IN SENATE.
WEDNESDAY, February 9, 1881--10 a. m.Prayer offered by Rev. J. B. Logan.
The reading of the Secretary's minutes was dispensed with, and the following described new proposition was introduced:
By Mr. Spann, a bill [S. 270]: To create the Forty-fourth Judicial Circuit, amendatory of the act approved March 6, 1873, and amending Section 9 of said act, concerning the Counties of Franklin, Fayette, Union, Decatur and Rush.
Mr. Spann's bill [S 57]: To authorize incorporated towns to contract with Water Works Companies, was read the third time and passed by yeas, 40; nays, 0.
Mr. BUNDY offered a concurrent resolution, which was adopted, authorizing the Joint Committee to investigate the affairs of the Asylum for Feeble Minded Children to employ a Clerk.
SENATE BILLS PASSED.
Mr. Urmston's bill [S. 58] to amend Section 74 of the school law so that school moneys shall be loaned at 6 per cent. in advance, was read the third time and referred to a Special Committee of three consisting of Messrs. Viehe, Graham and Urmston.
The Committee on Revision's bill [S. 153] concerning voluntary assignments of personal and real property for the benefit of creditors, was read the third time and passed by yeas, 35; nays, 1--Mr. Garrigus.
The Committee on Revision's bill [S. 155] concerning Circuit Courts, being read the third time--
Mr. MENZIES stated the only effect of this bill is to codify the laws in reference to Circuit Courts, and throwing all the statutes relating thereto, passed in the last thirty years, into one compact act.
The bill passed-yeas, 40; nays, 0.
PARTITION OF REAL ESTATE.
The Committee on Revision's bill [S. 156], concerning the partition of land, being read the third time--
Mr. MENZIES explained that the bill is amendatory of the partition act of May 20, 1852. It enlarges the first section; strikes out the word "co-partner;" inserts guardians and trustees, embracing them as tenants in common. It eliminates some four or five sections, which refer to proceedings in Courts in relation to partition suits. It permits Commissioners appointed to divide land, to acknowledge their acts before any competent officer, and send, the same to the Court, instead of incuring the expense of traveling some distance to the County seat for the purpose of presenting it in open Court. Then it divides expenses of the suit ratably among parties thereto. Now, in some cases, one party pays expenses for services that inures to the benefit of all. This bill simplifies the partition act, and eliminates much that is mere verbiage.
Mr. HEFRON had great respect for the Revision Committee, but pointed out objections to this bill. The Legislature intends to give widows a homestead on partition, and give her a right to say in what place her share should be set off to her. This bill gives her no more rights than other tenants in common. Then it provides that all expenses, including attorney's fees, shall be paid ratably. Other tenants may not desire partitions, while the one bringing suit does, and under this bill all must pay a proportion of the expense. Where a man is required to pay something, he ought to have a voice in the contract. There should be no taxation without representation. He could not understand how an administrator or guardian could become a tenant in common.
Mr. BELL contended if the administrator guardian, executor or trustee could not show interest he would go out of Court. The only question that can be raised against the passage of this bill is the clause as to attorneys' fees. If they are not sui adjuerus the only manner in which partition can be had is by applying to the Courts, and on proper consideration the distribution of expense will be found advisable.
Mr. VOYLES favored the bill. He thought the clause proportioning attorneys' expense pro rata was a good one.
Mr. SPANN opposed the clause to repeal the act of March 5, 1859. The bill is too sweeping in striking down a law that has stood for twenty-two years. By this bill the widow is left on the same plane with every heir or tenant, whereas the sacred traditions, hanging around the old homestead should be respected. Sons-in-law page: 152[View Page 152] may take umbrage at the widow and oust her from the homestead to advance their own ends.
Mr. BROWN reminded the Senator that the act of 1859 was only advisory.
Mr. SPANN insisted that it has been looked upon as directory in general practice.
Mr. HENRY referred to some points against the bill, notably the provision concerning the taxation of attorneys' fees. He was not pleased with the wording of the first section, and doubted if it will give satisfaction to the people generally if passed into an act.
