4. In loans upon unincumbered real property, worth at least one hundred per cent more than the amount loaned; or upon merchandise or cereals in warehouse, but in no instance shall such loan be made in excess of seventy-five' per cent of the security taken. 5. Corporations engaged in the business of insuring titles to real estate may, after the investment of one hundred thousand dollars in the manner provided for in subdivisions one, two, three, and four of this section, invest an amount not exceeding fifty per cent of their subscribed capital stock in the preparation or purchase of the materials or plant necessary to enable them to engage in such business; and such material or plant shall be deemed an asset, valued at the actual cost thereof, in all statements and proceedings required by law for the ascertainment and determination of the condition of such corporations. 6. Corporations organized for and engaged in the business of fire and marine insurance may, after the investment of two hundred thousand dollars, and corporations formed or organized for the transaction of business in any kind of insurance not enumerated in section four hundred and nineteen of the Civil Code may, after the investment of one hundred thousand dollars in the manner provided in subdivisions one, two, three, and four of this section, invest the balance of their capital, and any accumulations, in interest-bearing first mortgage bonds of any corporations (except mining companies), not in default of interest, organized and carrying on business under the laws of any state of the United States; provided, that a two-thirds vote of all the directors of such corporations shall approve such investment. It shall be the duty of the officers of such corporation to report quarterly, on the first days of January, April, July, and October of each year, to the insurance commissioner, a list of such investments so made by them; and the insurance commissioner may, if such investments, or any of them, seem injudicious to him, require the sale of the same. But no investment in the securities named in subdivisions one, two, three, and six of this section, must be made in an amount exceeding the market value of such securities at the date of such investmont. En. March 21, 1872. Am'd. 1873-4, 210; 1877-8, 81; 22; 1899, 66. .Cit. 123, 203. $428. Limit of one risk. Fire and marine insurance corporations must never take, on any one risk, whether it is a marine insurance or an insurance against fire, a sum exceeding one-tenth part of their capital actually paid in, and intact at the time of taking such risk, without reinsuring the excess above one-tenth. En. March 21, 1872. Am'd. 1873-4, 210. § 429. Amounts to be reserved before making dividends. No corporation formed subsequent to April first, eighteen hundred and seventy-eight, under the laws of this state, and transacting fire, marine, inland navigation insurance business, or insurance provided for by section four hundred and twenty (420) of this code, except insurance of the title to real property, must make any dividends except from profits remaining on hand after retaining unimpaired: 1. The entire subscribed capital stock. 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks. 3. A fund equal to one half of the amount of all premiums on all other risks not terminated at the time of making such dividend. 4. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. En. March 21, 1872. Am'd. 1877-8, 81; 1887, 23. Declaring dividends generally: See ante, sec. 309; see also ante, sec. 417, as to declaring dividends by insurance companies generally. $430. Reservation by companies with less than $200,000 capital. No fire or marine insurance corporation, with a subscribed capital of less than two hundred thousand dollars, must declare any dividends, except from profits remaining on hand after reserving: 1. A sum necessary to form, with the subscribed capital stock, the aggregate sum of two hundred thousand dollars; 2. All the premiums received or receivable on outstanding marine or inland risks, except marine time risks; 3. A fund equal to one half the amount of all premiums on fire risks and marine time risks not terminated at the time of making such dividend; 4. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. En. March 21, 1872. Cal.Rep.Cit. 110, 460. Act conferring power to establish fire patrol: See post, Appendix, title Fire Patrol. § 431. Amounts to be reserved by life insurance companies. No corporation formed under the laws of this state, and transacting life insurance business, must make any dividends, except from profits remaining on hand after retaining unimpaired 1. The entire capital stock. 2. A sum sufficient to pay all losses reported or in course of settlement, and all liabilities for expenses and taxes. 