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GOVERNMENT OF THE DISTRICT OF COLUMBIA,

Washington, March 20, 1930 Hon. ARTHUR CAPPER,

United States Senate, Washington, D. C. MY DEAR SENATOR CAPPER: At your request Mr. Levi Cooke and I have framed amendments to S. 3492, to meet the objections I advanced at the hearing last Friday.

As already explained at the hearing, the bill consists of three sections. The first, section 639° (b) enables corporations to add to or diminish corporate powers, substitute other purposes and powers, change corporate business, change location of place of business, and make any other amendment or amendments not already provided for if such amendment or amendments of the charter contain only such provisions as would have been lawful or proper in the original certificate of incorporation.

We suggest no change in this section.

The second section, section 639 (C) as originally framed, provides for the issuance of preferred stock. We suggest an amendment which also permits the classification of common stock and eliminates the requirement that the recorder of deeds before receiving and filing a certificate of incorporation, shall have proof of a full subscription of all stock and payment of 10 per cent of cash thereon. This requirement has no premise in general sections and is created by section 552 of the code. Its effect is to restrict unduly the incorporation of companies under District of Columbia law. It is subject to easy evasion and undoubtedly has been the source of misstatements under oath in order to secure recordation.

Sections 613, 615, and 616, which are general sections, provide, respectively, that no company shall be authorized to transact business until 10 per cent of the capital stock shall have been actually paid in, either in money or in property at its actual value; that stockholders shall be individually liable for the unpaid amount due upon shares of stock held by them; and that the president and a majority of the trustees, within 30 days of the payment of the last installment of capital stock, shall make a certificate as to the amount of the capital stock so fixed and paid in; and that they shall within the said 30 days record the same in the office of the recorder of deeds of the District. The provisions of these three sections are ample to protect the public in dealing with corporations as organized in the District.

An effort was made to include a provision for no-par stock, but such an amendment would require correction of several other provisions in the code, and it is respectively suggested that such provision in the District law await a general revision of the corporation laws of the District of Columbia.

The third section, section 639 (d) permits a corporation to dispose of all of its assets upon a two-thirds vote of all of its stockholders with protection to minority stockholders. This protection is furnished by the amendments substituted for lines 7 and 8 on page 6 through giving to dissenting stockholders prior to the settlement of their claims a lien upon proceeds of the sale, lease, or exchange in the hands of the vendor, lessor, or grantor corporation. In other words, until the dissenting stockholders' rights are finally determined through agreement or award in litigation, the company in which the dissenting stockholder holds shares must submit to a lien in favor of the dissenting stockholders on the proceeds of the sale, lease, or exchange.

We have also removed from this section the provision that the vendee shall take the property subject to the grantor's debts and liabilities including the claims of dissenting stockholders. As before stated, provision has been made for the protection of the dissenting stockholders and general creditors of vendor corporations are fully protected by the bulk sales law.

The formal amendments are self-explanatory
I have the honor to remain,
Very respectfully yours.

VERNON E. WEST,
Principal Assistant Corporation Counsel,

District of Columbia.

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SENATE

71st CONGRESS

2d Session

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REPORT No. 760

LEGAL RESERVE ON LIFE INSURANCE POLICIES IN THE

DISTRICT OF COLUMBIA

May 29, 1930.-Ordered to be printed

Mr. CAPPER, from the Committee on the District of Columbia, sub

mitted the following

REPORT

[To accompany S. 4325)

The Committee on the District of Columbia, to whom was referred the bill (S. 4325) to amend subchapter 5 of chapter 18 of the Code of Law for the District of Columbia by adding thereto a new section to be designated section 648–a, having considered the same, reports favorably thereon, with the recommendation that the bill do pass, with the following amendment:

Page 2, line 4, strike out the word "after" and insert, in lieu thereof, "before the first day of January next following".

The object of this bill is to require life-insurance companies operating in the District of Columbia to maintain a legal reserve. The District now has no law requiring maintenance of such a reserve, which is a vitally important element in the life-insurance contract. It is the insured's only assurance that his contract will be satisfied by the company.

