[Rev. 10/29/2015 1:33:11 PM]

Link to Page 1792

 

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ê1971 Statutes of Nevada, Page 1793 (Chapter 660, AB 416)ê

 

as such under the Securities Exchange Act of 1934, or with respect to securities the sale of which is underwritten (other than on a best efforts basis) by such a broker-dealer.

      7.  With respect to solicitation of subscriptions to or purchase of securities covered by a solicitation permit issued by the commissioner, the license required by this section is in lieu of a license or permit otherwise required of the solicitor under any other law of this state.

 

 

MUTUAL INSURERS: INITIAL QUALIFICATIONS.

 

      Sec. 572.  1.  When newly organized, a domestic mutual insurer may be authorized to transact any one of the kinds of insurance listed in the schedule contained in subsection 2.

      2.  When applying for an original certificate of authority, the insurer must be otherwise qualified therefor under this code, and must have received and accepted bona fide applications as to substantial insurable subjects for insurance of a substantial character of the kind of insurance proposed to be transacted, must have collected in cash the full premium therefor at a rate not less than that usually charged by other insurers for comparable coverages, must have surplus funds on hand and deposited as of the date such insurance coverages are to become effective, or, in lieu of such applications, premiums, and surplus, may deposit and thereafter maintain surplus, all in accordance with that part of the following schedule which applies to the one kind of insurance the insurer proposes to transact:

 

     (A)                 (B)               (C)           (D)               (E)               (F)               (G)              (H)

                                                                                                      Max.          Deposit        Deposit

                          Min.         Min. No.     Min.             Min.            Amt.            Min.               of

                         No. of        Subjects     Prem.           Amt.          Ins. Ea.        Surplus        Surplus

  Kind of            Apps.           Cov-         Col-          Ins. Ea.          Subj.           Funds          in Lieu

     Ins.            Accepted         ered        lected           Subj.             (v)               (vi)              (vi)

Life (i).............. 500              500         Annual         $2,000        $ 5,000     $100,000     $200,000

Health (ii)......... 500              500     Quarterly         $     25        $      50     $100,000     $200,000

(Weekly Indemnity)

Property (iii)..... 100              250         Annual         $3,000       $  7,000     $100,000     $200,000

Casualty (iv)....... 50              500         Annual         $5,000       $25,000     $200,000     $300,000

 

Expendable surplus: In addition to surplus deposited and thereafter to be maintained as shown in column (G) or (H) in the above schedule, the insurer when first authorized must have on hand additional surplus funds in an amount not less than 150 percent of the applicable deposited surplus required of it under the above schedule. Of such additional surplus the insurer may expend two-thirds thereof thereafter in conduct of its business, and shall maintain unimpaired the remaining one-third together with such deposited surplus.

 

      3.  The following provisions are respectively applicable to the schedule in subsection 2 and provisions as indicated by like Roman numerals appearing in such schedule:

 

       (i) No group insurance or term policies for terms of less than 10 years shall be included.


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ê1971 Statutes of Nevada, Page 1794 (Chapter 660, AB 416)ê

 

       (ii) No group, blanket or family plans of insurance shall be included. In lieu of weekly indemnity a like premium value in medical, surgical and hospital benefits may be provided. Any accidental death or dismemberment benefit provided shall not exceed $5,000.

       (iii) Only insurance of the owner’s interest in real property may be included.

       (iv) Insurance of legal liability for bodily injury and property damage, to which the maximum and minimum insured amounts apply, must be included.

       (v) The maximums provided for in column (F) are net of applicable reinsurance.

       (vi) The deposit of surplus in the amount specified in columns (G) and (H) must thereafter be maintained unimpaired. The deposit is subject to the provisions of sections 165 to 176, inclusive, of this act (administration of deposits).

 

      As to the financial requirements for the authority of such insurer to transact additional kinds of insurance, see section 599 of this act.

 

 

MUTUAL INSURERS: PERMIT, BOND.

 

      Sec. 573.  1.  Before soliciting applications for insurance as required under section 572 of this act, the incorporators of the proposed insurer shall procure a solicitation permit as required by section 556 of this act, and shall file with the commissioner a corporate surety bond in the penal sum of $50,000 in favor of the State of Nevada and conditioned as follows:

      (a) Upon due accounting for and deposit, as required under section 575 of this act, of funds received as premiums upon applications for insurance; and

      (b) If the corporation fails to complete its organization and secure a certificate of authority issued by the commissioner within the period allowed therefor by the solicitation permit, all premiums collected from applicant members will be promptly returned to them, and all other indebtedness of the corporation, other than any compensation to directors, officers or solicitors of insurance applications, and costs incurred by the State of Nevada in any legal proceedings for the liquidation or dissolution of the corporation will be paid.

      2.  In lieu of such a bond, the incorporators may deposit with the commissioner cash in the amount of $50,000, or securities of the United States Government or of the State of Nevada of a market value of at least $50,000, and the commissioner shall hold such deposit in trust for the same purposes as apply to a bond under subsection 1.

      3.  If the corporation or an affiliate corporation proposes also to offer securities for initial financing of the proposed insurer, in addition to the securing of qualifying applications for insurance, the bond or deposit required by this section may be combined with that required under section 567 of this act, with appropriate extension of the conditions of such bond or deposit to comply with the requirements of both sections, so that only one such bond or deposit of $50,000 shall be necessary for all such purposes.


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ê1971 Statutes of Nevada, Page 1795 (Chapter 660, AB 416)ê

 

      4.  The commissioner shall release and discharge the bond or deposit or remaining portion thereof held under this section upon settlement of all liabilities, if any, against it.

 

 

MUTUAL INSURERS: QUALIFYING APPLICATIONS FOR INSURANCE.

 

      Sec. 574.  1.  Upon issuance of the required solicitation permit, the proposed insurer may commence solicitation of requisite applications for insurance policies and may receive deposits of premiums thereon.

      2.  All such applications shall be in writing signed by the applicant, covering subjects of insurance resident, located or to be performed in this state.

      3.  All such applications shall provide that:

      (a) Issuance of the policy is contingent upon the insurer qualifying for and receiving a certificate of authority;

      (b) No insurance is in effect unless and until the certificate of authority has been issued;

      (c) The prepaid premium or deposit, and membership or policy fee, if any, shall be refunded in full to the applicant if organization is not completed and the certificate of authority is not issued and received by the insurer before expiration or other termination of the solicitation permit; and

      (d) All qualifying premiums shall be paid in cash.

      4.  Solicitations for such qualifying applications for insurance shall be by licensed agents of the corporation; and the commissioner shall upon the corporation’s request therefor and fulfillment of the requirements applicable under sections 191 to 238, inclusive, of this act (agents, brokers and solicitors), license as agents of the corporation individuals qualified therefor under, and subject to, such sections.

 

 

MUTUAL INSURERS: ESCROW OF QUALIFYING PREMIUMS.

 

      Sec. 575.  1.  All sums collected by a domestic mutual corporation as premiums or fees on qualifying applications for insurance therein shall be deposited in escrow with a bank or trust company located in this state under a written agreement filed with and approved by the commissioner. Terms of such agreement shall be consistent with those of the solicitation permit and of the applicable provisions of this section and section 577 of this act.

      2.  Upon issuance to the corporation of a certificate of authority as an insurer for the kind of insurance for which such applications were solicited, all funds so held in escrow shall become the funds of the insurer. Until the certificate of authority is issued, such funds shall remain the property of the applicants for insurance as respectively entitled thereto.

 

 

FAILURE TO COMPLETE OR QUALIFY.

 

      Sec. 576.  1.  The commissioner shall withdraw all funds held in escrow under section 569 of this act, and refund to securities subscribers or purchasers all sums paid in thereon under the solicitation permit, less that part allowed and used for organization, sales and promotion expenses, if:

 


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ê1971 Statutes of Nevada, Page 1796 (Chapter 660, AB 416)ê

 

or purchasers all sums paid in thereon under the solicitation permit, less that part allowed and used for organization, sales and promotion expenses, if:

      (a) The permit holder has failed to complete its organization or financing, within the terms of the permit, or, if to be an insurer, it has failed to secure its certificate of authority, all before expiration of the permit; or

      (b) The permit is revoked.

      2.  As to funds paid in on subscriptions by founders, promoters and incorporators and held on deposit in lieu of the bond under subsection 3 of section 567 of this act, only such portion of such funds shall be refundable under this section as may remain after discharge of all liabilities against the deposit under section 567 of this act and the charging of such funds with a proportionate share of organization, sales and promotion expenses.

