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TITLE II.

INSURANCE CORPORATIONS.

CHAPTER I.

GENERAL PROVISIONS.

$ 421. Investment of capital, surplus, and accumulations.

8 421. INVESTMENT OF CAPITAL, SURPLUS, AND ACCUMULATIONS. Corporations organized under the laws of this state for the transaction of any kind of insurance business authorized by such laws may invest their capital, surplus and accumulations in the purchase of, or loans upon any of the securities specified in subdivisions one to five inclusive of this section.

1. [United States bonds.] 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. [State bonds.] 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. [County, etc., bonds.) 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 two 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. [Road division, etc., bonds.] Bonds of any 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 such 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. [First mortgage notes.] (a) 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 loaned or the entire note or bond issue so secured shall not exceed sixty per centum of the market value of such real estate, or of such real estate with improvements taken as security at the date of investment; provided, also, in case said loan is made, or said note or bond issue created for a building loan on real estate, that at no time shall the principal so loaned or the entire outstanding note or bond issue exceed sixty per centum of the market value of the real estate and the actual cost of the improvements thereon taken as security; or

[Notes guaranteed by policy of mortgage insurance.] (b) Notes or bonds secured by mortgage or deed of trust, payment of which is guaranteed by a policy of mortgage insurance, and mortgage participation certificates, issued by a mortgage insurance company in accordance with the provisions of chapter eight of title two of part four of division first of the Civil Code; provided, that no insurance corporation shall make any investment in any of the securities specified in subdivisions one, two, three, four and five of this section in an amount exceeding the market value of such security, at the date of such investment.

6. [Investment of balance of capital.] Corporations organized for and engaged in the business of fire, life or marine insurance, may, after the investment of two hundred thousand dollars, and corporations organized for and engaged in the business of transacting any other kind of insurance authorized by law, except mortgage insurance, may also, after the investment of one hundred thousand dollars in any of the securities specified in subdivisions one, two, three, four and five of this section, invest the balance of their capital, surplus and any accumulations in the purchase of or loans upon the stock of any corporation (except a mining corporation) organized and carrying on business under the laws of this state, or the laws of the United States, which stocks have, at the date of such investment, a market value of not less than their paid-in value, or in the purchase of, or loans upon, interest-bearing bonds issued by a corporation organized under the laws of any state or territory in the United States, which corporation has not, within five years next preceding the date of such investment, defaulted in payment of any part of either principal or interest of any bond of the issue of which the bonds which comprise such investment form a part, and which stocks or bonds must, in each case, be rated as first-class securities; provided, that any investment made, under the provisions of this subdivision of this section shall be approved by vote of two-thirds of all the directors of the investing corporation. Such approval shall be entered upon the records or minutes of such corporation.

[Record of investment.] Such entry must show the fact of making such investment, the amount thereof, the name of each director voting to approve the same, the amount, character and value of the security purchased or taken as collateral, and if the investment be a loan, the name of the borrower, the rate of interest thereon, and the date when the loan will become due or payable. It shall be the duty of the secretary of any such investing corporation to report in writing during the months of January and July of each year to the insurance commissioner, the data above set forth respecting each such investment, and the insurance commissioner may, if any such investment is not approved by him, require the corporation to sell or dispose of the same.

7. [Policy loans.] Life insurance companies may also loan upon their own policies; provided, that the amount so loaned upon each policy shall not exceed the reserve against said policy at the time said loan is made; provided, further, that no policy loans whatever shall ever be used as security which may be deposited with the insurance commissioner under section six hundred thirty-four of the Political Code; and provided, further, that whenever any such loan in any amount is made on a policy registered with the insurance commissioner under said section six hundred thirty-four of the Political Code, such registration shall be forthwith canceled.

8. [Securities issued in foreign country.] Any insurance company of this state doing business in any foreign country may invest so much of its funds as are required to meet its obligation incurred in such foreign country and in conformity to the laws thereof, in the same kind of securities issued in such foreign country that such company is by law allowed to invest in this state, and subject to the limitations imposed by law in this state.

History: Added by Code Commission, Act March 16, 1901, Stats. and Amdts. 1900-1, p. 355; held unconstitutional, see History, $ 4, C. C.; re-enacted March 3, 1905, Stats. and Amdts. 1905, p. 34; also re-enacted March 21, 1905, with slight variations which latter enactment is given in Kerr's Cyc. Codes, Pocket Codes of 1909, and Cumulative Supplement 1906-1913 as $ 421[a]; repeal enacted March 18, 1907, Stats, and Amdts. 1907, p. 597, Kerr's Stats. and Amdts. 1906-7, p. 411; the re-enactment approved March 21, 1905, and retained as No. § 421[a], as above indicated, was amended by Act of June 6, 1913, and numbered $ 421, Stats. and Amdts. 1913, p. 488; June 12, 1915, Stats. and Amdts., 1915, p. 1532; May 26, 1917, Stats. and Amdts. 1917, p. 976. In effect July 27, 1917.