Discovery of this serious defect in the District laws was made by the corporation counsel in a recent case. The District Commissioners urged the introduction of this bill, and recommend its adoption in their letter appended hereto, as part of this report. The committee knows of no opposition to the bill.

COMMISSIONERS OF, THE DISTRICT OF COLUMBIA,

Washington, May 15, 1930. Hon. ARTHUR CAPPER, Chairman Committee on the District of Columbia,

United States Senate, Washington, D. C. Sir: The Commissioners of the District of Columbia have the honor to submit the following on Senate bill 4325, Seventy-first Congress, second session, entitled

SR-71-2—VOL 2- -45

“A bill to amend subchapter 5 of chapter 18 of the Code of Laws for the District of Columbia by adding thereto a new section to be designated section 648-a,” which you referred to them for report as to the merits of the bill and the propriety of its passage:

This bill was introduced by you upon request of the commissioners in a letter to you dated April 29, 1930, from which the following is quoted:

"There now exists no provision of law in the District of Columbia requiring the maintenance of a legal reserve on life-insurance policies. The corporation counsel in reviewing an appeal of the Federal Life Insurance Co. from the action of the superintendent of insurance suspending its license to operate in the District of Columbia for alleged impairment of capital, rendered an opinion holding that life-insurance companies now operate in the District of Columbia under the provisions of section 653 of the Code of Laws of the District of Columbia. The opinion further held that section 648 of the code, supra, has been repealed by the provisions of legislation contained in section 653, supra. (Act of August 15, 1911.) The outstanding point of the opinion was the holding that there now exists no provision of law in the District of Columbia requiring the maintenance of a legal reserve on life-insurance policies.

A legal reserve is an important, as well as a necessary, element in the contract of life insurance. Its existence is the only assurance that the insured has that his contract will be satisfied at maturity. To realize that there is no authority in law requiring the maintenance of such a fund is but a harbinger of chaos so far as the insured is concerned.

“The bill proposes to grant relief in this connection and the commissioners believe that the measure is an emergency one requiring prompt action.".

The bill should be amended by striking out on page 2, line 4, the word "after". and inserting in lieu thereof, the words “before the 1st day of January next following."

The bill, as introduced, used the word "after" for the reason that the reserve requirement is an essential element in a life insurance contract and it was felt that immediately upon passage of the act all companies transacting life insurance business in the District of Columbia should be required to set up the reserve required by the legislation; but the superintendent of insurance states that there are two different standards of valuation made applicable to contracts issued after the approval of the bill and no provision is made for standards for valuation of contracts issued before the approval of the bill. It is customary in other jurisdictions when setting up new standards of valuation to have the law take effect as of the first of any given year. Very truly yours,

L. H. REICHELDERFER, President.

BRIDGE ACROSS KANAWHA RIVER BETWEEN HENDER

SON AND POINT PLEASANT, W. VA.

May 29, 1930.-Ordered to be printed

Mr. DALE, from the Committee on Commerce, submitted the

following

REPORT

[To accompany H. R. 9439)

The Committee on Commerce, to whom was referred the bill (H. R. 9439) to extend the times for commencing and completing the construction of a bridge across the Kanawha River between Henderson and Point Pleasant, W. Va., having considered the same, report favorably thereon and recommend that the bill do pass without amendment.

The bill has the approval of the Departments of War and Agriculture, as will appear by the annexed House Report No. 679, which is made a part of this report.

(House Report No. 679, Seventy-first Congress, Second Session) The Committee on Interstate and Foreign Commerce, to whom was referred the bill (H. R. 9439) to extend the times for commencing and completing the construction of a bridge across the Kanawha River between Henderson and Point Pleasant, W. Va., having considered the same, report thereon with an amendment, and as so amended, recommend that it pass.

Amend the bill as follows:

“Line 9, after the word 'approved' insert the words - March 2, 1927, heretofore extended by acts of Congress approved March 14, 1928, and'.”