      3.  If a proposed domestic mutual insurer fails to complete its organization and to secure its original certificate of authority within the period allowed therefor by the solicitation permit, the corporation shall transact no further business, and the commissioner shall return or cause to be returned to the persons entitled thereto all advance deposits or payments of premiums or fees held in escrow under section 575 of this act.

 

 

VOLUNTARY DISSOLUTION.

 

      Sec. 577.  1.  At any time prior to the issuance of a certificate of authority to a proposed domestic stock or mutual insurer, the incorporators may voluntarily surrender the articles of incorporation and the corporation may be voluntarily dissolved by written agreement filed with the commissioner. The agreement shall be signed and verified by a majority of the incorporators, and shall be signed (without verification) by at least two-thirds of all persons who theretofore have become subscribers to or purchasers of securities of the corporation and (in the case of a proposed mutual insurer) by at least two-thirds of all persons who theretofore have applied for policies in the proposed insurer.

      2.  The commissioner shall approve the surrender of such articles of incorporation and dissolution if upon investigation he finds that:

      (a) No insurance business has been transacted by the corporation except (in the case of a proposed mutual insurer) for solicitation of qualifying applications for insurance; and

      (b) Arrangements satisfactory to him have been made for the return to subscribers, purchasers and applicants of all funds paid by them upon subscription or purchase or securities, or upon applications for insurance, under the solicitation permit theretofore held by the corporation, less (as to securities subscriptions and purchases) the part thereof actually and lawfully used for expenses; and

      (c) All obligations of the corporation have been paid or discharged.

      3.  The articles of incorporation so surrendered, together with the executed copy of the agreement, bearing thereon the endorsed approval of the commissioner, shall be filed with the secretary of state and thereupon the corporate existence of the corporation shall cease.

      4.  The provisions of sections 835 and 836 of this act (grounds for rehabilitation, liquidation of domestic insurer) do not apply to the voluntary dissolution of a proposed domestic insurer pursuant to this section.


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ê1971 Statutes of Nevada, Page 1797 (Chapter 660, AB 416)ê

 

rehabilitation, liquidation of domestic insurer) do not apply to the voluntary dissolution of a proposed domestic insurer pursuant to this section.

 

 

SUBSEQUENT FINANCING: SOLICITATION PERMIT REQUIRED; PENALTY.

 

      Sec. 578.  1.  No person referred to in section 556 of this act (solicitation permit required), after receiving a certificate of authority, if an insurer, or after completing its original organization and financing, if other than an insurer, shall in this state solicit or receive funds in exchange for or grant options with respect to its securities until it has applied to the commissioner for, and has been granted, a solicitation permit. This section is subject to the same exemptions as are provided by section 558 of this act (exemptions).

      2.  The commissioner shall issue such a permit unless he finds that:

      (a) The funds proposed to be secured are inadequate or excessive in amount for the purposes intended; or

      (b) The proposed securities or the manner of their distribution would be unfair or inequitable to existing or proposed security holders or policy holders of the issuer; or

      (c) Other reasonable objections exist as to the proposed financing.

      3.  Any such permit granted by the commissioner shall be for such duration, and shall contain such terms and be issued upon such conditions, as the commissioner may reasonably require for the protection of existing or proposed investors. In the commissioner’s discretion escrow of funds, or a bond or deposit in lieu thereof, need not be required, and other terms and conditions of the permit may be substantially the same as or materially different from requirements made under this chapter as to solicitation permits for initial financing; but no such permit shall allow sales or promotion expense, for the sale of the securities in excess of the amount reasonably required therefor, and in no event to exceed 15 percent of the proceeds of such sales if and as such funds are actually received.

      4.  Every person who violates the provisions of subsection 1 is subject to the same penalties prescribed by section 556 of this act (solicitation permit required; penalty).

 

 

CHAPTER 27

 

CORPORATE POWERS, PROCEDURES OF DOMESTIC STOCK AND MUTUAL INSURERS

 

      Sec. 579.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 580 to 617, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 580.  1.  Except as provided in subsection 2, this chapter applies only to domestic stock insurers and domestic mutual insurers.


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ê1971 Statutes of Nevada, Page 1798 (Chapter 660, AB 416)ê

 

      2.  Subsection 3 of section 584 of this act also applies to foreign and alien insurers whose principal United States offices are located in this state; and subsection 5 of section 605 applies to the issuance of nonassessable policies by foreign mutual insurers.

 

 

GENERAL CORPORATION STATUTES APPLY.

 

      Sec. 581.  Domestic stock and mutual insurers shall be governed by the applicable provisions of the general statutes of this state relating to private corporations as such statutes are constituted on the effective date of this act or may thereafter be constituted, except where such general statutes are in conflict with the express provisions of this code and the reasonable implications of such provisions, in which case the provisions of this code shall govern.

 

 

INSURANCE BUSINESS EXCLUSIVE; EXCEPTIONS.

 

      Sec. 582.  1.  Except as provided in subsections 2, 3 and 4, no domestic insurer formed prior to or after the effective date of this act shall engage in any business other than the insurance business and in business activities reasonably and necessarily incidental to such insurance business.

      2.  A title insurer may also engage in business as an escrow agent.

      3.  Any insurer may also engage in business activities reasonably related to the management, supervision, servicing of and protection of its interests as to its lawful investments, and to the full utilization of its facilities.

      4.  An insurer may own subsidiaries which may engage in such businesses as are provided for in section 147 of this act (stocks of subsidiaries).

 

 

PRINCIPAL OFFICES.

 

      Sec. 583.  1.  Except as provided in subsection 2, every domestic insurer shall have and maintain its principal office and principal place of business in this state.

      2.  The commissioner for good cause shown may permit an insurer to have and maintain such office or place of business in another state if found by the commissioner to be in the best interests of the insurer and its policy holders and reasonably convenient to the commissioner in his supervision of the insurer, all subject to such reasonable terms and conditions as the commissioner shall, by his order granting such permission, establish.

 

 

BOOKS AND RECORDS: DOMESTIC INSURERS AND OTHER INSURERS HAVING PRINCIPAL OFFICE IN THIS STATE.

 

      Sec. 584.  1.  Every domestic insurer shall keep at its principal place of business its books, records, documents, accounts and vouchers in such a manner that its financial condition can be ascertained and that its financial statements filed with the commissioner can readily be verified and its compliance with the law determined.


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ê1971 Statutes of Nevada, Page 1799 (Chapter 660, AB 416)ê

 

a manner that its financial condition can be ascertained and that its financial statements filed with the commissioner can readily be verified and its compliance with the law determined.

      2.  No insurer shall make any disbursement of $25 or more, unless evidenced by a voucher or other document correctly describing the consideration for the payment and supported by a check or receipt endorsed or signed by or on behalf of the person receiving the money. If the disbursement is for services and reimbursement, the voucher or other document, or some other writing referred to therein, shall describe the services and itemize the expenditures. If the disbursement is in connection with any matter pending before any legislature or public body or before any public officer, the voucher or other document shall also correctly describe the nature of the matter and the nature of the insurer’s interest therein.

      3.  All such books, records, documents, accounts and vouchers of a domestic insurer, or of any principal United States office of a foreign or alien insurer located in this state, shall be preserved and kept available for the purposes of examination and until authority to destroy or otherwise dispose of such records is secured from the commissioner.

      4.  Any director, officer, agent or employee of any insurer who destroys any such books, records or documents without the authority of the commissioner in violation of this section is guilty of a gross misdemeanor.

 

 

ASSETS TO BE KEPT IN STATE; EXCEPTION.

 

      Sec. 585.  1.  Every domestic insurer shall keep its assets within the State of Nevada, except where requisite for the normal transaction of its business.

      2.  This section does not apply to:

      (a) Assets maintained at the insurer’s principal place of business located outside this state with the commissioner’s permission granted under section 583 of this act; and

      (b) Securities on deposit with or through the insurance supervisory officer of another state, province or country as a condition to authority for the transaction of insurance business by the insurer in such state, province or country.

 

 

REMOVAL, CONCEALMENT OF RECORDS, ASSETS.

 

      Sec. 586.  1.  No person shall remove all or any material part of the records or assets of a domestic insurer from this state except pursuant to a plan of merger, consolidation or bulk reinsurance approved by the commissioner under this code, or for such other reasonable purposes and periods of time as may be permissible under sections 584 and 585 of this act, or as may have been approved by the commissioner in writing in advance of such removal.

      2.  No person shall conceal any such records or assets from the commissioner.

      3.  Any person who unlawfully removes or attempts to remove such records or assets or such material part thereof from the principal place of business of the insurer or place of safekeeping thereof, or who unlawfully conceals or attempts to conceal the same from the commissioner, is guilty of a felony.


