conflict with this Act, be and the same are hereby repealed. Sec. 15. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 15, 1907. -84- ADMISSION OF FOREIGN MUTUAL FIRE INSURANCE COMPANIES. CHAPTER 462, ACTS OF 1907. AN ACT to provide for the admission and regulation of mutual fire insurance companies incorporated under the laws of other States. Section i. Be it enacted by the General Assembly of the State of Tennessee^ That mutual fire insurance companies incorporated and organized under the laws of other States shall not be permitted to do business in this State until they have received a certificate of authority from the Insurance Commissioner, stating that such company has complied with the provisions of this Act. Sec. 2. Be it further enacted, That the Insurance Com- missioner shall not license or authorize any mutual fire in- surance company incorporated under the laws of any other State to transact the business of fire insurance in this State until — 1. It shall file with him a certified copy of its charter or articles of incorporation and a statement of its financial con- dition and business on the 31st day of December preceding the day on which it shall apply for admission to transact business, in such form and detail as the Insurance Com- missioner may require, the same to be signed and sworn to by its president and secretary, or other proper officers, and shall pay for the filing of such copy and statement the sum of thirty dollars ($30.00). 2. It shall also file with the Insurance Commissioner a certificate from the Insurance Commissioner of its home State, stating that it is duly organized under the laws of such State and authorized to do the business of fire insurance in such State, and also the amount of its actual and contingent -85- i assets and the amount of its quarterly [guaranty] capital, if any. 3. It shall appoint the Insurance Commissioner of this State its lawful attorney, upon whom all lawful process in any action or legal proceeding against it may be served, on a form prescribed by the Insurance Commissioner, as re- quired of stock fire insurance companies of other States admitted to do business in this State. Sec. 3. Be it further enacted, That whenever any such mutual fire insurance company has complied with the pro- visions of this Act and has satisfied the Insurance Com- missioner that it is safe and solvent, it shall be the duty of the Insurance Commissioner to license such company to do business in this State. Sec. 4. Be it further enacted, That every such mutual fire insurance comany in order to do business in this State must have and maintain in admitted assets over and above liabilities, including its reinsurance reserve, of not less than fifty thousand dollars ($50,000.00) ; and in addition it must have and maintain contingent assets of not less than one hundred and fifty thousand dollars ($150,000.00), or in lieu of the above it must have and maintain a net cash surplus of not less than one hundred thousand dollars ($100,000.00). Contingent assets are defined to mean the amount of the policyholder's liability for any unpaid premiums or assess- ments. Sec. 5. Be it further enacted. That all such companies operating under the provisions of this Act must have and maintain the same reserve for reinsurance of outstanding policies that is required of stock fire insurance companies doing business in this State. Sec. 6. Be it further enacted. That all such companies operating under the provisons of this Act, shall make an- nual reports to the Insurance Commissioner in such form as the Insurance Commissioner shall prescribe and as re- quired of stock fire insurance companies doing business in —86— this State, and shall pay the same fees for filing annual statement and renewal of license as stock fire insurance companies now pay. Sec. 7. Be it further enacted, That the authority of any such company admitted to do business in this State may be revoked by the Insurance Commissioner if it shall violate or neglect to comply with any provision of law obligatory upon it, or whenever, in the opinion of the Insurance Commis- sioner, its condition is unsound, or whenever it fails to main- tain the amount of surplus or assets over and above all liabilities as required by the provisions of this Act. Sec. 8. Be it further enacted. That every such company licensed to do business in this State under the provisions of this Act shall obtain from the Insurance Commissioner authority for every agent writing or soliciting insurance for it in this State, and such certificate shall be renewable as provided by law for agents of stock fire insurance companies, and shall pay the same fees for such certificates of authority as are required of stock companies. Sec. 9. Be it further enacted, That each and every com- pany doing business under the provisions of this Act shall pay the same amount of taxes on its premiums, at the same time and in the same manner as is now required of stock fire insurance [companies] of other States, and shall be sub- ject to the same penalties for neglecting to comply with this section. Sec. 10. Be it further enacted. That the Insurance Com- missioner of this State is authorized to examine any com- pany operating under the provisions of this Act, either in person or by deputy appointed by him, and he shall have as full authority as he now has to examine any foreign insur- ance company authorized to do business in this State. Sec. II. Be it further enacted. That all laws and parts of laws in conflict with the provisions of this Act be, and the same are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 15, 1907. FKATERNAL ACT. CHAPTER 480, ACTS OF 1905. AN ACT to provide for the organization, admission and regulation of fraternal beneficiary associations transacting the business of life insurance and to repeal all laws in conflict with the provis- ions of this Act. Section i. Be it enacted by the General Assembly of the State of Tennessee, That any corporation, society, order or voluntary association without capital stock, organized and carried on solely for the mutual benefit of its members and fheir beneficiaries, and not for profit, and having a lodge system with ritualistic form of work and representa- tive form of government, and which shall make provisions for the payment of death benefits, and which may make provisions for the payment of disability benefits, or both, is hereby declared to be a fraternal beneficiary association. Sec. 2. Be it further enacted, That any association hav- ing a supreme governing or legislative body and subordi- nate lodges or branches, by whatever name known, into which members shall be elected, initiated and admitted in accordance with its constitution, laws, rules, regulations and prescribed ritualistic ceremonies, which subordinate lodges or branches shall be required by such association to hold regular or stated meetings at least once in each month, shall be deemed to be operating under the lodge system. Sec. 3. Be it further enacted, That any association shall be deemed to have a representative form of government when it shall provide in its constitution and laws for a supreme legislative or governing body, composed of repre- sentatives elected either by the members or by delegates elected by the members through a delegate convention sys- tem, together with such other members as may be pre- scribed by its constitution and laws, provided that the elec- tive representatives shall constitute a majority in number, and have not less than a majority of the vote, nor less than the votes ' required to amend its constitution and laws, and provided, further, that the meetings of the supreme or gov- erning body and the election of officers, representatives or delegates shall be held as often as once in four years. The members, officers, representatives or delegates of a fraternal beneficiary society shall not vote by proxy. Sec. 4. Be it further enacted, That, except as herein provided, such association shall be governed by this Act, and shall be exempt from all provisions of the insurance laws of this State, not only in governmental relations with the State, but for every other purpose, and no law hereafter passed shall apply to them, unless they be expressly desig- nated therein. Sec. 5. Be it further enacted, That every association transacting business under this Act shall provide for the payment of death benefits, and may provide for the pay- ment of benefits in case of temporary or permanent physical disability, either as the result of disease, accident or old age, provided the period of life, at which the payments of benefits for disability on account of old age shall commence, shall not be under seventy years ; except as otherwise pro- vided in this Act, no association shall issue or ofifer, or promise to issue, any contract providing for the payment of any other benefit, or any contract which does not pro- vide for the regular payments or assessments during the entire existence of the contract. Sec. 6. Be it further enacted. That the payment of death benefits shall be confined to the wife, husband, family, rela- tives by blood, marriage or legal adoption, affianced hus- band or affianced wife, or to a person or persons dependent on the member, subject to the limitation and control of the association as to the designation of beneficiaries within said classes. Sec. 7. Be it further enacted, That no association shall adrnit to beneficial membership any person less than sixteen (]6) nor more than sixty (60) years of age, nor any per- son who has not been examined by a legally qualified prac- —89— ticing physician, and whose examination has not been ap- proved by the supervising medical authority of the asso- ciation, as provided by the laws of the association ; Provided, that such examination shall not be required of associations paying death benefits not exceeding three hundred ($300) dollars. Sec. 8. Be it further enacted, That every certificate issued by the association shall specify the definite amount of benefit provided by the contract, and shall provide that the certificate, the constitution and laws of the association and the application for membership and medical examina- tion, signed by the applicant, shall constitute the contract between the association and the member, and copies of the same, certified by the secretary of the association or corre- sponding officer, shall be received in evidence of the terms and conditions of the contract ; and any changes, additions or amendments to said charter or articles of association, constitution or laws duly made or enacted subsequent to the issuance of the benefit certificate shall bind the member and his beneficiaries, and shall govern and control the con- tract in all respects the same as though such changes, addi- tions or amendments had been made prior to and were in force at the time of the application for membership ; Pro- vided, hoivcver. That the constitution and laws of any asso- ciation shall never be amended or in any way altered ex- cept by the supreme legislative or governing body in a regular or special meeting called for that purpose, and no amendment to the constitution and laws shall in any way afifect the rights of any beneficiary whose claim accrued by death or otherwise prior to the passage of such amend- ment. Sec. 9. Be it further enacted, That any association may create, maintain, invest, disburse and apply a reserve, emer- gency, surplus or other fund in accordance with its consti- tution and laws for the purposes specified in Section 5 of this Act. Any such association so creating, maintaining, investing, disbursing or applying any such reserve, emer- gency or surplus funds, shall not be held to be organized or — 90— carried on for profit within the intent of the provisions of Section i of this Act. Such funds shall be held, invested and disbursed for the use and benefit of the association, and no member or beneficiary shall have or acquire any in- dividual rights therein, or be entitled to an apportionment or the surrender of any part thereof. The funds from which benefits shall be paid and the funds from which the expenses of the association shall be defrayed, shall bo de- rived from periodical or other payments by the members of the association and accretions of said funds ; Provided, That regular periodical payments shall not be made oftener than once per month; and every such association shall pro- vide in its constitution or laws that if such regular pay- ments 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 constitution and laws, extra assessments or other payments may be levied upon the members to meet such deficiency. Sec. id. Be it further enacted, That any association may invest its funds in and hold real estate for lodge and office purposes, and any real estate acquired by foreclosure or re- ceived in satisfaction of loans, and may sell and convey the same. Any such association may also invest its funds in government, State, provincial, county, or municipal bonds, or bonds of any township, park, or school district haying taxing powers ; Provided, That such bonds shall be a direct obligation on all the taxable property within such municipal- ity or district, and the net indebtedness of such municipality or district shall not exceed five (5) per centum of the value of all taxable property therein, according to the last valua- tion for taxation preceding the issuance of said bonds, or in first mortgages or first mortgage bonds upon improved real estate for not exceeding fifty (50) per centum of the actual cash value thereof at the time of making the loan ; Provided, however, That every foreign association shall be empowered to invest its funds in such securities as may be permitted by the laws of the State, province, or county [country] in which it is organized. —91— Sec. II. Be it further enacted, That every association shall make provision in its constitution and laws for pay- ment by members of such an association, which provision shall state the purpose of the same, and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes, and no part of the reserve, emergency, or surplus funds or the net accretions of either or any of said funds, shall be used for expenses. Sec. 12. Be it further enacted, That the money or other benefits, charity, relief, or aid to be paid, provided, or ren- dered by any association authorized to do business under this Act, shall, neither before nor after being paid, be liable to attachment, garnishment, or other process, and shall not be seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or liability of a certificate holder, or of any beneficiary named in a certificate, or of any person who may have any right thereunder; such associations are hereby declared to be charitable institutions, and the property held and used for lodge purposes and the funds of such associations shall be exempt from taxation under the general tax or revenue laws of the State. Sec. 13. Be it further enacted. That five or more per- sons, citizens of this State, who desire to form a fraternal or beneficiary association, as defined by this Act, may take out a charter in the way and manner provided by law in which shall be stated: First — The proposed corporate name of the association, which shall not so closely resemble the name of any asso- ciation or insurance company already transacting business in this State as to mislead the public or lead to confusion. Second — The purpose for which it is formed, which shall not include more liberal powers than are granted by this Act, provided that any lawful, social, intellectual, educa- tional, moral, or religious advantages may be set forth among the purposes of the association, and the mode in which its corporate powers are to be exercised. —92— Third — The names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control and management of the affairs and funds of the association for the first year, or until the ensuing election, at which all such officers shall be elected by the supreme legislative or governing body. Such articles of association and duly certified copies of the constitution and laws, rules, and regulations, and copies of all proposed forms of benefit certificates, applications therefor, and literature to be issued by such association, and a bond in the sum of five thousand dollars, with sureties approved by the Insurance Commissioner, conditioned upon the return of the advanced payments, as provided in this section, to applicants, if the organization is not completed in one year, or after such further period, not exceeding one year, as may be authorized by the Insurance Commissioner, shall be filed with the Insurance Commissioner, who may require such further information as he deems necessary, and if the purposes of the association conform to the re- quirements of this Act, and all provisions of the law have been complied with, the Insurance Commissioner shall so certify and retain and keep on file and furnish the incor- porators a preliminary certificate authorizing said associa- tion to solicit