Pro- Proviso, net

shall commence business, by issuing policies, until it shall have received at least five hundred applications for insurance, on which the premiums shall amount to at least five thousand dollars, nor until the examination by the attorney general and commissioner as hereinafter provided: vided, That the net indebtedness of said city or county shall indebtedness. not exceed five per cent of the assessed valuation of all the real estate of said city, county, village, township or school district, said valuation to be on the basis of the last preceding equalization of the state board for counties, and the proportionate amount thereof. The term net indebtedness in this section shall be construed to denote the indebtedness of any city, county, village, township or school district, omitting debt created for supplying the inhabitants with water, and deducting the amount of sinking funds available for the payment of such indebtedness: Provided, That such first mort- Proviso. gage bonds of corporations organized under the laws of the state of Michigan shall not be accepted as surety, unless the corporation issuing such bonds shall have paid interest on said bonds and dividends on its capital stock for three successive years immediately preceding the deposit of such security; and in case any of said securities shall depreciate below par, the state treasurer is hereby authorized and directed to cause the corporation which has deposited them to make such depreciation good by additional deposit of such securities as are allowed by law, and to prohibit any corporation from transacting any insurance business within this state until the same shall have been deposited: Provided Further further, That all provisions of law relating to the business in proviso. this state of companies doing a general surety bonding business, which are organized under the laws of other states or countries, and are doing business in this state, and all other existing laws of this state relating to such surety bonding business in any manner, shall apply, so far as they may be applicable thereto, to companies organized for the purpose of doing a general surety bonding business under the provisions of this act.

Am. 1901, Act 195; 1903, Act 72; 1907, Acts 172 and 174; 1909, Act 297. When the state treasurer will not be required to permit the withdrawal of its deposit.-Life Ins. Co. v. Hambitzer, 95 / 513.

approved by

of company.

(39) 7194. SEC. 5. The articles of association shall Articles to be be submitted to the attorney general for his examination, attorney genand if found by him to be in compliance with this act, he eral. shall so certify to the secretary of state [commissioner of in- Examination surance], and the secretary of state [commissioner of insurance] shall thereupon appoint three disinterested persons residing in the county where the principal business office of the corporation is proposed to be established, who shall cer- Certificate of tify, under oath, if they find such to be the fact, that the provisions in the articles of association, in respect to capital stock, as shown to them to have been fully complied with;

examiners.

and if the company is organized to do business on the mutual plan, that the company is in the actual possession of the applications for insurance, herein before provided for, and that it was shown to them by the affidavit of the president and secretary of the company that such applications have been taken in good faith and not merely colorably, and that [such] officers believe it to [be] the intention of each of the applicants to receive and pay for policies thereon, when the Articles filed. company shall be prepared to issue the same. A copy of the articles of association, together with such certificate and affidavit, shall thereupon be filed with the secretary of state [commissioner of insurance], and another copy of the articles and a copy of such certificate and affidavit, with the county clerk of the county in which the company's principal office is to be established; and the filing of the same with such officers, and the deposit with state treasurer of the stocks, or bonds, and mortgage securities, as herein before provided, shall be the authority of the company to commence business and issue policies.

Authority to

commence business.

Corporate existence, how proved.

Restrictions as

to holding real estate.

"Commissioner of insurance."-See note to section 36 of this compilation. Failure to file a certified copy of the articles of association with the county clerk cannot be set up by private persons to avoid contracts.-Jhons v. People, 25/499.

(40) § 7195. SEC. 6. Whenever it shall be necessary, in any legal proceedings, to prove the corporate existence of any such company, a copy of the articles of association, with a certificate by the secretary of state [commissioner of insurance], attached, that such copy is a duplicate of the copy on file in his office; that the certificate and affidavit required to be filed by examining commissioners, are also on file in his office, and that it has been made to appear to him by the certificate of the proper county clerk, that another copy of such articles has been duly filed in the office of such clerk, and by the certificate of the state treasurer, that the securities required to be deposited with him have been deposited, shall be prima facie evidence of the corporate existence of the company; and except in proceedings by or under the authority of the state, to question its corporate right by information in the nature of a quo warranto or otherwise, shall be conclusive evidence of the authority of the company to issue policies and transact business as contemplated by its articles, until such authority has been terminated by the expiration of the term of incorporation, or on some one of the grounds hereinafter specified.

