96

OF CORPORATIONS.

Surety company surety in

any case.

CHAPTER 73.

OF CORPORATIONS.

AN ACT relative to Bonds, Undertakings, and other Obligations with Surety or Sureties, to the acceptance as Surety or Guarantor thereupon of Companies qualified to act as such, and to provide a uniform System of procedure by and Standard of Qualifications for such Companies.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

SECTION I. Whenever any bond, undertaking, recogniyume zance or other obligation is by law or the charter, ordinances, rules or regulations of any municipality, board, body, organization or public officer, required or permitted to be made, given, tendered or filed with surety or sureties, and whenever the performance of any act, duty or obligation, or the refraining from any act, is required or permitted to be guaranteed, such bond, undertaking, obligation, recognizance or

sufficient alone whether such case requires

one or more sureties.

And may be guarantee may be executed by a surety company qualified to act as surety or guarantor as hereinafter provided; and such execution by such company of such bond, undertaking, obligation, recognizance or guarantee shall be in all respects a full and complete compliance with every requirement of every law, charter, ordinance rule or regulation that such bond, undertaking, obligation, recognizance or guarantee shall be executed by one surety or by one or more surewhen free- ties, or that such sureties shall be residents or freeholders, resident or either or both, or possess any other qualification and shall required. be accordingly accepted and treated.

And also

hold or

surety is

Foreign SECTION 2. That such company to be qualified to so act surety com- as surety or guarantor under this act, must be authorized be author- under the laws of the State wherein corporated, and under its charter to charter to guarantee the fidelity of persons holding places of other than public or private trust, and to guarantee the performance of policies. contracts other than insurance policies, and to execute bonds and undertakings required or permitted in actions or proceedAnd must ings or by law allowed; must comply with the requirements with laws of the laws of this State applicable to such company in doing of this State business therein; and if incorporated under the laws of any Foreign other State than this State it must have a paid-up, unimpaired must have and safely-invested capital of at least two hundred and fifty paid-up thousand dollars; must have good and available assets in

OF CORPORATIONS.

$250,000.

with In

Comnis

application

business

excess of its liabilities, which said liabilities, however, for the capital of
purposes of this act shall be taken to be its capital stock, its
outstanding debts and a premium reserve at the rate of fifty
per centum of the current annual premium on all outstand-
ing risks in force; must file with the Insurance Commissioner Must file
of this State a certified copy of its charter or act of incorpo-surance
ration, a written application to be authorized to do business sioner copy
under this act, and a statement signed and sworn to by its of charter,
president, or one of its vice-presidents, and its secretary, or to do
one of its assistant secretaries, stating the amount of its and state-
paid-up cash capital, particularizing each item of invest-ment of
ment, the amount of the current premium on existing bonds capital.
upon which it is surety, the amount of liability for unearned Items of
portion thereof, estimated at the rate of fifty per centum of
the current annual premiums, stating also the amount of its
outstanding debts of all kinds, and such further statement,
similarly verified, as may by the laws of this State be re-
quired of such company in transacting business therein, and
if such company be organized under the laws of any other Foreigır
State than this State it must, in addition thereto, appoint an corporation
attorney in this State on whom process of law can be served appoint an
and file in the office of the Insurance Commissioner a written whom pro-
statement, duly signed and sealed, certifying such appoint-be served.
ment, which shall continue until another attorney is substi-
tuted; and must have at least one hundred thousand dollars Must have
invested in good interest-bearing or dividend-paying securi- invested in
ties of the character in which it is allowed under the laws bearing
of the State wherein incorporated to invest its capital, or in securities
which like companies under the laws of this State are Insurance
allowed to invest their capital, which said securities shall be sioner of
in value at or above par and deposited with or held by the incorpor
Insurance Commissioner or other corresponding officer ofated.
the State where such company is incorporated, in trust for
the benefit of the holders of the obligations of such company;
provided, that any company incorporated under the laws of
any other State than this State, doing business in this State Foreign
under the provisions of this act, must have on deposit with must have
the State Treasurer of Delaware good interest-bearing and securities
dividend-paying securities worth at par and market value at with State
least ten thousand dollars, to be held for the benefit of the Treasurer
holders of the obligations of such company, said securities to be held
deposited with said State Treasurer shall remain with him those in-
in trust to answer any default of such company as surety and subject
upon such bond, undertaking, recognizance or other obliga-toexecution
tion established by final judgment upon which execution suit of such

Income from said securities to be collected by

said surety

may be

and others

from at

OF CORPORATIONS.

may lawfully be issued against said company, said State Treasurer and his successors in office being hereby directed to so receive and thereafter retain such deposit under this act in trust for the purposes hereof, such company, however, company. at all times to collect the interest, dividends and profits upon Securities such securities and from time to time to withdraw said secuwithdrawn rities or portions thereof substituting therefor others of substituted. equally good character and value to the satisfaction of the Securities State Treasurer, and such securities and substitutes therefor exempt shall at all times be exempt from and not subject to levy tachment. under any writ of attachment; and further, shall not be Company subject to any process against such company without at least thirty days' notice to said company, specifying the time, place and manner of such sale and the process under which process. and purposes for which said securities are to be sold, accomSurety com- panied by a copy of such process; and provided further, that Bane of this nothing herein contained shall be construed to in any way affected by disqualify any trust company now or hereafter to be incorporated under the laws of this State and duly authorized by its charter to act as sole surety from becoming such sole surety in any case where, by law or otherwise, a bond, undertaking, obligation, recognizance or guarantee shall or may be required or permitted.

must have 30 days' notice of sale under

State

this act.

surance Commissioner

to act as surety.