members as hereinafter provided. Upon receipt of said certificate from the Insurance Com- missioner, said association may solicit members for the pur- pose of completing its organization, and shall collect from each applicant the amount of not less than one death benefit assessment or payment, in accordance with its tables of rates, as provided by its constitution and laws, and shall issue [to] each such applicant a receipt for the amount so collected. But no such association shall incur any liability other than for such advance payments, nor issue any benefit certificate, nor pay, or allow, or offer a' promise to pay or allow to any person any death or disability benefit until actual bona fide applications for death benefit certificates have been secured upon at least five hundred lives for at least one thousand dollars each, and all such applicants for —93— death benefits shall have been regularly examined by legally qualified practicing physicians, and certificates of such ex- aminations have been duly filed and approved by the chief medical examiner of such association, nor until there shall be established ten subordinate lodges or branches into which said five hundred applicants have been initiated, nor until there has been submitted to the Insurance Commis- sioner, under oath of the president and secretary or cor- responding officers of such association, a list of such appli- cants, giving their names, addresses^ date examined, date approved, date initiated, name and number of the subordi- nate branch of which each applicant is a member, amount of benefits to be granted, rate of regular pa}ments or as- sessments, which shall not be lower for death benefits than those required by the National Fraternal Congress table of mortality, with interest at four per cent, per annum; nor until it shall be shown to the Insurance Commissioner by the sworn statement of the treasurer or corresponding officer of such association that at least five hundred applicants have each paid in cash at least one regular monthly pay- ment or assessment as herein provided per one thousand dollars of indemnity to be effected, which payments in the aggregate shall amount to at least twenty-five hundred dol- lars, all of which shall be credited to the mortuary or dis- ability fund on account of such applicants, and no part of which may be used for expenses. Said advanced payments shall, during the period of or- ganization, be held in trust for, and, if the organization is not completed within one year as hereinafter provided, re- turned to said applicants. The Insurance Commissioner may make such examina- tion and require such further information as he may deem advisable, and upon presentation of satisfactory evidence that the association has complied with all the provisions of the law, he shall issue to such association a certificate to that effect. Such certificate shall be prima facte evidence of the existence of such association at the date of such certifi- cate. The Insurance Commissioner shall cause a record of —94— such certificate to be made and a certified cop)' of such record may be given in evidence with like effect as the origi- nal certificate. No preliminary certificate granted under the provisions of this section shall be valid after one year from its date, or after such further period, not exceeding one year, as may be authorized by the Insurance Commissioner upon cause shown, unless five hundred applicants herein required have been secured and the organization has been completed as herein provided, and the articles of association and all pro- ceedings thereunder shall become null and void in one year from the date of said preliminary certificate, or at the expira- tion of said extended period, unless such association shall have completed its organization and commenced business as herein provided. When any domestic association shall have discontinued business for the period of one year, its charter shall become null and void. Sec. 14. Be it further enacted, That any domestic asso- ciation now engaged in transacting business in this State may exercise, after the passage of this Act, all of the rights conferred thereby, and, in addition thereto, may exercise all of the rights, powers, and privileges now exercised or possessed by it under its charter or articles of association not inconsistent with this Act, or it may be reincorporated hereunder. But no such association already organized shall be required to reincorporate hereunder, nor shall it be re- quired to adopt the rates prescribed herein for new asso- ciations, in order to avail itself of the privileges of this Act, and any such association may amend its articles of associa- tion from time to time in the manner provided therein, or in its constitution or laws, and all such amendments shall be filed with the Insurance Commissioner, and shall become operative upon such filing unless a later time be provided in such amendments or in its articles of association, consti- tution, or laws. Sec. 15. Be it further enacted, That no domestic asso- ciation shall transfer its membership or funds to any asso- ciation not authorized by the Insurance Commissioner to —95— transact business in this State ; nor shall an}- such associa- tion transfer its membership or funds to any licensed asso- ciation, unless the said contract to transfer has been ap- proved by a two-thirds vote of the members of the supreme body of the association whose membership is proposed to be transferred, and by a two-thirds vote of the trustees or board having charge of the association proposing to take such membership. Sec. i6. Be it further enacted, That no fraternal benefi- ciary association shall be authorized to do business in this State under the provisions of this Act, whether incorpo- rated under the laws of this or any other State, province or territory, which associates with, or seeks to associate with, as members of the same lodge, order, fraternity, society or association, the white and colored races with the objects and purposes provided in this Act. Sec. 17. Be it further enacted, That foreign associa- tions which are now authorized to transact business in this State in accordance with this Act may continue such busi- ness until the first day of April next succeeding the passage of this Act, and the authority of such associations may thereafter be renewed annually, but in all cases to terminate on the first day of the succeeding April. For each such license or renewal the association shall pay the Insurance Commissioner $10. A duly certified copy of such license shall be prima facie evidence that the licensee is a fraternal beneficiary association within the meaning of this Act. Sec. 18. Be it further enacted, That no foreign asso- ciation, which is not now authorized to transact business in this State, shall transact any -business herein without a license from the Insurance Commissioner. Before receiv- ing such license, it shall file with the Insurance Commis- sioner a duly certified copy of its charter or articles of asso- ciation; a copy of its constitution and laws, certified by its secretary or corresponding officer ; a power of attorney to the Insurance Commissioner as hereinafter provided ; a state- ment under oath of its president and secretary or cor- responding officers in the form required by the Insurance -96- Commissioner, duly verified by an examination made by the supervising insurance ofificial of its home State, of the busi- ness for the preceding- year; a copy of its contract, which must show that benefits are provided for by assessments upon or other payments by persons holding similar con- tracts, and shall furnish the Insurance Commissioner with Siich other information as he may deem necessary to a proper exhibit of its business and plan of working, and if he finds that it is transacting business in accordance with the provisions of this Act, that its assets are invested in accordance with the laws of the State where it is organized, and that it has the membership and qualifications required of domestic associations organized under this Act, he may license such association to do business in this State until the first day of the succeeding April, and such license may be renewed annually, but in all cases to terminate on the first day of the succeeding April. Sec. 19. Be it further enacted, That no license shall be issued to any association not now transacting business in this State which collects from any of its members assess- ments or payments for death benefits lower than those re- quired by the Fraternal Congress Mortality Table of 1900, with interest at four per cent, per annum ; Proznded, That this section shall not apply to fraternal beneficiary associa- tions organized prior to Janaury i, 1885. Sec. 20. Be it further enacted, That when the Insur- ance Commissioner refuses to license any association, or revokes its authority to do business in this State, he shall reduce his ruling, order or decision to writing and file the same in his ofifice, and shall furnish a copy thereof, together with a statement of his reasons, to the officers of the asso- ciation, upon request. Any society afifected by any such ruling, order, or decision shall have the right to appeal to any court of competent jurisdiction in this State by filing with said Commissioner a notice of such appeal, in writing, stating specifically to which court such appeal is proposed to be taken, and in such case said Commissioner shall forth- with, and within ten days thereafter, deliver to such asso- —97— elation a full and certified transeript of all proceedings had before him in such matter, including all applications, to- gether with all orders, rulings, and decisions had thereon, and on such transcript being filed in said court, such court shall be fully possessed of said action, and a full trial on the merits de nova shall be had thereon ; Provided, That such appeal shall be filed in such court within forty days after the rendition of the ruling, order, or decision appealed from ; And [provided, further, that nothing contained in this or the preceding section shall be taken or construed as pre- venting any such association from continuing in good faith all contracts made in this State during the time such asso- ciation was legally authorized to transact business herein. Sec. 21. Be it further enaetcd, That every foreign asso- ciation now transacting business in this State shall, within thirty days after the passage of this Act, and every such association hereafter applying for admission, shall, before being licensed, appoint in writing the Insurance Commis- sioner and his successors in office to be its true and lawful attorney, upon whom all legal process in any action or pro- ceeding against it shall be served, and in such writing shall agree that any lawful process against it, which is served upon said attorney, shall be of the same legal force and validity as if served upon the association, and that the au- thority shall continue in force so long as any liability re- mains outstanding in this State. Copies of such appointment, certified by the Insurance Commissioner, shall be deemed sufficient evidence thereof, and shall be admitted in evidence with the same force and efifect as the original thereof might be admitted. Service may only be had upon such attorney, must be made in duplicate, and shall be deemed sufficient service upon such association ; provided, however, that no such service shall be valid or binding against any such association when it is required thereunder to file its answer, pleading, or defense in less than thirty days after the date of such service. When legal process against any association is served upon said Insurance Commissioner, he shall forward forthwith by 7 -98- registered mail one of the duplicate copies, prepaid and directed to its secretary or corresponding officer. The plaintiff in such process so served shall pay to the Insurance Commissioner for the use of the State at the time of such service a fee of $2, which shall be recovered by him as part of the taxable costs, if he prevails in the suit. Sec. 22. Be it further enacted, That any domestic asso- ciation may provide that the meetings of its legislative or governing body may be held in any State, district, province, or territory wherein such association 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. 23. Be it further enacted, That officers and mem- bers of the supreme, or grand, or any subordinate body of any such incorporate association shall not be individually liable for the payment of any disability or death benefits provided for in the laws and contracts of such association, but the same shall be payable only out of the funds of such association and in the manner provided by its laws. Sec. 24. Be it further enacted. That the constitution and laws of the association may provide that no subordinate body, nor any of its officers or members, shall have the power or authority to waive any of the provisions of the laws and constitution of the association, and the same shall be binding on the association and each and every member thereof. Sec. 25. Be it further enacted, That all grand lodges, by whatever name known, whether incorporated or not, holding charters from a supreme governing body, which are conducting business in this State, upon the passage of this Act, as a fraternal beneficiary association, upon what is known as the separate jurisdiction plan, shall be treated as a federation of grand lodges and not as simple State or- ganizations, and all reports required by the provisions of this Act shall be made and furnished by the officers of each supreme g-overning body and shall embrace and contain the transactions, liabilities, and assets of the entire order. Sec. 26. Be it further enacted. That every association transacting- business under this Act shall file with the In- surance Commissioner a duly certified copy of all amend- ments of, or additions to, its constitution and laws within ninety days after the enactment of the same. Printed copies of the constitution and laws and of additions or amend- ments thereto, certified by the secretary or corresponding officer of the association, shall be prima facie evidence of the legal adoption thereof. Sec. 27. Be it further enacted, That every association transacting business in this State shall annually, on or be- fore the first day of March, file with the Insurance Commis- sioner, in such form as he may require, a statement under oath of its president and secretar}^ or corresponding officer, of its condition and standing on the thirty-first day of De- cember next preceding, and of its transactions for the year ending on that date, and shall, also, 'furnish such other in- formation as the Insurance Commissioner may deem neces- sary 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 associations. But such association [Insur- ance Commissioner] shall neither make, nor permit to be made, from any information so obtained, any valuation of its outstanding benefit certificates unless requested to make such valuation by the association. Sec. 28. Be it further enacted. That the Insurance Com- missioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic association. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to any books, papers, and documents that relate to the business of the association, and may summon and qualify as witnesses, under oath, and ex- amine its officers, agents, and employes, or other persons in relation to the affairs, transactions, and condition of the — lOO — association. The expense of such examination shall be paid by the association examined, but the amount thereof shall not exceed one hundred dollars. Whenever, after examination, the Insurance Commis- sioner is satisfied that any domestic association has failed to comply with any provisions of this law or is exceeding its powers ; or is not carrying out its contracts in good faith ; or is transacting business fraudulently ; or is in such condition as to render further proceedings hazardous to the public or its certificate holders ; or whenever any do- mestic association, after the existence of one year or more, shall have a membership of less than three hundred, or votes to discontinue business, the Insurance Commissioner may present the facts relative thereto to the State Attorney- General, who shall, if he deem the circumstances warrant, commence an action in quo warranto in a court of compe- tent jurisdiction, and such court shall thereupon notify the officers of such association of a hearing, and, unless it shall then appear that some. special and good reason exists why such association should not be closed, said association shall be enjoined from carrying on any further business, and some person shall be appointed receiver of such association, and shall proceed at once to take possession of the books, papers, moneys, and other assets of the association, and shall forthwith, under the direction of the court, proceed to close the affairs of the association, and to distribute its funds to those entitled thereto. No such proceeding shall be com- menced b}'- the State Attorney-General against any such association until after notice has been duly served on the chief executive officers of the assocfation 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. 