"Commissioner of insurance."-See note to section 36 of this compilation.

(41) § 7196. SEC. 7. No company formed under this act shall purchase or hold any real estate, except:

1.

Such as shall be necessary for its immediate accommodation in transacting business; or,

2. Such as shall have been conveyed or mortgaged to the company in good faith, by way of security for debts; or, 3. Such as shall have been conveyed to the company in satisfaction for debts; or,

4. Such as shall have been purchased at sales upon judg ments, decrees, or mortgages in favor of such company, or held or owned by it; and all real estate obtained by virtue of any provisions of this section, except that mentioned in the first subdivision, shall be sold or disposed of within five years after the title has been perfected in such company. (42) § 7197. SEC. 8. The directors of any company or- By-laws. ganized under this act shall have power to make such bylaws, not inconsistent with the constitution and laws of this state, or with their articles of association, as they may deem necessary for the government of the officers and members of the company, and the conduct of its affairs.

treasurer to

ceive interest.

treasurer may

(43) § 7198. SEC. 9. The bonds, or stocks and mort- State gage securities deposited by any such company with the state hold deposit. treasurer, shall be held by him as security for policy-holders in such company; but so long as it continues solvent, the When comcompany shall have the right from time to time to collect any may reand receive the dividends or interest thereon, and to withdraw any of the same, on depositing with the state treasurer other securities of the kinds specified, so that the amount in his hands for the security of policy-holders, at any time, shall not be less than one hundred thousand dollars, exclusive of interest. If at any time a claim shall be made against any When state such company on one of its policies, and the same shall not sell securities. be adjusted and paid, and the claimant shall recover judgment thereon against the company, the state treasurer, on being served with an affidavit by the claimant or his attorney, setting forth the recovery of the judgment, and that the same has remained unpaid for three months, and that no proceedings are pending for the review or reversal of the same, shall proceed to sell at the current market value, sufficient of the stocks or bonds so deposited with him, to satisfy the amount of such judgment, together with one per centum for his services and expenses; or, if said stocks or bonds shall previously have been disposed of for the satisfaction of claims, then he shall proceed to collect sufficient of the mortgage securities to pay the amount of the claim mentioned in such affidavit, with his reasonable costs and expenses; and Company resaid company, after notice of the service of such affidavit, issuing shall not be at liberty to issue any new policies until any de- policies. ficiency of securities caused by the necessity of meeting such claims, shall have been made good by further deposit with said state treasurer of the like securities: Provided, how- Proviso. ever, That if any such company shall become insolvent, and proceedings shall be taken in equity with a view to its dissolution, nothing in this section contained shall prevent an equal and just distribution of all its assets, including the se

stricted from

Companies to

Unlawful to

making.

curities so deposited with the state treasurer, among the persons equitably entitled thereto.

