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quired to be possessed by stock companies organized under this act, the liability of each note decreasing proportionately as the profits are accumulated; but any note which may have been deposited with any mutual insurance company, subsequent to its organization, in addition to the cash premiums, or any insurance effected with such company, may, at the expiration of the time of such insurance, or upon the cancellation by the company of the policy, be relinquished, and given up to the maker thereof, or his legal representatives, upon his paying his proportion of losses and expenses which may have accrued thereon during such term. The directors or trustees of any such company shall have the right to determine the amount of the note to be given, in addition to the cash premiums, by any person insured in such company; and every person effecting insurance in any mutual company, and also their heirs, executors, administrators, and assigns, continuing to be so insured, shall thereby become members of said company during the period of insurance, and shall be bound to pay for losses and such necessary expenses as aforesaid accruing to said company, in proportion to his or their deposit note or notes; Provided, That any person insured in any mutual company, except in case of notes acquired [required] by this act to be deposited at the time of its organization, may at any time return the policy for cancellation, and upon payment of the amount due at such time upon his premium note, shall be discharged from further liability thereon. *Provided, further, That any mutual company, doing a city business, under the laws of Nebraska, may establish a guaranty fund, which when paid into the treasury, shall become the property of the company and certificates therefor shall be issued to the parties paying the same as the company may determine. Said fund shall be kept safely invested and shall not be reduced, except temporarily for the payment of losses, and shall then be replaced out of the accumulating profits of the company. Any maker of an original deposit note, may take up the same, by paying the face amount thereof into the guaranty fund and taking a certificate therefor. The company may take up and retire any guaranty fund certificate whenever it can do so out of accumulated profits. Whenever any company shall report to the auditor that it has a guaranty fund paid in, he shall make an examination with reference thereto and issue to the company a certificate showing the amount of such fund, and new certificates thereafter if such funds shall be increased. Such company may write insurance on a cash basis, or stipulated payments, as may be determined. In the event of the dissolution of any such company, the guaranty fund, after all losses and expenses are paid, shall be returned pro rata to the respective certificate holdcrs. By-laws shall be passed to carry out the provisions of this amendment. History. All after added 1905, H. R. 204; in force March 2.

6432

1. This section is valid and a proper exercise of the legislative powers. The state may impose on a foreign corporation, as a condition of coming into and doing business within the state, any terms, conditions, and restrictions it may think proper not repugnant to some fundamental law. State v. Ins. Co., Neb. -; 99 N.

W. R. 36.

2. This provision for the reciprocal tax on insurance companies from other states is in force and effect and requires such companies to pay the same license fees required by the laws of the foreign state of companies of this state doing business therein. State v. Ins. Co., Neb.; 100 N. W. R. 405; 102 N. W. R. 1022.

6440. Annual statement filed-What contain.

It shall be the duty of every insurance Company now created, or that may hereafter be created under the laws of this State, to file an annual statement of the affairs of said Company, with the Auditor of the State, on the first day of January of each year, or within thirty days thereafter, which statement shall be

verified by the oath of the secretary of the Company. Such statement shall contain: First, The name and locality of each Company. Second. The amount of capital stock of said Company. Third. The amount of its capital stock paid up. Fourth. The assets of the Company, including I. The amount of cash on hand. II. The amount of cash in hands of agents. III. The real estate unincumbered. IV. The bonds and notes of the Company, and how they are secured, with the rates of interest thereon, and whether given in payment of stock subscription, or for bona fide loans. V. Debts of the Company secured by mortgage. VI. Debts otherwise secured. VII. Debts for premiums. VIII. All other securities. Fifth. The amount of liabilities due or not due to banks or other creditors by the Company. Sixth. Losses adjusted and due. Seventh. Losses adjusted and not due. Eighth. Losses unadjusted. Ninth. Losses in suspense. Tenth. All other claims against the Company. Eleventh. The greatest amount insured by any one risk. And the Auditor shall cause a brief abstract of such statement to be published in at least one newspaper at the capitol of the state, and such Company shall pay for said publication. He shall also on or before the first day of February in each year cause to be made a valuation of the policies of all joint stock legal reserve life insurance Companies, organized under the laws of this state, and ascertain the reinsurance reserve thereof computed upon the basis of the so-called "actuaries or combined experience table of mortality" with compound interest at four per cent per annum. He shall also when requested so to do by the proper officers of any such Company, ascertain the amount of such reinsurance reserve upon the basis of the so-called "American Experience Table of Mortality" with compound interest at the rate of four and one-half per cent per annum, and the amounts ascertained upon said basis shall be legal reserve. History. Amended and changed from semiannual statement, 1905, S. F. 281; in force April 4.

6440a. Deposit required of life insurance company.