29. Be it further enacted, That no action or pro- ceeding to discontinue or enjoin, in whole or in part, the business or methods of any such domestic association, or to appoint a receiver therefor, or to dissolve the same, or in any manner affecting its corporate rights, or to oust an}' ■lOI- foreign association, or enjoin it from transacting;- business in this State, shall be entertained by any court, except on the suit of the Attorney-General of this State. Sec. 30. Be it further enacted, That the Insurance Com- missioner, or any person whom he may appoint, may ex- amine any foreign association transacting or applying for admission to transact business in this State. The Insurance Commissioner 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 docu- ments that relate to the business of the association, and may summon and qualify as witnesses under oath and ex- amine its officers, agents, employes, and other persons in relation to the affairs, transactions, and conditions of the association. He may, in his discretion, accept in lieu of such examination [the examination] of the insurance de- partment of the State, territory, district, province, or coun- try where such association is organized. All examinations made under the provisions of this section shall be made at the expense of the association examined, but the expenses of any examination shall not exceed two hundred dollars. If any such association or its officers refuse to submit to such examination, or to comply with the provisions of this section relating thereto, the authority of such association to transact business in this State shall be revoked until satis- factory evidence is furnished the Insurance Commissioner relating to the condition and affairs of the association, and during such revocation the association shall not transact any business in this State. Sec. 31. Be it further enacted, That when the Insur- ance Commissioner, on investigation, is satisfied that any foreign association transacting business under this Act has exceeded its powers, or has failed to comply with the pro- visions of the law, or is conducting business fraudulently, or is not carrying out its contracts in good faith, or is in such condition as to render further proceedings hazardous to the public or its certificate holders, he may revoke the certificate of authoritv granted to it, and shall cause notifi- -I02- cation thereof to be published in one or more newspapers of general circulation, and no new business shall thereafter be done by it or its agents in this State, while such default or disability continues, nor until its authority to do busi- ness is restored by the Insurance Commissioner; provided, that nothing in this Act shall prevent such association from applying to a court of competent jurisdiction, by mandamus or otherwise, to compel said Insurance Commissioner to issue such certificate, if such court, in its discretion, should determine that said association was entitled, under the law, to have said certificate issued to it. Sec. 2i~- Be it further enacted, That nothing contained in this act shall be construed to affect or apply to grand or subordinate lodges of Masons, Odd Fellows, or Knights of Pythias (exclusive of the insurance branch of the Supreme Lodge Knights of Pythias), or to similar orders which do not issue insurance certificates, nor to local lodges of an association now doing business in this State, that provide death benefits not exceeding three hundred dollars to any one person, or disability benefits not exceeding three hun- dred dollars in any one year to any one person, or both, nor to domestic associations which limit their membership to the employes of a particular city or town, designated firm, business house, or corporation ; the Insurance Com- missioner may require from any association such informa- tion as will enable him to determine whether such associa- tion is exempt from the provisions of this Act. No asso- ciation which is exempt by the provisions of this section from the requirements of this Act shall give or allow, or promise to give or allow, to any person an}' compensation for procuring new members. Sec. 33. Be it further enacted, That associations com- ing within the definition of fraternal beneficiary associations as defined by this Act, and now transacting business as fra- ternal beneficiary associations, organized prior to Anno Domini 1900, and authorized to do business in this State prior to and at the time of the passage of this Act, and which shall have established, or may hereafter establish, — 103— rates deemed by it adequate to perpetuate its existence or meet its obligations, and in so doing- has increased, or shall increase, the payments required to be made by any mem- ber, so that such member shall be unable for any reason to make such payment and continue his membership ; in such case or cases, any such association may make such allow- ance to such member or members, by way of extended in- surance or reduced benefit payable to a beneficiary desig- nated in accordance with the provisions of Section 6 of this Act. as it may determine to be equitable and provided for by the laws and regulations, and may provide for paying the cost of carrying such extended insurance out of any reserve, emergency, surplus, or other fund it has or shall accumulate or create. The provisions of this section shall not be construed as applicable to any association which does not make pro- vision for such extended insurance in its laws or regula- tions, nor shall the members of any association which does not, by its laws or regulations, make provisions for such extended insurance, have any right to or interest in any fund which any such association may have now or may hereafter create, either as a reserve, emergency, surplus, or other fund. Sfx. 34. Be it further enaetcd. That such associations shall not employ paid agents in soliciting or procuring mem- bers, except in the organization or building up of subordi- nate bodies, or granting members inducements to procure new members. Sec. 35. Be it further enacted, That each and every cer- tificate issued by any association operating under the pro- visions of this Act shall be incontestible on account of erroneous or innocent statements made in the application as to age, provided the member w^as within the age limited for membership at the time of the application ; and provided, further, that in the settlement of any loss, where there was an error as to age, such settlement shall be made on the basis of the correct age. But no association operat- ing under the provisions of this Act shall contest the age — 104 — of any member, after his death, unless the proof offered by the beneficiary shows the age of the deceased member to be different from that given in his appHcation; then the correct age may be ascertained, and settlement made as herein provided. Sec. 36. Be it further enacted, That any person, officer, member, or examining physician, who shall knowingly or wilfully make any false or fraudulent statement or repre- sentation in or with reference to any application for mem- bership, or for the purpose of obtaining money from or benefit in any association transacting 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 im- prisonment 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 state- ment of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any such association 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 au- thorized by this Act, shall be guilty of perjury, and shall be proceeded against and punished as provided by the statutes of this State in relation to the crime of perjury. Any person who shall solicit membership for, or in any manner assist in procuring membership in, any association 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 association 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 association, or any officer, agent, or employe thereof, neglecting or refusing to comply with, or violating any of the provisions of this Act, the penalty for which neglect, —105— refusal, or violation is not specified in this section, shall be fined not exceeding two hundred dollars upon conviction thereof. Sec. 37. Be it further enacted, That the word "associa- tion," as used in this Act, shall be taken and construed as meaning a fraternal beneficiary corporation, society, order, or voluntary association as defined in this Act. The words "domestic association" shall be taken and construed as meaning an association organized or incorporated under the laws of this State. The words "foreign association" shall be taken and construed as meaning an association or- ganized or incorporated under the laws of another State, territory, district, province, or country. The word "State," as used in this Act, shall be taken and construed as meaning "State," "Territory," "District." "County" [country], or "Province." All provisions of each section of this Act, ex- cept as otherwise provided, shall be taken and construed as applying to both domestic and foreign associations. In the event of a vacancy in the office of the Insurance Commissioner, or in the absence or disability of that officer, the Deputy Insurance Commissioner shall perform all the duties required of the Insurance Commissioner by this Act. Sec. 38. Be it further enacted, That nothing contained in this Act shall be construed to require any society to make or cause to be made any valuation of its benefit certificates for any purpose whatever, nor shall the Insurance Depart- ment have the right to require or demand that such valua- tion be made or embraced in the report of any fraternal beneficiary society to the Insurance Department. Sec. 39. Be it further enacted, That Chapter 113, Acts of 1901, passed March 22, 1901, and approved April 13, 1901, and all other laws and parts of laws in conflict with the provisions of this Act, be, and the same are hereby, re- pealed. Sec. 40. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 14, 1905. Approved April 17, 1905. — io6 — FRATERNAL CONGRESS MORTALITY TABLE OF 1900. (Referred to in Section 19.) PROBABIL- NUMBER NUMBER ITY OF AGE LIVING DYING DYING 20 100,000 500 .005000 21 99,500 501 .005035 22 98,999 502 .005071 23 98,497 503 .005107 24 97,994 505 .005153 25 97,489 . 507 .005201 26 96,982 510 .005259 27 96,472 513 .005318 28 95,959 517 .005388 29 95,442 522 .005469 30 94,920 527 .005552 31 94,393 533 .005647 32 93,860 540 •005753 33 93.320 548 .005872 34 9^,77^ 557 .006004 35 92.215 567 .006149 36 91,648 578 .006307 37 91,070 591 .006490 38 90,479 606 .006698 39 89,873 622 .006921 40 89,251 640 .007171 41 88.611 660 .007448 42 87,951 682 .007766 43 87,268 708 .008113 44 86,560 734 .008480 45 85.826 761 .008867 46 85,065 790 .009287 47 84.275 822 .009754 48 83453 857 .0102693 49 82,596 894 .0108238 50 81,702 935 .0114440 51 80.767 980 .0121337 52 79,786 1029 .0128970 ■I07 — NUMBER NUMBER PROBABIL- ITY OF AGE LIVING DYING DYING 53 78,757 1083 .0137511 54 77,674 I 140 .0146767 55 76,534 1202 •0157054 56 7S,2>Z2 1270 .0168587 57 74,062 1342 .0181200 58 72,720 I418 .0194994 59 71,302 I5OI .0210513 60 69,801 1588 •0227504 61 68,213 I68I .0246434 62 66,532 1778 .0267240 63 64,754 1880 .0290330 64 62,874 1985 •O3I57II 65 60,889 2094 •0343904 66 58.795 2206 .0375206 67 56,589 2318 .0409620 68 54,271 2430 •0447753 69 51.841 2539 .0489767 70 49,302 2645 .0536489 71 46,657 2744 .0588122 72 43,913 2832 .0644912 73 41,081 2909 .0708113 74 38,172 2969 •0777795 75 35,203 3009 •0854757 76 32,194 3026 •0939927 77 29,168 3016 .1034010 78 26,152 2977 •I 138345 79 23,175 2905 •1253506 80 20,270 2799 •I385163 81 17.471 2659 •1521951 82 14,812 2485 .1677694 83 12,327 2280 .1849599 84 10,047 2050 .1855707 85 7,997 1800 .2250844 86 6,197 1539 .2483460 87 4,658 1277 .2741520 88 3.381 1023 .3025732 89 2,358 788 ,3341815 — io8— PROBABIL- NUMBER NUMBER ITY OF AGE LIVING DYING DYING 90 1,570 579 .3687898 91 991 404 .4076690 92 587 264 •4497445 93 323 161 .4984520 94 162 89 •5493827 95 73 44 .6027397 96 29 19 •6551724 97 10 7 .7000000 98 3 3 1 .0000000 PREMIUMS OR RATES Per $1,000 of insurance computed in accordance with the foregoing table at 4 per cent, interest : POST-MORTEM CONTINUOUS LEVEL ADVANCE NAT- NATURAL ANNUAL PRE- AGE URAL PREMIUMS PREMIUMS MIUMS 21 $4 84 $5 04 $ [O 62 22 4 88 5 07 ] 92 23 4 91 5 II ] [I 24 24 4 96 5 15 1 I 57 25 5 00 5 20 ] I 91 26 5 06 5 26 ] 2 28 27 5 II 5 32 ] [2 67 28 5 18 5 39 [3 07 29 5 26 5 47 ] [3 50 30 5 34 5 55 1 [3 96 31 5 43 5 65 1 f4 43 32 5 53 5 75 1 [4 93 33 5 65 5 87 ] [5 46 34 5 77 6 00 ] [6 02 35 5 91 6 15 ^ [6 62 36 6 06 6 31 1 [7 24 37 6 24 6 49 [7 90 38 6 44 6 70 ^8 59 39 6 65 6 92 ] [9 33 — 109 — POST-MORTEM CONTINUOUS LEVEL ADVANCB NAT- NATURAL ANNUAL PRE- AGB URAL PREMIUMS PREMIUMS MIUMS 40 6 89 7 17 20 II 41 7 16 7 45 20 93 42 7 46 7 75 21 80 43 7 80 8 II 22 72 44 8 15 8 48 23 69 45 853 8 87 24 72 46 8 93 9 29 25 81 47 9 38 9 75 26 97 48 9 87 10 27 28 20 49 10 41 10 82 29 51 50 II 00 II 44 30 90 51 II 67 12 13 32 39 52 12 40 12 90 33 97 53 13 22 13 75 35 65 54 14 II 14 68 37 45 55 15 10 15 71 39 36 56 16 21 16 86 41 41 57 17 42 18 12 43 60 58 18 75 19 50 45 94 59 20 24 21 05 48 44 60 21 88 22 75 51 13 -II OFFICIAL SURETY BONDS. CHAPTER 175, ACTS OF 1895. AN ACT relative to recognizances, stipulations, bonds, and under- takings, and to allow certain corporations to be accepted as surety thereon. Section i. Be it enacted by the General Assembly of the State of Tennessee, That whenever any recognizance, stipulation, bond or undertaking, conditioned for the faith- ful performance of any duty, or for doing or refraining from doing anything in such recognizance, stipulation, bond or undertaking specified, is by the laws of this State re- quired or permitted to be given with one surety or with two or more sureties, for the execution of the same or the guar- anteeing of the performance of the condition thereof shall be sufficient when executed or guaranteed solely by a cor- poration incorporated under the laws of the United States, of this State, or any other State, having power to guarantee the fidelity of persons holding positions of public or private trust, and to execute and guarantee bonds and undertakings in judicial proceedings ; Provided, That such recognizance, stipulation, bond or undertaking to be approved by the head of department, court, judge, officer, board or body execu- tive, legislative, or judicial, required to approve or accept the same. But no officer or person having the approval of any bond shall exact that it shall be furnished by a guaran- tee company or by any particular guarantee company. Sec. 2. Be it further enacted, That no such company, organized under the laws of any sovereignty other than that of this State, shall do business under the provisions of this Act within any county of this State until it shall, by a written power of attorney, appoint the Clerk of any County Court of the county within which it intends to do business as its agent, upon whom may be served all lawful process against such company, and who shall be authorized — Ill — to enter an appearance in its behalf. Such power of attor- ney, duly certified and authenticated, shall be filed with the Clerk of the County Court of such county, which power of attorney, or a certified copy thereof, shall be le^al evi- dence in all controversies arising under this Act. The ofiicer executing such process upon such Clerk shall immediately transmit [a copy] thereof by mail to the company, and state such fact on his return ; Prov-idcd, That the officer shall re- ceive as compensation for the transmission of a copy of such process the sum of one ($i) dollar, to be paid him by the plaintiff in the suit, before such copy shall be trans- mitted, and said sum shall be taxed in the bill of costs. A judgment, decree, or order of court entered or made after service of process as aforesaid, shall be as valid and bind- ing on such company as if secured with process in said county. Sec. 3. Be it further cnaetcd. That every company, before transacting any business under this Act, shall deposit with the State Treasurer of this State a copy of its charter, or articles of incorporation, and a statement signed and sworn to by its president and secretary showing its assets and liabilities. If the said State Treasurer shall be satisfied that such company has authority under its charter to do the business provided for in this Act, and that it has a paid-up capital of not less than $100,000 in cash, or its equivalent, and is able to keep and perform its contracts, he shall grant authority, in writing, to such company to do business under this Act ; and before any company shall do any business under the provisions of this Act, within any county of this State, it shall deposit with the County Court Clerk of such county a copy of