CHAP. II. Inland nav § 2. Any insurance company hereafter incorporated under the igation in last of said acts may have the powers aforesaid if in its charter it companies shall express its intent to exercise such powers. surance hereafter incorporated. When examinations When supreme court to have power to appoint a receiver. L. 1873, Chap. 851-An Act to amend an act entitled "An (SECTION 1. Amends Laws of 1853, chap. 466.) § 2. It shall be the duty of the superintendent of the insurance to be made department to make the examination into the affairs of any fire by superintendent. insurance company doing business in this State in the manner authorized by section twenty-four of the act of which this is amendatory, whenever any stockholder or creditor of any such company shall, by a declaration subscribed and sworn to by him, notify the said superintendent that, from facts within the knowledge of the person making such declaration, he believes that the condition of such insurance company does not justify its continuance in business. Such examination may also be made without any such declaration whenever the said superintendent shall deem it expedient, and the supreme court shall have power, after any such examination shall have been made in either of the cases mentioned in said section twenty-four, to appoint a receiver of its property and effects, and no stockholder or creditor, unless with the consent of such company by a vote of its board of directors at a meeting called for the purpose, shall have the right to maintain an action for the dissolution of any such company, or to apply for the appointment of a receiver of its property and effects until after notification to the said superintendent by such creditor or stockholder as hereinbefore provided, the said superintendent of the insurance department shall have refused or neglected, for the space of ten days from the filing of such notice, to make the examination authorized by said section twenty-four of the act of which this is amendatory. (See Laws of 1853, chap. 466, § 24, ante, p. 31.) Guarantee and special reserve L. 1874, Chap. 189-An Act to provide security against extraordinary conflagrations, and for the creation of safety funds by fire insurance companies. PASSED April 16, 1874. SECTION 1. Hereafter it shall be lawful for any fire insurance funds. company, organized under the laws of this State, to create the funds herein provided for, to be known and designated as the guaranty surplus fund and the special reserve fund, and to avail itself of the provisions of this act upon complying with the requirements thereof. CHAP. II. ated. ation of by superin § 2. Any fire insurance company desiring to create such funds How creshall be and it is hereby authorized to do so, upon the adoption of a resolution by its board of directors at a regular meeting thereof, and filing with the superintendent of the insurance department a copy thereof, declaring the desire and intention of such company to create such funds and to do business under the provisions of this act; and as soon after the filing of such copy of the resolu- Examintion as convenient, the superintendent shall make, or cause to be company made, an examination of such company, and he shall make a cer- tendent. tificate of the result thereof, which shall particularly set forth the amount of surplus funds held by such company at the date of such examination, which, under the provisions of this act, are to and may be equally divided between and be set apart to constitute said guaranty surplus and special reserve funds, which certificate shall be recorded in the insurance department; and from Notice on and after the date of the recording of such certificate all the policies and renewals of policies issued by such company shall have printed thereon, by such company, a notice that the same are issued under and in pursuance of this act, referring to the same by its chapter, date and title; and such policies and renewals shall be deemed to have been issued and received subject to the provisions of this act. policies. panies not dividends seven per § 3. After the date mentioned in any such resolution so passed When comand filed it shall not be lawful for such company to make, declare or to pay pay in any form any dividend upon its capital stock exceeding beyond seven per cent per annum thereupon, and upon the surplus cent. funds to be formed hereunder, until after its guaranty surplus fund and its special reserve fund shall have together accumulated to an amount equal to its said capital stock; and the entire surplus profits of such company above such annual dividend of seven per cent shall be equally divided between and be apart to constitute the said guaranty surplus fund and the said spe- pastitute cial reserve fund, which said funds shall be held and used as hereinafter provided, and not otherwise, and any company doing business under this act, which shall declare or pay any dividend contrary to the provisions herein contained, shall be liable to be proceeded against by the attorney-general for its dissolution. When Surplus profits to set Brot apart to funds. CHAP. II. Examination of company ever such company shall notify the superintendent of the insurance department that it has fulfilled the requirements already exby superin- pressed in this section and that its guaranty surplus fund and its tendent. to funds special reserve fund, taken together, equal its capital stock, it shall be his duty to make an examination of such company, and to make a certificate of the result thereof; and thereafter such comAdditions pany may continue, out of any subsequent profits of its business, to add to such funds, provided that when any addition is made to the special reserve fund an equal sum shall be carried to the guaranty surplus fund. [As amended by Laws of 1878, chap. 282, § 1.] may be made thereafter. Guaranty fund, how to be invested. Special reserve fund, how invested and depos ited. § 4. Said guaranty surplus fund shall be held and invested by such company the same as its capital stock and surplus accumulation; and shall be liable and applicable in the same manner as the capital stock and surplus accumulation, and shall be liable and applicable in the same manner as the capital stock to the payment generally of the losses of such company. § 5. Said special reserve fund, until it shall amount to a sum equal to one-half of the capital stock of such company, shall be invested according to existing laws relating to investments of capital by fire insurance companies, and any additional sum added to such fund shall be invested in any securities in which such company is by law authorized to invest its capital or its surplus accumulations, and