shall consist either of a full abstract of title, a full certificate of title, or a guarantee or policy of title insurance, and such evidence of title shall be examined and approved by or under the direction of the insurance commissioner. The value of the property covered by each such mortgage or deed of trust shall be appraised by one or more appraisers selected or approved by the insurance commissioner. The appraisers shall be residents of the county in which the property or some part thereof is situated. The reasonable cost of examining such evidence of title and of making such appraisement, shall be paid by the title insurance company making such deposit, and shall not exceed twenty dollars for examining the title to the property covered by each mortgage or deed of trust, nor five dollars for each appraiser, not exceeding two, besides the necessary expenses of such appraisers; provided, that as to any part of the securities so deposited with the state treasurer which consists of notes or bonds secured by mortgage or deed of trust, payment of which is guaranteed by a policy of mortgage insurance, or of mortgage participation certificates, issued by a mortgage insurance company in accordance with the provisions of Chapter VIII, of title II of part IV of division first of the Civil Code, such evidence of title need not be required. Any such corporation organized under the laws of this state and having a capital stock paid in, in cash, of more than one hundred thousand dollars, after depositing said guarantee fund as above provided, may invest an amount not exceeding fifty percent of its subscribed capital stock in the preparation and purchase of materials or plant necessary to enable it to engage in such title insurance business; and such materials or plant shall be deemed an asset valued at the actual cost thereof, in all statements and proceedings required by law for the ascertainment and determination of the condition of such corporation, or at such lesser value as may be estimated by such corporation in any such statement or proceeding, or omitted entirely therefrom. 1925.

453u. Every title insurance company shall annually set apart a sum equal to ten percent of its premiums collected during the year, which sums shall be allowed to accumulate until a fund shall have been created equal in amount to twenty-five percent of the subscribed capital stock of such corporation. Such fund shall be maintained as a further security to holders of the guaranties and policies of insurance issued by such corporation and shall be known as the "Title insurance surplus fund"; and if at any time such fund shall be impaired by reason of a loss, the amount by which it may be impaired shall be restored in the manner hereinabove provided for its accumulation. The reporting of a loss shall be deemed an impairment of such fund for the purposes of this section. Such corporation must not make any dividends except from profits remaining on hand after retaining unimpaired:

1. The entire subscribed capital stock.

2. The amount set apart as a surplus fund under the provisions of this section.

3. A sum sufficient to pay all liabilities for expenses and taxes, and all losses reported or in course of settlement, without impairment of the title insurance surplus fund required to be set apart as hereinabove provided. 1913-491.

453v. Any written contract or instrument purporting to show the title to real property, or furnish information relative thereto, which shall in express terms purport to insure or guarantee such title or the correctness of such information, shall be deemed a policy of title insurance. 1913-491.

453w. Every title insurance company organized under the laws of this state shall also have power to guarantee or insure the identity,

due execution, and validity of any note or bond secured by mortgage or trust deed, and the identity, due execution and validity and recording of any such mortgage or trust deed, and the identity, due execution and validity of bonds, notes or other evidence of indebtedness issued by this state, or by any county, city and county, city, school district, irrigation district, or other municipality or district therein, or by any private or public corporation, and to act as registrar or transfer agent of this state, or of any county, city and county, city, school district, irrigation district, or other municipality or district therein, or of any private or public corporation, and to transfer or countersign any such bonds, notes, or other evidence of indebtedness and to transfer and countersign certificates of stock of any private or public corporation. 1913-491.

453x. Any title insurance corporation incorporated under the general incorporation laws of this state, authorized by its articles of incorporation to act as executor, administrator, guardian, assignee, receiver, depositary, agent or trustee, or to do a general trust business, and having a capital of not less than three hundred thousand dollars actually paid in, in cash, may also do business as a trust company, and maintain a trust department as well as a title insurance department, on compliance with the following conditions.

1. When such title insurance company desires to do such a departmental business, it shall first obtain the consent of both the superintendent of banks and of the insurance commissioner, and in its application for such consent, must file a statement making a segregation of its capital and surplus for each such department. At least two hundred thousand dollars of its capital must be apportioned by such statement to its trust department. The respective portions of such capital and surplus, when such apportionment has been approved by the superintendent of banks and by the insurance commissioner, shall be considered and treated as the separate capital and surplus of each such department respectively, as if each such department was a separate business.

