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plus profit arising from their business, and in estimating such profits there shall be reserved therefrom a sum equal to forty per cent. of the amount received as premiums on unexpired risks and policies, which amount so reserved is hereby declared to be unearned premiums; and there shall also be reserved all sums due the corporation on bonds and mortgages, bonds, stocks, and book accounts of which no part of the principal or interest thereon has been paid during the year preceding such estimate of profits, and upon which suit for foreclosure or collection has not been commenced, or which, after judgment has been obtained thereon, shall have remained more than two years unsatisfied, and upon which interest shall not have been paid; and in case of any such judgment, the interest due or accrued thereon and remaining unpaid shall also be reserved. Any dividends made contrary to these provisions shall subject the company making it to a forfeiture of their charter.
SEC. 16. [Real estate.]-No company organized under this act shall purchase, hold, or convey any real estate, save for the purposes and in the manner herein set forth, to wit: First. Such as shall be requisite for its convenient accommodation in the transaction of its business. Second. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted or for money due; or, Third. Such as shall have been conveyed to it in satisfaction of debts previously contracted in the legitimate business of the company or for money due; or, Fourth. Such as shall have been purchased at sales or upon judgments, decrees, or mortgages obtained or made for such debts. And it shall not be lawful for any such company to purchase, hold, or convey real estate in any other case, or for any other purpose, or acquired in any other manner, except that it may convey real estate which shall be found in the course of its business not necessary for its convenient accommodation in the transaction thereof; and all such last mentioned real estate shall be sold and conveyed within three years after the same shall have been deemed by the auditor of state unnecessary for such accommodation, unless the company shall procure a certificate from the said auditor that the interest of said company will materially suffer by a forced sale, in which event the sale may be postponed for such a period as the said auditor shall direct in said certificate.
SEC. 17. [Security notes.]-All notes deposited with any mutual insurance company, at the time of its organization, as provided for in section three hereof, shall remain as security for all losses and claims, until the accumulation of the profits invested as required by the sixth section of this act shall equal the amount of cash capital required 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 expense as aforesaid accruing to said company, in proportion to the amount of his or their deposit note or notes; Provided, That any person insured in any mutual company, except in the case of notes required by this act to be deposited at the time of its organization, may at any time return the policy of cancellation, and upon payment of the amount due at such time upon his premium note, shall be discharged from further liability thereon.
SEC. 18. [Losses-Settlement.]-The directors shall, as often as they
deem necessary, after receiving notice of any loss or damage, settle and determine the sums to be paid by the several members thereof, as their respective portions of such loss, and publish the same in such manner as they shall deem proper, or the by-laws shall have prescribed; but the sum to be paid by each member shall always be in proportion to the original amount of his deposit note or notes. and shall be paid to the officers of the company within thirty days after the publication of said notice; and if any member shall, for the space of thirty days after personal demand, or by letter, for payment shall have been made, neglect, or refuse to pay the sum assessed upon him as his proportion of any loss aforesaid, the directors may sue for and recover the whole amount of his deposit note or notes, with costs of suit; but execution shall issue for assessments and costs as they accrue only, and every such execution shall be accompanied by a list of losses for which the assessment was made; if the whole amount of deposit notes shall be insufficient to pay the loss occasioned, the sufferers insured by the said company shall receive, toward making good their respective losses, a proportionate share of the whole amount of said notes, according to the sums to them respectively insured; but no member shall ever be required to pay for any loss more than the whole amount of his deposit note or notes.
SEC. 19. [Company's title on policy.]-Every insurance company hereinafter organized as provided in this act, shall, if it be a mutual company, embody the word "mutual" in its title, which shall appear upon the first page of every policy, and renewal receipt; and every company doing business as a cash stock company, shall, upon the face of its policies, express in some suitable manner that such policies were issued by stock companies.
