INSURANCE COMPANIES.

certificate of incorporation, which stock shall be divided into shares of one hunCH. 43 dred dollars each, of which capital, at least fifty per cent. shall be fully paid up in cash, and that for the remainder of its capital there are in its possession notes of its stockholders, secured by at least one surety or by mortgages on unincumbered real estate, within this state, worth at least twice the amount of such notes, which notes or other security shall be approved by the state auditor; nor shall any company on the plan of mutual insurance commence business in this state until agreements have been entered into for insurance with at least two hundred applicants, the premiums upon which shall amount to not less than twenty-five thousand dollars, of which at least five thousand dollars shall have been paid in actual cash, and for the remainder of which notes of solvent parties, founded upon actual and bona fide applications for insurance, shall have been received; no one of the notes received as aforesaid shall amount to more than five hundred dollars, and no two thereof shall be given for the same risk or made by the same person or firm, except where the whole amount of such notes does not exceed the sum of five hundred dollars; nor shall any note be regarded or represented as capital stock, unless a policy be issued upon the same within thirty days after the organization of the company taking the same, upon a risk which shall be for no shorter period than twelve months; each of said notes shall be payable, in whole or in part, 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 notes shall be accepted as part of such capital stock, unless the same shall be accompanied by a certificate of a justice of the peace, notary public, or clerk of the district court of the county in which the person executing such note shall reside, that the person making the same is, in his opinion, pecuniarily good and responsible for the same, in property not exempt from execution by the laws of their state; and no such note shall be surrendered while the policy for which it was given continues in force.

SEC. 4. [Subscription books.]-Having published the notice and filed the publisher's affidavit of the publication thereof with the auditor of state, together with the certificate, as required by the first section of this act, the persons named in the certificate of incorporation, or a majority of them, shall be commissioned to open books for the subscription of stock to the company, at such times and places as to them may seem convenient and proper, and shall keep the same open until the full amount specified in the certificate 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 enter into agreement in the manner and to the extent specified in the third section of this act.

SEC. 5. [Directors.]-The affairs of any company organized under the provisions of this act shall be managed by not more than twenty-one nor fewer than five directors, all of whom shall be stockholders; within thirty days after the subscription books shall have been filled, a majority of the subscribers shall hold a meeting for the election of directors, each share entitling the holder thereof to one vote; and the directors then elected shall continue in office until their successors have been duly chosen and have accepted the trust.

SEC. 6. [Capital-Investment.-It shall be lawful for any insurance company organized under the act, or incorporated under any law of this state, to invest its capital and the funds accumulated in the course of its business, or any part thereof, in bonds and mortgages on unincumbered real estate, within the state of Nebraska, worth double the sum loaned thereon, exclusive of buildings, unless such buildings are insured in some responsible company or companies and the policy or policies transferred to said company, and also in stocks of this state or stocks or treasury notes of the United States, in the stocks and bonds of any county or incorporated city in this state, which may have been therefore authorized to be issued by the legislature of this state, and to lend the same, or any part thereof, on the security of such stock, or lands, or treasury notes, or upon the bonds

and mortgages as aforesaid, and not otherwise; and to change and re-invest the same in like securities, as occasion may from time to time require; but any surplus money over and above the paid-up capital stock of any such company organized under this act or incorporated under any law of this state, may be invested in or loaned upon the pledge of public stocks of the United States or any of the stock, or stocks, bonds, or other evidences of indebtedness of any solvent, dividend paying institution incorporated under the laws of this state or the United States, except their own stock; Provided, always, That the current market value of such stock, bonds, or other evidences of indebtedness, shall be at all times during the continuance of such laws, at least twenty per cent. more than the sum loaned thereon.

SEC. 7. [Certificate of organization.]-Upon receiving notification that the requirements of the preceding sections have been complied with, the auditor of state shall make an examination, or cause one to be made by some disinterested person officially appointed by him for that purpose, and if it shall be found (if the examination shall be made other than [by] the auditor, then the finding shall be certified under oath), that the capital herein required by the company named, according to the nature of the business proposed to be transacted by such company, has been paid in and possessed by it in money, or in such stocks, notes, bonds, or mortgages, as are required by the third and sixth sections of this act, then he shall so certify; and if the examination be made by other than the auditor, then the finding shall be certified under oath; or, if it is proposed to be a mutual insurance company, that it has received and is in actual possession of the capital, premiums or bona-fide engagements of insurance, or the securities, as the case may be, to the extent and value required by the third and sixth sections of this act, the name and residence of the maker of each premium note forming part of the capital of any such proposed insurance company, and the amount of such note, shall be returned to the auditor. The corporators or officers of any such company or proposed.mutual company contemplated by this act, shall be required to certify under oath, to the auditor of state, that the capital exhibited to the person making the examination directed in this section, was bona-fide property of the company so examined; the certificates above contemplated shall be filed in the office of said auditor, who shall thereupon deliver to such company a certified copy of the same, with his written permission for them to commence business as proposed in their written certificate of incorporation, which on being placed on record in the office of the recorder of the county in which the company is to be located, by the recorder, in a book prepared by him for that purpose, shall be their authority to commence business and issue policies; and such certified copy of said certificate may be used in evidence for or against said company with the same effect as the originals. [Cited 18 Neb. 282.]