said grant of authority, properly certified by the State Treasurer, which shall be filed in said Clerk's office. Sec. 4. Be it further enacted, That every such comj^any shall, in the months of January, April, July and October of each year, file with said State Treasurer a statement, signed and sworn to by the President and Secretary, show- — 112 — ing its assets and liabilities, as is required by Section 3 of this Act ; and the said State Treasurer shall have the power, and it shall be his duty, to revoke the authority of any such company to transact any new business under this Act when- ever, in his judgment, such company is not solvent, or is conducting its business in violation of this Act. He may institute inquiry at any time into the solvency of said company, and whenever he shall become satisfied that the authority of any such company to do business under this Act should be revoked, and he shall have, in fact, revoked said authority, he shall forthwith transmit, by mail, to the County Court Clerk of each county in this State, a properly certified copy of his act of revocation, and shall, moreover, cause to be published in a daily newspaper, issued in the cities of Knoxville, Chattanooga, Nashville and Memphis, a copy of said order of revocation. Sec. 5. Be it further enacted, That any surety company doing business under the provisions of this Act may be sued in respect thereof in any court in this State which has now or may hereafter have jurisdiction of actions or suits upon such recognizance, stipulation, bond, or under- taking in the county in which such recognizance, stipula- tion, bond or undertaking was made or guaranteed, or in the county in which the principal office of such company is located ; and for the purposes of this Act such recognizance, stipulation, bond or undertaking shall be treated as made or guaranteed in the county in which the office is located, to which it is returnable, or in which it is filed, or in the county in which the principal in such recognizance, stipula- tion, bond or undertaking, resided when it was made or guaranteed. Sec. 6. Be it further enacted, That if any such com- pany shall neglect or refuse to pay any final judgment or decree rendered against it upon any such recognizance, stipulation, bond or undertaking made or guaranteed by it under the provisions of this Act, from which no appeal, writ of error, or supersedeas has been taken, for thirty —113— clays after the rendition of such judgment or decree, it shall forfeit all right to do business under this Act. Sec. 7. Be it further enacted. That any company which shall execute or guarantee any recognizance, stipulation, bond or undertaking under the provisions of this Act shall be estopped in any proceeding to enforce the liability which it shall have assumed to incur, to deny its corporate power to execute or guarantee such instrument or assume such liability. Sec. 8. Be it further enaeted, That any company doing business under the provisions of this Act which shall fail to comply with any of its provisions shall forfeit to the State of Tennessee for every such failure not less than $500 nor more than $5,000, to be recovered by suit in the name of the State of Tennessee, in the same courts in which suit may be brought against such company under the provisions of this Act, and such failure shall not afifect the validity of any contract entered by such company. Sec. 9. Be it further enaeted, That before any surety company shall be authorized to execute the bonds referred to in this Act, it shall deposit in the office of the State Treasurer of this State one hundred thousand ($100,000) dollars in lawful money of the United States, or an equal amount in the bonds of the United States or of the State of Tennessee, said bonds to be estimated at their actual value, and said deposit shall be continually kept at said amount during the time the corporation or company remains bound upon any bond or obligation as contemplated in this Act. The said deposit shall be held by the Treasurer as se- curity for any liability incurred by the company making said deposit, by reason of the breach of any bond or obligation referred to in this Act ; Provided, hozvever. That any surety company incorporated under the laws of any other State or government, and having a general deposit in some State of the United States of a sum not less than $100,000, con- sisting of lawful money of the United States, or an equal amount in the bonds of the United States, or of any State, —114— the value of which shall be at or above par, as security for any liability incurred under this Act, shall be required to deposit only the sum of $25,000 in the State, consisting- of lawful money of the United States, or an equal amount in the bonds of the United States, or of the State of Tennessee ; Provided, further, That said surety company, organized under the laws of any other State or government, and hav- ing such general deposit, shall file with the Treasurer of this State a certificate from the officer of the State with whom said general deposit has been made, showing that the said company has deposited with the said officer $100,000 in lawful money of the United States, or an equal amount in bonds of the United States or of any State, for the bene- fit of all liabilities of said company in any or all States. Sec. 10. Be it further enacted. That this Act take effect from and after its passage, the public welfare requiring it. Passed May 13, 1895. Approved May 14, 1895. -US- OFFICIAL SURETY BONDS. (Amendatory.) CHAPTER 360, ACTS OF 1905. AN ACT to amend "An Act relative to recognizances, stipulations, bonds, and undertakings, and to allow certain corporations to be accepted as surety thereon," being Chapter 175 of the Acts of 1895, approved May 14, 1895. Section i. Be it enacted by the- General Assembly of the State of Tennessee, That Section 9 of the said Act of 1895, Chapter 175, be amended by striking out the second paragraph of said section and substituting the following: "The said deposit shall be held by the Treasurer as se- curity for any liability incurred by the company making said deposit by reason of the breach of any bond or obligation referred to in this Act; Provided, however, That said surety company organized under the laws of any other State or government, and having a general deposit in some State of the United States of a sum not less than $100,000, consist- ing of lawful money of the United States, or of an equal amount in the bonds of the United States, or of any State, the value of which shall be at or above par, as security for any liability incurred under this Act, shall be required to keep on deposit only the sum of $25,000 in the State, con- sisting of lawful money of the United States, or an equal amount in the bonds of the United States, or of the State of Tennessee; Provided, further, That no deposit in this State shall be required of any company organized under the laws of any other State or government, which has an actual paid- up cash capital of $300,000, of which at least $200,000 shall be invested in the bonds of the United States, or other good securities, to be itemized and certified as such by the Insur- ance Commissioner of the State in which said sum is de- posited, reckoning same at their current market value, and to be approved by the Insurance Commissioner of Tennes- — ii6 — see, which $200,000 shall be deposited with and held by some Insurance Commissioner or other proper officer of some State of the United States, as security for the protec- tion of all policy holders and creditors in the United States ; Provided, further, That said surety company organized under the laws of any other State government, and hav- ing such general deposit, shall file with the Treasurer of this State a certificate from the officer of the State with whom said general deposit has been made, showing that the said company has deposited with the said officer the sums required in the lawful money of the United States, or an equal amount in the securities above provided for, for the benefit of all liabilities of said company in any or all States." Sec. 2. Be it further enaeted, That this Act take effect from and after its passage, the public welfare requiring it. Passed March 28, 1905. Approved April 12, 1905. — 117— PARTIAL VALUED POLICY LAW. CHAPTER 107, ACTS OF 1893. AN ACT to compel insurance companies to pay the full amount of loss sustained upon property covered by policies of insur- ance up to the amount expressed in the policies, notwithstand- ing any stipulation in such policies to the contrary. Section i. Be it enacted by the General Assembly of the State of Tennessee, That insurance companies shall pay their poHcy holders the full amount of loss sustained upon property insured by them ; Provided, Said amount of loss does not exceed the amount of insurance expressed in the policy, and that all stipulations in such policies to the con- trary are, and shall be, null and void ; Provided, hozvever, That insurance policies issued upon cotton in bales shall not be subject to the provisions of this Act. Sec. 2. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring;- it. Passed March 23, 1893. Approved April 10, 1893. — IIS — OPTIONAL USE OF CO-INSURANCE AND THREE-QUARTERS VALUE CLAUSE. (Amendatory.) CHAPTER 539, ACTS OF 1903. AN ACT to amend An Act to compel insurance companies to pay the full amount of the loss sustained upon property covered by policies of insurance up to the amount expressed in the policies, notwithstanding any stipulation in such policies to the contrary. And being Chapter 107 of the Acts of the General Assembly for the year 1893, by providing for the validation of the three-fourths value clause and the co-insurance clause under certain condi- tions. Section i. Be it enacted by the General Assembly of the State of Tennessee, That an Act entitled "An Act to compel insurance companies to pay the full amount of the loss sustained upon property covered by policies of insur- ance up to the amount expressed in the policies, notwith- standing any stipulation in such policies to the contrary," being Chapter 107 of the Acts of the General Assembly of the State of Tennessee for the year 1893, be, and the same is hereby, amended by adding at the end of the first Sec- tion of said Act the following : "Provided, however. That a three-quarter value limit clause may be applied to a policy of insurance if it is left optional with the insured, whether he will accept said clause or not, and said option is, in fact, given him, and when accepted by the policy holder it shall be a valid contract between the company and the policy holder; Provided, how- ever. That said clause shall be absolutely void, even if ac- cepted by the policy holder, except under the following conditions, to-wit : "i. Said three-fourths clause shall be printed in bold type across the face of the policy or on a separate form as — 119 — a special agreement — this separate form to be also printed in clear type of reasonable size — and it shall provide therein, in event of loss, if it appears that there is an excess in the face of the policy over and above seventy-five per cent. (75 per cent.) of the cash value of the property insured, that the company shall return to the assured all premiums that have been paid on such excess, and it shall also be a condi- tion precedent to the validity of said three-fourths value limit clause that the insurance company has given to the insured accepting such a clause upon any policy not less than twenty-five per cent. (25 per cent.) reduction from the present basis rate, as shozmi by the rate sheets in the office of the Insurance Commissioner, and, if the basis rate should be lowered, then said reduction of not less than twenty-five per cent, shall be given from such lowered basis rate, but if in any case the basis rate be raised from the present existing rate, said three-fourths clause, even if applied with the consent of the assured, and said reduction given, it shall be absolutely null and void as to said policy ; "Provided, also, A co-insurance clause in a policy, or attached in the form of a rider, shall be valid if printed in clean, bold type, either across the face of the policy or on ' said rider, and accepted by the insured after the option to accept same or reject same has been given him; Provided, That if said co-insurance clause is accepted by the policy holder, it shall be a condition precedent to its validity that the assured has been allowed a reduction from the present basis rate, as shown by rate sheet now on file in the office of the Insurance Commissioner of not less than five per cent, on a seventy per cent, co-insurance clause ; not less than ten per cent, on an eighty per cent, co-insurance clause ; and not less than fifteen per cent, on a ninety per cent, co- insurance clause ; and if the present basis rate is lowered, the insured shall receive the benefit of the same reduction upon the lowered rate, but if the basis rate is raised in any case, said co-insurance clause shall be void as to said poHc}-, although the insured has received the benefit of the reduced rate ; — 120 Provided, further, That said co-insurance clause shall apply only to cities and towns in this State having a popu- lation of more than 15,000 by the census of 1900 or any subsequent Federal census. "Sec. 2. Be it further enacted. That this Act take effect from and after its passage, the public welfare requiring it." Passed April 14, 1903. Approved April 15, 1903. -121- ANTI-COMPACT LAW. CHAPTER 479, ACTS OF 1905. AN ACT to prevent any agreement between fire insurance 'com- panies doing business in Tennessee to maintain rates to be charged for insurance on property located in this State, and to prescribe penalties for violations of this Act. Section i. Be it enacted by the General Assembly of the State of Tennessee, That it shall be unlawful for any two or more fire insurance companies doin^ business in Tennessee, or any two or more agents or representatives of fire insurance companies doing business in Tennessee, to enter into any contract, compact, or agreement looking to the maintaining of any specific rates to be charged for insurance on any property located in this State; Provided, That this Act shall not be so construed as to prohibit the formation of associations of fire insurance agents in any city, town or county in this State for the purpose of minim- izing expenses by the employment of joint inspectors or ex- perts for preparing rating schedules and designating im- provements, with a view to the reduction of the cost of in- surance; Provided, That all rates which may be suggested through such associations shall be advisor>^ only, and not binding on any member thereof; Provided, further. That if any board of agents or agent or company attempt to im- pose any fine upon any agent or company who shall refuse to write at any rate other than that fixed by such board, shall be guilty of a misdemeanor and subject to a fine of not less than fifty dollars. Sec. 2. Be it further enacted, That it shall be unlawful for any one or more agents, or association of fire insurance agents in any city, town, or county of this State, to impose any penalty upon any agent because of any rate which may be charged for insurance by said agent or any member of said association. — 122 — Sec. 3. Be it further enacted, That any fire insurance company doing business in Tennessee found guilty of a vio- lation of Section i of this Act shall be subject to a penalty in a sum not less than one hundred ($100) dollars nor ex- ceeding one thousand ($1,000) dollars, to be recovered by action in the name of the State upon relation of the Insur- ance Commissioner, to be instituted by the Attorney-General of the State, or any District Attorney-General under his direction, in any Circuit or Chancery Court, and the amount so recovered shall be paid into the State Treasury, and in addition the company so offending shall be subject to the revocation of its license to do business in this State, in the discretion of the Insurance Commissioner. Sec. 4. Be it further enaeted, That any agenf^or officer of any association of agents violating the provisions of Sec- tion 2 of this Act shall be guilty of a misdemeanor and shall, upon conviction, be fined not less than $100 nor more than $500. Sec. 5. Be it further enaeted. That it shall be the duty of the Insurance Commissioner, upon complaint of any citi- zen of this State, or upon his own initiative, to make in- vestigation as to violations of this Act, and if, upon investi- gation, he finds that there is sufficient justification for such proceedings, he shall lay the facts before the Attorney- General of this State, and shall authorize the District Attorney-General to enter his name as prosecutor in any criminal proceedings to be instituted for a violation of this Act ; Provided, That this shall not be so construed as to prevent any citizen from acting as prosecutor in such cases. Sec. 6. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 14, 1905. Approved April 17, 1905. -123— RESIDENT AGENTS' LAW. CHAPTER 430, ACTS OF 1899. AN ACT to prevent fire, fire marine, or marine insurance compa- nies or associations not incorporated under the laws of this State from placing, writing, or causing to be written or placed, con- tracts or policies of insurance covering property located in this State or otherwise than through resident local agents. Section i. Be it enacted by the General Asscmhly of the State of Tennessee, That no fire, fire marine, or marine insurance company or association not incorporated tmder the laws of this State, authorized to transact business herein, shall make, write, place, or cause to be made, written or placed, any policy, duplicate policy, or contract of insurance of any kind or character, or any general or floating policy, upon property situated or located in this State, except after the said risk has been approved, in writing, by a local agent who is a resident in this State, regularly commissioned and licensed to transact insurance business herein, who shall countersign all policies so issued or contracts of insurance, and receive the full commission thereon, when the premium is paid, to the end that the State may receive the taxes re- quired by law to be paid on the premiums collected for in- surance on all property located in this State; Provided, how- ever. That nothing in this Act shall be construed to pre- vent any such company or association authorized to trans- act business in this State from contracting for insurance at its principal or department ofiices covering property in this State ; Provided, That policies are issued and counter- signed by and entered in the usual form on records of the local agents, who are residents of this State, and licensed to transact the business of insurance in this State, and re- ceive the full commission thereon when paid. No provision of this section is intended to or shall apply to direct insur- ance covering the rolling stock of railroad corporations, or property received for shipment or delivery in transit while 124 — in the possession and custody of railroad corporations, or other common carriers of freight, merchandise or passen- gers. Sec. 2. Be it further enacted, That renewal of license to transact the business of fire, fire marine, or marine in- surance in this State for companies or associations not in- corporated under the laws of this State, shall only be issued after the secretary or manager of such company or asso- ciation so desiring to renew license to do business in this State shall have first made oath that no policy or contract of insurance covering property located in the State of Ten- nessee has been issued, written or placed during the twelve months preceding, except by resident local agents of such company or association in Tennessee, duly commissioned, and until and after such company or association shall have complied with all other laws of this State in respect to the admission of companies of other States and foreign coun- tries. Sec. 3. Be it further enacted, That whenever the In- surance Commissioner shall have received information that any fire, fire marine, or marine insurance company or asso- ciation, not incorporated under the laws of this State, has violated any of the provisions of Section i of this Act, he is authorized, at the expense of such company or associa- tion, to examine by himself or his accredited representative, at the principal office or offices of such company or associa- tion, located in the United States of America or in any for- eign country, and also at such offices or agencies of such company or association as he may deem proper, all books, records, and papers of such company or association, and he may examine under oath the officers, managers, and agents of such company or association as to such violation or viola- tions. The refusal of any such company or association to submit to such examination, or to exhibit its books and records for inspection, shall constitute a forfeiture of its license as hereinafter provided for. Sec. 4. Be it further enacted, That if any fire, fire marine, or marine insurance company or association shall — 125— violate or fail to observe and comply with any or all of the provisions of this Act applicable thereto, it immediately shall become the duty of the Insurance Commissioner to investigate same, and if the Insurance Commissioner is him- self satisfied as to the guilt of the insurance company or association, it shall be the duty of the Insurance Commis- sioner, in the manner now provided by law, to revoke the license of such company or association to transact business in this State, and such revocation shall continue for at least one year from the date thereof, nor shall any insurance company or association whose authority to transact busi- ness in this State shall have been so revoked, be again au- thorized or permitted to transact business herein until it shall have filed in the ofifice of the Insurance Commissioner a certificate, signed by its president or other chief officer, to the efifect that terms and obligations of the provisions of this Act are accepted by it as a part of the condition of its right and authority to transact business in this State. Sec. 5. Be it further enacted. That under this Act is also included citizens of this State procuring and holding insur- ance contracts or policies in fire, fire marine, or marine in- surance companies or associations upon property situated or located in this State, in companies not authorized to transact business in this State ; that the procuring or accept- ing policies or contracts of such insurance in such unauthor- ized companies or associations makes liable every citizen holding such contracts or policies for taxes, the same as if each company or association was duly avithorized to trans- act business in the State. Sec. 6. Be it further enacted. That all laws and parts of laws in conflict with this Act be, and the same are hereby, repealed. Sec. 7. Be it further enacted. That this Act take effect from and after its passage, the public welfare requiring it. Passed April 19, 1899. Approved April 24, 1899. 126 PENALTY IMPOSED ON INSURANCE COMPANIES FOR DELAY IN PAYING LOSSES. CHAPTER 141, ACTS OF 1901. AN ACT to impose additional liability upon insurance companies and other corporations, firms or persons, for failure to promptly pay insurance losses and a liability upon policy holders where suits are not brought in good faith. Section i. Be it enacted by the General Assembly of the State of Tennessee, That the several insurance com- panies of this State, and foreign insurance companies and other corporations, firms, or persons doing an insurance business in this State, in all cases where a loss occurs and they refuse to pay the same within sixty days after a de- mand shall have been made by the holder of said policy on which said loss occurred, shall be liable to pay the holder of said policy, in addition to the loss and interest thereon, a sum not exceeding twenty-five per cent, on the liability for said loss ; Provided, That it shall be made to appear to the court or jury trying the case that the refusal to pay said loss was not in good faith, and that such failure to pay in- flicted additional expense, loss, or injury upon the holder of said policy; And, provided, further. That such additional liability, within the limit prescribed, shall, in the discretion of the court or jury trying the case, be measured by the additional expense, loss, and injury thus entailed. Sec. 2. Be it further enacted, That in the event it shall be made to appear to the court or jury trying the cause that the action of said policy holder in bringing said suit was not in good faith, and recovery under said policy shall not be had, said policy holder shall be liable to such insur- ance companies, corporations, firms or persons in a sum not exceeding twenty-five per cent, of the amount of the loss claimed under said policy; Provided, That such liability, 127 — \yithin the limit prescribed, shall, in the discretion of the court or jury trying the cause, be measured by the addi- tional expense, loss, or injury inflicted upon said insurance companies, corporations, firms or persons by reason of said suit. Sec. 3. Be it further enacted, That all x*\cts and parts of Acts in conflict with this Act be, and the same are hereby repealed, and that this Act take effect from and after its passage, the public welfare requiring it. Passed April 16, 1901. Approved April 18, 1901. — 128— INDORSEMENTS ON LIFE INSUR- ANCE POLICIES. CHAPTER 392, ACTS OF 1905. AN ACT to require all life insurance companies, other than frater- nal beneficiary associations, to print or stamp in conspicuous type on each policy of insurance, sold to citizens of this State, words indicating the kind or character of such policy, the same to be .approved by the Insurance Commissioner. Section i. Be it enacted by the General Assembly of the State of Tennessee, That all life insurance companies, other than fraternal beneficiary associations, authorized to do the business of life insurance in the State of Tennessee be, and the same are hereby, required to print or stamp in conspicuous type, on the face or first page of each and every policy sold to citizens of this State, words indicating cor- rectly and fully the kind and character of the policy. The same words shall also be printed or stamped on the back or title page of ever}' such policy, so that they may be easily seen and read when the policy is folded. Sec. 2. Be it further enacted, That every such life in- surance company shall submit to the Insurance Commis- sioner for his approval the words required in Section i of this Act to be printed on each policy, together with sample copy of every kind or class of policies offered for sale in this State, and every life insurance company shall print on each of its policies sold to citizens of this State such words as the Insurance Commissioner shall approve. Sec. 3. Be it further enacted, That the license of any insurance company doing business in this State may be re- voked by the Insurance Commissioner for violating any of the provisions of this Act. Sec. 4. Be it further enacted. That this Act shall take effect from and after July i, 1905, the public welfare re- quiring it. Passed April 12, 1905. Approved April 14, 1905. — 129 — ANNUAL PUBLICATION OF UN CLAIMED DIVIDENDS. (Section 1830, Code of 1858.) Every insurance company doing business in this State shall, on the first day of January each year, and for thirty days thereafter, cause to be published in one newspaper printed in the city of Nashville, a full and accurate state- ment, verified by the oath of the presiding- officer, of the dividends and profits declared and payable upon stock, bonds, or other evidences of indebtedness which remain un- claimed by the person entitled thereto. (Shannon's Code, Section 3346.) — i3c^- LIFB INSURANCE NOT SUBJECT TO CLAIMS OF CREDITORS. (Sections 2294, 2478 and 2479, Code of 1858.) A life insurance effected by a husband on his own life shall inure to the benefit of the widow and next of kin, to be distributed as personal property free from the claims of his creditors. [Shannon's Code, Section 4030.] Any life insurance effected by a husband on his own life shall, in case of his death, inure to the benefit of his widow and children, and the money thence arising shall be divided between them according to the law of distributions, without being in any manner subject to the debts of the husband, whether by attachment, execution, or otherwise. [Shannon's Code, Section 4231.] Whenever a married woman causes a life insurance to be effected on her husband's life, it shall in no case be subject to execution or attachment for the debts of the husband, but shall inure to the benefit of the widow and children. [Shannon's Code, Section 4232.] —131- CAPITAL STOCK OF FOREIGN INSUR- ANCE COMPANIES NOT TAXABLE. CHAPTER 21, ACTS OF 1897. Whereas, It has been, and is the opinion of some that any life, fire, marine, accident or other insurance companies, and all other companies other than those chartered in the State, who have filed, or may file, their charters of incorporation in this State, would be lia- ble under the laws of this State for a State and county ad valorem tax on their capital stock located and kept in other States ; and. Whereas, Several insurance companies acting under this belief have in the last two years withdrawn from the State, thereby depriv- ing the State of a large amount of revenue; now, therefore. Section i. Be it enacted hy the General Assembly of the State of Tennessee, That no life, fire, marine, accident, or other insurance companies, or other companies having their capital stock wholly outside of the State of Tennessee, shall be required to pay any tax on its capital stock for do- ing business in this State. Sec. 2. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed May 11, 1895. Approved May 13, 1895. — 132— PRIVILEGE TAXES OF DELINQUENT INSURANCE AGENTS COLLECTED BY COUNTY COURT CLERKS. CHAPTER 21, ACTS OF 1897. AN ACT to further enforce the collection of the State tax from in- surance agents as provided in Chapter 4, Acts of 1895, second Whereas, By the provisions of Section 3 of Chapter 4 of the Acts of 1895, Second Session, it is required of each insurance agent, writing or sohciting insurance in this State, to pay a tax of ten dollars per annum direct to the Treasurer of the vState; and. Whereas, It is not possible, under the present law, for the Treasurer to enforce the collection of this tax from all agents ; therefore, Section i. Be it enacted by the General Assembly of the State of Tennessee, That in order to further enforce the collection of this tax, the Treasurer of the State, when- ever any insurance agent has failed or refused to make payment of the required tax, may report such agent to the County Court Clerk of the county in which such agent re- sides, as a delinquent, and it shall then become the duty of the County Court Clerk to enforce the collection of the tax from such agent by the means usually employed for the en- forcement of the collection of privilege taxes, and the Coun- ty Court Clerk may add a penalty of 50 per cent, to the amount of the tax, one-half of which penalty he may retain as compensation for his services, and the other one-half to be by him accounted for and paid into the Treasury in like manner as the tax. Sec. 2. Be it further enacted, That it shall be the duty of the County Court Clerk to report at once to the Treas- —133— urer of the State the tax collected by him under this law, giving the name and postoffice address of the agent from whom collected, and it shall be the duty of the Treasurer to furnish the County Court Clerk with a receipt which shall show the name and postoffice address of each agent, and the amount paid by each. Sec. 3. Be it further enacted. That this Act take effect from and after its passage, the public welfare requiring it. Passed January 19, 1897. Approved January 22, 1897. —134— TAX ON PREMIUMS PAYABLE AS LONG AS INSURANCE IS IN FORCE. CHAPTER 442, ACTS OF 1903. AN ACT to prescribe the conditions as to license and taxation upon which foreign insurance companies shall enter or remain in this State for the transaction of business. Section i. Be it enacted by the General Assembly of the State of Tennessee, That all licenses authorizing for- eign insurance companies to transact their business in the State of Tennessee shall terminate or expire with the last day of the year during which they were issued. ' Sec. 2. Be it further enacted, That all foreign insur- ance companies which shall hereafter take out or renew a license to transact business in this State shall, upon the expiration of their license for any cause, or upon their ceasing to transact new business in this State, continue to pay the same tax upon their business remaining in force in this State, and in like manner, and at like times, as other insurance companies of the same class, which are duly licensed, are required to pay by any current law in force at such time. Sec. 3. Be it further enacted, That such foreign com- panies as shall fail to pay the tax required of them by this Act within sixty days after the same are due, shall be liable for a penalty of fifty per cent, in addition thereto, recoverable at law or in equity. Sec. 4. Be it further enacted, That a compliance with the provisions of this Act shall be a condition upon which any foreign insurance company shall be authorized to ob- tain or renew a license, and that the acceptance of these terms or conditions shall be conclusively presumed from the taking out or the renewing of such license. —135— Sec. 5. Be it further enacted, That this Act take effect from and after its passage, the pubHc welfare requiring it. Passed April 13, 1903. Approved April 15, 1903. —136— FORM OF CHARTER OF INSURANCE COMPANIES. CHAPTER 142, ACTS OF 1875. AN ACT to provide for the organization of corporations. Section 5. Be it further enacted, That the