No company organized under the laws of this state for the purpose of transacting the business of life insurance with a capital stock, shall continue or commence business until such company has transferred to and deposited with the auditor of public accounts for the security of its policy holders the sum of one hundred thousand dollars in the kinds of securities as provided by the laws of this state; but in no case shall such securities be received at a rate above their par value nor above their current market value.

History.-Laws 1905, H. R. 56, sec. 1; in force July 1. This is declared to be supplemental of existing laws, see 6444b.

6444a. Auditor-Treat foreign companies as their states treat our company. Whenever the existing or future laws of any other state of the United States, or the rules and regulations of the insurance department of any such state, shall require of life insurance companies organized under the laws of this state. any deposit of securities in such state for the security of the policy holders, or any payment of taxes, fines, penalties, certificates of authority, licenses, fees, or require any other duties, examinations or acts than are by the laws of this state required of such companies organized under the laws of such other state, then the auditor of public accounts shall immediately require from every insurance company of any and every character whatever of such other state transacting or seeking to transact business in this state, the like payment of all licenses, fees, taxes, fines, or penalties, and the like making of all deposits of securities and statements, and the like doing of all acts which by the laws or rules of the insurance department of such other state, are in excess of the licenses, fees, taxes, de

posits, statements, fines, penalties, acts, examinations or duties required by the laws of this state of the companies of such other states.

History.-Laws 1905, H. R. 56, sec. 1; in force July 1. This is supplemental of existing laws. See 6444b.

6444b. Sections 6440a and 6444a are both supplemental of existing laws.

This act is intended not as amendatory of but as additional and supplementary to that part of said chapter 25 [6400 et seq.] having reference to insurance companies and regulatory of the same and all acts and parts of acts inconsistent herewith, or so far as they may be inconsistent, are hereby repealed. History.-Laws 1905, H. R. 56, sec. 2; in force July 1.

6456

6452. Repealed 1905, S. F. 281; in force April 4.

1. A fidelity bond for the indemnity of an employer against the dishonesty of an employee issued on the application of the latter, who pays the premium, and by him delivered to the former, which contains on its face, in addition to the contract of an indemnity, an undertaking of the employee to the obligor, and a provision that it shall not be binding on the obligor unless signed by the employee, is not binding on the obligor unless thus signed, in the absence of a showing that the signature of the employee had been waived by the obligor. The signing of the bond by the obligor and its delivery to the employee does not constitute the employee the agent of the obligor with authority to bind the latter by a waiver of such signature. Insurance contracts and contracts of this character distinguished. The fact that the obligor retained the premium paid by the employee does not, under the circumstances shown in this case, constitute a waiver of the signature of the employee to the bond. Statements made by an employer in support of his employee's application for such bond as to the nature of the duties of the employee, the extent of his authority, etc., are in the nature of warranties, and a breach thereof will avoid the bond. United States F. & G. Co. v. Ridgley, Neb.; 97 N. W. R. 836.

6476

19. The allowance of an attorney's fee under this section is the settled policy of this state. Union Ins. Co. v. McCullough, 2 Unoff. 198-203; 96 N. W. R. 79.

6477

1. Risks can not be reinsured in a company not authorized to do business in Nebraska. Opinions Atty. Genl. 1902-3, 288. 6483

1. What is meant by "visible external marks" of the injury. 57 C. L. J. 163.

2. Power of incorporated fraternal society to borrow money and issue negotiable notes. 57 C. L. J. 161.

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1. All claims for death losses must be included in the annual reports to the auditor. A failure to make such report as the statute requires is sufficient cause for enjoining the society from transacting business. The books and records must show the true condition of its business, including its benefit assessments and its liabilities. If it refuses to report to the auditor the details of its business it may be enjoined from continuing. State v. Bankers' Union, Neb.; 99 N. W. R. 531.

6498

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1. When a fraternal association refuses or neglects to report to the auditor, or exceeds its powers, or conducts its business fraudulently, it is the duty of the auditor to notify the attorney general, and the duty of the attorney general to immediately commence an action to enjoin such society from doing business. If any of the causes are proved to exist, the court must enjoin at least until the law is complied with and costs are paid. Diverting the funds of the society from the purposes for which they are contributed is a violation of the statute. Such societies are not al

lowed to take members who are above the upon the good faith and solvency of its age limit nor without medical examina- members. It can not be said to be insoltion; and to do this indirectly by the pur- vent when it is reasonably probable that chase of the business of another society is by its authorized assessments it can proa violation of the law. The assets of such vide sufficient funds to meet its just liaa society do not consist in cash and tan- bilities. State v. Bankers' Union Neb. gible securities alone. If its plans of; 99 N. W. R. 531. business are feasible and just, it may rely

Secs. 6505a to 6505c. An act to provide for consolidation or reinsurance of the risks of fraternal beneficiary societies with or by other societies or organizations, and providing a plan therefor. Bartoo's fraternal reinsurance bill. 1905, H. R. 106; in force March 28.

6505a. Consolidation or reinsurance of fraternal risks.