(44) § 7199. SEC. 10. No company organized or existmake deposit. ing under any authority whatsoever other than the statutes of this state shall be at liberty to transact the business of life insurance within this state until such company, in addition to the requirements now made by law, shall have deposited with the state treasurer at least one hundred thousand dollars of the like securities required to be deposited by companies formed under this act, which shall be held as security for any losses suffered by policy holders of said company, upon the same terms and conditions, and with the same authority of sale or collection to satisfy judgments, as are set forth in the last preceding section; and any person who solicit before shall solicit and obtain within this state applications for insurance upon lives or issue policies of insurance upon lives, or contracts, guarantees or pledges for the payment of annuities, or endowments to the families or representatives of policy or certificate holders, in any company not organized under the statutes of this state, before such securities are deposited, shall be liable to a penalty of one hundred dollars for every application obtained, policy issued, or contract, guaranty or pledge made, to be sued for and recovered in the name of the people by the attorney general or prosecuting attorney of the proper county either by action for debt or criminal prosecution; and any person who shall have paid to any agent of such company any premium moneys before such securities are deposited shall be entitled to recover the same back from such agent, or, at his option, from the company, by action of assumpsit to be brought at any time within six years after such payment: Provided, however, That when, by the statutes of any other state, life insurance composit in other panies organized or doing business therein are required to keep on deposit with the state treasurer, or other state officer, securities for the protection of policy holders generally, and any such company shall furnish to the commissioner of insurance of this state the certificate of the proper officer of such state showing the amount and character of the securities so deposited with him, and it shall appear therefrom that the said securities are equal in market value and availability to one hundred thousand dollars, and that a portion equal in market value of fifty thousand dollars is of stocks or bonds of the United States, or of this state, or of any city or county in this state authorized by act of legislature to issue the same, or of state, county or city bonds, or of stocks of the state where such company or association is organized, or of bonds or mortgages on improved real estate worth double the sum loaned thereon, and it shall further appear from the laws of such state that the securities so deposited are subject to be made available to satisfy judgments of policy holders, in any manner corresponding to that provided for the care of

Proviso, companies having de

states.

license to

securities deposited under this act, the commissioner of insurance shall thereupon be authorized to issue to such company an authority or license to transact the business of life insurance within this state until the thirty-first day of January of the succeeding year without any such deposit of securities with the state treasurer of this state as is above provided. And upon compliance with the provisions of this act when annual and the laws of the state of Michigan, the commissioner of issue. insurance shall be authorized to issue a license or authority to transact said business, annually thereafter for the period of one year: Provided, That life insurance companies organ- Proviso. ized under the laws of any foreign government may be required to keep on deposit, with the state treasurer of this state, or with some state officer of one of the United States, or with trustees, for the benefit of policy holders resident in the United States, said trustees being residents or corporations of this or some other state, securities in which any such company is authorized to invest, to an amount at least equal to the net value of the policies issued by said company to residents of these United States as computed by the commissioner of insurance: Provided further, That such companies Further proviso. shall be required to pay taxes upon securities so deposited in this state on the same principle as is required under section three thousand eight hundred thirty-four of the compiled laws of eighteen hundred ninety-seven of insurance companies organized under the laws of this state. The liabilities to be deducted as provided in such section shall be only the liabilities of such company to residents of these United States as computed by the commissioner of insurance.

Am. 1903, Act 74.

NOTE.-Act 29 of 1877 (C. L. '97, 7221) provides that sections 10 and 29 of the amendatory act of 1871 "shall not be construed so as to include, apply to, or in anywise affect mutual benefit, co-operative and other benevolent associations, organized or to be organized within this state, under and by virtue of the provisions of an act entitled 'An act to provide for the incorporation of co-operative and mutual benefit associations,' approved April 3, 1869." See note to section 114 of this compilation.

This section was not intended to apply, and does not apply, to co-operative and mutual benefit associations organized under any law of this state.-Rensenhouse v. Seeley, 72/612. The collection of assessments by the agent of a foreign mutual benefit society is such a transaction of business as is prohibited by this section, and the company cannot maintain an action to recover such assessments from its agent.-Mut. Ben. Society v. Lester, 105/ 716. (Citing C. L. '97, 10467). See also Seamans v. Temple Co., 105 / 400; People v. Hawkins, 106 / 482. And assessing members for the payment of death losses which occurred after a refusal to license is doing business prohibited by law.-Stamm v. N. W. Mut. Ben. Assn., 65/317. An insurance company cannot defend against the contract contained in its policy upon the ground that it had no authority to do business within this state. -Clay F. & M. Ins. Co. v. Huron S. & L. Mfg. Co., 31/346.

statements.

(45) § 7200. SEC. 11. It shall be the duty of the presi- Annual dent, or vice president and secretary, or actuary, or a majority of the directors or trustees of any life insurance company transacting business within this state annually, in the month of January, to prepare, under oath, and deposit with the secretary of state [commissioner of insurance] a statement, showing:

1. The number of policies issued during the year;

Contents of.