general powers of all corporations chartered for purposes of indi- vidual profit, the provisions of and restrictions in said cor- poration shall be as follows : To sue and be sued by the corporate name ; to have and use a common seal, which it may alter at pleasure ; if no common seal, then the signature of the name of the corporation by any duly authorized officer shall be legal and binding; to purchase and hold or receive by gift in addition to the personal property owned by said corpora- tion any real estate necessary for the transaction of the corporate business, and also to purchase or accept any real estate in payment or part payment of any debt due to the corporation, and sell realty for corporation purposes ; to establish by-laws and make all rules and regulations not inconsistent with the laws and the constitution, deemed expedient for the management of corporate afifairs. and to appoint such subordinate officers and agents in addition to president and secretary or treasurer as the business of the corporation may require ; designate the name of the office and fix the compensation of the officers. The following provisions and restrictions avo coupled with said grant of powers : A failure to elect officers at the proper time does not dissolve the corporation, but those in office hold until the election or appointment and qualification of their successors. The term of all officers may be fixed by the by-laws of the corporation ; the same not, however, to exceed two years. The corporation may, by by-laws, make regulations concerning the subscription —137— for, or transfer of stock ; fix upon the amount of capital to be invested in the enterprise ; the division of the same into shares ; the time required for payment thereof by the subscribers for stock; the amount to be called for at any one time ; and in case of failure of any stockholder to pay the amount thus subscribed by him at the time and in the amounts thus called, a right of action shall exist in the corporation to sue said defaulting stockholder for the same. The Board of Directors, which may consist of five or more members, at the option of the corporation, to be elected either in person or by proxy, by a majority of the votes cast, each share representing one vote, shall keep a full and true record of all their proceedings, and an annual statement of receipts and disbujsemcnts shall be copied on the minutes, subject at all times to the inspection of any stockholder. The books of the corporation shall show the original or subsequent stockholders; their respective inter- ests ; the amount which has been paid on the shares sub- scribed; the transfer of stock, by and to whom made; also other transactions in which it is presumed a stockholder or creditor may have an interest. The amount of any unpaid stock due from a subscriber to the corporation shall be a fund for the payment of any debts due from the corporation, nor shall the transfer of stock by any subscriber relieve him from payment, unless his transferee has paid up all or any of the balance due on said original subscription. By no implication or construction shall the corporation be deemed to possess any powers except those hereby ex- pressly given or necessarily implied from the nature of the business for which the charter is granted, and by no infer- ence whatever shall said corporation possess the power to discount notes or bills, deal in gold or silver coin, issue any evidence of debts as currency, buy and sell any agricultural products, deal in merchandise or engage in any business outside the purpose of the charter. The right is reserved to repeal, annul, or modify this charter. If it is repealed, or if the amendments proposed, -138- being not merely auxiliary, but fundamental, are rejected by a vote representing more than half of the stock, the corporation shall continue to exist for the purpose of winding up its affairs, but not to enter upon any new business. If the amendments or modifications, being fun- damental, are accepted by the corporation as aforesaid, in a general meeting to be called for that purpose, any minor, married woman, or other person under disability, or any stockholder not agreeing to the acceptance of the modifica- tion, shall cease to be a stockholder, and the corporation shall be liable to pay said withdrawing stockholders the par value of their stock, if it is worth so much ; if not, then so much as may be its real value in the market, on the day of the withdrawal of said stockholders, as aforesaid ; Provided, That the claims of all creditors are to be paid in preference to said withdrawing stockholders. A majority of the Board of Directors shall constitute a quorum, and shall fill all vacancies until the next election. The first Board of Directors shall consist of the five or more corporators who shall apply for and obtain the char- ter. The said corporation may have the right to borrow money, and issue notes or bonds upon the faith of the cor- porate property, and also to execute a mortgage or mort- gages, as further security for repayment of money thus bor- rowed. ^ ^ ^J: ^ :4^ 5:C ^ ^: ;|< ^tc ^ ^ ;}c ;fc 5{c Sec. 10. Be it further enacted, That the form for the charter of an insurance company shall be as follows : "State of Tennessee — Charter of Incorporation. "Be it known, That (here insert the names of five or more persons not under twenty-one years of age), are hereby constituted a body politic and corporate, by the name of (here insert the name of the corporation). "The general powers, etc., of said corporation are" (here insert the general powers, etc., as in Section 5.) The said company, incorporated as aforesaid, shall have —139— the power to make insurance against losses by fire, at such rate of premium and upon such terms and conditions as may be agreed on, on any house, tenement, manufactory or other building; on goods, wares or merchandise, and on other effects ; on hay, grain, and other agricultural products in barns or stacks ; and generally to insure against loss by fire, earthquakes, storms or floods, on all kinds and species of property. The said company shall have the further right to insure the lives of persons, and engage in the general business of life insurance ; and, coupled therewith, the right to grant and sell annuity, or contract loans based on life annuity, with bnefit of survivorship, and accept and execute all legal trusts which may be confided to said company. That said company shall also have the power to make insurance against all accidents to property in transit ; to per- sons in traveling; against disabilities to persons by disease or sickness or other bodily infirmities [Chapter 224, Acts of 1889] ; or against thefts of property ; and also, insur- ance upon ships, steamboats, and other craft ; upon freights and seamen's wages, including all marine risks. The Company may, at its option, exercise one or more, or all of the three branches of business in which it is au- thorized to engage. There shall be annually printed, in at least one newspa- per in the county where the principal office of the company is located, or if an agency is established in any other coun- ty, as the corporation may have the right to do, then also in a newspaper printed in said county, a general balance sheet, showing the amount of capital stock paid in or secured by notes of stockholders for stock subscribed by them ; the amount of premiums and interest received on investments during the year ; amount of expenses and losses ; the bal- ance due ; the nature of the securities in which said balance is invested ; the amount of cash on hand ; and also a full ac- count of existing policies and the nature of risks therein insured against; and said balance sheet or statement shall — 140 — be sworn to by the President and Secretary of said com- pany. When policies of insurance are effected by any person on his life, for the benefit of his wife, or for the benefit of any one or more of his children, or for the joint benefit of his wife and children, the creditors of the person thus in- suring shall have no claim on the proceeds of the policy, and the same shall inure to the persons for whose benefit the insurance was effected. Creditors shall have an insura- ble interest in the lives of their debtors. Moneys received as premiums upon risks undetermined and outstanding at the time of declaring any dividend, shall not be considered as profits, earned and divided as such ; and if any loss should happen, impairing the capital stock, no dividend shall be declared until said capital stock is made good ; and if a dividend shall be declared, contrary to this prohibition, the directors consenting thereto shall be liable to make good to the creditors of the company, if their claims cannot otherwise be satisfied, the amounts of dividends thus illegally divided. The said company may have the right to establish of- fices in any other county of the State for the transaction of business allowed by the charter. The insurance business of the company may, at the op- tion of the company, be conducted upon the principle of giv- ing to policyholders an interest in the profits ; and the com- pany may purchase for its own benefit, an}^ policy of insur- ance or other obligation growing out of its busin,ess, and also any claims of policyholders for profits. Any company organized under the provisions of this Act, may restrict its business to the insurance of the lives of its members or stockholders alone ; it being the intent by this paragraph to give a corporate existence to any pro- fessional association, guild, brotherhood or other mutual association, the right, by an arrangement among themselves, as stockholders in a corporation, to insure the lives of each other upon the principle of a mutual participation in the —141— profits, by annual subscriptions or otherwise, and thereby provide a fund out of which provision may be made ac- cording to the by-laws of the corporation for the support of the family of any stockholder on his decease, or for the payment of any policy due his estate on his decease. In case any company organized under this charter restricts its busi- ness to the insurance of the lives of stockholders, no publi- cation need be annually made of its debt and liabilities. Sec. 26. Be it further enacted, That any five or more persons, over the age of twenty-one, desiring to form cor- porations for any of the foregoing purposes, shall copy the form of charter aforesaid adapted to the purpose, filling the necessary blanks, and append to the same an application in these words : "We, the undersigned, apply to the State of Tennessee, by virtue of the laws of the land, for a charter of incorporation, for the purposes and with the powers de- clared in the foregoing instrument. Witness our hands, the day of , 19 — ." (To be signed by the appli- cants). The said instrument, when probated as hereinbefore en- acted, with application, probates, etc., is to be registered in the county where the principal office of the company is sit- uated, and also registered as aforesaid in the office of the Secretary of State, as required for corporations for pur- poses not for individual profit, and a certificate of registra- tion given by the Secretary of State, under the Great Seal of the State, being given as aforesaid, shall, when regis- tered in the Register's office of said county, with the fac simile of said seal as aforesaid, complete the formation of the company as a body politic ; and the validity of the same in any legal proceeding shall not be collaterally questioned. If the corporation establishes agencies in any other coun- ty or counties, the instrument must also be registered in said county. Passed March 19, 1875. Approved March 23, 1875. — 142- FORM OF CHARTER OF MUTUAL MA- RINE INSURANCE COMPANIES. CHAPTER 126, ACTS OF 1881. AN ACT to amend Section 7 of an Act passed March 19, 1875, en- ■ titled "An Act to provide for the organization of corporations, and also to amend said Act so as to provide for the organization of mutual marine insurance companies," and to amend Section 5 of said Act so as to provide for the organization of stock yard and packing companies. si: * :Js ^: *>;<******** * Sec. 6. Be it further enacted, That mutual marine in- surance companies may hereafter be organized in this State under the provisions of this Act, and charters may be grant- ed for such corporations by the corporators complying with the provisions thereof in the same way that charters are now granted under Section 26 of Chapter 142 of the Acts of 1875- Sec. 7. Be it further enacted, That the form of the charter for a mutual marine insurance company shall be as follows : "State of Tennessee — Charter of Incorporation. "Be it known that (here insert the names of five or more persons not under twenty-one years of age) are hereby constituted a body politic and corporate under the name of (here insert name). The general powers of the corporation are to sue and be sued by the corporate name, to use a common seal, which it may alter at pleasure ; if no common seal, then the signature of the corporation by any duly authorized officer shall be legal and binding; to purchase and hold or receive by gift, in addition to the general prop- erty owned by said corporation, any real estate necessary for the transaction of the corporate business, and also to purchase or accept any real estate in payment of any debt due to said corporation ; or to take and hold mortgages upon —143— real estate to secure debts due; to invest surplus funds in interest bearing securities or notes; to make all rules and regulations not inconsistent with the laws and constitution deemed expedient for the management of the corporate af- fairs ; to establish by-laws and to appoint such subordinate officers and agents in addition to the President and Secre- tary and Trustees as the business of the corporation may require; designate the names of the officers and fix their compensation. Sec. 8. Be it further enacted, That said corporation, chartered as aforesaid, shall have power to make insurance on freights, goods, wares, merchandise, specie, bullion, jew- els, commissions, bank notes, bills of exchange in transit, bottomry, respondentia, marine risks, and risks of trans- portation of every character whatever, which risks said cor- poration shall have power to reinsure. Sec. 9. Be it further enacted, That said corporation shall take notes from subscribers to a guaranty fund, and shall have power to make calls for payment of cash upon those notes until fully paid. Sec. 10. Be it further enacted. That no charter for a mutual marine insurance company shall be granted and issued under this Act until not less than ten or more per- sons shall have made, signed, and delivered their written obligations subscribing at least $100,000 as a guaranty fund to pay any and all risks of insurance made by said company, and a certified copy thereof is filed in the office of the Secretary of State with the application for charter. Each subscriber to said guaranty fund shall be liable to the full amount of the subscription thereto by him or them made, and at the suit of any creditor of said corporation, but only after the refusal of the corporation to pay ; the guaranty fund in no event shall be less than $100,000, but may exceed that amount. No dividend shall be declared upon the guaranty fund exceeding ten per cent, per annum. Sec. II. Be it further enacted, That parties insuring in such corporations as are organized under this Act, shall —144— be entitled to participate in the profits thereof, and receive certificates for the amounts of such profits, which shall be transferable alone upon the books of the company, and shall so state upon their face, and such certificates shall be charge- able for future losses to the amount thereof, and may bear interest at six per cent, per annum. Sec. 12. Be it further enacted, That until the profits of such company reach $100,000 no certificate shall be re- deemed, but certificates may be redeemed out of the excess of profits over that sum, commencing by redeeming them in the order issued. Sec. 13. Be it further enacted, That the certificate may be in the following form : is entitled to $ , to be redeemed when the profits of this company exceed $100,- 000, and then only in the order of its issuance, transfera- ble alone on the books of this company. Sec. 14. Be it further enacted, That the following pro- visions and restrictions are coupled with the grant of pow- ers to mutual marine insurance companies : A failure to elect officers at the proper time does not dissolve the cor- poration, but those in office hold until their successors are elected and qualified. The term of all officers may be fixed by by-laws, but not to exceed two years. Certificates of membership may be issued, based upon subscriptions to guaranty fund, and certificates of profits or return pre- miums ; fix amount of guaranty fund, but at not less than $100,000; provide a contingent fund; provide how and when payments shall be made by the subscribers to the guaranty fund ; upon failure to pay the amount subscribed as and when called, to institute and maintain suit therefor. The Board of Trustees shall consist of not less than ten persons, to be elected by the subscribers to the guaranty fund and holders of certificates of profits for each sum of $50 ; the subscriber or holder shall be entitled to one vote. An an- nual statement of the condition of the company shall be made showing all disbursements and receipts, the correct- ness of which shall be attested by the Secretary, and the —145— books shall show all transactions of the company and the proceedings of the trustees ; they shall at all times be open to holders of certificates of profit or return premiums. No subscriber to the guaranty fund shall be released from lia- bility to the full amount of his or their subscription, except by payments on account thereof. By no implication or con- struction shall any mutual marine insurance corporation, or* ganized under this Act, be deemed to possess any powers except those hereby expressly given, or necessarily implied from the nature of the business for which this charter is granted; and by no inference whatever shall said corpora- tion possess the power to deal in gold or silver coin, issue any evidence of debts as currency, buy and sell any agri^ cultural products, deal in merchandise, or engage in an}/ business outside the purpose of this charter, or engage in the business of banking. The charter of mutual marine insurance companies may be repealed or amended, and in case of fundamental amendments, if not accepted by the subscribers to the guaranty fund and holders of certifi^ cates of profit or return premiums, then said company may be wound up, or the interest of those dissenting from such amendments purchased by those who accept them, or are willing to do so; Provided, the guaranty fund is always kept at $100,000. Sec. 15. Be it further enacted, That this Act take efifect from and after its passage, the public welfare requiring it. Passed April 4, 1881. Approved April 6, 1881. 