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ê1971 Statutes of Nevada, Page 1800 (Chapter 660, AB 416)ê

 

business of the insurer or place of safekeeping thereof, or who unlawfully conceals or attempts to conceal the same from the commissioner, is guilty of a felony.

      4.  Upon any unlawful removal or attempted removal of such records or assets, or upon retention of such records or assets or material part thereof outside this state in violation of the terms of the applicable consent of the commissioner, or upon any unlawful concealment of or attempt to conceal records or assets, the commissioner may, in his discretion, institute delinquency proceedings against the insurer pursuant to sections 815 to 871, inclusive, of this act (conservation, rehabilitation and liquidation).

 

      Sec. 587.  [There is no section 587.]

 

 

INFORMATION TO STOCK HOLDERS AND PROXY REGULATIONS: SCOPE OF PROVISIONS.

 

      Sec. 588.  1.  Sections 588 to 590, inclusive, of this act apply to all domestic stock insurers except:

      (a) A domestic stock insurer having of record less than 100 holders of any class of equity securities; but if 95 percent or more of the insurer’s equity securities are owned or controlled by a parent or an affiliated insurer, sections 588 to 590, inclusive, of this act do not apply to such insurer unless its remaining securities are held of record by 500 or more persons; and

      (b) Domestic stock insurers which, relative to the voting or other securities involved, file with the Securities and Exchange Commission forms of proxies, consents and authorizations pursuant to the Securities Exchange Act of 1934, as amended.

      2.  The commissioner shall have authority to make and promulgate reasonable rules and regulations for the effectuation of sections 588 to 590, inclusive, of the act, and in so doing shall give due consideration to rules and regulations promulgated for similar purposes by the insurance supervisory officers of other states.

 

 

INFORMATION TO STOCK HOLDERS AND PROXY REGULATIONS: INFORMATION IN ADVANCE OF STOCK HOLDER MEETINGS.

 

      Sec. 589.  Every insurer to which sections 588 to 590, inclusive, of this act apply shall seasonably furnish to its stock holders, in advance of stock holder meetings, information in writing reasonably adequate to inform them relative to all matters to be presented by the insurer’s management for consideration of stock holders at such meeting.

 

 

INFORMATION TO STOCK HOLDERS AND PROXY REGULATIONS: SOLICITATION AND FORM OF PROXIES.

 

      Sec. 590.  1.  No person shall solicit a proxy, consent or authorization in respect of any stock or other voting security of such an insurer unless he furnishes the person so solicited with written information reasonably adequate as to:

 


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ê1971 Statutes of Nevada, Page 1801 (Chapter 660, AB 416)ê

 

he furnishes the person so solicited with written information reasonably adequate as to:

      (a) The material matters in regard to which the powers so solicited are proposed to be used; and

      (b) The person or persons on whose behalf the solicitation is made, and the interest of such person or persons in relation to such matters.

      2.  No person shall so furnish to another information which the informer knows or has reason to believe is false or misleading as to any material fact, or which fails to state any material fact reasonably necessary to prevent any other statement made from being misleading.

      3.  The form of all such proxies shall:

      (a) Conspicuously state on whose behalf the proxy is solicited;

      (b) Provide for dating the proxy;

      (c) Impartially identify each matter or group of related matters intended to be acted upon;

      (d) Provide means for the principal to instruct the vote of his shares as to approval or disapproval of each matter or group, other than election to office; and

      (e) Be legibly printed, with context suitably organized;

but a proxy may confer discretionary authority as to matters as to which a choice is not specified pursuant to paragraph (d), if the form conspicuously states how it is intended to vote the proxy or authorization in each such case, and may confer discretionary authority as to other matters which may come before the meeting but unknown for a reasonable time prior to the solicitation by the persons on whose behalf the solicitation is made.

      4.  No proxy shall confer authority to:

      (a) Vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement; or

      (b) Vote in any annual meeting (or adjournment thereof) other than the annual meeting next following the date on which the proxy statement and form were furnished stock holders.

      5.  Any proxy, consent or authorization obtained in violation of, or which violates, this section or the lawful rules and regulations of the commissioner relating thereto is void.

 

 

MANAGEMENT AND AGENCY CONTRACTS.

 

      Sec. 591.  1.  After the effective date of this act no domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the material exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, or, if an officer, director or otherwise part of the insurer’s management, is to receive any commission, bonus or compensation based upon the volume of the insurer’s business or transactions, unless the contract is filed with and not disapproved by the commissioner. The contract shall become effective in accordance with its terms unless disapproved by the commissioner within 20 days after the date of filing, subject to such reasonable extension of time as the commissioner may require by notice given within such 20 days.


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ê1971 Statutes of Nevada, Page 1802 (Chapter 660, AB 416)ê

 

such 20 days. Any disapproval shall be delivered to the insurer in writing stating the grounds therefor.

      2.  Any such contract shall provide that any such manager, producer of its business or contract holder shall within 90 days after expiration of each calendar year furnish the insurer’s board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during such calendar year, with specification of the emoluments received therefrom by the respective directors, officers and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer’s board of directors may reasonably require.

      3.  The commissioner shall disapprove any such contract if he finds that it:

      (a) Subjects the insurer to excessive charges; or

      (b) Is to extend for an unreasonable length of time; or

      (c) Does not contain fair and adequate standards of performance; or

      (d) Contains other inequitable provision or provisions which impair the proper interests of stock holders or members of the insurer.

      4.  The commissioner may, after a hearing held thereon, disapprove any such contract theretofore permitted to become effective, if he finds that the contract should be disapproved on any of the grounds specified in subsection 3.

      5.  This section does not apply to contracts enter into prior to the effective date of this act, or to extensions or amendments of such contracts.

 

 

PROHIBITED PECUNIARY INTEREST OF OFFICERS.

 

      Sec. 592.  1.  Any officer or director, or any member of any committee or an employee of a domestic insurer, having the duty or power of investing or handling the insurer’s funds, shall not:

      (a) Deposit or invest such funds except in the insurer’s name;

      (b) Borrow the funds of the insurer, or be pecuniarily interested in any loan, pledge, deposit, security, investment, sale, purchase, exchange, reinsurance or other similar transaction or property of the insurer except as a stock holder, member, employee or director, unless the transaction is authorized or approved by the insurer’s board of directors, with the knowledge and recording of such pecuniary interest, by an affirmative vote of not less than two-thirds of the directors; and

      (c) Take or receive to his own use any fee, brokerage, commission, gift of other similar consideration for or on account of any such transaction made by or on behalf of the insurer.

      2.  No insurer shall guarantee the financial obligation of any of its officers or directors.

      3.  This section does not prohibit:

      (a) Such a director, officer, member of a committee or employee from becoming a policy holder of the insurer and enjoying the usual rights of a policy holder or from participating as beneficiary in any pension trust, deferred compensation plan, profit-sharing plan, stock option plan or similar plan authorized by the insurer and to which he may be eligible; or


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ê1971 Statutes of Nevada, Page 1803 (Chapter 660, AB 416)ê

 

      (b) Any director or member of a committee from receiving a reasonable fee for lawful services actually rendered to the insurer.

      4.  The commissioner may, by regulation from time to time, define and permit additional exceptions to the prohibitions contained in subsection 1 solely to enable payment of reasonable compensation to a director who is not otherwise an officer or employee of the insurer, or to a corporation or firm in which a director is interested, for necessary services performed or sales or purchases made to or for the insurer in the ordinary course of the insurer’s business and in the usual private, professional or business capacity of such director, corporation or firm.

 

 

LIABILITY OF OFFICERS AND OTHERS FOR PAYING TAXES, LICENSES AND FEES.

 

      Sec. 593.  No director, trustee, officer or agent of any insurer shall be subject to personal liability by reason of any payment or any determination not to contest or seek recovery of any payment made subsequent to June 4, 1944, by or on behalf of such insurer on account of any tax, license, fee, deposit or other charge paid pursuant to the terms of any statute, law or ordinance of this or any other state, county, city or taxing authority, unless prior to such payment or determination such statute, law or ordinance has been expressly held invalid by the state court having final appellate jurisdiction in the premises or by the Supreme Court of the United States.

 

 

DIVIDENDS TO STOCK HOLDERS.

 

      Sec. 594.  1.  A domestic stock insurer shall not pay any cash dividend to stock holders except out of that part of its available and accumulated surplus funds otherwise unrestricted and derived from realized net operating profits and realized capital gains.

      2.  A cash dividend otherwise lawful may be so paid out of the insurer’s earned surplus even though its total surplus is then less than the aggregate of its past contributed or paid-in surplus.

