The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-03-07
THE PARKER SURETY BILL.
Senator Wishard Gives His Reasons
for Eax0ring Its PrOvisiOns.

Senator Mtshard UiSes his 1ecnssoA.'
for. Fav0rinE It's Provisions.
Considerable interest is being manifested
in the probable fate in the House, to-day,
of Senate bill No. 40, an act to regulate
the business methods of foreign surety
companies and fixing the amount OF capital
stock necessary to transact business in the
State The bill was introduced by Senator
Parker 1t passed the Senate by snug
majority and has been reported favorably
to the House. The bill comes up to-day Tor
final passage. Among the ardent supporters
of the bill is Senator A. w. Wishard, who
is i'll at his home on North Capitol avenue.
In discussing the merits of Senator Par
ker's bill yesterday he said:
This bill is one of considerable public
interest AS passed the Senate it provides
that any foreign company doing business in
the State shall have a capital stock of not
less than 100000, fully paid up; also a
surplus of 100000 which shall be invested
approval OF the insurance department of
the State in which the company IS organ
lied. 1t also provides the method of the
acceptance of companies as surety instead
of individual sureties and provides that In
case shall the premium paid for a bond
exceed per cent. year or the actual ia
bility incurred; also the manner in which
companies shall make reports to the Audi
tor OF State. 1t is similar to the statute
Jersey Pennsylvania, Ohio, Minnesota and
other States The reason for requiring an
increase in the capital stock from S250,O00
TO $500 900 is the fact that the companies
incur such large liabilities that the public
will only be protected by recurring the
not be impaired. The fact of the matter
is that the companies permitted to execute
court. contract and public bonds should
all be required to have paid-up, we'll
invested capital of not less than $1,000, 900.
One or two companies are. complaining
~Ia,,t = L 90 +t,.rv l,,xyA
capital of but S25o,Ga and surplus largely
in excess of that amount. For instance,
one company has paid-up capital of $250,-
coo and a surplus. shown by it's state
ments, of over $2,e00,000 1t asks the public
to accept it as safe company, yet its sur
plus is composed largely of real estate
taken on the foreclosure of mortgages, and
that does not represent the value stated
claims unpaid premiums that are worthless
and cannot be collected, and other assets
that exist only on paper. The fact is, the
public only be protected when surety
companies are permitted. TO engage in but
one business and that of suretyship. Com
panies having a surplus may distribute that
surplus to the stockholders at any time
and persons contracting with the company
have no remedy A short time since 1 ex-
ecuted bond for the American Surety
Company as security for a guardian for
$50, GEO. The ward is not quite four years
old The bond is to run seventeen years
Is it not better to require other compares
to do as the American Surety Company has
acquire and hold paid-up. invested cap
ital of 81, 100000, that, under the laws of
New York. cannot be touched. but is held
for the absolute security and protection
from all trusts when 1t is the surety on a
bond.
'.rhe bill now pending permits only the
Fidelity and Deposit Company, of Balti-
more, and the American Surety Company to
do business in this State. There is plenty of
money seeking investment in these COM
panies, and when the Legislature fixes the
standard high and throws the prop
er safeguards around the business the conn
panies will all readily increase their capital
and comply with the conditions imposed.
Under the present law it would be possible
for a company with capital stock of but
$3.50 600 to incur liabilities in this State alone
of several hundred times the amount of its
capital stock. That is wrong. Either the
amount of capital stock should be material
ly increased or the amount of business
surety companies are permitted to do should
he limited"