by fire and lightning, is hereby authorized to insure against loss by fire, lightning and tornadoes, or either or any of said causes; and in all cases wherein any such company has heretofore insured against loss or damage from either, any or all of said causes, such insurance shall be binding on such company. [As amended by act approved May 25, 1881. In force July 1, 1881. L. 1881, p. 99.

2. May reinsure. § 2. Any companies organized under this act shall have power to effect reinsurance of any risks taken by them respectively. [Illinois M. Fire Ins. Co. v. Andes Ins. Co., 67 Ill 362.

3. Declaration — copy of charter. § 3. Such persons shall file in the office of the auditor of public accounts a declaration, signed by all the corporators, expressing their intention to form a company for the purpose of transacting the business of insurance as expressed in the first section of this act, which declaration shall also comprise a copy of the charter proposed to be adopted by them, and shall publish a notice of such their intention, once in each week, for at least four weeks, in a public newspaper in the county in which such insurance company is proposed to be located.

4. Form of charter. § 4. The charter comprised in such declaration shall set forth the name of the company, the place where the principal office for the transaction of its business shall be located, the mode and manner in which the corporate powers granted by this act are to be exercised, the mode and manner of electing trustees or directors, a majority of whom shall be citizens of this State, and of filling vacancies (but each director of a stock company shall be the owner, in his own right, of at least $500 worth of the stock of such company, at its par value), the period for the commencement and termination of its fiscal year, and the amount of capital to be employed in the transaction of its business; and the auditor of public accounts shall have the right to reject any name or title of any company applied for, when he shall deem the name too similar to one already appropriated, or likely to mislead the public in any respect.

5. Restriction. § 5. No company formed under this act shall, directly or indirectly, deal or trade in buying or selling any goods, wares, merchandise, or other commodities whatever, excepting such articles as may have been insured by such company, and are claimed to be damaged by fire or water.

6. Capital of joint stock companies — risks. § 6. No joint stock company shall be incorporated under this act in the city of Chicago, nor shall any company incorporated under this act establish any agency for the transaction of business in said city, with a smaller capital than one hundred and fifty thousand dollars ($150,000), actually paid in, in cash, nor in any other county in this State with a smaller capital than one hundred thousand dollars ($100,000), actually paid in, in cash. Nor shall any company formed under this act, for the purpose of doing the business of fire or inland navigation insurance on the plan of mutual insurance, commence business, if located in the city of Chicago, nor establish any agency for the transaction of business in said city, until agreements have been entered into for insurance with at least four hundred applicants, the premiums on which shall amount to not less than two hundred thousand dollars ($200,000), of which forty thousand dollars ($40,000). at least, shall have been paid in cash, and notes of solvent parties, founded on actual and bona fide application for insurance shall have been received for the remainder, nor shall any mutual insurance company in any other part of the State commence business until agreements have been entered into for insurance with at least one hundred applicants, the premiums on which shall amount to not less than fifty thousand dollars ($50,000), of which ten thousand dollars ($10,000) at least shall have been paid in cash and notes of solvent parties founded on actual

and bona fide applications for insurance shall have been received for the remainder. No one of the notes received as aforesaid shall amount to more than one thousand dollars ($1,000), and no two notes shall be given for the same risk, or be made by the same person or firm, except where the whole amount of such notes shall not exceed one thousand dollars ($1,000); nor shall any such note be represented as capital stock, unless a policy be issued upon the same within thirty days after the organization of the company upon a risk which shall not be for a shorter period than twelve months. Each of the said notes shall be payable in part or in whole at any time when the directors shall deem the same requisite for the payment of losses by fire or inland navigation, and such incidental expenses as may be necessary for transacting the business of said company. And no note shall be accepted as part of said capital stock unless the same shall be accompanied by a certificate of a justice of the peace, or supervisor of the town or city where the person making such note shall reside, that the person making the same is in his opinion pecuniarily good and responsible for the same, and no such note shall be surrendered during the life of the policy for which it was given. No joint stock fire insurance company organized under this act, or transacting business in this State, shall expose itself to any loss or any one fire or inland navigation risk or hazard to any amount exceeding ten per cent. of its paid up capital.