SEC. 20. [Annual statement.]-It shall be the duty of the president or of the vice-president and secretary of each company organized under this act, or incorporated under any law of this state, or doing business in this state, annually, on the first day of January of each year, or within thirty days thereafter. to prepare under oath and deposit in the office of the auditor of state, a full, true, and complete statement of the condition of such company on the last day of the month preceding that in which such statement is filed, which last statement shall exhibit the following items and facts in the following form, viz: First. The amount of capital stock of the company. Second. The names of the officers. Third. The name of the company, and where located. Fourth. The amount of capital stock paid up. Fifth. The property or assets held by the company specifying the value as near as may be of the real estate owned by such company. The amount of cash on hand and deposited in banks to the credit of the company, and in what bank the same is deposited. The amount of cash in the hands of agents, and in course of transmission. The amount of loans secured by first mortgages on real estate, with the rate of interest thereon, specifying the location of such real estate, and its assessed valuation. The amount of all other bonds and loans, and how secured, with the rate of interest thereon. The amount due the company on which judgment has been obtained. The amount of stocks of this state, of the United States, of any incorporated city of this state, and of any other stock owneo by the company, specifying the amount, numbers of shares, and par and market value of each kind of stock. The amount of stock held by such company as collateral security for loans, with amount loaned on each kind of stock, its par and market value. The amount of assessments on stock and premium notes paid and unpaid. The amount of interest actually due and unpaid. All other securities and their value. The amount for which premium notes have been given, on which policies have been issued. Sixth. The liabilities of such company, specifying the losses adjusted and due. Losses adjusted and not due. Losses unadjusted. Losses in suspense, and the cause thereof. Losses resisted and in litigation. Dividends either in scrip or cash specifying the amount of each declared, but not due. Dividends declared and due. The amount required to reinsure all outstanding risks on the basis of forty per cent. of the premium on all unexpired risks. The amount due banks or other creditors. The amount of money bor
rowed and the security therefor. All other claims against the company. Seventh. The income of the company during the previous year, specifying the amount received for premiums exclusive of premium notes; the amount of premium notes received; the amount received for interest; the amount received for assessment calls on stock or notes, or premium notes. The amount received from all other sources. Eighth. The expenditures during the preceding year, specifying the amount of losses paid during said term, stating how much of the same accrued prior, and how much subsequent to the date of the preceding statement, and the amount at which losses were estimated in such preceding statement. The amount paid for dividends. The amount paid commissions, salaries, expenses, and other charges of agents, clerks, and other employees. The amount paid for salaries, fees, and other charges of officers and directors. The amount paid for local, state, national internal revenue, and other taxes and duties. The amount paid for all other expenses, expenditures, including printing, stationery, rents, furniture, etc. Ninth. The largest amount insured in any one risk. Tenth. The amount of risks written during the year then ending. Eleventh. The amount of risks in force having less than one year to run. Twelfth. The amount of risks in force having more than one, and not over three years to run. Thirteenth. The amount of risks having more than three years to run. Fourteenth. The following questions must be answered, viz: Are dividends declared on premiums received for risks not terminated? The auditor of state shall withhold the certificate of authority from any such company neglecting or failing to comply with the provisions of this section.
SEC. 21. [Information to auditor.]-The auditor of state is hereby authorized and empowered to address any inquiries to any insurance company in relation to its doings and condition, or any other matter connected with its transactions which he may deem necessary for the public good, or for a proper discharge of his duties; and it shall be the duty of any company so addressed, to promptly reply in writing thereto.
SEC. 22. [Statement-Notes.]-The statement of any company, the capital of which is composed in whole or in part of notes, shall, in addition to the foregoing, exhibit the amount of notes originally forming the capital, and also what proportion of said notes are still held by such company and considered capital. SEC. 23. [Foreign companies-Capital-Qualifications.]-It shall not be lawful for any insurance company, association, or partnership, organized or associated for any of the purposes specified in this act, incorporated by, or organized under the laws of any other state of the United States, or any foreign government, directly or indirectly, to take risks or transact any business of insurance in this state, unless possessed of two hundred thousand dollars of actual paid up capital, exclusive of any assets of any such company as shall be deposited in any other states or territories for the special benefit or security of the insured therein. Any such company desiring to transact any such business as aforesaid, by an agent or agents in this state, shall appoint one attorney in each county in which agencies are established, resident at the county seat, and shall file with the auditor of state a written instrument, duly signed and sealed, authorizing such attorney of such company to acknowledge service of process for and in behalf of such company in this state, consenting that such service of process, mesne or final upon such attorney, shall be taken and held as valid as if served upon the company [according] to the laws of this or any other state, and waiving all claim or right of error by reason of such acknowledgment or service, and also a certified copy of their charter or deed of settlement, together with a statement under the oath of the president or vice-president, or other chief officer, and the secretary of the company for which they may act, stating the name of the company and the place where located, the amount of its capital, with a detailed statement of the facts and items as required from companies organized under the laws of this state, as per section twenty hereof. Such statement shall also show to the full satisfaction of the auditor of state, that said company has deposited, in some one
of the United States or territories, a sum not less than twenty-five thousand dollars, for the special benefit or security of the insured therein, and shall file also a copy of the last annual report, if any, made under any law of the state by which such company was incorporated; and no agent shall be allowed to transact business for any company whose capital is impaired by the liabilities, as stated in section twenty of this act, to the extent of twenty per cent. thereof, while such deficiency shall continue.
SEC. 24. [Same-Auditor's certificate.]-It shall not be lawful for any agent or agents, or individual, to act for any insurance company or companies referred to in this act, directly or indirectly, in taking risks or transacting business of insurance in this state, without procuring from the auditor of state a certificate of authority, stating that such company has complied with all the requisitions of this act.
SEC. 25. [Same-Annual statements.]—The statements and evidences of investments required of foreign companies as above, shall be renewed annually in such manner and form as required by this act and as said auditor may direct, with any additional statement of the amount of the losses incurred or premiums received in this state during the preceding period, so long as such agency continues; and the said auditor, on being satisfied that the capital, securities, and investments remain secure, as herein before provided, shall furnish a renewal of his certificate as aforesaid.