CHAPTER VI.

LIFE, HEALTH, ACCIDENT, AND ANNUITY OR ENDOWMENT INSURANCE

ON THE ASSESSMENT PLAN.

$ 453e. Formation of corporations; issuing of contracts; investments. 8 453e. FORMATION OF CORPORATIONS; ISSUING OF CONTRACTS; INVESTMENTS. Corporations may be formed to carry on the business of mutual insurance upon the assessment plan, and are subject only to the provisions of this chapter. No such corporation may issue contracts of insurance until at least five hundred persons have applied, in writing, to the insurance commissioner, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of twenty-five thousand dollars. This sum must be invested in bonds or securities, approved by the insurance commissioner of this state, or deposited in some bank in this state where it will earn interest. Said bonds or securities, or evidences of such deposit, must be placed, through the insurance commissioner of this state, with the state treasurer, and the principal sum must be held in trust for the contract holders of such corporation, with the right in the corporation to exchange said bonds, securities, or evidence of bank deposit for others of like value.

[Certificate of insurance commissioner.] Such corporation must also, as a condition precedent to issuing any contracts of insurance, obtain the written certificate of the insurance commissioner that it has complied with the requirements of this chapter; and that the name of the corporation is not the same as that of any other corporation of this or other states, as indicated by the insurance department reports in his office; nor must the commissioner approve any name or title so closely resembling another as to mislead the public. No corporation formed hereunder has legal existence after one year from the date of its articles, unless its organization has been completed and business commenced; nor shall any corporation or individual solicit, or cause to be solicited, any business, until such corporation has complied with the provisions of section six hundred thirty-three of the Political Code. Nothing contained in this chapter shall be construed to exempt any corporation from the provisions of sections two hundred ninety-six and two hundred ninety-nine of this code.

History: Enactment approved March 20, 1905, Stats, and Amdts. 1905, p. 418; a codification of $ 2 Act March 19, 1891, Stats, and Amdts. 1891, p. 126; amended May 26, 1917, Stats. and Amdts, 1917, p. 955. in

effect July 27, 1917. 8 456.

authorize turnouts or sidings in a street

or elsewhere.-San Pedro, L. A. & S. L. R. 1. Construction.—This section has no effect on certain public utility corporations,

Co. v. Long Beach, 172 Cal. 631, 158 Pac. 204. inasmuch as it was repealed as to them 3. -Laying out road (subd. 4). — This by sections 52b and 52e of the Public Utili- section merely gives power to construct and ties Act, which went into effect March 23,

maintain a railroad, and does not purport 1912 (Stats. Ex. Sess. 1911, p. 18).—Moss v. to grant franchises.—San Pedro, L. A. & Smith, 171 Cal. 777, 155 Pac. 90.

S. L. R. Co. v. Long Beach, 172 Cal. 631, 158

Pac, 204. § 465.

Land for freight-wharves and sheds. POWERS OF RAILROAD CORPORATIONS. A railroad corporation has the right to con1, 2. Construction-As to constructing road

demn land for freight-wharves and sheds, across or along streams, roads, etc.

as being land reasonably "necessary to suc(subd. 5).

cessfully work and conduct the business

of the road" and as a necessary appendage 3. -Laying out road (subd. 4).

or adjunct thereto, within the meaning of 4, 5. Land for freight-wharves and sheds.

section 465 of the Civil Code, where the 1. Construction-As to constructing road railroad extends to navigable river across or along streams, roads, etc. (subd. 5). through a large area of highly productive -This section is qualified and limited by land and upon such river there is a heavy section 470.-San Pedro, L. A. & S. L. R. Co. steamboat traffic engaged in carrying the v. Long Beach, 172 Cal. 631, 158 Pac. 204.

products of such land.-Vallejo & N. R. Co. 2. While this subdivision authorizes the v. Reed Orchard Co., 169 Cal. 545, 147 Pac. construction along any street, it does not 238.

a

to

to

5. It is not necessary that a railroad cor- branches. — People v. Southern Pacific Co., poration, in order to obtain a right to 172 Cal. 692, 158 Pac. 177. maintain wharves as a part of its road,

