limited. financial recording make and certificate holder in said corporation may have a prior right within said period to subscribe for said stock; and stating also that no Stock member shall subscribe for more than ten shares thereof, and that the par value shall be twenty-five dollars per share; and stating Statement of also, in a form that shall be satisfactory to the insurance commis- condition to sioner, the financial condition of the company at the time of the be made. meeting aforesaid. If within said period of sixty days the capital, as fixed, shall be over-subscribed by policy or certificate holders, the directors shall allot to each his proportionate part of the amount subscribed. At the expiration of said period of sixty days, the said right of priority to subscribe shall cease, and subscriptions for stock then undisposed of may be received from any member or certificate holder or other person and to any amount. Within thirty Subscribers to days after the stock shall have been subscribed, a meeting of the be notified by subscribers shall be called by a notice signed by the recording officer officer. of the corporation, stating the time, place and purpose of the meeting, a copy of which notice shall, seven days at least before the day appointed for the meeting, be given to each subscriber or left at his usual place of business or residence or deposited in the postoffice, post paid, and addressed to him at his usual place of business or residence. Said recording officer shall make an affidavit of his Recording doings which, with a copy of the notice, shall be recorded in the officer to records of the corporation. At such meeting, including any necessary or reasonable adjournment thereof, by-laws of such stock his doings. corporation shall be adopted, and the secretary, directors and such Adoption of by-laws and other officers as the by-laws require shall be chosen. The president, election of treasurer and other officers that the said by-laws authorize them to choose, shall be elected by the directors at a meeting held directly after the adjournment of the stockholders' meeting. A certificate Certificate of of organization, containing a statement that the capital stock has organization. been paid in in cash, shall be signed and sworn to by the president, secretary and a majority of the directors of such corporation and shall, with the records of the corporation pertaining to the incorporation, be submitted to the insurance commissioner. If it appears Approval of that the requirements of this section have been complied with, the commissioner insurance commissioner shall so certify, and approve the certificate, required. by his endorsement thereon. Such certificate shall thereupon be Certificate of reincorporafiled by said officers in the office of the secretary of the common- tion to be wealth who, upon payment by the company of a fee of ten dollars, shall issue to such corporation a certificate of re-incorporation as a stock corporation, with the powers retained and hereby conferred. Upon the issuance of such certificates such corporation shall cease to issue policies or certificates upon its former plan, and shall then be empowered to transact its business under the provisions of this record affidavit of officers. insurance issued. Liabilities and assets of former corporation. Proviso. Dividends. Increase of capital and kinds of busi ness. Directors, §§ 3, 5, 7. 1856, 252, § 11. G. S. 58, § 27. 1881, 142, § 1. P. S. 119, § 51. 1887, 214, § 32. Votes of stockholders, etc. Proxies. chapter, with all the obligations, rights and privileges that it would be subject to had it been incorporated under the provisions of this act. The corporation shall be subject to all the liabilities of the former corporation, and be entitled to all its assets including the emergency fund which shall be paid to it by the treasurer and receiver general, upon requisition signed by the president and a majority of the directors, accompanied by a copy of the certificate of re-incorporation. All policies or certificates. in force at the date of re-incorporation shall continue in full force and effect in all their provisions, agreements and undertakings and shall be construed according to the provisions of law under which they were issued, except that the policy or certificate holder shall not be liable to any extra assessment: provided, however, that the rates for benefits for death from natural causes may from time to time be raised if the experience of the company shows it to be necessary. Any defences or evidence relative to such policies or certificates open under such provisions shall constitute a defence and shall be received as evidence in any controversy between the parties to or interested in such policies or certificates. No such re-incorporated company shall declare a stock dividend unless its surplus thereafter would be equal to the amount of the surplus at the time of re-incorporation. Any company re-incorporated under section thirty-five of this