Mr. MENZIES replied to objections to the bill. Administrators have been trea ed as tenants in common since 1875, and this bill does not change the practice under that act. He moved the bill be recommitted to the Committee on Revision, with instructions to consider the provisions with reference to widows, attorneys' fees and administrators.
The motion was agreed to.
CARE OF POOR CHILDREN.
Mr. Spann's bill [S. 130] to provide for the support and care of pauper children more effectually [see these reports January 20] being read the third time--
Mr. SPANN believed this bill would work great good in providing for destitute children now in Poor Houses--near 1,000 in number--by bringing them into a family group under the care and control of a mother. That they should be reared in the family crib is God's plan. The bill is commendable upon the ground of economy in that it limits the expense to thirty cents a day per capita. Then it is not mandatory in any of its provisions.
Mr. WHITE said the Committee had given this bill careful consideration, and it was of the opinion that it proposes a plan admirably adopted for the care and custody of the pauper children of the State, and he hoped it would be passed into a law.
Mr. VAN VORHIS had carefully examined the bill. It does credit to the head and heart of the author. Its provisions are well guarded, and he hoped it would pass.
Mr. BUNDY believed his County and but one other has a similar plan in operation. It is a subject of common remark that these children in his County are advancing more rapidly than many children enjoying the blessings of a good home. He preferred this system to the aggregate plan of an Orphans' Hospital.
Mr. GARRIGUS claimed such a system for his County, and knew the plan works well.
Mr. RAHM would take great pleasure in voting for this bill, as it embraces a much-needed measure for the relief of a deserving class.
Mr. FOSTER had prepared a bill looking to the care of this class of children, which he was much interested in, but believing this one would do the work, he hoped it would pass.
Mr. HEFRON appreciated the generous feeling of humanity that prompts the favorable consideration of such a bill, but believing we should be just before being charitable, he would have to oppose it. There are features in it which will take away many of its intended benefits. It places in the power of the matron to farm out the children, with the consent of the Commission. We have a law already that will operate as just as this bill, and much more cheaply. The plan of the bill would beget in the children a spirit of dependence on the Home for sustenance and protection, while the very desirable elements of self-reliance are taken away. The present law is much preferable.
Mr. OWEN very heartily indorsed the bill. It promises more for the good of society than any measure yet brought before this body. The Poor House is a kind of reservoir for the most infamous slums of society, and these children, by this measure, would be taken away from such contaminating influences.
The State takes care of her poor, feeble-minded children, and yet is degrading those who posses brains.
Mr. BELL fully concurred with what was said by the Senator, who has just taken his seat. That such a measure as this has not been passed by the General Assembly heretofore reflects not to the credit of the State. He hoped the bill would pass.
The bill passed by yeas, 31; nays, 7.
Mr. Traylor, when his name was called, said he should vote for the bill inasmuch as it is not mandatory. These children ought to be provided for better than they are in our Poor Houses.
The LIEUTENANT GOVERNOR laid before the Senate the following report of the Insurance Commission:
The Legislature of 1879, directed the Governor to appoint some person to act with the Attorney- General and Auditor of State "to constitute a Commission whose duty it shall be to prepare and present to the next General Assembly of the State, a bill for an act embracing a codification of the insurance laws of the State; so amended and with such additional sections and provisions as will, when passed upon, provide an insurance law which will properly regulate the business of foreign and domestic Insurance Companies doing business in this State, and provide for a proper collection and accounting of all moneys due from such Companies, and embrace such other matter as in the opinion of said Commission will be necessary to frame a good insurance law."
The Governor accordingly appointed John A. Finch to this position. The Commission was immediately organized. John A. Finch was elected Chairman.
At our first consultation it was determined we would make no omission or change in the present law, and add nothing to it except upon the clearest public necessity. The policy of the State touching insurance business should not be changed without it appeared to be imperatively demanded. We have been firm in adhering to this rule. We report against no existing section, make no change in any section, and add no new section without the fullest consideration and what seemed the most satisfactory reasons. It was also determined to make a thorough examination of all existing statutes of the States of the Union, and of the United States and of all foreign countries. The Chairman has collected all these statutes and patiently read their curious and complex provisions, and made report to the other Members of the Commission. Whatever seemed to be of probable value to a State like Indiana was reserved for more careful consideration.