10 — 146 — FORM OF CHARTER OF MUTUAL MA- RINE INSURANCE COMPANIES. (Amendatory.) CHAPTER 254, ACTS OF 1883. AN ACT to amend Sections 7, 9, 10, 11 and 14 of an Act entitled "An Act to amend Section 7 of an Act passed March 19, 1875, entitled an Act to provide for the organization of corporations," and also to amend said Act so as to provide for the organization of Mutual Marine Insurance Companies, and to amend Section 5 of said Act so as to provide for the organization of stock j-ards and packing companies. Section i. Be it enacted by the General Assemblx of the State of Tennessee, That Sections 7, 9, 10, 11 and 14 of the Act entitled as in the caption hereof, being Sec- tions 7, 9, 10, II and 14 of Chapter 126 of Acts of 1881, approved April 6, 1881, be so amended as to permit anj' of the persons who have signed and deHvered their writ- ten obligations to the guaranty fund of the corporation authorized by said Act, to retire and be relieved from their said obligation; Provided, that before any such per- son or persons shall be relieved and discharged from said guaranty, and other person or persons shall enter into an obligation similar to the original obligation, said substi- tuted guarantor or guarantors shall be in every way ac- ceptable to the Board of Trustees of the company of which he or they may offer to become guarantor or guarantors, and the consent of said Board to the substitution be ob- tained. Sec. 2. Be it further enacted. That when any person or persons shall be thus substituted as guarantors, and the consent of said Board obtained thereto, said obligation of guaranty shall be acknowledged before the Clerk of the County Court of the county in which the company is lo- cated, and the same, together with the action of the Board —147— of Trustees, shall be registered in the office of the Register of said county. Sec. 3. Be it further enacted, That when said obliga- tion of guaranty shall have been thus acknowledged and registered, the guarantor or guarantors desiring to retire and be relieved, shall be relieved from all liability upon the guaranty accruing subsequent to the acknowledgment and registry of said substituted obligation, and the substituted guarantor or guarantors shall be and become liable for all subsequent losses and damages, and entitled to all the bene- fits of said Act in as full a manner as though he or they had originally signed the obligation of guaranty. Sec. 4. Be it further enacted, That the discharge of one or more of the guarantors, under the provisions of this Act, shall in nowise impair the liability of the remaining guarantors, but all such guarantors shall be and remain liable upon this obligation in as full manner as though no substitution had been made. Sec. 5. Be it further enacted, That at any time any substituted guarantor may be relieved and another guar- antor substituted in his stead, upon such steps being taken as are required by this Act in cases of first substitution, and no substitution shall impair the obligations of the remain- ing guarantors. Sec. 6. Be it further enacted. That at any time any guarantor shall have the right to redeem the amount of his guaranty by substituting another person or persons who are willing to assume a portion of his obligation ; Pro- vided, said proposed guarantor or guarantors shall be ac- ceptable to the Board of Trustees, and its consent ob- tained thereto, which substituted guaranty shall be ac- knowledged, and it and the consent thereon registered as required in Section 3 of this Act, and said redemption and substitution shall in nowise impair the obligation of the other guarantors. Sec. 7. Be it further enacted. That should any guar- antor die, then the Board of Trustees shall have the power —148— to substitute another guarantor or guarantors in the room of such deceased guarantor, which substituted guarantor shall sign and acknowledge the proper obligation of guar- anty, which, together with the action of said Board, shall be registered as provided in Section 3 of this Act, and the estate of the deceased guarantor shall thereafter cease to be liable for the subsequent losses and damages, and shall not thereafter be entitled to any further benefits of said Act, and such substitution shall in no wise impair the obligation of the other guarantors. Sec. 8. Be it further enacted, That before this Act shall apply to any corporation already organized under the Act which this is intended to amend, the Board of Trustees of such corporation shall adopt it as a part of their charter, w^hich Act shall be signed and acknowledged by the Trus- tees, and registered as now required in cases of amendment of charter. Sec. 9. Be it further enacted. That should any company, already organized under the Act which this is intended to amend, have a guaranty fund exceeding one hundred thou- sand dollars, said company may by vote of its Board of Trustees redeem its guaranty fund and allow any guarantor or guarantors to retire therefrom and be released from their guaranty, or allow any guarantor or guarantors to redeem the amount of his or their guaranty; Povided, That the guaranty fund of said company shall at no time be less than said sum of one hundred thousand dollars, and such retirement and release of reduction, by said guarantor or guarantors, shall in nowise eflfect the liability of the re- maining guarantors, but they shall remain liable as fully as though no such action had been had. Sec. 10. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed March 30, 1883. Approved March 30, 1883. —149— INSURANCE COMPANIES MAY RE- DUCE CAPITAL STOCK. CHAPTER 41, ACTS OF 1877. AN ACT authorizing insurance companies to reduce their capital stock ; and to amend an Act passed March 19, 1875, entitled "An Act to provide for the organization of corporations." Section i. Be it enacted by the General Assembly of the State of Tennessee, That any insurance company, chartered under either a general or special law of this State, be, and the same is hereby, authorized to reduce the amount of its capital stock, by a vote of its stockholders owning a major- ity of such stock; and when such reduction is so ordered by such stockholders, the Board of Directors shall amend the charter of such company in the manner provided in Section 19 of the Act of March 19, 1875, mentioned in the caption of this Act ; Provided, That any company availing itself of the power herein conferred, shall have and retain a surplus fund over the amount to which the capital stock shall be reduced, sufficient safely to reinsure all of its out- standing risks, and to protect the rights of all existing cred- itors. Sec. 2. Be it further enacted, That this act take effect from and after its passage, the public welfare requiring the same. Passed March 20, 1877. Approved March 22, 1877. — 150- FILING CHARTERS OF FOREIGN CORPORATIONS. CHAPTER 8i, ACTS OF 1895. AN ACT to amend Sections 2, 3 and 4 of an Act passed March 21, 1891, being Chapter 122 of said Acts, and providing for the au- thentication of copies of charters to be filed with the Secretary of State, etc. Section i. Be it enacted by the General Assembly of the State of Tennessee, That Section 2 of an Act passed March 21, 1 89 1, being Chapter 122 of said Acts, be so amended as to read as follows : That each and every corporation created or organized under, or by virtue of, any government other than that of the State, for any purpose whatever, desiring to own property, or carry on business in this State of any kind or character, shall first file in the office of the Secretary of State, a copy of its charter. It shall- be sufficient to au- thenticate such copies so filed by the certificate of the secretary or secretaries of such corporations, and by attach- ing thereto the corporate seal. =i- * * * :|: :r: * * * * * * * * * Passed April 27, 1895. Approved April 30, 1895. —151— PRIVILEGE TAX ON CAPITAL STOCK OF FOREIGN CORPORATIONS FOR FILING CHARTERS IN OFFICE OF SECRETARY OF STATE. CHAPTER 239, ACTS OF 1903. AN ACT to amend "An Act to impose taxes upon corporations, as- sociations and joint stock companies chartered or incorporated under the laws of any other State or country for the privilege of coming into this State for the purpose of doing business here, and to provide for the collection of the same and the payment thereof into the State Treasury," said Act being Chapter 431 of the Acts of 1899. Section i. Be it enacted by the General Assembly of the State of Tennessee, That the coming into this State of any corporation, association, or joint stock company, char- tered or incorporated under the laws of any other State or country, for the purpose of doing business here, is hereby declared and made a privilege. Sec. 2. Be it further enacted, That this section [Section 2, Chapter 431, Acts of 1889] is amended to read as follows: That every corporation, association, or joint stock company chartered or incorporated under the laws of any State or country, and having a capital stock, shall pay into the office of the Secretary of State, for use of the State, upon filing a copy of its charter, as required by Chapter 31 of the Acts of 1877, and Chapter 122 of the Acts of 1891, a tax upon its capital stock as follows — to wit : Companies of $100,000 and less. $50. Companies over $100,000 and not more than $250,000, $100. Companies over $250,000 and not more than $500,000, $150. Companies over $500,000 and not more than $1,000,000, $200. — 152— Companies over $1,000,000 and upward, $250; Provided, That any company chartered under the laws of another State desires to locate its principal office and do all of its business in and from Tennessee and have all or its main property holdings in Tennessee, it shall then pay a privilege tax of one-tenth of one per centum on the authorized cap- ital stock just as domestic corporations are now required to do; and Provided, also, That insurance companies shall be credited by the amount of fees paid to the Insurance Commissioner upon entering the State to do business. Sec. 3. Be it further enacted, That it shall be the duty of the Secretary of State to report and pay to the State Treasurer, quarterly, all taxes collected under this Act. Sec. 4. Be it further enacted, That this Act take effect from and after its passage, the public welfare requiring it. Passed April 14, 1903.' Approved April 15, 1903. ■153— FEES FOR FILING CHARTERS IN OFFICE OF SECRETARY OF STATE. Chapters 2 and 209, Acts of 1899, require insurance companies, incorporated under the laws of other States or governments, to pay the following fees in addition to priv- ilege taxes on capital stock : For filing each charter of a foreign corporation $20 00 For filing amendment to charter of a foreign corpora- tion 10 00 For filing articles of consolidation of foreign corpora- tions 25 00 —154- ANNUAL REPORTS TO SECRETARY OF STATE. CHAPTER 434, ACTS OF 1907. AN ACT to require corporations to file certain information with the Secretary of State, and to provide for the payment of an annual fee therewith to the Secretary of State. Section i. Be it enacted by the General Assembly of the State of Tennessee, That each and every corporation heretofore or hereafter chartered by the State of Tennessee or organized under the laws, and each and every foreign corporation quaHfied to do and transact its business in the State of Tennessee in cotnpHance with its laws, requiring foreign corporations to file its charter with the Secretary of State, shall on or before the first day of July in each and every year, commencing with the year 1907, prepare and file in the office of the Secretary of State a written statement signed by its president or vice-president, and attested by its secretary and sworn to by either its secretary or president, which shall contain the following informa- tion — to wit : The name and style of the corporation and its principal office or place of business in the State of Ten- nessee, if it be a Tennessee corporation ; and if it be a foreign corporation its principal office and place of business in the State of its creation and also in the State of Tennes- see; the amount of its capital stock authorized by its char- ter, and the amount of capital stock issued and outstand- ing; the names of its principal officers — viz., its president, vice-president or vice-presidents, secretary and treasurer, and a complete list of its board of directors ; the nature and character of the business in which it is engaged. That every such corporation shall, at the time of filing said statement with the Secretary of State, pay to the said Secretary of State a sum of money as follows : Every cor- —155— poration with a capital stock authorized by its charter of less than $100,000 and more than $50,000, $20; every cor- poration with a capital stock authorized by its charter of less than $50,000 and more than $25,000, $10; every cor- poration with a capital stock authorized by its charter of less than $25,000, $5 ; every corporation with a capital stock authorized by its charter of more than $100,000 and not more than $250,000, $30; every corporation with a capital stock authorized by its charter of not less than $250,000 and not more than $500,000, $50; every corpora- tion having a capital stock authorized by its charter of not less than $500,000 or more than $1,000,000, $100.; and every corporation having a capital stock authorized by its charter of $1,000,000 and over, $150. That every company or corporation failing or refusing to prepare and file said statement and pay said money, as hereinbefore provided, shall be subject to a penalty of $500, which may be recovered in a suit brought in the name of the State of Tennessee against said company ; and that the Secretary of State shall, on or before the first day of Sep- tember in each and every year, prepare a list of the cor- porations in default and shall turn over the same to the Attorney General of the State, who shall cause suits to be instituted for the recovery of said amounts by the District Attorney General of the District in which said corporations in default have their principal offices or places of business. Sec. 2. Be it fiirtlicr enacted, That this Act take efifect from and after its passage, the public welfare requiring it. Passed April 10, 1907. Approved April 13, 1907. -156- TAXES ON PREMIUMS. CHAPTER 541, ACTS OF 1907. AN ACT to provide revenue for the State of Tennessee and the counties and municipalities thereof. Sec. 6. Be it further enacted. That all foreign insur- ance companies shall, as hereinafter designated, pay direct to the Insurance Commissioner the follow^ing taxes, which shall be in lieu of all other privilege taxes — viz. : Fire and all other insurance corporations or companies of other States and foreign countries, except life insurance corporations or companies, shall pay 2^ per cent on gross premiums paid by or for policy-holders residing in this State, or on prop- erty in this State, and life insurance corporations or compa- nies of other States or foreign countries shall pay 2^ per cent on gross premium receipts in this State, payable semi- annually — January and July — on sworn returns ; and life corporations of other States and foreign countries ceasing to transact new business in this State shall continue to pay the tax herein provided on business in force and until the same be terminated. Assessment life and casualty corporations organized under the laws of other States or foreign countries shall pay 23^ per cent on gross premiums, paid by or for policy holders residing in this State or on property in this State, payable semi-annually — January and July — direct to the In- surance Commissioner, on sworn returns, showing gross premiums paid by or for policy holders residing in this State or on property in this State for each six months, end- ing on December 31 and on June 30 of each year; and as- sessment life corporations ceasing to transact new business in this State shall continue to pay the tax herein provided on business in force and until the same be terminated ; Pro- —157— z'ided, hozi'cver, That this shall not apply to purely fraternal orders or societies. Each insurance agent or solicitor, except those repre- senting domestic mutual insurance companies, including each member of an agency or firm or corporation writing or soliciting insurance in this State, shall pay an annual State tax, in lieu of all other privilege taxes, on the follow- ing basis : Agents engaged in business or commencing busi- ness between January i and April i of each year, $io; agents commencing business between April i and July i of each year, $7.50; agents commencing business between July I and October i of each year, $5 ; agents commencing business after October i, $2.50. All payments to be made to the end of each calendar year; this tax to be paid direct to the Insurance Commis- sioner, except when he delegates the power to collect the same to the Comptroller. Passed April 15, 1907. Approved April 15, 1907. -158- REQUIREMENTS FOR ADMISSION OF ASSESSMENT LIFE AND ACCI- DENT INSURANCE COMPANIES. The law requires foreign assessment life and accident insurance companies to file with the Insurance Commis- sioner the following documents and pay to him the follow- ing fees and taxes before they can be licensed to do business in Tennessee : I. Two certified copies of charter or articles of incor- poration, one of which is to be retained in the Insurance Department and the other filed in the ofiice of the Secretary of State. 