3. A sum sufficient to reinsure all outstanding policies as ascertained and determined upon the basis of the American experience table of mortality, and interest at the rate of four and one half per cent per annum. En. 1877-8, 81. Life and health insurance: See post, secs. 2762 et seq. § 432. Corporations for insuring titles to real estate. Corporations transacting business in insuring titles to real estate shall annually set apart a sum equal to twenty-five per cent of their premiums collected during the year, which sum shall be allowed to accumulate until a fund shall have been created amounting to ten per cent of the subscribed capital stock. Such fund shall be maintained as a further security to policy holders, and shall be known as the surplus fund; and if at any time such fund shall be impaired by reason of a loss, the amount by which it may be impaired shall be restored in the manner hereinabove provided for its accumulation. The reporting of a loss shall be deemed an impairment of such fund for the purposes of this section. Such corporation must not make any dividends except from profits remaining on hand after retaining unimpaired: 1. The entire subscribed capital stock. 2. The amount owing to the surplus fund, under the Visions of this section. 3. A sum sufficient to pay all losses reported, or in course of settlement, which shall be in excess of the surplus fund, and all liabilities for expenses and taxes. 1887, 23. En. CHAPTER III. MUTUAL LIFE, HEALTH, AND ACCIDENT INSURANCE CORPORATIONS. $ 437. § 438. 439. 440. 441. 442. 443. 444. § 445. $ 446. 447. § 448. § 449. 450. 451. Capital stock. Guarantee fund. Of what guarantee fund shall consist. What constitutes, and deficiency in fixed capital. Guarantee notes and interest, how disposed of. Insured to be entitled to vote, when. Number of directors may be altered, how. Investment of capital stock. Limitations to the holding of stock and in other particulars may be provided for in by-laws. Premiums, how payable. Insurance corporations to furnish data to insurance com- No stamp required on accident insurance contract. Fraternal societies exempt from insurance laws. § 452. Policies continued in force. (Repealed.) § 437. Capital stock. Guarantee fund. Every corporation formed for the purpose of mutual insurance on the lives or health of persons, or against accidents to persons for life or any fixed period of time, or to purchase and sell annuities, must have a capital stock of not less than one hundred thousand dollars. It must not make any insurance upon any risk or transact any other business as a corporation until its capital stock is fully paid up in cash, nor until it has also obtained a fund, to be known as a "guarantee fund," of not less than two hundred and fifty thousand dollars, as is hereinafter provided. If more than the requisite amount is subscribed, the stock must be distributed pro rata among the subscribers. Any subscription may be rejected by the board of directors or the committee thereof, either as to the whole or any part thereof, and must be, so far as rejected, without effect. En. March 21, 1872. Cal.Rep.Cit. 121, 320; 121, 321; 121, 324. Act relating to life, health, accident and annuity or endowment insurance: See post, Appendix, title Insurance. Incorporation of mutual insurance companies: See post, Appendix, title Insurance. § 438. Of what guarantee fund shall consist. The guarantee fund mentioned in the preceding section must consist of the promissory notes of solvent parties, approved by the board of directors and by each other, payable to the corporation or its order, and at such times, in such modes, and in such sums, with or without interest, and conformable in all other. respects to such requirements as the board of directors prescribe; but the amount of the notes given by any one person must not exceed in the whole the sum of five thousand dollars, exclusive of interest. Such notes must be payable absolutely and at the option of the corporation; they must be negotiable, and may be indorsed and transferred, or converted into cash, or otherwise dealt with by the corporation, at its discretion, without reference to any contingency of losses or expenses. Such notes, or the proceeds thereof, must remain with the corporation as a fund for the better security of persons dealing with it, and constitute the assets of the corporation, liable for all its debts, obligations, and indebtedness next after its assets from premiums and other sources, exclusive of capital stock, until the net earnings, over and above its expenses, losses, and liabilities, shall have accumulated in cash, or securities in which the net earnings have been invested, to a sum which, with the capital stock, is equal to the aggregate of the original amounts of the guarantee fund and of the capital stock. En. March 21, 1872. § 439. What constitutes, and deficiency in fixed capital. The sum accumulated as provided in the preceding section, together with the capital stock, shall become and remain the fixed capital of the corporation, not subject to division among the stockholders or parties dealing with it, or to be expended in any manner otherwise than may be required in payment of the corporation's debts and actual expenses, until the business of the corporation is closed, its debts paid, and its outstanding policies and obligations of every kind canceled or provided for; and if from any cause a deficiency at any time occurs in such fixed capital, no further division of profits must take place |