In the consideration of the various intricate and delicate questions involved, the Chairman of the Commission was led into a very extensive correspondence with officials of other States in charge of insurance departments, with experts in insurance theories and practice, and in the law of insurance, with officials of Companies and with writers upon insurance topics. Patient attention was given to every communication received. This voluminous correspondence has been preserved and is at the service of the Committees on Insurance.
The Chairman also attended the Convention of Insurance Commissioners and Superintendents in St. Louis in September, 1879, and again in Chicago in September, 1880. The views of the gentlemen composing these Conventions were, from their official positon, of very great value. Many of them have been retained in their positions for many years, through changes in the politics of changing administrations. The Chairman also attended the sessions of the Association of Fire Underwriters of the Northwest in Chicago in September, 1879, and again in 1880. This is a body of men of singular activity and energy, and no one can attend one of their meetings without profit.
The Chairman and members of the Commission had also the benefit of an extended visit from Hon. Cornelius Walford, F. I. A., F. S. S., a most page: 153[View Page 153] eminent English barrister, who has a reputation as wide as civilization as a student and writer in insurance.
From his extended correspondence and acquaintance, and especially from interviews with the Commissioners and Superintendents of State Insurance Departments, the Chairman has had a pretty thorough information as to the general subject of insurance legislation. The points of discussion and for determination developed in this way have been canvassed with the Commission, and we have been in substantial accord on all leading propositions.
Upon the organization of the Commission, the Auditor of State notified all the Insurance Companies doing business in the State of the fact and invited suggestions from them. Similar notice was sent to all the newspapers in the State and to all citizens who might feel disposed to aid in the work to be done. There was some response to this from citizens and through the press, and valuable suggestions were received. The Insurance Companies without the State made no response. Later, the Chairman called particular attention of these Companies to special questions, and by repeated efforts in this way a fair expression was had.
Gentlemen interested in local Companies and other desirous of seeing strong local Companies organized have pressed upon our attention the fact that for some cause, and that ascertainable by reference to existing statutes, Indiana has been forced to buy insurance from corporations of other States. It was apparent that some change was needed--that this unnatural and unhealthy condition should be corrected.
It has long been a matter of surprise and regret with the best citizens of the State that the business of insurance should be so largely done by Companies organized without the State. It would seem that in a State of such wealth and population and energy as this, the business of insurance should largely be done by home Companies. The sums sent out of the State for insurance annually for the last thirty years make an immense aggregate. It is felt to be a drain from the State that prudence and enterprise would seek to diminish and balance by forming home Companies of strength that would, while doing all of the home insurance they prudently could without incurring danger from conflagration risks, also draw from other States in some such proportion as they draw from us. That this has not been done is a matter demanding attention, and we have given it a thorough investigation.
We do not believe any fostering legislation will develop home Insurance Companies. They must come from the energy, enterprise and intelligence of the citizens. They should be under no regulation or requirement that will chafe the management or imperil the business. It is an earnest hope of the Commission, as of every citizen of the State, that the insurance of property and life in Indiana should, so far as practicable, be by home Companies. The State can grant no special favor to incorporators of Companies for insurance that upon equal terms is not given to incorporators of Companies for any other business. Neither should the State impose conditions upon incorporators of Insurance Companies unknown to other business beyond the strictest necessity growing out of the of the nature of the business. With this thought we have considerately gone through with the existing law. No one need feel surprised at the fact of so few Companies for insurance having ever been attempted in this State. Since 1852 the law has been practically prohibitory. It has required every Company organized under the general law after notice of a loss "to pay the amount so lost within sixty days after such notice, under a penalty of ten percentum damages for every thirty days such loss remains unpaid thereafter."
It allowed an Insurance Company so organized to take real estate security, and to realize the debt, to take title to such realty. But "such Company shall be required to offer said real estate once in every two years at public auction to the highest bidder." This is simply a prohibition. Under these provisions a contested claim draws 120 per cent. interest, and in a suit to recover the claimant might delay a final trial until his claim would be quadrupled. A depression in prices, such as we have lately witnessed, would, under the rule of forced auction sale speedily bankrupt the most solvent Company. It would, indeed, be in such imminent hazard constantly that prudent men might well, as experience shows they have for thirty years, refuse to so place their capital.