5. —Purpose of section.—The main obshould first obtain a wharf franchise in

ject of this section is to provide for a forpursuance of sections 528 to 531, inclusive,

feiture of the right to operate a railroad, and section 2921 of the Political Code.—'

in case of failure to keep it in "full operaVallejo & N. R. Co. v. Reed Orchard Co., 169

tion." It was not intended to apply and Cal. 545, 147 Pac. 238.

has no application to the determination

of whether or not the property of a railroad 8 465a.

or other public service corporation is "opera1. Electric railroads.-In their principal tive" within the meaning of section 14 of essentials, electric railroads now have the article XIII of the constitution and the act same legal status as steam railroads.-Los of April 1, 1911 (Stats. 1911, p. 530). The Angeles v. Los Angeles Pac. Co., 31 Cal. App. clause merely defines what shall be deemed 100, 159 Pac. 992.

"full operation" sufficient to escape for

feiture.-San Diego & Ariz. R. Co. v. State 8 466.

Board, 165 Cal. 560, 132 Pac. 1044. 1. Construction. Compliance with the requirement of making a map and profile

$ 470. and filing the same is not a condition 1. Construction. — This section qualifies precedent to the exercise of the right of and limits subdivision 5 of section 465.eminent domain.-Northwestern Pac. R. Co. San Pedro, L. A. & S. L. R. Co. v. Long v. Lambert, 166 Cal. 749, 137 Pac. 1116.

Beach, 172 Cal. 631, 158 Pac. 204. $ 468.

8 473. 1. Forfeiture of franchise Construction,

1. Construction.—There is nothing herein -The term "road" was intended to include

to indicate an intention to change the law the main line and all branches of the rail- in holding that the term "road" as used road company, and this applies both in section 468 included the main line and all original 'and consolidated companies. branches of both the original and consolThere is nothing in section 473 as amended idated railroad companies. — Northwestern in 1901 to indicate an intention to change

Pac. R. Co. v. Lambert, 166 Cal. 749, 137 Pac, this.-Northwestern Pac. R. Co. v. Lambert,

1116. 166 Cal. 749, 137 Pac. 1116. 2. The purpose of this section is to se

§ 474. cure the due completion and full operation

1. Construction. The words "swamp, of the road from one end to the other and

overflowed, or other public lands of the also of the intermediate branches, and the

state" include tide lands and submerged first sentence thereof does not apply to

lands.-People v. Southern Pac. Co., 172 Cal. the construction of tracks over land subse

692, 158 Pac. 177. quently acquired at a terminus to increase

2. The grant made by this section is a its facilities and ability to accommodate direct grant to each company accepting it. the traffic.-People v. Southern Pacific Co.,

It is general and unlocated, but becomes de172 Cal. 692, 158 Pac. 177.

fined and complete when the corporation 3. Section 468 of the Civil Code, which

selects the land, files a plat thereof, records provides that "every railroad corporation

the selection and it is approved by the surmust, within two years after filing its origi

veyor-general, and his permit to use the nal articles of incorporation, begin the con

same is duly issued to the corporation. This struction of its road, and must every year

permit together with the statutory grant thereafter complete and put in full opera

give the grantees an easement or franchise tion at least five miles of its road, until the

over the land described for the use of the same is fully completed; and upon its fail

corporation and for all necessary adjuncts ure so to do, for the period of one year,

thereon.-People v. Southern Pac. Co., 172 its right to extend its road beyond the

Cal. 692, 158 Pac. 177. point then completed is forfeited," has no logical relation to

8 483. the construction of tracks over lands subsequently acquired at 1. Construction.-Under the provisions of one terminus for the purpose of increasing section 510 this section governs the duty its facilities and capacity to accommodate of street railroad companies.—Kelly v. Santa the traffic to be handled at that end of the Barbara Consol. R. Co., 171 Cal. 415, 153 line.-People v. Southern Pacific Co., 172 Pac. 903. Cal. 692, 158 Pac. 177.

2. Greater precaution necessary when 4. Such code provision refers to the orig- passenger obliged to ride on steps.—Where inal articles of incorporation, which are a passenger on a street-car is obliged, by provided for in section 291 of the Civil Code, reason of the crowded condition, to ride and its purpose is to secure the performance upon the step of the car, a new contract of the promise implied from the part of and relationship springs into existence bethe articles requiring due completion and tween him and the carrier, making it incumfull operation of the road from one end bent upon the former to take greater preto the other and also of the intermediate cautions for his own safety, and upon the latter to use greater precautions in the railroad or other utility in the street is to be operation of the car.–Kelly V. Santa Bar- strictly construed, and, in cases of a fair bara Consol. R. Co., 171 Cal. 415, 153 Pac. doubt, in favor of the public as against those 903.

claiming under the grant.-City of Sacra

mento v. Pacific Gas & Electric Co., 173 Cal. $ 485.

