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so insured shall give their obligation to the company, binding themselves, their heirs and assigns, to pay their pro rata share to the company of the necessary expense and of loss by fire which may be sustained by any member thereof during the time for which their respective policies are written, and they shall also at the time of effecting the insurance pay such a percentage in cash, and such other charges, as may be required by the rules or by-laws of the company.

SEC. 9. All such companies must classify the property insured therein at the time of issuing policies thereon under different rates, corresponding as nearly as may be to the greater or less risk from fire loss which may be attached to the several kinds of property insured.

SEC. 10. No such company shall insure any property beyond the limits of the county wherein which the company is organized, except that a company may insure in an adjoining county to the amount of fifty-five thousand dollars and no more, where no mutual company exists, or is organized therein, and as soon as a mutual company shall organize therein, said company first insuring, and with its original place of business in an adjoining county, shall, as soon as its policies originally issued expire or shall be canceled, retire therefrom. Nor shall any company issue policies of insurance on any property within the limits of any city containing over six thousand inhabitants, at the time of the organization of such company; provided, that no dwelling shall be insured within the corporate limits of any city or town exposed by any other building within one hundred feet, or by any other risk other than a dwelling or private barn within two hundred feet of the risk assumed; provided, that the amount of insurance shall not exceed seventy-five per cent of the value of the property, and that no additional insurance shall be allowed. [Amendment approved March 23, 1907;

in effect in sixty days.]

SEC. 11. Every member of such company who may sustain loss or damage by fire shall immediately notify the president, or in his absence, the secretary thereof, stating the amount of damages or loss sustained or claimed, and if not more than five hundred dollars, then the president and secretary shall proceed to ascertain the amount of such loss or damage, and adjust the same. If the claim for damage or loss be an amount greater than five hundred dollars, then the president of such company, or in his absence, the vice-president, or in

the absence of both, the secretary thereof, shall forthwith convene the board of directors of such company, whose duty it shall be when convened to appoint a committee, of not less than three disinterested members of such company, to ascertain the amount of such damage or loss. If in either case there is a failure of the parties to agree upon the amount of such damage or loss, they shall submit the question of the amount of such loss to arbitration. The president of the company shall appoint one disinterested person to act as an arbitrator, and no claimant or insured shall appoint another, and if such two arbitrators fail to agree upon the amount of such loss, then they shall select a third disinterested person to act with them. Such arbitrators so appointed shall have full authority to examine witnesses, and shall do all other things necessary to the proper determination of the amount of loss sustained by the claimant, and shall make their award in writing to the president of the company, and such award so as aforesaid made shall be final as to the amount of the loss sustained. The pay of said committee shall be three ($3.00) dollars per day for each day's services so rendered, and five cents for each mile necessarily traveled in the discharge of their duties, which shall be paid by the claimant, unless the award of such committee shall exceed the sum offered by the company in liquidation of such loss or damage, in which case such expense shall be paid by the company. [Amendment approved March 23,

1907; in effect in sixty days.]

SEC. 12. When the amount of any loss shall have been ascertained, which exceeds in amount the cash funds of the company, the president shall convene the directors of said company, who shall make an assessment upon all the property to the amount for which each several piece of property is insured, taken in connection with the rate of premium under which it may be classified; provided further, that the board of directors may at their annual meeting levy an assessment not to exceed twenty-five cents on the one hundred dollars on first class insurance and a pro rata amount on other classes and said sum so raised shall constitute a reserve fund to be used in emergency cases only and another assessment for this fund shall not be made while this reserve remains intact. [Amendment approved March 23, 1907; in effect in sixty days.]

SEC. 13. It shall be the duty of the secretary, whenever such an assessment shall have been made, to immediately

notify every person holding a risk in such company, personally, by an agent, or by letter directed to his usual postoffice address, of the amount of such loss, and the sum due from him, as his share thereof, and of the time and to whom such payment is to be made; but such time shall not be less than thirty days, nor more than ninety days, from the date of such notice.

SEC. 14. An action may be brought against any member of such company who shall neglect or refuse to pay any assessment made upon him by the provisions of this Act, or other liabilities due the company, and the directors of any company so formed who shall willfully refuse or neglect to perform the duties imposed upon them by law or by the by-laws of the company shall be liable in their individual capacity to the person sustaining such loss. An action may also be brought and maintained against any such company by members thereof for losses sustained if payment is withheld after the amount of such losses have been determined, and is due by the terms of the policy.

