societies, to deposit with some officer of this state securities in trust for, and for the benefit of, the members, policy-holders or beneficiaries of such corporation as a prerequisite for transacting the business of such corporation in such other state or foreign country; the insurance commissioner of this state must receive from such corporation securities in the amount required by the law under which such deposit is made upon deposit and in trust for the members, policy-holders and benefi ciaries of such corporation. There is included within this statute corporations organized or operating under the act entitled "An act for the regulation and control of fraternal benefit societies," approved May 1, 1911, and acts amendatory thereof. § 2. Deposit in state treasury. Any securities so deposited with the insurance commissioner shall be deposited by him in the state treasury and shall be subject to the laws of this state governing deposits of securities delivered to the insurance commissioner and deposited in the state treasury by standard insurance companies. The commissioner shall issue certificates and receipts as by said laws provided. Deposit of securities with state treasurer for security of members: See Civ. Code, § 453e. ACT 3742. An act prohibiting the borrowing of money from an insurance company by an officer of such company. [Approved June 6, 1913. Stats. 1913, p. 468.] § 1. Officer prohibited from borrowing insurance funds. § 2. Penalty. § 1. Officer prohibited from borrowing insurance funds. No officer of any insurance company shall directly or indirectly, for himself or as a partner or agent for others, borrow any of the funds of such insurance company; provided, however, that the provisions of this act shall not be construed to prevent the borrowing by any insured upon the security of policies of insurance in accordance with their terms, nor prevent agents of life insurance companies from receiving advances under their agency contracts. § 2. Penalty. Any officer who acts in violation of the provisions of this act shall be guilty of a misdemeanor. ACT 3743. An act to prohibit insurance companies, associations, or societies and their agents from misrepresenting the terms of any policy of in surance. [Approved June 7, 1915. Stats. 1915, p. 1272.] §1. Misrepresenting terms of policy prohibited. § 2. No excuse from testifying. § 3. Penalty. § 1. Misrepresenting terms of policy prohibited. No insurance company, association, or society, or any officer, director, agent, broker or solicitor thereof shall issue, circulate or use or cause or permit to be issued, circulated or used, any statement, estimate, illus tration, or circular misrepresenting the terms of any policy issued or to be issued by such company or the benefits or privileges promised under any such policy, or the future dividends, payable under any such policy. No insurance company, association, or society, officer, director, agent, solicitor or broker, or any person, firm, association or corporation shall make any misrepresentation, oral, written or otherwise, to any person for the purpose of inducing or tending to induce such person to take out a policy of insurance, or for the purpose of inducing or tending to induce a policy-holder in any company to lapse, forfeit or surrender his insurance therein, or to refuse to accept a policy issued upon an application therefor, and to take out a policy of insurance in any other company. § 2. No excuse from testifying. No person shall be excused from testifying or from producing any books, papers, contracts, agreements or documents at the trial or hearing of any person or company, association or society charged with violating any provisions of section 1 of this act on the ground that such testimony or evidence may tend to incriminate himself, but no person shall be prosecuted for any act concerning which he shall be compelled so to testify or produce evidence, documentary or otherwise, except for perjury committed in so testifying. § 3. Penalty. Any insurance company, association, or society, agent, solicitor or broker, or any person, firm, association, or corporation, violating the provisions of this act shall upon conviction be sentenced to pay a fine of not more than one hundred dollars for each and every violation, or in the discretion of the court, to an imprisonment for a period of not more than six months. The insurance commissioner shall have authority, in his discretion, to revoke or suspend a license theretofore issued to any agent, solicitor or broker, for a period not exceeding three years, on its being proven to him after a hearing that such agent, solicitor or broker, has knowingly or willfully violated any of the provisions of this act. ACT 3744. An act to provide for the establishment and maintenance by fire insurance corporations of guaranty surplus funds and special reserve funds and thereby limiting liability and to provide for the waiver by policy-holders of recourse against stockholders of such corporations. [Approved May 31, 1917. Amended May 2, 1923. Stats. 