      3.  A stock dividend may be paid out of any available surplus. Upon payment of such a dividend the insurer shall transfer to its paid-in capital stock accounts funds equal to the aggregate of the par values of the shares so distributed.

 

 

PARTICIPATING POLICIES.

 

      Sec. 595.  1.  If provided for in its articles of incorporation or charter, a stock insurer or mutual insurer may:

      (a) Issue any or all of its policies or contracts with or without participation in profits, savings, unabsorbed portions of premiums or surplus;

      (b) Classify policies issued and perils insured on a participating and nonparticipating basis; and

      (c) Determine the right to participate and the extent of participation of any class or classes of policies.


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ê1971 Statutes of Nevada, Page 1804 (Chapter 660, AB 416)ê

 

      Any such classification or determination shall be reasonable, and shall not unfairly discriminate as between policies so classified.

      2.  A life insurer may issue both participating and nonparticipating policies or contracts if the right or absence of the right to participate is reasonably related to the premium charged.

      3.  After the first policy year, no dividend, otherwise earned, shall be made contingent upon the payment of the renewal premium on any policy or contract; but a participating life or health insurance policy providing for participation at the end of the first or second policy year or the first and second policy year may provide that such dividend or dividends will be paid subject to payment of the premium for the next-ensuing year.

 

 

DIVIDENDS TO POLICY HOLDERS.

 

      Sec. 596.  1.  The directors of a domestic mutual insurer may from time to time apportion and pay or credit to its members dividends only out of that part of its surplus funds which represents net realized savings, net realized earnings and net realized capital gains, all in excess of the surplus required by law to be maintained by the insurer.

      2.  Subject to section 442 of this act (participating, nonparticipating policies; accounting, allocations, dividends), a domestic stock insurer may pay dividends to holders of its participating policies out of its available surplus.

      3.  No such dividend shall be paid which is inequitable, or which unfairly discriminates between classifications of policies or policies within the same classification.

 

 

PURCHASE OF OWN SHARES BY STOCK INSURER.

 

      Sec. 597.  A domestic insurer shall have the right to purchase or acquire shares of its own stock only as follows:

      1.  For elimination of fractional shares.

      2.  Incidental to the enforcement of rights of the insurer with respect to lawful transactions previously entered into in good faith for purposes other than the acquisition of such shares.

      3.  For the purposes of a general savings and investment plan for employees of the insurer.

      4.  For mutualization of the insurer, as provided in section 609 of this act.

      5.  For purposes as stated under a plan for such acquisition submitted to and approved in writing by the commissioner. The commissioner shall not approve a plan unless found by him to be for proper purposes, to be reasonable, fair and equitable as to the remaining stock holders of the insurer, and not materially adverse to the protection of the insurer’s policy holders.

      6.  As the result of a gift or bequest of the shares to the insurer.

      7.  By call for redemption and cancellation of a callable class of stock in accordance with provisions of the insurer’s articles of incorporation.


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ê1971 Statutes of Nevada, Page 1805 (Chapter 660, AB 416)ê

 

BORROWED CAPITAL FUNDS.

 

      Sec. 598.  1.  A domestic stock or mutual insurer may without pledge of assets borrow money to defray expenses of its organization, provide surplus funds or for any purpose of its business, upon a written agreement that such money is required to be repaid only out of the insurer’s surplus in excess of that stipulated in such agreement. The agreement may provide for interest not exceeding 6 percent per annum, which interest shall or shall not constitute a liability of the insurer as to its funds other than such excess of surplus, as stipulated in the agreement. No commission or promotion expense shall be paid in connection with any such loan, except that if a public offering and sale is made of the loan securities the insurer may pay the reasonable costs thereof approved by the commissioner.

      2.  Money so borrowed, together with the interest thereon if so stipulated in the agreement, shall not form a part of the insurer’s legal liabilities except as to its surplus in excess of the amount thereof stipulated in the agreement, or be the basis of any setoff; but until repaid, financial statements filed or published by the insurer shall show as a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid.

      3.  Any such loan shall be subject to the commissioner’s approval. The insurer shall, in advance of the loan, file with the commissioner a statement of the purpose of the loan and a copy of the proposed loan agreement. The loan and agreement shall be deemed approved unless within 15 days after the date of such filing the insurer is notified of the commissioner’s disapproval and the reasons therefor. The commissioner shall disapprove any proposed loan or agreement if he finds the loan is unnecessary or excessive for the purpose intended, or that the terms of the loan agreement are not fair and equitable to the parties and to other similar lenders, if any, to the insurer, or that the information so filed by the insurer is inadequate.

      4.  Any such loan to a mutual insurer or substantial portion thereof shall be repaid by the insurer when no longer reasonably necessary for the purpose originally intended. No repayment of such a loan shall be made by a mutual insurer unless approved in advance by the commissioner.

      5.  This section does not apply to other kinds of loans obtained by the insurer in the ordinary course of business, or to loans secured by a pledge or mortgage of assets.

 

 

MUTUAL INSURERS: ADDITIONAL KINDS OF INSURANCE.

 

      Sec. 599.  A domestic mutual insurer after being authorized to transact one kind of insurance may be authorized to transact such additional kinds of insurance as are permitted under section 68 of this act, if otherwise complying with this code and maintaining unimpaired surplus funds in an amount not less than the amount of paid-in capital stock and surplus required to be maintained by a domestic stock insurer transacting like kinds of insurance. When first so authorized to transact an additional kind of insurance, the domestic mutual insurer shall be subject to the additional expendable surplus requirements of section 68 of this act applicable to a stock insurer.


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ê1971 Statutes of Nevada, Page 1806 (Chapter 660, AB 416)ê

 

of insurance, the domestic mutual insurer shall be subject to the additional expendable surplus requirements of section 68 of this act applicable to a stock insurer.

 

 

MUTUAL INSURERS: MEMBERSHIP.

 

      Sec. 600.  1.  Each policy holder of a domestic mutual insurer, other than a policy holder of a reinsurance contract, is a member of the insurer during the period of the insurance with all the rights and obligations of such membership, and the policy shall so specify.

      2.  Any person, government or governmental agency or institution, estate, trustee or fiduciary may be a member of a mutual insurer.

 

 

MUTUAL INSURERS: BYLAWS.

 

      Sec. 601.  Every domestic mutual insurer shall promptly file with the commissioner a copy, certified by the insurer’s secretary, of its bylaws and of every modification thereof or addition thereto. The bylaws and modifications thereof shall be subject to the commissioner’s approval. The commissioner shall not disapprove any such bylaw or modification unless found by him, after a hearing held thereon, to be unlawful, unreasonable, inadequate, unfair or injurious to the proper interests or protection of the insurer’s members or any class thereof. The insurer shall not, after receiving written notice of such disapproval and during the existence thereof, effectuate any bylaw provision so disapproved.

 

 

MUTUAL INSURERS: CONTINGENT LIABILITY OF MEMBERS.

 

      Sec. 602.  1.  Except as otherwise provided in section 605 of this act with respect to nonassessable policies, each member of a domestic mutual insurer shall have a contingent liability, pro rata and not one for another, for the discharge of its obligations incurred while such member was a policy holder of the insurer, which contingent liability shall be in such maximum amount, not less than one nor more than six times the premium for the member’s policy at the annual premium rate, as shall be specified in the insurer’s articles of incorporation.

      2.  Every policy issued by the insurer shall contain a statement of the contingent liability.

      3.  Termination of the policy of any such member shall not relieve the member of contingent liability for his proportion of the obligations of the insurer which accrued while the policy was in force.

      4.  Unrealized contingent liability of members does not constitute an asset of the insurer in any determination of its financial condition.

 

 

MUTUAL INSURERS: LEVY OF CONTINGENT LIABILITY.

 

      Sec. 603.  1.  If at any time the assets of a domestic mutual insurer are less than its liabilities and the minimum amount of surplus required to be maintained by it under this code for authority to transact the kinds of insurance being transacted, and the deficiency is not cured from other sources, its directors may, if the same is approved by the commissioner as being reasonable and in the best interests of the insurer and its members, levy an assessment only on its members who held policies providing for contingent liability at any time within the 12 months next preceding the date the levy was authorized by the board of directors, and such members shall be liable to the insurer for the amount so assessed.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1807 (Chapter 660, AB 416)ê

 

insurance being transacted, and the deficiency is not cured from other sources, its directors may, if the same is approved by the commissioner as being reasonable and in the best interests of the insurer and its members, levy an assessment only on its members who held policies providing for contingent liability at any time within the 12 months next preceding the date the levy was authorized by the board of directors, and such members shall be liable to the insurer for the amount so assessed.

