The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1886-03-09
MUTUAL INSURANCE COMPANIES.
An Official Construction of the La Which
They Are Governed.

Attorney general Hord has given official
opinion in ansWer ACQUISITIONS submitted to him
by State Auditor Rice, regarding the construc-
ton of the law relating TO the organization Of
mutual fire insurance companies in Indiana.
The act providing for the organization of such
companies, he says, must be construed in con-
nection with the statute concerning stock insur-
ance companies; that not less than nine persons
must associate themselves together to form a
company, who designate three persons to act as
commissioners, to open books and receive appli-
cations for insurance and take premium notes.
The commissioners give notice for twenty one
days in one more newspapers published in the
counties in this State where the books are pro-
posed to be opened, when applications for insur-
ance are made, in which there shall
be taken not less than $4,000 in
bona fde premium notes by such
company, the commissioners deliver to the
board of directors the books. premium notes,
etc. The business is to be managed by not less
than five directors, elected by members or thu
company. The first directors must be appli
cants for insurance, and must have executed
premium notes to the company to form the
basis of the organization. The directors shall
elect one of their number president and one vice.
president, who shall be sworn to perform their
duty. The members of the company annually
elect secretary, who must take an oath to per-
form his duty. Whenever the president and di-
rectors, a majority of them, shall certify
under oath that there have been applications
for insurance in which the company has taken
not less than $4,000 in bona ide pre-
MUM notes, and produce the books,
verified by the commissioners and secre-
tary, the Auditor of State, upon inspection
of the books, applications, premium notes, and
all other matter connected Herewith, if satisfied
that the requirements OF the statute have been
complied with, shall issue to such company
certificate, which is filed with the Secretary of
State, who gives to the company certificate of
incorporation.
'Am authorized to give certificate Of in
corporation on application of mutual fire in
surance company if the premium notes, taken as
the basis to do business, are worthless and in
solventl' the Auditor asks.
The Attorney general answers substantially
that the advance premium notes constitute tie
capital of such companies or substitute there
for and should be bona fide GAS the premium
notes taken in advance are rendered by statute
the capital of Mutual Fire Insurance companies.
and the resource for the satisfaction OF losses.
the law declares that such notes shall be bona
ide, and the auditor must be satisfied that the
requirements of the law have been complied
with. 1t is essential to good faith that such
notes shall be solvent. or have some approxima-
ton to solveney, and that they should
be executed by such persons, and
un0er Such circumstances, as reasonably
give assurance of purpose, to comply
with their stipulations. If the notes are worth
less, they are not bona fde notes within the
meaning of the statute. 1t was certainly in
tended and contemplated by the Legislature that
the people should be protected against less from
insolvent, irresponsible and dishonest corpora
lions, and the statute should receive such con-
struction as will reasonably secure such purpose.
If corporation is insolvent, the law may para
lyze and suspend its action. and the law cannot
be construed to render insolvency the basis for
the inception and organization of mutual fire
insurance company in this State. The science
of the law is said to be the perfection of reason,
distinguishing the criterons of right and wrong,
and teaching to establish the one and prevent,
punish and redress the other. Laws
should be enacted to restrain evil not en-
throne it. The wise and good do not need
it as guide, but only as shield against rapine
and oppression. It should be the good mans
safety and the bad mans awe. If such a compa-
ny may be organized with worthless notes as its
capital, and find recognition and repose within
our statute. such creation is serpent's heart
hid with Towering face 1t is winged oppres-
sion in the drapery of the law, with look to de-
ceive and power to destroy. 1t wears "a virtuous
visor to hide Deep vice. 1t is dishonesty in dis
guise, fraud in amhush-the enforcement of
evil and the coronation of crime"
In answer to another question the Attorney
general says that the premium notes may be
made by persons residing within our without the
State.