2. Statement showing financial condition of corporation as of date December 31 preceding date of application, which must be sworn to by two executive officers. 3. Power of attorney properly executed on Department's blank form, authorizing the Insurance Commissioner to ac- cept service of process for the corporation in all actions at law and in equity. 4. Certificate of compliance from the supervising official of the corporation's home State, stating that it is licensed in said State to transact the kind or class of business which it seeks to do in this State. 5. Certified copy of constitution and by-laws, table of rates and samples of all advertising literature. 6. Blank application for insurance and specimen copy of each form of certificate issued, properly filled out, which certificate must show that the insured's liability to contrib- ute to the payment of benefits is not limited to the payment of a fixed sum. 7. Sworn statement by two executive officers that it is —159— paying, and for the twelve months just preceding has paid, in full the maximum amounts named in its policies or cer- tificates. 8. Certificate from the supervising official of the cor- poration's home State that corporations of this State doing business under the laws of this State regulating life and ac- cident business on the assessment plan are legally entitled to do business in such State. 9. Sworn statement by two executive officers that the corporation has not less than $1,000,000 of insurance in force, and that it maintains assets in excess of all liabilities other than capital stock, equal in amount to two per cent of all insurance said corporation has in force. 10. Fee for filing preliminary papers and issuing original license, $25. Fee for filing copy of charter in the office of the Secretary of State, $20. Privilege tax on capital stock graduated as follows : Authorized capital stock of $100,000 or lesss $ 20 00 Over $100,000 and not more than $250.000 70 00 Over $250,000 and not more than $500,000 120 00 Over $500,000 and not more than $1,000,000 170 00 Over $1,000,000 220 00 NOTE — After receiving license the corporation is re- quired to obtain from the Insurance Commissioner a cer- tificate of authority for each agent in the State, including each member of an agency or firm, the . fee for issuing which is $2.00. The State levies a tax of 23^ per cent on gross premiums received from business in the State, which tax is in lieu of all other privilege taxes, and is payable in January and July of each year. All licenses of insurance companies and agents expire December 31 of each year. Fee for filing annual statement and issuing renewal license, $15.00. Fee for issuing renewal certificate of authority to agents, $2.00. — 16() - REQUIREMENTS FOR ADMISSION OF FRATER- NAL BENEFICIARY ASSOCIATIONS. The law requires foreigri fraternal beneficiary associa- tions to file with the Insurance Commissioner the following documents^ and to have the following qualifications in order to obtain a license to do business in Tennessee : 1. Two certified copies of charter or articles of incor- poration, one of which is to be retained in the Insurance Department and the other filed in the office of the Secretary of State. 2. Statement showing financial condition of association as of date December 31 preceding date of application, which must be sworn to by two executive officers. 3. Power of attorney properly executed on Department's blank form, authorizing the Insurance Commissioner to ac- cept service of process for the corporation in all actions at law and in equity. 4. Certificate of compliance from the supervising official of the association's home State, stating that it is licensed in said State to do business as a fraternal beneficiary associa- tion. 5. Certified copy of constitution and by-laws, table of rates, and samples of all advertising literature. 6. Blank application for insurance and specimen copy of each form of certificate issued, properly fill'ed out, which certificate must show a definite amount to be paid the in- sured for any benefit promised. 7. Sworn statement of two executive officers that it is paying, and for the twelve months just preceding has paid, in full the maximum amount named in its policies or certifi- cates. — i6i— 8. It must have a lodge system and ritualistic form of work and representative form of government. 9. It must pay death benefits and may pay disability benefits. 10. Every contract must provide for regular payments or assessments during its entire existence. 11. The admission of members is limited to those be- tween the ages of 16 and 60, inclusive. 12. Constitution and by-laws cannot be amended or al- tered except by the supreme legislative or governing body, a majority of whose members must be elective, and if more than a majority is required to change the constitution and by-laws, then such number must be elective. 13. The constitution and by-laws must contain an as- sessment or emergency clause. 14. It must be provided in the constitution and by-laws what proportion of the dues or assessments is for expenses, and what proportion is for mortuary or disability purposes, and no part of the reserve, emergency or surplus funds, or the net accretion thereon, can be used for expenses. 15. White and colored persons cannot be members of the same fraternal association. 16. Premiums or rates must not be less than those re- quired by the Fraternal Congress mortality table. 17. Paid agents are prohibited. 18. Every association must have at least 500 members in good standing, $500,000 insurance in force and $2,500 above all liabilities to the credit of the mortuary or disability fund. NOTE — All licenses expire April ist of each year. Fee for issuing original or renewal license, $10.00. Fee for filing copy of charter in the office of the Secretary of State, $20.00. 11 1 62 — REQUIREMENTS FOR ADMISSION OF FIRE AND CASUALTY INSURANCE COMPANIES. The law requires foreign fire and casualty insurance companies to file with the Insurance Commissioner the fol- lowing documents and pay to him the following fees and taxes before they can be licensed to do business in Ten- nessee : 1. Two certified copies of charter or articles of incor- poration, one of which is to be retained in the Insurance Department and the other filed in the office of the Secretary of State. 2. Statement showing financial condition of corporation, as of date December 31 preceding date of application, which must be sworn to by two executive officers. 3. Power of attorney properly executed on Department's blank form, authorizing the Insurance Commissioner to accept service of process for the corporation in all actions at law and in equity. 4. Certificate of compliance from the supervising official of the corporation's home State, stating that it is licensed in said State to transact the kind or class of business which it seeks to do in this State. 5. If the corporation is organized under the laws of any foreign country, it is required to deposit in the United States $200,000 with some State official and file said State official's certificate of deposit. 6. A sworn statement that the corporation has a paid-up capital stock of not less than $100,000, of which amount at least $75,000 is invested in solvent securities, to be certi- fied as such by the Insurance Commissioner of the corpora- tion's home State, reckoning the said securities at their cur- rent market value. — 163— 7. Fee for filing preliminary papers and issuing original license, $30. Fee for filing copy of charter in the office of the Secretary of State, $20. Privilege tax on capital stock graduated as follows : Authorized capital stock of $100,000 or less $ 20 00 Over $100,000 and not more than $250,000 70 00 Over $250,000 and not more than $500,000 120 oa Over $500,000 and not more than $1,000,000 170 00 Over $1 ,000,000 220 00 NOTE — After receiving license the corporation is re- quired, to obtain from the Insurance Commissioner a cer- tificate of authority for each agent in the State, including each member of an agency or firm, the fee for issuing which is $2.00. The State levies a tax of 2^ per cent on gross premiums received from business in the State, which tax is in lieu of all other privilege taxes, and is payable in January and July of each year. All licenses of insurance companies and agents expire December 31 of each year. Fee for filing annual statement and issuing renewal license, $15.00. Fee for issuing renewal certificate of authority to agents, $2.00. — 164 — REQUIREMENTS FOR ADMISSION OF LEGAL RESERVE LIFE INSURANCE COMPANIES. The law requires foreign legal reserve life insurance companies to file with the Insurance Commissioner the fol- lowing documents, and pay to him the following fees and taxes before they can be licensed to do business in Ten- nessee : I. Two certified copies of charter or articles of incor- poration, one of which is to be retained in the Insurance Department and the other filed in the ofifice of the Secretary of State. 2. Statement showing financial condition of corporation, as of date December 31 preceding date of application, which must be sworn to by two executive officers. 3. Power of attorney properly executed on Department's blank form, authorizing the Insurance Commissioner to ac- cept service of process for the corporation in all actions at law and in equity. 4. Certificate of compliance from the supervising offi- cial of the corporation's home State, stating that it is licensed in said State to transact the kind or class of busi- ness which it seeks to do in this State. 5. Certificate of deposit from the official with whom the deposit is made, that the corporation has securities to the actual cash value of at least $100,000 deposited with him for the protection of all policy holders. 6. Specimen copies of all policies properly filled out, to- gether with table of rates. 7. Fee for filing preliminary papers and issuing original license, $30. Fee for filing copy of charter in the office of the Secretary of State, $20. Privilege tax on capital stock graduated as follows : -i65- Authorized capital stock of $100,000 or less $ 20 00 Over $100,000 and not more than $250,000 70 00 Over $250,000 and not more than $500,000 120 00 Over $500,000 and not more than $1,000,000 170 00 Over $1,000,000 220 00 NOTE — After receiving license the corporation is re- quired to obtain from the Insurance Commissioner a cer- tificate of authority for each agent in the State, including each member of an agency or firm, the fee for issuing which is $2.00. • The State levies a tax of 25^ per cent on gross premiums received from business in the State, which tax is in lieu of all other privilege taxes, and is payable in January and July pf each year. All licenses of insurance companies and agents expire December 31 of each year. Fee for filing annual statement and issuing renewal license, $25.00. Fee for issuing renewal certificate of authority to agents, $2.00. — 166— TO ACTS AND AMENDMENTS INSERTED THEREIN. Chap. Acts Affents of insurance companies, status of Anti-compact law Assessment life and accident insurance Applications for 11,000,000 of insurance Assets in excess of liabilities Deposit of SIOO.OOO Industrial companies exempt Apportionment and accounting of surplus Board contracts prohibited Casualty insurance companies, regrulation of Capital stock of domestic companies reduced Capital stock of foreign companies not taxable Charters must be filed in office of Secretary of State Corporations and stock companies cannot act as agents. Charter forms and provisions of domestic companies Charter forms of domestic mutual marine companies Disability insurance County mutual fire insurance companies Co-insurance clause Delinquent agents' privilege taxes, how collected Disbursements, regulated Fraternal act Pees for filing annual report with Secretary of State... Pees for filing charters in office of Secretary of State. Fire marshal law Fire insurance stock companies, regulation of.. Foreign mutual fire insurance companies General insurance act. Bureau of insurance Capital stock, amount required 442 479 127 574 574 450 164 454 456 160 41 21 81 444 142 j 126 1 254 224 463 539 21 439 480 434 ] '[ I 209 I 1907 1905 1897 1903 1903 1907 1901 1907 1907 1895 1877 1897 1895 1907 1875 1881 1883 1889 1907 1903 1897 1907 1905 1907 1899 460 1907 160 1895 462 1907 160 1895 58 1873 493 1907 -167 — INDEX— Continued. Chap. Acts Page Churches, capital stock of, companies to insure.. Deputy and his duties Insurance Commissioner, duties of, etc Jurisdiction of State courts exclusive Life insurance included Loss or damage Reserve liability of domestic fire companies Surplus line insurance Indorsements on life policies Investment of funds of domestic life companies Insurance agents are agents of the companies Insurance contract is the policy Life insurance not subject to claim of creditors. Sec- tions 2294, 2478, 2479, Code 1858 Life insurance companies, regulation of Misrepresentation of life insurance policies- Mutual fire insurance companies — County mutuals Foreign mutuals, admission of State mutuals Penalty act for delay in payment of losses.... Political purposes, funds of insurance companies cannot be used for Policy is the entire contract Privilege tax on capital stock of foreign companies for filing charter in office of Secretary of State Publication of unclaimed dividends. Sec. 1830, Code 1858 Regulation of all companies on legal reserve basis Regulation of salaries, etc., of insurance companies.. Reports, annual, to Secretary of State Resident agents' law Requirements for admission of— Assessment life and accident companies Fraternal associations Fire and casualty companies Legal reserve life insurance companies 131 459 58 253 423 31 37 492 392 458 442 441 160 455 463 462 461 141 443 441 239 160 440 430 1901 1907 1873 1907 1903 1899 1897 1907 1905 1907 1907. 1907 1895 1907 1907 1907 1907 1901 1907 1907 1895 1907 1907 1899 13 6 7 13 6 5 II 23 128 60 63 64 130 5 53 69 84 76 126 57 64 151 129 5 55 154 123 158 160 162 164 — 168- INDEX— Continued. Chap. Acts 440 1907 461 1907 457 1907 456 1907 454 1907 j 175 1895 1 360 1905 541 1907 442 1903 539 1903 107 1893 Page Salaries and compensation of officers and ag:ent8.. State mutual fire insurance companies Standard provisions and conditions of life policies Special board contracts Surplus apportionment and accounting Surety bonds, official Taxes on premiums Taxes on premiums payable, how long Three-fourths value clause Valued policy law 55 76 41 51 47 110 115 156 134 118 117 329277 7: UNIVERSITY OF CAUFORNIA LIBRARY