      2.  The levy of assessment shall be for such an amount as is required to cure such deficiency and to provide a reasonable amount of working funds above such minimum amount of surplus, but such working funds so provided shall not exceed 5 percent of the sum of the insurer’s liabilities and such minimum required surplus as of the date of the levy.

      3.  As to the respective policies subject to the levy, the assessment shall be computed upon the basis of the premium earned during the period covered by the levy.

      4.  No member shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium or loss payable.

      5.  As to life insurance, any part of such an assessment upon a member which remains unpaid following a notice of assessment, demand for payment and lapse of a reasonable waiting period as specified in such notice may, if approved by the commissioner as being in the best interests of the insurer and its members, be secured by placing a lien upon the cash surrender values and accumulated dividends held or to be held by the insurer to the credit of the member’s policy.

 

 

MUTUAL INSURERS: ENFORCEMENT OF CONTINGENT LIABILITY.

 

      Sec. 604.  1.  The insurer shall notify each member of the amount of the assessment to be paid by written notice mailed to the address of the member last of record with the insurer. Failure of the member to receive the notice so mailed, within the time specified therein for the payment of the assessment or at all, shall be no defense in any action to collect the assessment.

      2.  If a member fails to pay the assessment within the period specified in the notice, which period shall not be less than 20 days after mailing, the insurer may institute suit to collect the same.

 

 

MUTUAL INSURERS: NONASSESSABLE POLICIES; REVOCATION OF AUTHORITY.

 

      Sec. 605.  1.  A domestic mutual insurer, by depositing through the commissioner and thereafter maintaining unimpaired surplus funds not less in amount than the minimum paid-in capital stock and surplus required of a domestic stock insurer for authority to transact the same kind or kinds of insurance, may, upon receipt of the commissioner’s order so authorizing, extinguish the contingent liability to assessment of its members as to all its policies in force and, so long as such surplus and deposit are maintained, may omit provisions imposing contingent liability in all policies currently issued.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1808 (Chapter 660, AB 416)ê

 

in all policies currently issued. Any deposit of the insurer made through the commissioner as a prerequisite to its certificate of authority may be included as part of the deposit required under this section.

      2.  The commissioner shall not authorize a domestic insurer to extinguish the contingent liability of any of its members or in any of its policies to be issued, unless it qualifies to and does extinguish such liability of all its members and in all such policies for all kinds of insurance transacted by it.

      3.  The commissioner shall revoke the authority of a domestic mutual insurer to issue policies without contingent liability if:

      (a) The insurer’s assets are less than the sum of its liabilities and the surplus required for such authority and such deficiency is not cured within 30 days after written notice thereof to the insurer by the commissioner; or

      (b) The insurer, by resolution of its board of directors approved by a majority of its members, requests that the authority be revoked.

      4.  During the absence of such authority the insurer shall not issue any policy without providing therein for the contingent liability of the policy holder, or renew any policy which is then in force without endorsing the same to provide for such contingent liability.

      5.  A foreign mutual insurer may issue nonassessable policies to its members in this state as authorized by its charter and the laws of the state or country of its domicile, if the requirements for issuance of such policies are substantially equal to or higher than those applicable to domestic insurers under this code.

 

 

IMPAIRMENT OF CAPITAL, SURPLUS OR ASSETS.

 

      Sec. 606.  1.  If at any time the amount of assets of a domestic stock or mutual insurer are less than the sum of its liabilities plus its paid-in capital stock and minimum surplus required to be maintained (in the case of a stock insurer), or the minimum surplus required to be maintained (in the case of a mutual insurer), under this code for authority to transact the kinds of insurance being transacted, the commissioner shall at once determine the amount of the deficiency and give written notice to the insurer of the amount of impairment and require that the impairment be cured and proof thereof filed with him within such period, not less than 30 days nor more than 90 days from date of the notice, as he may designate.

      2.  If the impairment of assets is 10 percent or less of the combined required paid-in capital stock and surplus (as to a stock insurer) or surplus (as to a mutual insurer), and the commissioner believes that the impairment might be made good by an extension of time, he may extend the time within which the impairment may be cured by not to exceed an additional 90 days.

      3.  The commissioner shall require such restriction of, or arrangements as to, operations of the insurer while the impairment exists as he deems advisable for the protection of policy holders, the insurer or the public.


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ê1971 Statutes of Nevada, Page 1809 (Chapter 660, AB 416)ê

 

IMPAIRMENT OF CAPITAL, SURPLUS OR ASSETS: CURING DEFICIENCY; FAILURE TO CURE.

 

      Sec. 607.  1.  A deficiency referred to in section 606 of this act may be made good in whole or in part in cash or in assets eligible under sections 135 to 163, inclusive, of this act (investments) for investment of the insurer’s funds, or by amendment of the insurer’s certificate of authority to cover only such kind or kinds of insurance thereafter for which the insurer has sufficient paid-in capital stock and surplus (if a stock insurer) or surplus (if a mutual insurer) under this code, or, if a stock insurer, by reduction of its capital stock to an amount of authorized and unimpaired paid-in capital stock not below the minimum thereof required for the kinds of insurance thereafter to be transacted.

      2.  If the deficiency is not made good and proof thereof filed with the commissioner within the period required under section 606 of this act, the insurer shall be deemed insolvent and the commissioner shall institute delinquency proceedings against it under sections 815 to 871, inclusive, of this act.

 

 

IMPAIRMENT OF CAPITAL, SURPLUS OR ASSETS: VIOLATION OF RESTRICTIONS; PENALTY.

 

      Sec. 608.  If, while any such deficiency exists any officer, director, representative or employee of the insurer knowingly violates or fails to comply with any restriction or requirement placed upon the insurer and its operations by the commissioner pursuant to section 606 of this act, he shall be punished by a fine of not less than $500 nor more than $5,000 for each offense.

 

 

MUTUALIZATION OF STOCK INSURER.

 

      Sec. 609.  1.  A stock insurer other than a title insurer may become a mutual insurer under such plan and procedure as may be approved by the commissioner after a hearing thereon.

      2.  The commissioner shall not approve any such plan, procedure or mutualization unless:

      (a) It is equitable to stock holders and policy holders;

      (b) It is subject to approval by the holders of not less than two-thirds of the insurer’s outstanding capital stock having voting rights, and by not less than two-thirds of the insurer’s policy holders who vote on such plan in person, by proxy or by mail pursuant to such notice and procedure as may be approved by the commissioners;

      (c) If a life insurer, the right to vote thereon is limited to holders of policies other than term or group policies, and whose policies have been in force for more than 1 year;

      (d) Mutualization will result in retirement of shares of the insurer’s capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraisers;


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ê1971 Statutes of Nevada, Page 1810 (Chapter 660, AB 416)ê

 

      (e) The plan provides for the purchase of the shares of any nonconsenting stock holder in the same manner and subject to the same applicable conditions as provided by the general corporation law of the state as to rights of nonconsenting stock holders, with respect to consolidation or merger of private corporations;

      (f) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and

      (g) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policy holders and to enable it to continue successfully in business in the states in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in such states.

      3.  No director, officer, agent or employee of the insurer, or any other person, shall receive any fee, commission or other valuable consideration whatsoever, other than his customary salary or other regular compensation, for in any manner aiding, promoting or assisting in the mutualization, except as set forth in the plan of mutualization as approved by the commissioner.

      4.  This section does not apply to mutualization under an order of court pursuant to rehabilitation or reorganization of an insurer under sections 815 to 871, inclusive, of this act.

 

 

CONVERSION TO ORDINARY BUSINESS CORPORATION.

 

      Sec. 610.  1.  A domestic stock insurer may convert to a Nevada ordinary business corporation through the following procedures:

      (a) The insurer must give the commissioner written notice of its intent to convert to an ordinary business corporation.

      (b) The insurer must bulk reinsure all of its insurance in force, if any, with another authorized insurer under a bulk reinsurance agreement approved by the commissioner as provided in section 615 of this act. The agreement of bulk reinsurance may be made contingent upon approval of the stock holders as provided in paragraph (d).

      (c) The insurer must set aside in a special reserve funds in such amount and subject to such administration as may be found by the commissioner to be adequate and reasonable for the purpose, for payment of all obligations, if any, of the insurer incurred by it under its insurance contracts prior to the effective date of such bulk reinsurance, and remaining unpaid, or make other reasonable disposition satisfactory to the commissioner for such payment.

