The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1900-04-29

ance companies ~ "Au'uai Insult
my law oil this State above cited nro.
siues tnat the members Of ssja n,,,,,,,,
~ insurance companies applying for s,nh
snar,er shall be resident citizens a, tha
10" oi lexas. and it further provides
authorized capital stock wfsh " W az
especlal attention to the fact that tho al
ot IeSas provides for the incornnra,ion
oi tne members OF said mutual Are IN
surance companies. ~
IN May on Insurance vol. . scotia, gao
| II Is said: 'Vn 's0'
me principle which lies at the founda.
uon OF mutual insurance and gives il its
naine, IN mutuality in other words. tho
Intervention of each person insured In
the management OF the affairs Of fha COW
pany and the participation OF each mem.
Der In the profits and losses Of the busi
ness IN proportion to his interest Each
person insured becomes member OF Inc
body corporate, clothed with the rights
and subject to the liabilities Of a Stock
holder. He is at once insurer and in
sured"
In the same authority In section 14s II
is stated;
Mutual insurance, It is truly observed
- essentially different from stock insur-
ance, and most of the litigation which
nad grown out OF this species of insur-
ance had been owing to the Inattention
to this difference. It's original design was
10 provide cheap insurance by means OF
local assessments, the members of which
should insure each other Such associs-
lions are in their nature adapted only TO
local business. They need many by-isws
and conditions that are not required in
STOCK companies, and 1t Is necessary and
equitable to each person Nho gets iu-
sured in them should become subject 10
the same obligations towards his asso-
crates that he requires from them towards
himself. II the Officers have discretionary
power as to the terms OF the contract, or
even as to It's form. it is obvious that
different parties may become members
upon different terms and conditions, and
thus the principle Of mutually will he
completely abrogated
In discussing the nscessity that there
should exist mutually, In the case Of
Mutual Benefit Company VS.. Jarvis, ~
Conn 1913, l45 the coart says:
This makes between all the members
that mutually in regard to profts and
losses which was contemplated by the
charter and the organization of the COM
pany, and If the company can collect such
notes as il pleases without making an
equal assessment on all, 1t is clear that
there is an end TO everything like mutual
I ity."
/ II is we'll to bear in mind that the com
panies doing business in Texas provided
In the policies that If the premiums coll
lected Tor certain year exceeded the
losses that the excess shall be returned
TO the members paying it pro rata but no
provision is made in any Of the policies
or the bylaws of these companies doing
business In Texas that II the losses eS
coed the premiums collected that then the
members shall contribute prorata 20 pay
the losses. on the contrary, some OF The
policies have printed upon them this
clause in the bylaws; mo member or
members shall be personally or individual
~ liable for losses or expenses or any IN
debtedness OF the company 10 an amount
except TO the extent Of one years IRE
Iuium on the policy or policies held by
him, less the cash payment made hy MN
on the same member whose premium
has been fully paid in cash shall have 40
! liability Whatever
In discussing company organized on
this plan ] desire 10 quote from the sU-
preme court OF Ohio somewhat at length
in the case cl the state eX rel VS. Mont
itor Fire Insurance Association, which Is
reported in the ~ Ohio p $685. After re
viewing the facts and stating the case
fully it is said.
The annual deposit required is but
another name for annual premiums
these annual deposits exceed the necsS-
sary expenses ana losses during gwen
year they are treated as savings out or
! which dividends are made to those who
! NAV then be members. As q consequence
4 if the annual deposits exceed the expenses
/ and losses. there is net pToilj to be a.
vided or carried forward each year, derived
/ from those who may not be members me
1 next wear, but il eXpeIsrs and losses eX-
| coed the receipts from such source Tor a
given year, the deficit becomes burden
I upen succeeding members equally WIN
those who were members when the 1885
occurred and so continued. Those VINO,
were members when the loss occurred ana
ceased to be such before the defcit was
ascertained we're free from this burden.
/ Something has been said In argument
in favor OF the comparative merits OF the
system of insurance based upon this plan
for annual deposits In advance. we are
NOT called upon to consider or determine
/ the comparative merits OF the various plans
upon which companies are organized LOT
/ insurance The assessment plan antnoT-
ICED by the statutes under review mas oseh
thought by the law making power to De
worthy OF adoption ia this state II,
/ doubtless, has its merits, ana is entitled
to equal regard before US with any other
plan sanctioned by law. Whilo il may be
wise. prudent and within the scope OF Its
hauthority 10 require prepayment Of .
premium or annual deposit by members
1 to be covered by specific assessments 70
pay expenses and losses which occur while
they are members, yet the scheme before
u, which requires such annual deposit
from those who are then members TO nc
Icumulate a fund to NY losses after they
have ceased 10 be such, or before they
become members. is not insurance upon
the assessment plan, but upon the gem
eral plan of stock companies"
/ have considered these questions and
have discussed them very fully with some
OF the gentlemen who are operating and
managing what they believe TO be mutual
IRE insurance companies; but In none OF
these policies and In none OF the bylaws
OF The various companies do | see that
mutually. which is necessary, In order "a
constitute them mutual insurance compn-
MES, as intended by our law. have MOI
seen any policy yet, or any proposed
Ipolicy BY any OF the so-ealled mutual
companies which believe TO be legal, oil
a valid policy which Is authorized by the
laws Of this state, and by the. articles OF
.Nan