chapter may increase its capital stock in the manner provided in section thirty-nine of said chapter and may, if it has sufficient capital, transact any or all of the kinds of business which such companies are permitted to transact by sections thirty-two and thirty-four of said chapter and acts in amendment thereof or in addition thereto. STOCK COMPANIES. Officers, their Election, Duties and Liability. SECTION 36. The board of directors of each domestic stock insurance company shall consist of not less than five members, who shall be chosen by ballot from the stockholders, and a majority of whom shall be residents of the commonwealth. They shall hold office for one year or for the term provided in its by-laws, as authorized by the provisions of section twenty-six, and until their successors are qualified. In the choice of directors and at all meetings of the company each stockholder shall be entitled to one vote for each share he holds not in excess of one tenth of the capital. Proxies may be authorized by written power of attorney, but no officer shall vote elections. as proxy. The record of the votes made by the secretary or clerk, Evidence of which shall show whether the same were cast in person or by proxy, shall be evidence of all such elections. vacancies. The directors, before they are qualified to act, shall file with Directors to accept in the secretary a written acceptance of the trust. Not less than writing; four shall constitute a quorum, and a majority of those in attend- quorum; ance may transact business. Vacancies in any office may be filled by the directors or by the stockholders as the by-laws shall provide. transactions. The directors shall at each annual meeting of the company sub- Statement of mit a full statement of the transactions of the company during the previous year and of its financial condition. Such companies shall be subject to the provisions of section Elections, meetforty-four, except as herein modified. ings of stockholders, etc. 1817, 120, § 2. No treasurer shall be chosen unless such officer is required by 1819, 46. the by-laws. or 1832, 95, 1833, 83, R. S. 37, §§ 2-4, 6, 8. 1856, 252, Special meetings shall be called when written requests for the same shall be signed by owners of one fifth part of the capital, by twenty stockholders, and filed in the office of the corporation. G. S. 58, §§ 28, 29. 1864, 113, § 1. P. S. 119, §§ 52, 53. R. L. 118, § 32. The secretary shall keep a list of the stockholders and of the number of shares standing in the name of each and a record of all transfers of such shares. The directors or other officer making or authorizing an invest- Officers liable ment or loan in violation of the provisions of the following section shall be personally liable to the stockholders for any loss caused thereby. its or If a company is under liability for accrued losses equal to net assets, and the president or other officer knowing it make assent to further insurance, they shall be personally liable for any loss under such insurance. If the directors allow to be insured on a single risk a larger amount than the law permits they shall be liable for any loss thereon above the amount to which they might lawfully insure. In Lyman v. Bonney, 118 Mass. 222, 1874, the directors were held to be absolved from personal liability in the absence of bad faith on their part. During the pendency of a policy holder's suit on his policy, the directors closed the company's business and did not have sufficient funds to pay plaintiff's judgment. It was held, in an early case under Revised Statutes, chapter 37, section 18 (Acts of 1907, chapter 576, section 36), that before bringing action against the director the policy holder must have secured judgment against the company. The loss against the company must be first ascertained and determined. (Kingsley v. Rice, 10 Gray, 325, 1858.) It was also held, in Clark v. Brown, 12 Gray, 355, 1859, that 1854, chapter 453, section 26, making the president and directors of a mutual marine insurance company personally liable on any policy issued by them when they know the company to be insolvent, does not make the policy void. stockholders, etc. for loss, when. 1817, 120, § 4. 1856, 252, G. S. 58, §§ 31, 33. 1864, 29. P. S. 119, 1885, 308. 1887, 214, § 34. Investment of capital and reserve. 1817, 120, § 3. R. S. 37, § 10. 1836, 208. 1854, 453, § 5. 1856, 252, § 14. G. S. 58, § 31. P. S. 116, § 20, cls. 1, 2. 1882, 231. 1885, 111, 124. 1887, 423. 1888, 90. 1894, 317, § 21, Payment of Capital and Investment of Capital and Other Funds. SECTION 37.1 The capital stock shall be paid in cash within twelve months after date of the charter or certificate of organization, and no certificates of full shares and no policies shall be issued until the whole capital is paid in. A majority of the directors shall certify on oath that the money has been paid by the stockholders for their respective shares and that the same is held as the capital of the company invested or to be invested as required by the provisions of this section. 