SEC. 8. [Objects insurable.-It shall be lawful for any company organized under this act, or doing business in this state: First. To insure houses, buildings, and all other kinds of property against loss or damage by fire or other casualty, and to make all kinds of insurance on goods, merchandise, or other property in the course of transportation, whether on land or water, or any vessel afloat, wherever the same may be. Second. To make insurance on the health of individuals, and against the personal injury, disablement, or death, resulting from traveling or general accidents by land or water. Third. To insure the fidelity of persons holding places of public or private trust. Fourth. To receive on deposit and insure the safe keeping of books, papers, moneys, stocks, bonds, and all kinds of personal property. Fifth. To insure horses, cattle, and other stock, against loss or damage by accident, theft, or any unknown or contingent event whatever which may be the subject of legal insurance; to lend money on bottomry or respondentia, and to cause itself to be insured against any loss or risk it may have incurred in the course of its business and upon the interest which it may have in any property by means of any loan or loans which it may have made on mortgage, bottomry, or respondentia; and generally to do and

INSURANCE COMPANIES.

CH. 43 perform all other matters and things proper to promote these objects; Provided, That no companies shall be organized to issue policies of insurance for more than one of the above five mentioned purposes; and no company that shall have been organized for either one of said purposes, shall issue policies of insurance for any other; and no company organized under this act, or transacting business in this state, shall expose itself to loss on any one risk or hazard to an amount exceeding ten per cent. on its paid-up capital, unless the excess shall be re-insured by the same in some other good and reliable company; And Provided, That the restriction as to the amount of risk any company shall assume shall not apply to companies organized to guarantee the fidelity of persons in places of public or private trust, nor to companies that receive on deposit and guarantee the safe keeping of books, papers, moneys, and other property. [Cited 18 Neb. 282.]

SEC. 9. Directors Election.]-The annual meeting for the election of directors shall be holden during the month of January, as the by-laws of the company may direct; Provided, however, That if for any cause the stockholders shall fail to elect at any annual meeting, then they may hold a special meeting some day subsequent thereto for that purpose, by giving thirty days notice thereof in some newspaper in general circulation in the county in which the principal office of the company shall be located; and the directors chosen at any such annual or special meeting shall continue in office until the next annual meeting, and until their successors duly elected shall have accepted.

SEC. 10. [Same-Vacancies-President.-The directors shall choose by ballot a president from their own number, and shall fill all vacancies which shall arise in the board or in the presidency thereof, and the board of directors thus constituted, or a majority of them, when convened at the office of the company, shall be competent to exercise all the powers vested in them by this act.

SEC. 11. [Power of directors-Officers.]-The directors of any such company shall have power to appoint a secretary and any other officer or agents necessary for transacting the business of the company, paying such salaries and taking such securities as they may deem reasonable; they may ordain and establish such by-laws and regulations, not inconsistent with this act or with the constitution and laws of the United States and of this state, as shall appear to them necessary for regulating and conducting the business of the company; and it shall be their duty to keep full and correct entries of their transactions, which shall at all times be open to the inspection of the stockholders, and to the inspection of persons invested by law with the right thereof.

SEC. 12. [Policies Attestation.]-All policies or contracts of insurance made or entered into by the company may be made either with or without the seal of said company; but said policies shall be subscribed by the president or such other officer as may be designated by the directors for that purpose, and shall be attested by the secretary thereof.

SEC. 13. [Stock transfers.]-Transfers of stock may be made by any stockholder or his legal representative, subject to such restrictions as the directors shall, from time to time, establish in their by-laws, except as hereinafter provided.

SEC. 14. [Capital increased.]-Whenever any company organized under this act with less than the maximum capital limited in section three thereof, shall, in the opinion of the directors thereof, require an increased amount of capital, they shall, if authorized by the holders of a majority of the stock to do so, file with the auditor of state a certificate setting forth the amount of such desired increase not exceeding said maximum, and thereafter such company shall be entitled to have the increased amount of capital fixed by said certificate; and the examination of securities composing the capital stock thus increased shall be made in the same manner as provided in section seven of this act, for the capital stock first paid in.

SEC. 15. [Dividends.]-It shall not be lawful for the directors, trustees, or managers of any insurance company organized under this act, or incorporated under any law of this state to make any dividends except from the sur

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

INSURANCE COMPANIES.

Сн.43 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 Fosses 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