CHAP II.

Books of subscription to be opened.

Investment of capital, etc.

Condition

ties.

§ 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 their declaration and charter, as required by the third section of this act, and also on filing in the office of the superintendent of the insurance department 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 enter into agreements in the manner and to the extent specified in the sixth section of this

act

§ 8. It shall be lawful for any fire insurance company organized under this 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 and improved real estate within the State of New York, as to securi-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 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, in the security of such stocks or bonds or treasury notes, or upon bonds and mortgages as aforesaid, and to change and reinvest the same as occasion may, from time to time, require; but any surplus money over and above the capital stock of any such fire and inland navigation insurance companies, or any fire insurance companies incorporated under any law of this State, may be invested in or loaned upon the pledge of the public stock or the 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 institutions incorporated under the laws of this State or of the United States, except their own stock, and any amount not exceeding one-half the annual premium receipts of any company upon its outstanding policies in any other State of the United States, may be invested upon bond and mortgage security upon real estate in such State, which shall be certified by the superintendent of the insurance department of this State to be

Investment of surplus

CHAP. II.

Subject to

superin

tendent.

unincumbered, improved and worth double the sum loaned thereon, or in the stocks or bonds of any foreign country to the approval of extent which may be provided under the laws thereof as the condition of such company doing business therein; provided, that such investment in such foreign stocks or bonds shall be made only from funds which constitute a surplus over and above capital and other liabilities and subject to the approval of the superintendent of the insurance department. [As amended by Laws of 1862, chap. 367, § 2; by Laws of 1863, chap. 242, § 1; by Laws of 1864, chap. 563, § 1; and by Laws of 1871, chap. 608, § 1.] Matter of World's Safe Ins. Co., 40 Barb. 499.

(See Laws of 1875, chap. 423, post, p. 179.)

not to be

§ 9. No company organized by or under this act shall purchase, Real estate hold or convey real estate, excepting for the purposes and in the held, except manner herein set forth, to-wit:

1. Such as shall be requisite for its convenient accommodation in the transaction of its business; or,

2. Such as shall have been mortgaged to it in good faith, by way of security for loans previously contracted, or for money due; or, 3. Such as shall have been conveyed to it in satisfaction of debts previously contracted in their legitimate business or for money due; or,

4. 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 superintendent of the insurance department 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 superintendent shall direct in said certificate; and the said superintendent 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.

(See Laws of 1872, chap. 146; as amended by Laws of 1875, chap. 119, post, p. 228, Laws of 1881, chap. 484, post, p. 133, and Laws of 1882, chap. 290, post, P. 235.)

for certain purposes and in a certain

manner.

§ 10. The charter and proof of publication herein required to Attorneygeneral to be filed by every such company shall be examined by the attorney-examine general, and, if found conformable to this act and not inconsistent with the constitution or laws of this State, shall be certified by him

charter, etc

CHAP. II.

to the superintendent of the insurance department, who shall thereupon cause an examination to be made, either by himself or by Examina- three disinterested persons specially appointed by him for that tion by superin- purpose, who shall certify, under oath, that the capital herein required of the company named in the charter, according to the nato capital. ture of the business proposed to be transacted by such company,

tendent or commissioners as

Director to make by-laws.

Common seal.

No dividends ex

cept from

profits.

Risks not matured.

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 required 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 superintendent; and the corporators or 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 certificates shall be filed in the office of the said superintendent, 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.

Matter of World's Safe Ins. Co., 40 Barb. 499.

§ 11. 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. It shall not be lawful for the directors, trustees or managers of any fire insurance 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 premiums on unexpired risks and policies, which are hereby declared to be unearned premiums, and also there shall be reserved all sums due the corporation on bonds

CHAP. II.

tions.

and mortgages, bonds, 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, Reservathat 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 Penalty for subject the company making the same to a forfeiture of its charter, improperly declaring and each stockholder receiving it to a liability to the creditors of dividends. 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. [As amended by Laws of 1862, chap. 367, § 3; by Laws of 1864, chap. 563, § 2; by Laws of 1865, chap. 199, § 1, and by Laws of 1867, chap. 91, § 7.]

People ex rel. v. Commissioners of Taxes, etc., 76 N. Y. 64.

remain as

losses.

§ 13. All notes deposited with any mutual insurance company Notes to at the time of its organization, as provided in section six, shall security for remain as security for all losses and claims, until the accumulation of the profits, 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 mutual insurance company subsequent to its organization, in addition to the cash premium on 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 repre

CHAP. II.

mutual

members

thereof.

Settlement

of losses, etc.

sentative, 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 whole amount Persons of the cash premium. And every person effecting insurance in effecting insurance in any mutual company, and also their heirs, executors, administracompanies tors and assigns, continuing to be so insured, shall thereby become to 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 said 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 after personal demand for payment shall have been made, 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 costs of suit; but execution shall only issue for assessments and costs as they accrue, and every such execution shall be accompanied by a list of the losses for which the assessment is made. If the whole amount of 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, towards 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. [As amended by Laws of 1854, chap. 369, § 3.]

When members may be sued.

Hulbert v. Carter, 21 Barb. 221; Devendorf v. Beardsley, 23 id. 656;