1917, p. 1378. In effect July 30, 1917.] § 1. Guaranty surplus fund and special reserve fund may be created. Limitation on amount of dividend. Sum deducted in estimating profits. § 2. Investment of funds. Waiver of recourse against stockholders. § 3. In case of extensive conflagration. Corporation discharged from liability. Transfer of securities in special reserve fund. If guaranty surplus fund reduced. If capital impaired. § 4. Discontinuance of guaranty surplus fund and special reserve fund. Effect. Return of fund. Return of excess deposit. § 1. Guaranty surplus fund and special reserve fund may be created. Limitation on amount of dividend. Sum deducted in estimating profits. Every domestic corporation having a capital stock issuing fire insurance policies may at its option create a guaranty surplus fund and a special reserve fund by the adoption of a resolution by its board of directors at a regular meeting, and by filing with the insurance commissioner a copy thereof, declaring their desire and intention to create such funds and to do business under this and the two following sections. The insurance commissioner shall thereupon make or cause to be made an examination of the condition of such corporation and a certificate of the result thereof, which shall particularly set forth the amount of surplus funds held by it at the date of the examination, and the same may be equally divided between and set apart to constitute guaranty surplus and special reserve funds to the extent necessary to constitute such two funds. Said certificate shall be recorded in the office of the insurance commissioner. Thereafter all policies of fire insurance and renewals of such policies issued by such corporation shall contain a provision that they are issued under and in pursuance of this act, of which this is amendatory, referring to the same by the title of this said act, and all such policies and renewals shall be subject to the provisions of this act, and a policy-holder, by accepting the policy, becomes bound thereby. Limitation on amount of dividend. After the passage and filing of such resolution, the corporation shall not make, declare, or pay in any form any dividend upon its capital stock exceeding seven per centum per annum thereon, and upon the surplus funds to be formed thereunder, until after its guaranty surplus fund and its special reserve fund shall have together accumulated to an amount equal to twice the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state; and until such funds shall together amount to a sum equal to twice the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state, the entire surplus profits of the corporation above such annual dividend of seven per centum shall be equally divided between and be set apart to constitute such guaranty surplus and special reserve funds, which funds shall be held and used as hereinafter provided and not otherwise. Any such corporation which shall declare or pay any dividend contrary to the provisions herein contained, shall be deemed to have forfeited its charter. Sum deducted in estimating profits. In estimating the profits of any such corporation for the purpose of making a division thereof between the guaranty surplus fund and the special reserve fund, until such funds shall together amount to a sum equal to twice the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state, there shall be deducted from the gross assets of the corporation, including for the purpose the amount of the guaranty surplus fund and the special reserve fund, the sum of the following items: 1. The amount of all outstanding claims. 2. An amount sufficient to meet the liability of the corporation for the unearned premiums upon all of its unexpired policies of every class, which shall be at least equal to the unearned premiums on policies having one year or less to run, and a pro rata proportion of the premiums received on the policies having more than one year to run, and shall be known as the reinsurance liability. 3. The amount of its guaranty surplus fund and its special reservé fund. 4. The amount of its capital. 5. Interest at the rate of seven per centum per annum upon the amount of its capital and of such funds for whatever time shall have elapsed since the last preceding cash dividend. The balance shall constitute the net surplus of the corporation subject to the equal division between the funds as herein provided. When the corporation shall notify the insurance commissioner that it has fulfilled the requirements of this section, and that its guaranty surplus fund and its special reserve fund, taken together, equal twice the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state, he shall make an examination of the corporation and make a certificate of the result thereof; and thereafter such corporation may continue, out of any subsequent profits of its business, to add to such funds, either the whole or only a part thereof, but when any addition is made to the special reserve fund, an equal sum shall be carried to the guaranty surplus fund. [Amendment approved May 2, 1923. Stats. 