2. Such company, as to its title insurance department, shall be subject to and shall comply with all the requirements of the insurance laws and the rules and regulations of the insurance department of this state, and may invest its capital apportioned to its title insurance department and the accumulations therefrom, in the securities in which the capital and accumulations of insurance companies are allowed by the laws of this state to be invested, including the materials and plant necessary to enable it to engage in the title insurance business, as provided in this chapter.

3. Such company, as to its trust department, shall be subject to and shall comply with all the requirements of the banking laws and rules and regulations of the state banking department of this state, and may invest its capital apportioned to its trust department, and the accumulations therefrom, and trust funds received by it, in accordance with the laws of this state relative to the investment of funds of trust companies. 1913-492.

453y. No corporation shall make any contract or issue any policy of guarantee or insurance affecting titles to real estate, or engage in the business of a title insurance company, until it has obtained from the insurance commissioner his certificate that such company has complied with the provisions of this chapter and is duly authorized to do business as such title insurance company. 1915-1266.

453z. No loan shall be made by any title insurance company, directly or indirectly, to any of its officers or directors or employees or to any member of the family of any officer or director. Any officer director, agent, or employee of any such company who knowingly

consents to any violation of the terms or provisions of this section shall be guilty of a misdemeanor. 1913-493.

453aa. Every mortgage insurance company shall be subject to and shall comply with all the requirements of the laws of this state made applicable to insurance companies generally and the rules and regulations of the insurance department of this state, excepting in so far as said laws, rules or regulations may be inconsistent with the other provisions in this chapter contained; and the insurance commissioner shall have the same power and authority over such company that he may exercise in relation to other insurance companies, including the right to examine and inspect the financial condition and affairs of such company relating to the business of such company, and to compel compliance with the provisions of law governing any such company. 1915-1539.

453bb. The term "mortgage insurance company" shall include every association, corporation, firm or person who shall engage as a business in making and issuing policies of mortgage insurance.

The term "security" wherever used in this chapter, without a different meaning being specified or made apparent, shall be construed to refer to and include within its meaning a note or notes, or bond or bonds, together with the mortgage or deed of trust securing the same, which evidence a debt secured by a first lien on a marketable title in fee to real estate, or to real estate with improvements thereon.

Any contract made and issued by a mortgage insurance company, which purports to guarantee or insure against loss on, or to guarantee the payment of, within a specified time, the whole, or any part, of the principal, interest or other sums agreed to be paid under the terms of any security, or other sums secured under the terms of any security, shall be deemed, and is hereby designated, a "policy of mortgage insurance."

A policy of mortgage insurance which evidences the ownership by the insured of an undivided or other partial share or interest, or the right to participate to a specified extent in a security, or in a group consisting of several securities, and purports to guarantee the payment of such securities, or the payment of such undivided or other partial share or interest therein, or the amount of such participation, may be referred to as, and is hereby designated, a "mortgage participation certificate."

A policy of mortgage insurance, other than a mortgage participation certificate, which covers and refers to the entire indebtedness evidenced by a security, may be referred to as, and is hereby designated an "entire mortgage guaranty." 1915-1539.

453cc. No mortgage insurance company shall engage in business,

or issue any policy of mortgage insurance, within this state without having at least two hundred and fifty thousand dollars in capital stock fully paid in, in cash; nor until after having obtained from the insurance commissioner his certificate that such company has complied with the laws of this state applicable thereto and is duly authorized to do business as a mortgage insurance company.

No mortgage insurance company shall guarantee the payment of any security except the same be a first lien upon a marketable title in fee to the property covered thereby. No mortgage insurance company shall issue any policy of mortgage insurance guaranteeing the payment of any portion of any security exceeding fifty percentum of the market value of the real estate with improvements covered by the same. No mortgage insurance company shall have at any time outstanding policies of mortgage insurance guaranteeing the payment of securities the aggregate amount of the unpaid principal of which exceeds twenty times the amount of its paid up capital. The making and issuing of policies of mortgage insurance under this act by mortgage insurance companies must not be construed to be the creation of debt within the meaning of the phrase "create any debts" in section three hundred nine of the Civil Code, nor of indebtedness within the meaning of the phrase "such capital stock cannot be diminished to an amount less than the indebtedness of the corporation" in section three hundred fifty-nine of the Civil Code, except that no mortgage insurance company shall reduce its capital stock to an amount less than is required by this act to be maintained by such mortgage insurance company, or less than the indebtedness of such mortgage insurance company other than such policies of mortgage insurance.