SEC. 26. [Violation of act-Penalty.]-Every insurance company organized under the laws of, or doing business in this state, shall conform to all the provisions of this act, applicable thereto, on or before the first day of April, 1873; and when necessary, any existing company shall change its charter and by-laws so as to conform thereto, by a vote of a majority of its board of directors, and any president, secretary or other officer of any company organized under the laws of Nebraska, or any officer or person doing business or attempting to do business in this state for any insurance company organized without this state, failing to comply with any of the requirements of this act, or violating any of the provisions thereof, shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be fined in a sum not exceeding one thousand dollars and be imprisoned in the county jail for a period of not less than thirty days, nor more than six months. SEC. 27. [Agent's advertisement.]-Every agent of any insurance company shall, in all advertisements of such agency, publish the location of the company, giving the name of the city, town, or village in which the company is located and the state or government, under the laws of which it is organized. The term agent or agents used in the foregoing sections shall include an acknowledged agent or surveyor, or any other person or persons, who shall in any manner directly or indirectly transact or aid in transacting the insurance business of any insurance company not incorporated by the laws of this state. The provisions of the foregoing sections relative to foreign companies, shall apply to all such companies, partnerships, associations, or individuals, whether incorporated or not; Provided, That none of the provisions of this clause shall be deemed operative in regard to insurance upon goods or merchandise in transit.
SEC. 28. [Examination by auditor-Settlement.]—It shall be the duty of the auditor of the state, whenever he shall deem it expedient so to do, in his judgment, to appoint one or more persons, not officers, agents or stockholders of any insurance company doing business in this state, to examine into the affairs and condition of any insurance company incorporated or doing business in this state, or to make such examination himself; and it shall be the duty of the officers, or agents of such company or companies, to cause their books to be opened for the inspection of the auditor or the person or persons so appointed, and otherwise facilitate such examination so far as may be in their power so to do, and for the purpose of arriving at the truth in such cases, the auditor, or person or per sons so appointed by him, shall have power to examine, under oath, the officers or agents of any company or others, if necessary, relative to the business and condi
tion of said company; and whenever the auditor shall deem it best for the interest of the public so to do, he shall publish the result of such investigation in one or more papers of this state; and whenever it shall appear to the said auditor from such examination, that the assets and funds of any company incorporated in this state, are reduced or impaired by the liabilities of said company, as described under the head of liabilities in the statement required by this act, more than twenty per cent. below the paid up capital stock required by this act, may direct the officers thereof to require the stock holders to pay in the amount of such deficiency within such a period as he may designate in such requisition; or he shall communicate the fact to the attorney of state, whose duty it shall then become to apply to the district court, or, if in vacation, to one of the judges thereof for an order requiring said company to show cause why their business should not be closed; and the court or judge, as the case may be, shall thereupon proceed to hear the allegations and proofs of the respective parties; and in case it shall appear to the satisfaction of said court or judge, that the assets and funds of said company are not sufficient as aforesaid, or that the interest of the public require it, the said court or judge shall decree a dissolution of said company, and a distribution of its effects; the said court or judge shall have the power to refer the application of the attorney of state to a referee, to inquire into and report upon the facts stated herein.
SEC. 29. [Same-Deficiency.]-Any company receiving the aforesaid requisition from the said auditor, shall forthwith call upon its stockholders for such amounts as will make its paid up capital equal to the amount filed by this act, or the charter of said company; and in case any stockholder shall refuse or neglect to pay the amount so called for, after notice personally given, or by advertisement, in such time and manner as said auditor shall approve, it shall be lawful for the said company to require the return of the original certificate of stock held by such stockholder, and in lieu thereof, to issue new certificates for such number of shares as such stockholders may be entitled to, in the proportion that the ascertained value of the funds of the said company may be found to bear to the original capital of the said company, the value of such shares for which new certificate shall be issued to be ascertained under the direction of the said auditor, the company paying for the fractional parts of shares. And it shall be lawful for the directors of such company to create new stock, and dispose of the same, and to issue new certificates therefor, to an amount sufficient to make up the original capital of the company; and in the event of any additional losses, accruing upon new risks taken upon expiration of the period limited by the auditor, in the aforesaid requisition for the filling up of the deficiency in the capital of such company, and before said deficency shall have been made up, the directors shall be individually liable to the extent thereof.
SEC. 30. [Same-Mutual companies.]—If, upon such examination, it shall appear to the said auditor that the assets of any company chartered upon the plan of mutual insurance under this act, are insufficient to justify the continuance of such company in business, it shall be his duty to proceed in relation to such company, in the same manner as is herein required in regard to jointstock companies; and the trustees or directors of such company are hereby made personally liable for any losses which may be sustained upon risks taken after the expiration of the period limited by the said auditor for filling up the deficiency in the capital, and before such deficiency shall have been made up; any transfer of the stock of any company organized under this act, made during the pending of any investigation required above, shall not release the party making the transfer from his liability for losses which may have accrued previous to such transfer
SEC. 31. [Same-Certificate revoked.]-The auditor of state shall be authorized to examine into the condition and affairs of any insurance company, as provided for in this act, doing business in this state, not organized under the laws of this state, or cause such examination to be made by some person or persons appointed by him, having no interest in any insurance company; and when