When any fraternal beneficiary association shall propose to consolidate or enter into any reinsurance contract with any other association or organization, it shall present its proposed plan of consolidation or reinsurance, together with a statement of the condition of its affairs to the Auditor of State for his approval. Should he approve of the plan, the same shall be submitted by any association proposing to reinsure its risk or transfer its business, to its local lodges or organizations or to a regular or special meeting of its supreme lodge or governing body to be voted upon, such notice being given as the Auditor of State may direct. If, in the judgment of the Auditor of State it is deemed advisable he may require the plan to be in like manner submitted to the association proposing to accept or reinsure the risks of any other association. In case two or more associations propose to consolidate, the proposed plan of consolidation shall be submitted, as above provided, to all of the associations interested in such consolidations. In any of the above cases, a two-thirds vote of all the members of each association present and voting shall be necessary to an approval of any plan of consolidation or reinsurance, and in no case shall proxies be voted. On presenting to the Auditor of State satisfactory proof that the foregoing provisions have been complied with and that the required number of votes have been cast in favor of the proposed plan, he shall issue to the association an order to the effect that the plan has been approved, and the same shall be in force and effect from and after the date of such order, and the Auditor of State shall direct such distribution of the assets of any such association or associations as shall be just and equitable.

History.-Laws 1905, H. R. 106, sec. 1; in force March 8.

6505b. Costs and expenses paid by the association.

All expenses or costs incident to proceedings under the provisions of this act shall be paid by the associations interested.

History.-Laws 1905, H. R. 106, sec. 2; in force March 8.

6505c. Penalty for violation of act by officers.

Any officer, director or manager of any association violating or consenting to the violation of any of the provision[s] of this act shall be punished by a fine of not less than one thousand dollars, or by imprisonment in the county jail not less than one year or by both such fine and imprisonment in the discretion of the court. History.-Laws 1905, H. R. 106, sec. 3; in force March 8.

6507. Declaration of intention to form company-Charter.

Such persons shall file with the Auditor of Public Accounts a declaration of their intention to form a company, for the purposes expressed in the preceding section, which declaration shall be signed by at least twenty of the incorporators, and shall contain a copy of the charter proposed to be adopted by them. Such

charter shall set forth the name of the corporation, the name of the city, town, or village in which the business office of such company is to be located, and the intended duration of the company; and if such declaration is found conformable to this act, and not inconsistent with the constitution of this state, the Auditor shall thereupon deliver to such persons a certified copy of the charter, which, on being filed in the office of the county clerk of the county where the office of such company is to be located, shall be their authority to organize and commence business.* Such corporation may amend its articles of incorporation or charter as to the time. of the intended duration of the Company, or in any other manner not inconsistent with the laws of this state, at any annual meeting of its members; and said amended articles of incorporation or charter shall be filed with the Auditor of Public Accounts, and a copy thereof, duly certified by said Auditor, filed in the office of the county clerk of the county in which its headquarters are located, and shall then have the same force and effect as if originally adopted by said corporation. A copy of such articles of incorporation or charter, duly certified by the Auditor of Public Accounts shall be evidence in all cases of equal credibility with the original instrument so filed.

History. All after added 1905, H. R. 212; in force March 29.

6513. Policies-Expenses-Obligation of insured.

*

Such company may issue policies only on detached farm buildings (except livery, boarding and hotel barns) and such property as may properly be contained therein, and grain and hay in stack on cultivated land, and country school houses and contents, country churches and contents, country parsonages and contents, town halls and contents, and also upon horses, mules, cattle, sheep and hogs, against damage by fire, lightning, or tornado for any length of time. but not to extend beyond the limit and duration of the charter, and for any amount the company may deem safe on any one risk, nor shall any property be insured for more than two-thirds of its actual value. All persons so insured shall give their obligations to the company, in written or printed application, binding themselves, their heirs and assigns to pay their pro-rata share to the company of the necessary expenses and of all losses by fire, lightning, or tornado which may be sustained by any member thereof during the time for which their respective policies are written and they continue as members of the company, and they shall also, at the time of effecting the insurance, pay such percentage in cash and such. other charges as may be required by the rules and by-laws of the company. Provided. That any company formed under the provisions of this act may in its bylaws limit the percentage of the liability of its members.

History. to inserted 1905, H. R. 363; in force July 1.

€515. Not insure property outside of its territory.

No such company shall insure any property beyond the limits of its territory. but any company may at its discretion extend its insurance to cover persona! property when temporarily removed from the territory or this state in which it is insured. But in no case shall such insurance be made to cover any property removed beyond the limits of the adjoining county.

History. Amended 1905, H. R. 212, sec. 2; in force March 29.

6579

1. Directors of an insurance corporation have no power to alter, amend, or annul the articles of incorporation. Such power

can not be
legislature.

78.

conferred upon them by the Opinions Atty. Genl. 1902-3,

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