These sections and many other minor provisions we omit. We have, indeed, entirely revised the law for the incorporation and management of stock Insurance Companies, and while we have most carefully guarded the solvency of the Company that might be organized, we have made no provision that will bear unfairly upon or harass the Company when organized. The policy holder and the stockholder will be equally safe.
Very decided changes are made for the admission of Companies of other States, and of foreign countries. Under the present law a Company is required to appoint its agents every six months, and authorize them to accept service during that time. Under this rule a Company may, as many have, come into the State and remain a short time until a considerable liability is incurred and then, by failing to renew its appointment of agents, can withdraw from the State. A citizen of this State having a disputed loss in such a Company, would be required to go to the State or foreign country where the Company is located in order to litigate. Under the present law the requirement, it will be noticed, is wholly upon the agent. The Company, as a Company, directly does nothing toward securing the right to do business in the State. Its first act is to appoint an agent, and the agent, before he can transact any business of insurance for the Company must do certain things. In this a change is made. The application for admission is made by the Company. It must present a detailed statement of its condition and comply with other requirements. It must appoint some person upon whom service may be had as long as any risks of the Company exist in the State. In case of the death, resignation or removal of such person, and the failure of the Company, for thirty days, to make a new appointment, service, it is agreed, shall be upon the Auditor of State. This provision will effectually secure citizens from annoyance by being unable to litigate against a Company upon a disputed claim in this State.
The same provision is made for Companies of foreign countries. They are required to make three statements-one showing the condition and business of the Company in the United States; one showing condition and business in the aggregate. These statements are to be made in a prescribed form. If such Company is required, where organized, to make a report to any official, it shall also file with the Auditor of State a copy of such report. These reports will, if truthfully made, give satisfactorily full information concerning these Companies. Under the provisions of the bill we report, all Companies, organized without the State issuing any form of policy or certificate, by which anything is promised in the event of loss of property or life, are upon equal footing. The only exception is in favor of Companies insuring only against injury by accident, or loss of time by disease. It would seem that $100,000 of capital unimpaired, or of accumulated surplus, would be amply sufficient to meet their liabilities. This may exclude from the State a class of Companies issuing certificates of membership by which at the death of a member, an assessment on existing membership is promised. Experience has fully page: 154[View Page 154] justified grave doubts of the permanency of this form of Company. No such Company has ever succeeded for any long period. Membership is not held by any obligation beyond agreement to pay the assessments as made. It is Impracticable to compel payment by litigation. As a result of this, it has, without exception, been the rule, that as the age of members increases, and the death rate increases correspondingly, new members will not unite, and those who drop out are the strongest and least liable to die. The selection is thus against the Company with an inevitable result of practical dissolution. It is not believed that any benefit from such Companies, organized in other States, has been realized equal to the loss. A Company without capital or accumulation can give no guaranty to our citizens. Such a Company can only do a business satisfactory to its membership, when its management is within immediate observation of all those interested. The Commissioners and Superintendents of Insurance Departments of other States are unanimous in condemnation of this system. In many of the States they can only organize by full compliance with the law concerning the organization of Life Insurance Companies.
While making this requirement as to the assessment Companies, we have made no change in the law for the organization of such Companies in this State. They are organized under the law for organization of Voluntary Associations, and that is not within the laws referred to this Commission. All such Companies are, however, required to make annual report of their business and condition, and the reports are required to be published, as are the reports of other form of Companies. We can see no objection on the part of any Company to this requirement. So far as we have had expression from any of these Companies, they all favor an annual report. Officers of these Companies, as a rule, think it as important that such Companies should make report as that Companies upon any other theory should report. Upon the theory that the patrons of every sort of Company doing insurance business in any form should have for their information sworn reports of what the Company is doing, we have provided that Companies whose business is limited to one County shall make report to the Auditor of the County. For this only a nominal fee is provided.