      (d) The proposed conversion must be approved by an affirmative vote of not less than two-thirds of each class of the outstanding securities of the insurer having voting rights, at a special meeting of holders of such securities called for the purpose, and at such meeting and by a like vote the articles of incorporation of the corporation must be amended to remove therefrom the power to transact an insurance business as an insurer and to provide for such new powers and purposes as may be consistent with the purposes for which the corporation is thereafter to exist.

      (e) Security holders of the corporation who dissent from such proposed conversion shall have the same applicable rights as exist under the general corporation laws of this state with respect to a dissent from a proposed merger of the corporation.


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ê1971 Statutes of Nevada, Page 1811 (Chapter 660, AB 416)ê

 

corporation laws of this state with respect to a dissent from a proposed merger of the corporation.

      (f) Upon compliance with paragraphs (a) to (d), inclusive, and upon filing of the amendment of the articles of incorporation as required by law, the conversion shall thereupon become effective.

      2.  An insurer which has once converted to an ordinary business corporation shall not have the power thereafter to convert to an insurer.

 

 

AFFILIATION OF STOCK INSURERS.

 

      Sec. 611.  1.  A domestic stock insurer shall not acquire a controlling interest in the shares of another stock insurer by an exchange of securities or partly in exchange for securities and partly for cash or property, unless the insurer has first submitted the plan for such acquisition and exchange to the commissioner and the commissioner has approved the same.

      2.  The commissioner shall not so approve unless he finds the plan for such acquisition and the terms and conditions thereof to be fair and equitable to all parties concerned therein, after a hearing at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear.

      3.  Notice and conduct of such hearing shall be as provided in sections 48 to 54, inclusive, of this act.

 

 

ACQUISITION OF CONTROLLING STOCK.

 

      Sec. 612.  1.  Any person proposing to acquire the controlling capital stock of any domestic stock insurer and thereby to change the control of the insurer, other than through merger or consolidation or affiliation as provided for in sections 611 and 613 of this act, shall first apply to the commissioner in writing for approval of such proposed change of control. The application shall state the names and addresses of the proposed new owners of the controlling stock and contain such additional information as the commissioner may reasonably require.

      2.  The commissioner shall not approve the proposed change of control if he finds that:

      (a) The proposed new owners are not qualified by character, experience and financial responsibility to control and operate the insurer, or cause the insurer to be operated, in a lawful and proper manner; or

      (b) As a result of the proposed change of control the insurer may not be qualified for a certificate of authority under the provisions of section 65 of this act (ownership, management); or

      (c) The interests of the insurer or other stock holders of the insurer or policy holder would be materially harmed through the proposed change of control; or

      (d) The proposed change of control would tend materially to lessen competition, or to create any monopoly, in a business of insurance in this state or elsewhere.

      3.  If the commissioner does not by affirmative action approve or disapprove the proposed change of control within 30 days after the date such application was so filed with him, the proposed change may be made without such approval; but if the commissioner gives notice to the parties of a hearing to be held by him with respect to the proposed change of control, and the hearing is held within such 30 days or on a date mutually acceptable to the commissioner and the parties, the commissioner shall have 10 days after the conclusion of the hearing within which to so approve or disapprove the proposed change.


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ê1971 Statutes of Nevada, Page 1812 (Chapter 660, AB 416)ê

 

of a hearing to be held by him with respect to the proposed change of control, and the hearing is held within such 30 days or on a date mutually acceptable to the commissioner and the parties, the commissioner shall have 10 days after the conclusion of the hearing within which to so approve or disapprove the proposed change. If not so approved or disapproved, the change may thereafter be made without the commissioner’s approval.

      4.  If the commissioner disapproves the proposed change he shall give written notice thereof to the parties, setting forth in detail the reasons for disapproval.

      5.  The commissioner shall suspend or revoke the certificate of authority of any insurer the control of which has been changed in violation of this section.

 

 

MERGER, CONSOLIDATION OF STOCK INSURERS.

 

      Sec. 613.  1.  Subject to subsections 2 and 3, a domestic stock insurer may merge or consolidate with one or more domestic or foreign stock insurers, by complying with the applicable provisions of the statutes of this state governing the merger or consolidation of stock corporations formed for profit. A domestic stock insurer shall not merge or consolidate with any corporation not formed for the purpose of transacting insurance as an insurer.

      2.  No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the commissioner and approved in writing by him after a hearing thereon after notice to the stock holders of each insurer involved. The commissioner shall give such approval within a reasonable time after such filing unless he finds such plan or agreement:

      (a) Is contrary to law; or

      (b) Unfair or inequitable to the stock holders of any insurer involved; or

      (c) Would substantially reduce the security of and service to be rendered to policy holders of the domestic insurer in this state or elsewhere; or

      (d) Would materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved, or would materially tend to create a monopoly as to such business; or

      (e) Is subject to other material and reasonable objections.

      3.  No director, officer, agent or employee of any insurer party to such merger or consolidation shall receive any fee, commission, special compensation or other valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in such plan or agreement.

      4.  If the commissioner does not approve any such plan or agreement, he shall so notify the insurer in writing specifying his reasons therefor.

 

 

PRESERVATION OF OLD CHARTER IN MERGER, CONSOLIDATION.

 

      Sec. 613.5.  1.  In any merger or consolidation of a foreign stock or mutual insurer into or with a domestic insurer under sections 613 or 614 of this act, and if so provided in accordance with this section, the continuing Nevada corporation shall for all purposes be deemed to be a continuation of the corporate existence of the foreign corporation, with Nevada as the adoptive state of domicile and with date of corporate origin the same as the original date of incorporation of the foreign insurer in its original domiciliary state or country, subject to the following conditions:

 


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ê1971 Statutes of Nevada, Page 1813 (Chapter 660, AB 416)ê

 

614 of this act, and if so provided in accordance with this section, the continuing Nevada corporation shall for all purposes be deemed to be a continuation of the corporate existence of the foreign corporation, with Nevada as the adoptive state of domicile and with date of corporate origin the same as the original date of incorporation of the foreign insurer in its original domiciliary state or country, subject to the following conditions:

      (a) The plan and agreement for merger or consolidation shall provide for such continuation of corporate existence through designation of Nevada as the state of domicile of the foreign corporation by adoption, and shall specify the original date of incorporation of the foreign corporation in its original domiciliary state or country as being the date of incorporation of the Nevada corporation pursuant to this section.

      (b) The articles of incorporation of the Nevada corporation shall provide, or be amended to provide, that the corporation is a continuance of the corporate existence, through adoption of the State of Nevada as the corporate domicile, of the foreign corporation, and shall specify the original date of incorporation of the foreign corporation in its original domiciliary state or country as being the date of incorporation of the Nevada corporation pursuant to this section.

      2.  The continuing Nevada corporation shall have all the rights and obligations of, and be given recognition in all respects as, a corporation formed under the laws of this state as of the date of incorporation of the foreign corporation in its original domiciliary state or country. This provision shall not be deemed to impose upon the continuing Nevada corporation any liability or obligation with respect to filings, fees, taxes or otherwise which might have accrued prior to the effective date of the merger or consolidation.

      3.  This section shall not be deemed in any manner to preserve, after the effective date of such merger or consolidation, the corporate existence of such foreign corporation as a corporation of its original domiciliary state or country.

 

 

MERGER, CONSOLIDATION OF MUTUAL INSURERS.

 

      Sec. 614.  1.  A domestic mutual insurer shall not merge or consolidate with a stock insurer.

      2.  Except as provided in this section, a domestic mutual insurer may merge or consolidate with another mutual insurer under the applicable procedures prescribed by the laws of this state governing ordinary business corporations.

      3.  If the insurer is then unimpaired, the plan and agreement for merger or consolidation shall be submitted to and approved by at least two-thirds of the members of each mutual insurer voting thereon at meetings called for the purpose pursuant to reasonable notice and procedure. The plan and agreement may provide for giving such notice to members by publishing the same once a week for 2 successive weeks in any two of the four cities of greatest population according to the last-preceding national census of the Bureau of the Census of the United States Department of Commerce in each state in which the insurer is authorized, or by depositing the notice in the United States mail, postage prepaid, addressed to the member at his address last of record with the insurer, or by personal delivery.


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ê1971 Statutes of Nevada, Page 1814 (Chapter 660, AB 416)ê

 

prepaid, addressed to the member at his address last of record with the insurer, or by personal delivery. For a life insurer, the right to vote may be limited to members whose policies are other than term and group policies, and have been in effect for more than 1 year.