No mortgage insurance company shall invest in, hold or own any of the capital stock of any other corporation, or make any loan, in whole or in part, on the security of capital stock of any other corporation; provided, that a mortgage insurance company may take in its own name as pledgee, in connection with any loan conforming to the provisions of subdivision five of section four hundred fifty-three ee, stock in a water or power corporation in cases where such stock represents the right to receive or obtain water or power for the irrigation or cultivation, or other beneficial use thereon, of the real estate covered by the loan, whether such right be appurtenant thereto or atherwise; and if such loan be used as a part of a security or of a group of securities taken as the basis for the issue of mortgage participation certificates, may assign such stock to a trust company as a part of the security or securities required to be assigned by the terms of section four hundred fifty-three ff. Said company may also hold, use, transfer or dispose of any such stock for the benefit and protection of such loans.

No loan shall be made by any mortgage insurance company directly or indirectly to any of its officers or directors.

A violation of any of the terms or provisions of this section shall not make any security or any policy of such company void or voidable, but any officer, director, agent or other employee of any mortgage insurance company who knowingly consents to any violation of any of the terms or provisions of this section shall be guilty of a misdemeanor. 1915-1539.

453dd. Every mortgage insurance company shall annually set apart a sum equal to ten percentum of its net earnings collected during the year, which sums shall be allowed to accumulate until a fund shall have been created equal in amount to twenty-five per centum of the paid up capital stock of such company. Such fund shall be maintained as a further security to the holders of policies of mortgage insurance issued by such company, and shall be known as the "surplus"; and if at any time such surplus shall be impaired by reason of a loss,

the amount by which it may be impaired shall be restored in the manner hereinabove provided for its accumulation. All additions to said surplus, whether made in fulfillment of the requirements of this section or voluntarily by the company, shall be and remain subject to the provisions of this law. Such company must not make any dividends except from profits remaining on hand after retaining unimpaired:

1. The entire capital stock.

2. The amount set apart as a surplus under the provisions of this section.

3. A sum sufficient to pay all liabilities for expenses and taxes, and all losses reported or in course of settlement, without impairment of said surplus. 1915-1540.

453ee. A mortgage insurance company may invest its capital, surplus and accumulations in the purchase of, or loans upon, any of the obligations specified in subdivisions one to six, inclusive of this section:

1. Bonds or interest-bearing notes or obligations of the United States or those for which the faith and credit of the United States are pledged for the payment of principal and interest.

2. Bonds of this state or those for which the faith and credit of the state of California are pledged for the payment of principal and interest and bonds of any other state in the United States, that has not, within five years next preceding such investment by such insurance company, defaulted in payment of any part of either principal or interest due upon any legally authorized bond issue.

3. Bonds or interest-bearing notes or obligations issued under authority of law by any county, municipality or school district in this state or in any other state or territory of the United States; provided that said county, municipality or school district or the state or territory in which it is located has not, within five years next preceding such investment by such insurance company, defaulted in payment of any part of either principal or interest due upon any legally authorized bond issue.

4. Bonds of a permanent road division in this state and any irrigation district bonds which the law may now or hereafter authorize as legal investments for insurance companies; provided, that the total amount of bonds issued by any such irrigation district does not exceed sixty per centum of the aggregate market value of the lands. within such district, and of the water, water rights, canals, reservoirs, reservoir sites and irrigation works owned or to be acquired or constructed with the proceeds of any such bonds, by said district, such facts in reference to bonds of irrigation districts to be determined by a commission now or hereafter authorized by law to ascertain and report upon such facts.

5. Notes or bonds secured by first mortgage or deed of trust or other first lien upon real estate, improved or unimproved; provided that the principal so lent or the entire note or bond issue so secured shall not exceed fifty percentum of the market value of such real estate, or of such real estate with improvements; provided, also, in case said loan is made, or said note or bond issue created as or for a building loan on real estate, that at no time shall the principal so lent or the entire outstanding note or bond issue exceed fifty per centum of the market value of the real estate and the actual cost of the improvements thereon.

6. Securities guaranteed by a mortgage insurance company operating under the laws of the State of California, also mortgage participation certificates issued by any such company in accordance with the