shall be deposited, from time to time, as the same shall accumulate, and be invested with the superintendent of the insurance department, who shall permit the company depositing the same to change such deposits by substituting for those withdrawn others of equal amount and value, and to collect and receive the interests or dividends upon such securities as the same may accrue; and such special reserve fund shall be deemed a fund contributed by the stockholders to protect such company and its policy-holders other than claimants for losses already existing, or then incurred, in case of such extraordinary conflagration or conFund not flagrations as hereinafter mentioned; and said fund shall not be regarded as any part or portion of the assets in possession of said company so as to be or render the same liable for any claim or claims for loss by fire or otherwise, except as herein provided. [As amended by Laws of 1878, chap. 282, § 2.] assets. Profits of company, how estimated. § 6. In estimating the profit of any such company for the purpose of making a division thereof between said guaranty surplus fund and such special reserve fund until such funds shall together amount CHAP. II. on div to a sum equal to the capital stock of such company, there shall be deducted from the gross assets of the company, including for this purpose the amount of the special reserve fund the sum of the following items: First, the amounts of all outstanding claims; second, an amount sufficient to meet the liability of such company for the unearned premiums upon its unexpired policies, which amount shall be at least equal to one-half of the premiums received on policies having less than one year to run from date of policy, and a pro rata proportion of the premiums received on the policies having more than one year to run from date of policy, and shall be known as the reinsurance liability; third, the amount of its guaranty surplus fund and of its special reserve fund; fourth, the amount of the capital of the company; and, fifth, interest at the rate of seven per cent per annum upon the amount of the capital and of the said funds for whatever time shall have elapsed since the last preceding cash dividend; and the balance shall constitute the net surplus of the company subject to an equal division between the said funds as herein provided. The restriction of diviHow long dends upon the capital stock of such company to an amount not restriction exceeding seven per cent per annum upon the amount of such idends capital stock, and of the surplus funds formed hereunder, shall tinue. continue until the said funds shall together equal the amount of such capital, but any addition to said funds beyond an amount equal to such capital stock may be made out of any profits of the funds. subsequent business of such company, whether such addition or additions shall constitute the whole of such subsequent profits or only a part thereof. [As amended by Laws of 1878, chap. 282, § 3.] 7. In the event of any extensive conflagration or conflagra- In cases of tions, whereby the claims upon such company shall exceed the amount of its capital stock, and of the guaranty surplus fund provided for by this act, the said company shall notify the said superintendent of the fact, who shall then make, or cause to be made, an examination of said company, and shall issue his certificate of the result, showing the amounts of capital, of guaranty surplus fund, of special reserve fund, of reinsurance liability, and of other assets, and, upon his issuing such certificate in duplicate, one copy to be given the company and one to be recorded in the insurance department, the said special reserve fund shall be immediately held to protect all policy-holders of said company, other than such as are claimants upon it at the time, or such as become such claimants in consequence of such conflagration or conflagrations; and the shall con Addition to extensive conflagrations, CHAP. II. amount of said special reserve fund, and an amount equal to the unearned premiums of such company, to be ascertained as hereinbefore provided, shall constitute the capital and assets of such company for the protection of policy-holders, other than such claimants, and for the further conduct of its business; and such official certificate of the superintendent shall be binding and conclusive upon all parties interested in such company, whether as When com- stockholders, creditors, or policy-holders, and upon the payment charged to the claimants for losses or otherwise, existing at the time of from liabil- or caused by such general conflagration or conflagrations, of the pany dis ity. securities. capital stock. amount to which they are respectively entitled, in proportion to their several claims, of the full sum of the capital of such company, and of its guaranty surplus fund, and of its assets, excepting only such special reserve fund and an amount of its assets equal to the liability of the company for unearned premiums, as so certified by such superintendent, such company shall be forever discharged from any and all further liability to such claimants, and to each of them; and the said superintendent shall, after issuing his said Transfer of certificate, upon the demand of such company, transfer to it all such securities as shall have been deposited with him by such Making up company as such special reserve fund; and, if the amount of such special reserve fund be less than fifty per cent of the full amount of the capital of the company, a requisition shall be issued by the said superintendent upon the stockholders to make up such capital to that proportion of its full amount in the manner now provided by law in the case of companies with impaired capital; and provided, further, that any capital so impaired shall be made up to at least the sum of two hundred thousand dollars, and in case said company, after such requisition, shall fail to make up its capital to at least said amount of two hundred thousand dollars as therein directed, said special reserve fund shall still be held as security and liable for any and all losses occurring upon policies of such company after such conflagration or conflagrations; and provided, further, that if any amount greater than a sum equal to one-half of its capital stock shall by such company, under the provisions of this act, have been deposited with such superintendent, he shall retain of such securities a sum equal to one-half of what amount he shall so hold thereof in excess of such one-half of such capital stock, and he shall transfer the balance thereof to such company, as herein provided; and the amount so transferred to such company shall, from the time of such transfer (provided the amount |