787, 161 Pac. 978. 1. Duty to fence-Killing of stock.-The provisions of section 485 of the Civil Code

$ 498. as that section existed prior to the amend

1. Construction.-Section 20 of the Vrooment of 1915, that railroad corporations

man Act should be read in connection with must make and maintain a good and suff

this section.-Barber Asphalt Pav. Co. v. cient fence on either side or both sides of

Jurgens, 170 Cal. 273, 149 Pac. 560. their track and property, and that in case they do not do so, if their engine or cars

8 501. shall kill or maim any cattle or other domes

1. tic animals upon their line of road which

Rates of fare Construction of amend. passes through or along the property thereof,

ment of 1903.-The act of 1878 limiting and they must pay to the owner of such cattle

fixing the rates of fares on street railroads or other domestic animals a fair market in cities of more than 100,000 inhabitants price for the same, unless it occurred and providing a penalty for its violation, through the fault or neglect of the owner was superseded by the amendment of 1903 of the animal so killed or maimed, were not to section 501 of the Civil Code, which conintended to be for the benefit of owners sists in adding to the original section which of stock running at large, but the right of provided that the rates of fare should not action thereby given existed only in favor exceed ten cents for one fare for any disof one having some interest in the land tance under three miles, the words "and in adjoining the right of way of a railroad.- municipal corporations of the first class Wills v. Southern Pac. Co., 31 Cal. App. 723, must not exceed five cents for each passen161 Pac. 501.

ger per trip of any distance in one direction, 2. The interest of a lessee in the land either going or coming, along any part constitutes a sufficient ownership under the of the whole length of the road or its constatute.-Wills v. Southern Pac. Co., 31 Cal. nections."-Suydam v. Los Angeles R. Co., App. 723, 161 Pac. 501.

27 Cal. App. 157, 149 Pac. 55. 3. In an action against a railroad company for damages for the loss of certain 8502. horses which were killed by collision with

1. Time for commencing and completing one of the defendant's trains, by reason

-Limitation by ordinance granting franof the negligence of the defendant in per

chise.Where a municipal ordinance grantmitting the gate in its fence inclosing its

ing a street railway corporation a franchise right of way to be left open and the animals

to build and operate a railway along a certo stray upon the track, the right of the

tain route and fixes a shorter time for the plaintiff in or to the land on which she

commencement and completion than that was keeping the horses is not established,

fixed by this section, and which furthermore by proof that she leased the premises from

provides for the forfeiting of the franchise a third party, without any further proof that

as to the uncompleted portion, there is an such party owned the land or owned any

abandonment thereof in writing by the interest therein, or that he was in posses

grantee and a consent by the city within sion of it, or that plaintiff obtained posses

the meaning of this section.-People v. Los sion through him.-Wills v. Southern Pac,

Angeles Ry. Co., 168 Cal. 406, 143 Pac. 739. Co., 31 Cal. App. 723, 161 Pac. 501. 4. An instruction “that the laws of this

$ 510. state require railroads to maintain fences beside their tracks, and if they make a gate

1. Construction.-Sections 483, 2102, 2184 in the fence, it is a part of the fence, and

and 2185 of the Civil Code, while for the when there is road across their track

most part having direct reference to "railwith a gate in the fence across it, they are

road corporations," by section 510 of the under the same duty to keep it in repair

Civil Code govern the duties of street railwhen erected as it is regarding any other

road companies "where applicable," and it part of the fence, and also it is their duty

can not be successfully argued that they to keep such gate closed at all proper occa

are not applicable to such companies.-Kelly sions to prevent stock from adjoining lands

v. Santa Barbara Consol. R. Co., 171 Cal. 415, from passing upon the right of way of

153 Pac. 903. said roadbed,” is erroneous, in that it imposes upon the defendant the absolute duty 88 528-531. to keep the gate closed, whereas in fact its 1. Construction. Sections 528, 529, 530 only duty was to use reasonable care to and 531 are to be construed in connection keep it closed.-Wills v. Southern Pac. Co., with Title III relating to railroad corpora31 Cal. App. 723, 161 Pac. 501.

tions exclusively, and in which title section

465 is found. When so construed it is $ 497.

apparent these sections were not intended 1. Franchise Construction of.-A grant to apply to corporations formed for the of a franchise to construct and operate a purpose of constructing and operating rail

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