Statements of all Companies doing business in the State are required to be filed in the office of the Auditor of State. Certified copies of these must be filed in the office of the Clerk of every County where they do, business. These are to be kept by the Clerk for public inspection, and this will give full information to all concerned of the condition of every Company, The Auditor of State is required to publish, in his annual report, the amount of fees and taxes paid by each Company, and to send a copy of his report to every Company doing business in the State. This will be sufficient guard for correct accounting. His report shall also contain an abstract of the annual statements of the Companies and such other information as he may deem proper to publish.
In framing the provisions affecting the relation between the Companies and the public who patronize them, we have kept this principle in mind, that in a Government like this, the State shall do no act for a citizen that he can as well do for himself. We dislike tampering with contracts by-legislation. Only considerations of grave public policy will justify this. We have endeavored to interfere with the terms of contracts as slightly as is desirable asa matter of public policy. As a general rule, we think the parties to a contract should be left to its terms. But this rule only fully applies where contracting parties are on equal terms. The ordinary policy-holder and the Insurance Company are not on equal terms. Therefore, we make certain requirements touching the contract. The most important of these may be mentioned:
1. After three annual payments of premiums on any life policy, death by suicide shall not avoid the policy, if the person on whose life the policy was written, shall commit suicide when insane.
2. After three annual payments of premium on a life policy, a paid-up policy shall be issued for such amount as the unexpended part of the premiums paid (technically called the reserve) will purchase at the then age of the person on whose life the policy was written. This provision may be waived in favor of any other provision, which shall, however, be fully stated in the waiver.
3. After five annual premiums have been paid on a life policy, the Company issuing it can not defeat recovery on account of any misstatement or omission in the application, unless the misstatement or omission was fraudulent. Error as to age may be corrected by accounting when the policy matures.
4. Every policy must have attached to it every instrument in any way affecting it. Other changes are made, but they are of slight importance, and do not need recapitulation.
Under the provisions of the bill we report, the Auditor of State is given the right to visit the agents and offices of all Companies doing business in the State, whenever in his discretion the public good requires it. The expenses of such examination is borne by the Companies examined. This isa large power, and, if wisely exercised, will guard the State from Companies of doubtful solvency. The Auditor is required to report the cause upon which he acted making or ordering an examination.
The Auditor of State, by this bill, is intrusted with the heavy responsibility of saying to the people of the State in what Companies they may safely insure. This duty requires such technical knowledge that many of our citizens have urged upon us the necessity of providing for the appointment of an especial officer, who shall be skilled in such matter. In nearly all of the States there is such an official. It would, on many accounts, seem to be desirable that Indiana should have such an official. If a salary would be given sufficient to secure the services of one technically informed and devoted to this specialty, and he be made only removable for cause, it might reasonably be expected that a more perfect service would be rendered in this Department. But it is not the policy of the time to create new offices or to give inviting salaries or indefinite term of office. And it may be said in justification or extenuation of the present system that the people of Indiana have not suffered more by failure of Insurance Companies than have the people of other States protected by special Departments of Insurance.
And further, that in New York, where the statutes relating to Insurance Companies make a considerable volume, and a department is provided with a well-paid official in charge, there have been most disastrous failures, particularly in life insurance.
Then came the recess till 2p. m.
AFTERNOON SESSION.
POWER OF ATTORNEY.
Mr, Chapman's bill [S. 189] defining power of attorney, was read the third time.
Mr. VIEHE objected to the penal clause in the second section.
Mr. BROWN regarded this bill as appointing a guardian for all mortgagees and alienees, and its enactment would result in great confusion.
Mr. CHAPMAN considered that every feature of the recording law would be open to the same criticism. He moved to set aside the order for the engrossment, and recomit the bill.
It was agreed to.
page: 155[View Page 155]GRAVEL ROADS.
Mr. Ristine's bill [S. 54]j to amend Section 7 of the gravel road law of March 3, 1877, in relation to assessments and outstanding bonds, [see these reports page 80,] was read the third time.
MR. RISTINE said the only change was in reducing the rate of interest from 7 to 6 per cent., increasing the amount of outstanding bonds from $50,000 to $100,000. An emergency clause is added for the reason that the limit of $50,000 in many Counties has been reached, having roads uncompleted for want of funds.
The bill passed by-yeas 32, nays 2.
WARD CONSOLIDATION.