      4.  No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the commissioner and approved by him in writing. If the insurer is not then impaired the commissioner shall not act upon such plan and agreement until after a hearing thereon. The commissioner shall give such approval within a reasonable time after such filing unless he finds such plan or agreement:

      (a) Inequitable to the policy holders of any domestic insurer involved; or

      (b) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state and elsewhere; or

      (c) Would materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved, or would materially tend to create any monopoly as to such business; or

      (d) Is subject to other material and reasonable objections.

      5.  If the commissioner does not approve such plan or agreement he shall so notify the insurers in writing specifying his reasons therefor.

      6.  No director, officer, agent or employee of any insurer party to such merger or consolidation, or any other person, shall receive any fee, commission or other special valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in the plan and agreement approved by the commissioner.

 

 

CONVERSION OF MUTUAL TO STOCK INSURER.

 

      Sec. 614.5.  1.  A mutual insurer may become a stock insurer under such reasonable plan and procedure as may be approved by the commissioner after a hearing thereon of which notice was given to the insurer, its directors or trustees, its officers, employees and its members, all of whom shall have the right to appear and be heard at the hearing.

      2.  The commissioner shall not approve any such plan or procedure unless:

      (a) Its terms and conditions are fair and equitable;

      (b) It is subject to approval by vote of not less than three-fourths of the insurer’s current members entitled to vote and voting thereon in person, by proxy, or by mail at a meeting of members entitled to vote and called for the purpose pursuant to such reasonable notice and procedure as may be approved by the commissioner; in the case of a life insurer, the right to vote shall be limited to members who hold policies other than group policies or term policies for terms of less than 20 years, and whose policies have been in force for not less than 1 year;

      (c) The equity of each member in the insurer is determinable under a fair and reasonable formula approved by the commissioner and based upon the determination of the value of the corporation by an appraisal committee, consisting of at least three qualified persons, to be appointed by the commissioner.

 


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ê1971 Statutes of Nevada, Page 1815 (Chapter 660, AB 416)ê

 

      (d) The plan gives to each member of the insurer as specified in paragraph (e), a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer within a designated reasonable period, as such part is determinable under the plan of conversion, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under paragraph (c);

      (e) The members entitled to participate in the purchase of stock or distribution of assets shall include not less than all current policy holders of the insurer and each existing person who had been a policy holder of the insurer within 3 years prior to the date such plan was submitted to the commissioner;

      (f) Shares are to be offered to members at a price not greater than to be thereafter offered under the plan to others, and not in excess of one-half of the median equitable share of all policyholders;

      (g) The plan provides for payment, to each member not electing to apply his equity in the insurer for or upon the purchase price of stock to which preemptively entitled, of cash in an amount found to be reasonable by the commissioner but not in excess of 50 percent of the amount of his equity not so used for the purchase of stock, and which cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the member’s equity or property interest in such mutual insurer;

      (h) The plan, when completed, would provide for the converted insurer paid-in capital stock in an amount not less than the minimum paid-in capital stock required of a new domestic stock insurer upon initial authorization to transact like kinds of insurance, together with expendable surplus funds in amount not less than one-half of such required capital stock; and

      (i) The commissioner finds that the insurer’s management has not, through reduction in volume of new business written, or cancellation or through any other means sought to reduce, limit or affect the number or identity of the insurer’s members to be entitled to participate in such plan, or to secure for the individuals comprising management any unfair advantage through such plan.

      3.  Subsection 2 shall not be deemed to prohibit the inclusion in the conversion plan of provisions under which the individuals comprising the insurer’s management and employee group are entitled to purchase for cash at the same price as offered to the insurer’s members, shares of stock not taken by members on the preemptive offering to members, in accordance with such reasonable classification of such individuals as may be included in the plan and approved by the commissioner.

      4.  No director, officer, agent or employee of the insurer, or any other person, shall receive any fee, commission or other valuable consideration whatsoever, other than their usual regular salaries and compensation, for in any manner aiding, promoting or assisting in such conversion except as set forth in the plan approved by the commissioner. This provision shall not be deemed to prohibit the payment of reasonable fees and compensation to attorneys at law, accountants and actuaries for services performed in the independent practice of their professions, even though also directors of the insurer.

 


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ê1971 Statutes of Nevada, Page 1816 (Chapter 660, AB 416)ê

 

BULK REINSURANCE.

 

      Sec. 615.  1.  A domestic insurer shall not reinsure with another insurer all or substantially all of its business in force, or of a major class thereof, or during a period of 6 consecutive months reinsure with another insurer over 20 percent of its insurance in force exclusive of individual risks currently reinsured in the ordinary course of business, except under an agreement of bulk reinsurance and in compliance with this section. No such agreement shall become effective unless filed with the commissioner and approved by him in writing.

      2.  The commissioner shall approve such agreement within a reasonable time after filing if he finds that:

      (a) The plan and agreement are fair and equitable to each insurer and to the policy holders involved;

      (b) The reinsurance, if effectuated, would not substantially reduce the protection or service to the policy holders of any domestic insurer involved;

      (c) The agreement embodies adequate provisions by which the reinsuring insurer becomes liable to the original insureds for any loss or damage occurring under the policies reinsured in accordance with the original terms of such policies;

      (d) The assuming reinsurer is authorized to transact such insurance in this state, or is qualified as for such authorization and will appoint the commissioner and his successors as its irrevocable attorney for service of process, so long as any policy so reinsured or claim thereunder remains in force or outstanding;

      (e) Such reinsurance would not materially tend to lessen competition in the insurance business in this state or elsewhere as to the kinds of insurance involved, and would not materially tend to create any monopoly as to such business; and

      (f) The proposed bulk reinsurance is free of other reasonable objections.

      3.  If the commissioner does not so approve he shall forthwith notify each insurer involved in writing, specifying his reasons therefor.

      4.  If for reinsurance of all or substantially all of the business in force of a mutual insurer at a time when the insurer’s surplus is not impaired, the plan and agreement for such reinsurance must be approved by a vote of not less than two-thirds of the mutual insurer’s members voting thereon at a meeting of members called for the purpose, pursuant to such reasonable notice and procedure as is provided for in the agreement. The agreement may provide for giving notice to members of a mutual insurer by publishing the same once a week for two successive weeks in any two of the four cities of greatest population according to the last-preceding national census of the Bureau of the Census of the United States, Department of Commerce in each state in which the insurer is authorized, or by depositing the notice in the United States mail, postage prepaid, addressed to the member at his address last of record with the insurer, or by personal delivery. For a life insurer, the right to vote may be limited to members whose policies are other than term or group policies, and have been in effect for more than 1 year.


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ê1971 Statutes of Nevada, Page 1817 (Chapter 660, AB 416)ê

 

BULK REINSURANCE: CERTIFICATE OF FEES AND COMMISSIONS; RESTRICTIONS UPON PAYMENT; PENALTY.

 

      Sec. 616.  1.  At the time of filing the agreement of bulk reinsurance with the commissioner as provided in section 615 of this act, the parties shall also file with the commissioner a certificate or certificates under oath of a principal officer of each insurer involved, as to fees, commissions and other valuable considerations paid or to be paid to any person directly or indirectly in connection with the agreement or the proposed bulk reinsurance. This subsection does not apply to fees of attorneys, accountants, actuaries and other independently contracting persons rendering similar technical services in connection with the bulk reinsurance, or to regular salaried compensation received or to be received by employees in the ordinary course of business.

      2.  No director or officer of any insurer party to such bulk reinsurance shall, except as fully expressed in the bulk reinsurance agreement, receive any fee, commission or other special or valuable consideration whatever, directly or indirectly, for in any manner aiding, promoting or assisting in the negotiation or effectuation of such reinsurance.

      3.  Any person violating the provisions of subsection 2 is guilty of a gross misdemeanor.

 

 

MUTUAL MEMBER’S SHARE OF ASSETS ON LIQUIDATION.

 

      Sec. 617.  1.  Upon any liquidation of a domestic mutual insurer, its assets remaining after discharge of its indebtedness, policy obligations, repayment of contributed or borrowed surplus, if any, and expenses of administration shall be distributed to currently existing persons who had been members of the insurer for at least 1 year and who were its members at any time within 36 months next preceding the date such liquidation was authorized or ordered, or the date of the last termination of the insurer’s certificate of authority whichever date is the earlier; but if the commissioner has reason to believe that those in charge of the management of the insurer have caused or encouraged the reduction of the number of members of the insurer in anticipation of liquidation and for the purpose of reducing thereby the number of persons who may be entitled to share in the distribution of the insurer’s assets, he may enlarge the 36-month qualification period as he may deem to be reasonable.

      2.  The insurer shall make a reasonable classification of its policies so held by such members, and a formula based upon such classification for determining the equitable distributive share of each such member. Such classification and formula shall be subject to the approval of the commissioner.