SEC. 15. It shall be the duty of the secretary to prepare an annual statement showing the condition of such company on the thirty-first day of December, and present the same at the annual meeting.

SEC. 16. Any member of such company may withdraw therefrom by surrendering his policy for cancellation at any time while the organization continues the business for which it was organized, by giving notice in writing to the secretary thereof, and paying his share of all claims that may exist against such company; provided, that the company shall have power to cancel or terminate any policy by giving the insured five days' written notice to that effect, and returning to him any excess of premium he may have paid during the term of the policy, over the cost of his insurance, as measured by the rates of standard fire insurance companies doing business in this State.

SEC. 17. It shall be the duty of the president and secretary, within thirty days after the first day of January in each year, to prepare, under their own oath, and transmit to the Insurance Commissioner, a statement of the condition of the company on the last day of the month next preceding the annual meeting. If, upon examination, the Insurance Commissioner finds that such company is doing business correctly, in accord

ance with the provisions of this Act, he shall thereupon furnish the company his certificate, which shall be deemed authority to continue business during the ensuing year, subject, however, to the provisions of this Act. For such examination and certificate the company shall pay one dollar. Each com

pany shall pay, at the time of organization, five dollars to the Insurance Commissioner, for all services which he shall render in the matter of organization.

SEC. 18. Any such company may be proceeded against and dissolved in the manner and upon the same conditions as provided in case of other insurance companies incorporated in this State.

SEC. 19. All Acts and parts of Acts in conflict with this Act are hereby repealed.


An Act providing for the organization and management of mutual fire insurance companies.

[Approved March 19, 1907.]

The people of the State of California, represented in Senate and Assembly, do enact as follows:

SECTION 1. Private corporations may be formed for the purpose of insuring the property of their members in accordance with and on the properties designated in this Act, and not otherwise. Such corporations may be formed and organized as provided in part four, division first, of the Civil Code of the State of California.

SEC. 2. Any such corporation may be formed for the purpose of transacting fire insurance business and in one of the following lines, to wit:

1. Lumber yards, factories and mills.

2. Mercantile risks, dwelling houses, churches, schools and farm buildings, and contents.

SEC. 3. Each person or corporation accepting a policy in any such mutual insurance corporation shall thereby become a member of such corporation and shall be liable for his pro rata share of losses and operating expenses, except as hereinafter provided.

SEC. 4. No policy shall be issued by such corporation until not less than two hundred thousand dollars of insurance, in not less than two hundred separate risks, have been subscribed for and entered on its books, and until it shall have a cash reserve fund of fifty thousand dollars. No officer or other person whose duty it is to determine the character of risks, and upon whose decision the application shall be accepted or rejected by such corporation, shall receive as any part of his compensation a commission upon the premiums, but his compensation shall be a fixed salary and such share of the net profits as the directors may determine.

SEC. 5. Every member shall be notified of the time and place of holding its meeting by a written notice, or by an imprint upon the back of each policy receipt or certificate of renewal, and shall be entitled to a vote as provided by law.

SEC. 6. Such company may issue policies provided the term of any policy does not exceed the time limited for the existence of the charter but not for an amount in excess of twenty-five hundred dollars on any one risk; provided, however, that one thousand dollars additional insurance may be written on any one risk for each million dollars of total insurance outstanding on the books of the company in excess of one million dollars; provided further, that two or more buildings situated in the same city block, or separated by less than one hundred feet, shall be deemed to be one risk.

SEC. 7. When any number of citizens or corporations not less than one hundred owning insurable property in this State desire to insure in a mutual company incorporated under the laws of some other State, they shall petition the Insurance Commissioner to grant such company a license to transact business in this State. Such corporation before being licensed in this State must file with the Insurance Commissioner its last annual statement signed by its president and secretary under oath, showing that the company is solvent and possessed of not less than two hundred thousand dollars bona fide premium notes or contingent liabilities of its members, and not less than seventy-five thousand dollars available cash assets over and above all liabilities or losses reported, expenses, taxes and reinsurance on all outstanding risks estimated at fifty per cent of the premiums received and receivable on all risks. Such company must also file a copy of its articles of incorporation

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