1896, 171. R. L. 118, § 34. 146 Mass. 224. 1894, 522, § 34. The capital of any domestic insurance company other than life, and three fourths of the reserve of any domestic stock or mutual life insurance company, shall be invested only as follows: 1. In the public funds of the United States or District of Columbia, or of any state of the United States. 2. a. In the legally authorized bonds or notes of any county, city, town, school or water district in Massachusetts. b. In the legally authorized notes or bonds of any county, city, school or water district in any other state in the United States which are a direct obligation of the county, city, school or water R. L. 118, § 34. district issuing the same, and which has a population, according to the last national or state census preceding the date of such investment, of more than one hundred thousand inhabitants. Railroad and street railway securities. 1838, 35. 1845, 55. 1854, 453, § 5. G. S. 58, § 31. c. In the legally authorized bonds or notes of any county, city, town, school or water district in any such other state of the United States which are a direct obligation of the county, city, town, school or water district issuing the same whose indebtedness, after deducting the amount of its water debt and securities in the sinking funds which are available for payment of its bonds, does not exceed five per cent of the valuation of property therein, as assessed for taxation next preceding the date of such investment. 3. In the bonds or notes of any railroad or street railway corporation incorporated or located wholly or in part in Massachusetts, or in the mortgage bonds of any railroad corporation located 1856, 252, 14. wholly or in part in any state of the United States whose capital stock equals at least one third of its funded indebtedness, which has paid regularly for the five years next preceding the date of such investment all interest charges on said funded indebtedness, and which has paid for such period regularly dividends of at least four per cent per annum upon all its issues of capital stock, or in R. L. 118, § 34. the mortgage bonds of any railroad, railway or terminal corporation 1887, 113, 196. 1889, 305. 1894, 317, § 21, cl. 3. 1898, 184. 1 As amended by chapters 92 and 95, Acts of 1909, and chapter 375, Acts of 1910. which have been, both as to principal and interest, assumed or guaranteed by any such railroad or railway corporation. Legal meaning of the term "funded indebtedness." (Op. A. G., 1914.) In the mortgage bonds of any railroad corporation located wholly or in part in any state of the United States whose liens junior to such mortgage bonds equal at least one third of the funded indebtedness secured by such mortgage bonds and bonds prior thereto, which has paid regularly for the five years next preceding the date of such investment all interest charges on the said funded indebtedness, and which has paid for such period regularly at least four per cent interest on such junior securities. Acts of 1910, Chapter 375. SECTION 1. Sub-division 4 of section thirty-seven of chapter five hundred and seventy-six of the acts of the year nineteen hundred and seven is hereby amended by inserting after the word "States", in the second line, the words: and upon leasehold estates in improved real property for a term of ninety-nine years or more where fifty years or more of the term is unexpired and where unencumbered except by rentals accruing therefrom to the owner of the fee, and where the mortgagee is entitled to be subrogated to all the rights under the leasehold, and by inserting after the word "property", in the third line of said sub-division 4 the words: or such leasehold estate, so that said sub-division as amended will read as follows:- 4. In loans upon improved and Mortgage unencumbered real property in any state of the United States, and upon leasehold estates in improved real property for a term of ninety-nine years or more where fifty years or more of the term is unexpired and where unencumbered except by rentals accruing therefrom to the owner of the fee, and where the mortgagee is entitled to be subrogated to all the rights under the leasehold, provided that no loan on such real property or such leasehold estate shall exceed sixty per cent of the fair market value thereof at the time of such loan, and a certificate of the value of such property shall be executed before making such loan by the person or persons making or authorizing such loan on behalf of the corporation, which certificate shall be recorded on the books of the company. An extension of a mortgage or a renewal thereof is a new loan to the extent that a new certificate of value of property would be required to be executed by the person or persons authorizing such renewal or extension. (Op. A. G., 1914.) loans. 1817, 120, § 3. 6, 237 10. 1854, 453, § 5. 1856, 252, § 14. G. S. 58, § 31. P. S. 116, § 20. 1894, 317, § 21, 1836, 208. cl. 1. R. L. 118, § 34. |