The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-11-06
MUTUAL COMPANIES
ARE AVOIDING
THE Law
Do Not Comply With Ger
tain Regulations Accord
ing to Taylor,

1T is repbrted that certain of our
domestic mutual fire insurance COM
panies make q practice of allowing q
discount or advance dividend upon
collecting the premium" says Com
missioner of Insurance Walt c. Tay-
lor in the current bulletin, just is
sued. 1.-The department takes the posi-
ton that such practice IL in violation
of the provision of section 4440, re-
vised codes of 1906: Mutual insur-
ance companies shall charge and coll
premium in cash OF notes. Such prac-
tice also conflicts with section 4442,
revised codes of 1905, which provides
that every member Of a mutual In
surance company, except a mutual life
insurance company, when his policy
expires shall be entitled to be paid in
cash his share of the net profits or
in force Net profits cannot be as
sumed. and so-called dividends must
not be paid in advance. The depart
ment desires that the records of the
domestic transactions with reference
to each premium in full. In the case
of reinsurance, the commission al
lowed by the reinsuring company, as
we'll AS the net premium paid, should
be disclosed.
Another. matter recently brought
to the attention Of the department is
the failure of domestic mutual insur-
ance companies to comply with the
provisions of law in the matter of
fixing the contingent liability Of the
members thereof. Section 4440 pro-
vides that mutual companies may by
their bylaws fix the contingent liabili-
ty Of its members for the payment Of
losses and expenses not provided for
by their cash funds; provided, that
such contingent liability of a member
shall not be less than a sum equal to,
and in addition to the cash premium
written in his policy. The total amount
q the liability Of a policy holder shall
early and legibly5 stated upon the
ton an opinion Of the attorney gen.
eraf was requested, and a copy of the
opinion submitted is given herewith:
Hon. w. c.. Taylor, Insurance Com
missioner,
Dear Sir: You have submitted an
inquiry as to whether mutual insur-
ance companies. such as those engag-
fire risks. should literally comply with
the provisions of section 4440. re-
>vised codes OF 1905, and If the answer
is in the affirmative, you wish to
know If the provisions are applicable
to county mutual insurance COM
lDAnleRt p - =.
sHSTts sAction named was before our
the case of Montgomery vs. Whit
beck. IL N. d. 1856. 1t was there held
that the language iof the statute was
necessarily incorporated as g. part of
the contract of insurance, and that
because of the failure to comply with
the statute in all it's terms the con
tract was nuility. 1t is therefore
necessary that mutual insurance
companies should comply literally
with the language Of section 4440.
This section. and article 9 Of chap
ter. II of the civil code of this state
nave been a part of the statutory law
Of h state since the revision of our
codes In 1896. By section 4499 all
companies organized under article 9,
that sis;st ell companies organized as
ounty mutual insurance companies,
are made subject to the provisions Of
all preceding articles Of said chap
ter II.
Section 4440 being included in and
q part of chapter IA. it applies to
county. mutual insurance companies
as we'll as to all other domestic mu-
tSal insurance companies. 1t is
panies fix the contingent liability OF
the members thereof. and that such
liability be clearly and legibly stated
upon each Of the policies issued by the
company.
Very truly yours.
"(Signed) c. l.. Young,
Assistant Attorney General"
I'm consideration of the opinion
above quoted. every mutual insurance
company domiciled in the state of
North Dakota is directed to comply
with the provisions of section 4l4O
with respect to fixing the contingent
liability of its members and stating
the mount of such liability Of policy