[As amended by act approved May 11, 1877. In force July 1, 1877. L. 1877, P. 120; People v. Empire Fire Ins. Co., 88 Ill. 309.

7. Opening books of joint stock and mutual com[*592] panies. § 7. It shall and may be lawful for the individuals associated for the purpose of organizing any company under this act, after having published the notice and filed the declaration and charter as required by the third section of this act, and also on filing in the office of the auditor of public accounts proof of such publication by the affidavit of the publisher of such newspaper, his foreman or clerk, to open books for subscription to the capital stock of the company so intended to be organized, and to keep the same open until the full amount specified in the charter is subscribed; or in case the business of such company is proposed to be conducted on the plan of mutual insurance, then to open books to receive propositions, and to enter into agreements in the manner and to the extent specified in the sixth section of this act.

8. Investment of capital. 8. It shall be lawful for any insurance company organized under this act, or any such company incorporated under any law of this State, to invest its capital and the fund accumulated in the course of its business, or any part thereof, in bonds and mortgages on improved unincumbered real estate within the State of Illinois, worth fifty per cent more than the sum loaned thereon (exclusive of buildings, unless such buildings are insured and the policy transferred to said company); and, also, in the stocks of this State, or stocks or treasury notes of the United States; and, also, in the bank stock of national banks; and, also, in the stocks and bonds of any county or incorporated city in this State authorized to be issued by the legislature; and to lend the same, or any part thereof, on the security of

such stocks or bonds, or treasury notes, or upon bonds or mortgages as aforesaid, and to change and re-invest the same as occasion may, from time to time, require; but any surplus money, over and above the capital stock of such fire and inland navigation insurance companies, or any such insurance companies incorporated under any law of this State, may be invested in or loaned upon the pledge of the public stocks or bonds of the United States or any one of the States, or the stocks, bonds or other evidences of indebtedness of any solvent, dividend-paying institution incorporated under the laws of this State or of the United States, except their own stock: Provided, always, that the current market value of such stocks, bonds and other evidences of indebtedness shall be, at all times during the continuance of such loans, at least ten per cent. more than the sum loaned thereon.

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9. What real estate company may hold-sale. § 9. No company organized by o. under this act shall purchase, hold or convey real estate, excepting 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; or, 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 their legitimate business or for money due; or, Fourth, such as shall have been purchased at sales 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; and all such real estate as may be acquired as aforesaid, and which shall not be necessary for the accommodation of such company in the transaction of its business, shall be sold and disposed of within five years after such company shall have acquired title thereto, unless the company shall procure a certificate from the auditor of public accounts, that the interests of the company will suffer materially by a forced sale thereof; in which event the sale may be postponed for such a period as the said auditor shall direct in said certificate; and the said auditor may also give such certificate and extend the time for holding real estate, in the like circumstances, on the application of any insurance company heretofore incorporated.

10. Charter, etc., examined by attorney-general-capital by auditor-certificate filed-commence business— evidence. 10. The charter and proof of publication herein required to be filed by every such company, shall be examined by the attorneygeneral, and if found conformable to this act and not inconsistent with the constitution or laws of this State, shall be certified by him to the auditor of public accounts, who shall thereupon cause an examination to be made, either by himself or by three disinterested persons specially appointed by him for that purpose, who shall certify, under oath, that the capital herein required of the company named in the charter, according to the nature of the business proposed to be transacted by such company, has been paid in, and is possessed by it in money or in such stocks and bonds and mortgages as are required by the eighth section of this act, or if a mutual company, that it has received and is in actual possession of

the capital, premiums or bona fide engagements of insurance or other securities, as the case may be, to the full extent and of the value re quired by the sixth section of this act; and the name and the residence of the maker of each premium note forming part of the capital, and the amount of such note, shall be returned to the said auditor, and the corporators and officers of such company shall be required to certify, under oath, that the capital exhibited to those persons is bona fide property of the company. Such certificate shall be filed in the office of the said auditor, who shall thereupon deliver to such company a certified copy of the charter and of said certificates, which, on being filed in the office of the clerk of the county where the company is to be located, shall be their authority to commence business and issue policies; and such certified copy of the charter and of said certificates may be used in evidence for or against said company with the same effect with the originals, and shall be conclusive evidence of the fact of the organization of such company. [Bigelow v. Gregory, 73 Ill. 197.