The acts of Congress referred to in the bill are as follows:

(PUBLIC—No. 675—69TH CONGRESS)

(H. R. 16116] AN ACT Granting the consent of Congress to the Henderson Bridge Company, its successors and assigns,

to construct, maintain, and operate a bridge across the Kanawha River at or near the town of Henderson, West Virginia, to a point opposite thereto in or near the city of Point Pleasant, West Virginia

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the consent of Congress is hereby granted to Henderson Bridge Company, its successors and assigns, to construct, maintain, and operate a bridge and approaches thereto across the Kanawha River at a point suitable to the interests of navigation between a point in or near the town of Henderson, West Virginia, and a point opposite thereto in or near the city of Point Pleasant, Mason County, West Virginia, in accordance with the provisions of the act entitled “An act to regulate the construction of bridges over navigable waters,” approved March 23, 1906, and subject to the conditions and limitations contained in this act.

Sec. 2. After the completion of such bridge, as determined by the Secretary of War, either the State of West Virginia, any political subdivision thereof within or adjoining which any part of such bridge is located, or any two or more of them jointly, may at any time acquire and take over all right, title, and interest in such bridge and its approaches and any interests in real property necessary therefor, by purchase or condemnation in accordance with the laws of such State governing the acquisition of private property for public purposes by condemnation. If at any time after the expiration of twenty years after the completion of such bridge the same is acquired by condemnation, the amount of damages or compensation to be allowed shall not include good will, going value, or prospective revenues or profits, but shall be limited to the sum of (1) the actual cost of constructing such bridge and its approaches, less a reasonable deduction for actual depreciation in value, (2) the actual cost of acquiring such interests in real property, (3) actual financing and promotion cost, not to exceed 10 per centum of the sum of the cost of constructing the bridge and its approaches and acquiring such interest in real property, and (4) actual expenditures for necessary improvements.

SEC. 3. If such bridge shall at any time be taken over or acquired by any municipality or other political subdivision or subdivisions of the State of West Virginia, under the provisions of section 2 of this act, and if tolls are charged for the use thereof, the rates of toll shall be so adjusted as to provide a fund sufficient to pay for the cost of maintaining, repairing, and operating the bridge and its approaches, and to provide a sinking fund sufficient to amortize the amount paid for such bridge and its approaches as soon as possible under reasonable charges, but within a period of not to exceed twenty years from the date of acquiring the same. After a sinking fund sufficient to amortize the cost of acquiring the bridge and its approaches shall have been provided, such bridge shall thereafter be maintained and operated free of tolls, or the rates of toll shall thereafter be so adjusted as to provide a fund of not to exceed the amount necessary for the proper care, repair, maintenance, and operation of the bridge and its approaches. An accurate record of the amount paid for the bridge and its approaches, the expenditures for operating, repairing, and maintaining the same, and of daily tolls collected shall be kept and shall be available for the information of all persons interested.

Sec. 4. The Henderson Bridge Company, its successors and assigns, shall, within ninety days after the completion of such bridge, file with the Secretary of War a sworn itemized statement showing the actual original cost of constructing such bridge and its approaches, the actual cost of acquiring any interest in real property necessary therefor, and the actual financing and promotion cost. The Secretary of War may at any time within three years after the completion of such bridge investigate the actual cost of constructing the same, and for such purpose the said Henderson Bridge Company, its successors and assigns, shall make available all of its records in connection with the financing and the construction thereof. The findings of the Secretary of War, as to the actual original cost of the bridge, shall be conclusive, subject only to review in a court of equity for fraud or gross mistake.

Sec. 5. The right to sell, assign, transfer, and mortgage all the rights, powers, and privileges conferred by this act is hereby granted to Henderson Bridge Company, its successors and assigns, and any corporation to which or any person to whom such rights, powers, and privileges may be sold, assigned, or transferred, or who shall acquire the same by mortgage foreclosure, or otherwise, is hereby authorized and empowered to exercise the same as fully as though conferred herein directly upon such corporation or person.

Sec. 6. The right to alter, amend, or repeal this act is hereby expressly reserved.
Approved, March 2, 1927.

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