SECTION 3. Upon production of proof to the Insurance Certificate Commissioner of this State by any company organized from In- under the laws of any other State than this State that it possesses the qualifications by this act required and that it authorizing has in all respects complied therewith, he shall issue to such company and to each of its agents in this State a certificate that it is authorized to become and be accepted as sole surety on all bonds, undertakings and obligations, required or permitted by law, or the charter, ordinances, rules and regulations of any municipality, board, body, organization or public officer, which said certificate shall be prima facie evidence of such company's right to do business in this

No power hereby

to

State; provided, however, that no such company as aforegranted said, by virtue of this act, shall within the limits of this accepturety State, by implication or construction, be deemed to possess the power to act in the capacity of executor, administrator, guardian, trustee, receiver, assignee, or agent, or in any other capacity than that of surety, anything in its charter or articles of incorporation to the contrary hereof notwithstanding; and provided further, that all certificates issued by the Insurance Commissioner of this State under the provisions of

Certificate of Insur

to be filed.

OF CORPORATIONS.

State

cted

this act shall expressly set forth the limitations and restric-icejoner to tions contained in the preceding proviso.

Com

specify said restrictions.

deposited in

SECTION 4. That such company shall also annually, in Annual the month of January, file with the Insurance Commissioner med a statement similar to that hereinbefore in Section 2 of this act provided for, and such further statement as may be by the laws of this State required of such company, in transacting business therein, and shall also furnish him with a certificate Certificate from the officer with whom the deposit in Section 2 of this of securities act specified is required to be made, describing such securities other State so deposited and the manner in which they are held by him and stating that he is satisfied that such securities are fully worth the amount so required to be deposited, and also shall Other infurnish the Insurance Commissioner with such other information, touching its condition and credit, as he may require, signed and sworn unto as in said Section 2 provided.

to be filed.

formation.

business.

SECTION 5. That any such surety company may at any May time surrender to the Insurance Commissioner said certificate discontinue of qualification, and shall thereafter cease to engage in the said business of suretyship and indemnity; such company shall thereupon be entitled to the release and return of its said securities deposited as aforesaid in the manner following: said company shall file with said commissioner a When. statement in writing, under oath, giving the date, name and amount of all its then existing obligations of suretyship or indemnity in this State, setting down the facts of each case, and said commissioner after an examination of the facts, shall Bond require said company to file with the Treasurer a bond to the to be filed State in the penalty of not less than ten thousand nor more Treasure than twenty thousand dollars, executed by said company and two or more responsible freeholders of this State, or a responsible surety company qualified as aforesaid, conditioned for the prompt fulfillment by said company of all its said out- Condition standing obligations of suretyshipor indemnity, and stipulat- of bond. ing that the makers of said bond may be joined as defendants to any action upon any of the aforesaid obligations of suretyship or indemnity of said company, and that if judgment in such action be rendered against said company it may at the same time be rendered and enforced against the makers of said bonds without further or other action against same, and such bond shall stand for the security and benefit of all persons interested in said outstanding obligations of suretyship and indemnity; upon approving and filing such bond said treasurer shall deliver said securities to said company.

Surety company maybecome bailee of

money and assets of party for whom

surety is entered.

Surety may be released

liability on

OF CORPORATIONS.

SECTION 6. It shall be lawful for any party of whom a bond or undertaking is required to agree with his sureties for the deposit for safe keeping of any and all moneys and other depositable assets for which such sureties are or may be held responsible with a trust company, safe deposit company or bank authorized by law to transact business as such in this State, if such deposit is otherwise proper, in such manner as to prevent the withdrawal of such moneys and assets or any part thereof, except with the written consent of such sureties, or an order of the court, made on such notice to them as such court may direct.

SECTION 7. The surety or the representatives of any from further surety upon the bond of any trustee, committee, guardian, surety assignee, receiver, executor or administrator or other fiduciary bond; how. may apply by petition to the court wherein said bond is filed or which may have jurisdiction of such trustee, committee, guardian, assignee, receiver, executor or administrator, or other fiduciary or to a judge of said court, praying to be relieved from turther liability as such surety, for the acts or omissions of the trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary, which may occur after the date of the order relieving such surety, to be granted as herein provided for; and to require such trustee, committee, guardian, receiver, assignee, executor or administrator or other fiduciary, to show cause why he should not account and such surety be relieved from any such further liability as aforesaid, and such principal be required to give a new bond; and thereupon upon the filing of such petition, the court or a judge thereof, shall issue such order returnable at such time and place and to be served in such manner as such Court's con- court or judge may direct, and may restrain such trustee, comtrustes, &c., mittee, guardian, assignee, receiver, executor or administrator for whom or other fiduciary from acting except in such manner as it may direct to preserve the trust estate and upon the return of such order to show cause if the principal in the bond account in the due form of law, * and file a new bond duly approved, then such court or judge must make an order releasing such surety filing the petition, as aforesaid, from liability upon the bond for any subsequent act or default of the principal; and in

Order of

court.

trol of

surety was entered.

default of such principal thus accounting and filing such new trustee, &c., bond, such court or judge must make an order directing such to account. trustee, committee, guardian, assignee, receiver, executor or administrator, or other fiduciary to account in due form of