1923, p. 177.] § 2. Investment of funds. Waiver of recourse against stockholders. Such guaranty surplus fund shall be held and invested by such corporation in the same manner as its capital stock and surplus accumulations, and shall be liable and applicable in the same manner as the capital of the corporation to the payment generally of its losses. Such special reserve fund, until it shall amount to a sum equal to the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state, shall be invested in the same manner as the capital of the corporation, and any additional sum added to such fund shall be invested by the corporation in any securities in which the corporation is by law authorized to invest its capital or its surplus accumulations, and shall be deposited from time to time, as the same shall accumu late and be invested, with the insurance commissioner. Such special reserve fund shall be deemed a fund to protect such corporation and its policy-holders other than claimants for losses already existing or then occurred in case of any extraordinary conflagration or conflagrations as hereinafter mentioned, and shall not be regarded as any part or portion of the assets of the corporation so as to be liable for any claim for loss by fire or otherwise, except as herein provided. Waiver of recourse against stockholders. No corporation, after it has declared its desire and intention, as provided in section one hereof, to create a guaranty surplus fund and a special reserve fund, shall have the right thereafter to insert in its policy a provision to the effect that the insured, by accepting the policy, waives recourse against the stockholders of the corporation, until such corporation has created, as herein provided, a guaranty surplus fund and a special reserve fund each in amount equal to the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state; but when it has so done, then it may thereafter insert in any policy of fire insurance it may thereafter issue a provision in red ink to the effect that the insured, by accepting the policy, waives any recourse to its stockholders and agrees, in case of making any claim thereunder, to look solely to the assets and property of the corporation as and to the extent herein provided. [Amendment approved May 2, 1923. Stats. 1923, p. 178.] Corporation discharged from reserve fund. If guaranty When any extensive confla § 3. In case of extensive conflagration. liability. Transfer of securities in special surplus fund reduced. If capital impaired. gration or conflagrations shall occur whereby the claims upon the corporation shall exceed the amount of its capital stock and surplus, including said guaranty surplus fund, the corporation shall notify the insurance commissioner of the fact, who shall then make or cause to be made, an examination of the corporation, and shall issue his certificate in duplicate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and all other assets. One of such certificates shall be given the corporation, and the other shall be recorded in the office of the insurance commissioner. Such special reserve fund shall be immediately held to protect all policyholders of the corporation other than such as are claimants upon it at the time, or such as become claimants in consequence of such conflagration or conflagrations. The amount of such special reserve fund, and an amount equal to the unearned premiums of such corporation, to be ascertained as hereinbefore provided, shall constitute the capital and assets of such corporation for the protection of policy-holders other than such claimants, and for the further conduct of its business. Such certificate of the insurance commissioner shall be binding and conclusive upon all parties interested in the corporation, whether stockholders, creditors or policy-holders. Corporation discharged from liability. Upon the payment to the claimants for losses or otherwise, existing at the time of or caused by such general conflagration or conflagrations, of an amount to which they are respectively entitled in proportion to their several claims, of the full sum of the capital of the corporation and of its guaranty surplus fund, and of its assets, except only such special reserve fund and an amount of its assets equal to the liability of the corporation for unearned premiums, as certified by the insurance commissioner, such corporation shall be forever discharged from any and all further liability to such claimants and to each of them on any policy of insurance issued after the creation as above provided of the special reserve fund in the amount hereinbefore specified. Transfer of securities in special reserve fund. The insurance commissioner shall, after issuing such certificate, upon the demand of the corporation, transfer to it all such securities as shall have been deposited with him by it as such special reserve fund. If the amount of such special reserve fund shall be less than the minimum amount of capital required by the laws of this state to be maintained by fire insurance companies admitted to do business in this state, a requisition shall be issued by the insurance commissioner upon the stockholders to make up the capital to that proportion of its full amount. If the corporation, after such requisition, shall fail to make up its capital to at least such amount as herein directed such special reserve fund shall |