11. By-laws-seal. II. The corporators or the trustees or directors, as the case may be, of any company organized under this act, shall have power to make such by-laws, not inconsistent with the constitution or laws of this State, as may be deemed necessary for the government of its officers and the conduct of its affairs, and the same, when necessary, to alter and amend ; and they and their successors may have a common seal and may change and alter the same at their pleasure. 12. Dividends "year" defined. 12. It shall not be lawful for the directors, trustees or managers of any such insurance [*594] company to make any dividend except from the surplus profits arising from their business; and in estimating such profits there shall be reserved therefrom a sum equal to the whole amount of unearned premiums on unexpired risks and policies, and, also, there shall be reserved all sums due the corporation on bonds and mortgages, stocks and book accounts, of which no part of the principal or the interest thereon has been paid during the last year, and for which foreclosure or suit has not been commenced for collection, or which, after judgment obtained thereon, shall have remained more than two years unsatisfied, and on which interest shall not have been paid; and, also, there shall be reserved all interest due or accrued and remaining unpaid: Provided, always, that any company may declare dividends, not exceeding ten per cent on its capital stock in any one year, that shall have accumulated and be in possession of a fund, in addition to the amount of its capital stock and of such dividend, and all actual outstanding liabilities, equal to one-half of the amount of all premiums on risks not terminated at the time of making such dividend. Any dividend made contrary to these provisions shall subject the company making the same to a forfeiture of its charter, and each stockholder receiving it to a liability to the creditors of such company to the extent of the dividend received, in addition to the other penalties and punishments in such case made and provided. This section shall not apply to the declaration of scrip dividends by participating companies, but no such scrip dividends shall be paid except from surplus profits after reserving all sums as above provided, including the

whole amount of premiums on unexpired risks. The word “year," wherever used in this section, shall be construed to mean the calendar year. 13. Mutual companies-notes-members-assessments -liabilities. § 13. All notes deposited with any mutual insurance company at the time of its organization, as provided in section six, shall remain as security for all losses and claims, until the accumulation of premium notes and assets, invested as required by the eighth 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 such mutual insurance company subsequent to its organization, in addition to the cash premium or any insurance effected with such company, may, at the expiration of the time of such insurance, be relinquished and given up to the maker thereof, or his representative, upon his paying his proportion of all 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 premium, by any person insured in such company; but in no case shall the note be more than five times the annual rate charged such persons by such companies. And every person effecting insurance in any mutual company organized under this act, and also their heirs, executors, administrators and assigns, continuing to be so insured, shall thereby become members of said corporation during the period of insurance, and shall be bound to pay for losses and such necessary expenses as aforesaid, accruing in, and to said company, in proportion to the amount of his deposit note or notes. The directors shall, as often as they deem necessary, after receiving notice of any loss or damage by fire, sustained by any member, and ascertaining the same, or after the rendition of any judgment against such company for loss or damage, settle and determine the sums to be paid by the several members thereof as their respective portion of such loss, and publish the same in such manner as they shall see fit, or as the by-laws shall have prescribed, and 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 next after the publication of said notice. And if any member shall, for the space of thirty days after the publication of said notice and service of such notice upon such member by mail, directed to him at his post-office, addressed as written in or upon his application for insurance, neglect or refuse to pay the sum assessed upon him as his proportion of any loss as aforesaid, in such case the directors may sue for and recover the whole amount of his deposit note or notes, with cost of suit, but execution shall only issue for assessments and costs as they accrue. If the whole amount of the deposit notes shall be insufficient to pay the loss occasioned by any fire or fires, in such case the sufferers insured by the said company shall receive toward making good their respective losses a proportional share of the whole amount of said notes, according to the sums by them respectively insured, but no member shall ever be required to pay for any loss, occasioned by fire or inland navigation more than the whole amount of his deposit note