Mr. Smith's bill [S 16] to amend Section 79 of the general city incorporation act, so as to authorize cities to consolidate wards, being read the third time--
Mr Smith explained the bill simply authorizes the consolidation of one or more Wards, there by decreasing the number and also the number of Councilmen. It is not directory or mandatory but simply discretionary.
The bill passed by-yeas, 35; nays, 0.
INTEREST ON SCHOOL FUNDS.
Mr. Rahm's bill [S. 13] to amend Section 8 of the Common School law of 1865, so as to reduce the rate of interest on school funds to 6 per cent., being read a third time--
Mr. VIEHE saw no objection to the bill, except it does not require the interest to be payeble in advance, as has been customary with all school funds.
Mr. TAYLOR opposed the bill because it will cripple the school fund one-fourth. He was satisfied that eighty-two out of the ninety-two Counties of the State have already their money loaned at 8 per cent., and could not see the consistency of reducing the income to the school fund one-fourth because some few Auditors have some money on hand unloaned.
Mr. MENZIES said the author of the bill agrees to have it lie on the table, to be considered when the school of law codification is considered.
Mr. FOSTER objected to delay.
Mr. OWEN had a list covering one-fourth of the Counties, showing that but 3 per cent. of the whole amount remains unloaned. The question should be: How much can we get legally and not usurious? If the legal rate of interest is reduced from 8 to 6 per cent., the rate on these funds ought to be reduced, and the bill should await action on the interest bills before the General Assembly.
Mr. VOYLES believed that the rate of interest on the public moneys ought to be lowered.
Mr. Rahm thought it but right and just that the rate of interest on school funds should be reduced. Senators should relieve those so poor as to have to mortgage their farms to get this money from paying 8 per cent., when 6 is enough, He believed it wrong to ask more, even if we could get it. In his County money can be obtained for less than 8 per cent., and some $7,000 or $9,000 of the school funds are now lying idle. The bill read that the interest should be paid in advance, and he desired it should read so now.
Mr Chapman considered it as well to meet this this question now as at any other time, whether the rate of interest of the school fund shall be reduced from 8 to 6 pe cent. He opposed the proposition, and opposed delay.
Mr. URMSTON believed the bill it passed as it is, would change the rate of interest entirely. Then the title and the body of the bill are at variance. It should be recommitted.
Mr. HENRY desired to see the bill defeated or indefinitely postponed.
On motion by Mr. CHAPMAN, the bill was indefinitely postponed--yeas, 21; nays 19.
SENATE BILLS FINALLY PASSED.
Mr. Voyles' bill [S. 72] authorizing the distribution of the 3 per cent. fund by County Boards to Township Trustees, was read the third time.
Mr. VOYLES explained while the bill is general in its scope, it has direct reference to his County.
The bill passed by yeas 37: nays, 1.
Mr. Leeper's bill [S. 52] to amend Section 34 of the Common School [see these reports January 13], was read the third time and passed by yeas, 35; nays, 1--Mr. Garrigus.
Mr. Kramer's bill [S. 67] extending term of Township Trustee to two years, was read the third time.
Mr. KRAMER explained that the change of terms requires some provision for the next election, so where more than one is chosen, one-half, or those receiving the highest number of votes shall hold for two years. The object being to have one-half hold over. Another provision allows the Trustee to levy a road tax concurrent with the County Boards.
Mr. URMSTON was satisfied this bill has not been carefully examined, and should not be passed.
Mr. FOSTER favored the plan of having one-half the Board hold over. He moved to recommit the bill, with Instructions to add an emergency clause.
The motion was agreed to.
Mr. Menzies' bill [S. 213] authorizing the incorporation of Public Libraries, was read the third time.
Mr. MENZIES said the purpose of the bill was to authorize persons to associate themselves together for purpose of establishing Public Libraries.
The bill passed--yeas, 40; nays, 0.
Mr. Kramer's bill [S. 104] to amend Sections 2 and 4 of the Common School law, [see p. 116] was read the third time and passed--yeas, 32; nays, 4.
Mr. Wilson's bill [S. 147] authorizing the Governor to appoint all officers elected by the General Assembly, was read the third time, but failed to pass, by yeas, 18; nays, 19.
And then the Senate adjourned.