 

 

CHAPTER 28

 

CONTINUITY OF MANAGEMENT DURING EMERGENCY RESULTING FROM ATTACK

 

      Sec. 618.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 619 to 635, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1818 (Chapter 660, AB 416)ê

 

DEFINITIONS.

 

      Sec. 619.  As used in this chapter, unless the context otherwise requires:

      1.  “Acting director” means an acting director elected or appointed in accordance with this chapter.

      2.  “Acting officer” means an acting officer appointed in accordance with this chapter

      3.  “Acute emergency” means a period in which, by reason of loss of life, epidemic disease, destruction or damage of property, contamination of property by radiological, chemical or bacteriological means, or disruption of the means of transportation and communication, resulting from an attack, it is impossible or impracticable for the business of insurance in this state to be conducted in strict accord with the provisions of law or charters applicable thereto.

      4.  “Attack” means any attack, actual or imminent, or series of attacks by an enemy or a foreign nation upon the United States of America causing, or which may cause, substantial damage or injury to civilian property or persons in the United States in any manner by sabotage or by the use of bombs, shellfire, or atomic, radiological, chemical, bacteriological or biological means or other weapons or processes.

      5.  “Board” means the board of directors, board of trustees, committee or similar body having control of the affairs of an organization.

      6.  “Charter” means the certificate of organization or incorporation of an organization together with its bylaws, or the agreement establishing a fund or association together with its constitution and bylaws.

      7.  “Commissioner” means the commissioner of insurance or other person designated to exercise the powers of that office during an acute emergency.

      8.  “Director” means a director, trustee or member of a board.

      9.  “Domestic organization” means any organization which is domiciled in this state, including, insofar as the provisions of this chapter may appropriately apply thereto, any welfare or pension fund or United States branch of an alien insurer.

      10.  “Officer” means an officer of a domestic organization.

      11.  “Organization” means any insurer, rating organization, service or advisory organization, joint underwriting association or other organization which is subject, in whole or in part, to the insurance laws of this state.

      12.  “Quorum” means the minimum number of directors required by charter and law, other than this chapter, to be present for valid action to be taken at a meeting of a board with respect to each particular item of business which may come before such meeting.

 

 

EMERGENCY BYLAWS: PROVISIONS.

 

      Sec. 620.  1.  With the approval of the commissioner, any domestic organization may at any time adopt, in the same manner as in the case of ordinary bylaws, emergency bylaws to become operative during a period of acute emergency. Emergency bylaws may contain provisions with respect to the number of directors capable of acting which shall constitute its board, the number of such directors which shall constitute a quorum at a meeting of the board, the number of votes necessary for action by such board, the manner in which vacancies on the board shall be filled, the line of succession of its officers, and the interim management of the affairs of the organization.


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ê1971 Statutes of Nevada, Page 1819 (Chapter 660, AB 416)ê

 

with respect to the number of directors capable of acting which shall constitute its board, the number of such directors which shall constitute a quorum at a meeting of the board, the number of votes necessary for action by such board, the manner in which vacancies on the board shall be filled, the line of succession of its officers, and the interim management of the affairs of the organization.

      2.  Such provisions, if approved by the commissioner, need not comply with the requirements of the charter of such domestic organization.

      3.  Except as provided in section 630 of this act the provisions of sections 622 to 628, inclusive, and 630 and 631 of this act shall not be applicable during a period of acute emergency to any domestic organization operating in accordance with emergency bylaws approved by the commissioner to the extent that the procedure set forth in such emergency bylaws relate to subject matter contained in sections 622 to 628, inclusive, of this act.

 

 

CHANGE OF LOCATION OF PRINCIPAL OFFICE; NOTICE TO COMMISSIONER.

 

      Sec. 621.  Any domestic organization, without complying with any provision of law requiring approval, or application for approval, of a change of location of its principal office may from time to time change the location thereof during an acute emergency to a suitable location within the United States, and may carry on its business at such new location during such acute emergency and for a reasonable time thereafter. Any organization which changes the location of its principal office during an acute emergency shall notify the commissioner thereof in writing as soon as practicable, stating the address of the new location, the address of the former location, and the dates when business is ceasing at the former location and commencing at the latter location.

 

 

BOARD MEETINGS: CALL; NOTICE.

 

      Sec. 622.  Notwithstanding any contrary provision of law or of its charter, if at any time during an acute emergency affecting any domestic organization, no person otherwise empowered to call meetings of its board is capable of acting, a meeting thereof may be called by any director or acting director, or if no director or acting director is capable of acting, by any officer or acting officer. If it is impracticable or impossible to give notice of a meeting of the board in the manner prescribed by charter and law, the person calling such a meeting may give notice thereof by making such reasonable efforts as circumstances may permit to notify each director and acting director of the time and place of the meeting, but need not specify the purposes thereof. Failure of any director or acting director to receive actual notice of a meeting of directors and acting directors shall not affect the power of the directors and acting directors present at such meeting to exercise the powers of an emergency board of directors as prescribed in this section. Nothing contained in this chapter shall be construed as requiring a meeting of the board of such an organization to be convened in any manner different from that prescribed by its charter and by the provisions of law other than this chapter.


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ê1971 Statutes of Nevada, Page 1820 (Chapter 660, AB 416)ê

 

organization to be convened in any manner different from that prescribed by its charter and by the provisions of law other than this chapter.

 

 

EMERGENCY BOARD OF DIRECTORS: NUMBERS;

AUTHORIZED ACTION.

 

      Sec. 623.  If three or more directors or acting directors of any domestic organization are present at any meeting of its board duly convened during an acute emergency affecting such domestic organization, they shall constitute its emergency board of directors which, notwithstanding any contrary provision of law or of its charter, may, subject to the limitation prescribed in this chapter, by a majority of those present, take any action which may be necessary to enable such domestic organization to meet the exigencies of the acute emergency and conduct its business during such period.

 

 

EMERGENCY BOARD OF DIRECTORS: POWERS.

 

      Sec. 624.  The powers of an emergency board of directors shall include, but shall not be limited to, the following:

      1.  At any meeting to elect such acting directors as it may deem necessary, without regard to the number of directors which would otherwise be required, to serve in any positions on such board which are vacant or in place of any directors or acting directors who are absent from such meeting, but not to elect any director on a permanent basis.

      2.  To elect such acting officers as it may deem necessary, without regard to the number of officers which would otherwise be required, to serve in any offices which are vacant or in place of any officers or acting officers who fail to appear and assume their duties, to fix the compensation and determine the powers and duties of acting officers and to remove acting officers, but not to remove any officer or fill any vacancy on a permanent basis or to cause the organization to enter into any contract of employment for a term of over 1 year.

      3.  To cause the organization to change the location of its principal office, pursuant to section 621 of this act, or any of its places of business, and to authorize such action as it may deem appropriate to acquire space and facilities at the new locations, but not to acquire for use as its principal office property in fee or for a term of over 1 year.

      4.  To postpone any meeting of the stock holders, policy holders, members or directors of such organization if, in the judgment of the members of such emergency board of directors, it would be impracticable to hold such meeting at the time it would otherwise have been held or conducted.

      5.  If it appears to an emergency board of directors that a quorum of the board cannot be assembled within a reasonable time, to call a meeting of the stock holders, policy holders or members of the organization to be held as soon as the circumstances may reasonably permit, at a place to be designated by the emergency board of directors within this state or a contiguous state, for the purpose of electing directors to fill vacancies of the board, but for no other purpose, and to propose nominees for such election. Any such meeting of stock holders, policy holders or members shall be held upon notice given in accordance with the charter of the organization and applicable law other than this chapter.


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ê1971 Statutes of Nevada, Page 1821 (Chapter 660, AB 416)ê

 

or members shall be held upon notice given in accordance with the charter of the organization and applicable law other than this chapter.

 

 

COMMISSIONER TO BE NOTIFIED OF MEETINGS OF EMERGENCY BOARD OF DIRECTORS.

 

      Sec. 625.  As soon as practicable after each meeting of an emergency board of directors, the person who presided thereat shall notify the commissioner in writing of the time and place of such meeting, of the manner in which notice thereof was given, of the persons present, and of all actions taken at such meeting.

 

 

ACTING DIRECTORS: QUALIFICATIONS; OATHS NOT REQUIRED.

 

      Sec. 626.  No person prohibited by law or by the charter of a domestic organization from serving as a member of its board shall be eligible to serve as an acting director except that no person shall be disqualified to serve as an acting director by reason of his not being a stock holder, policy holder or member of such organization, by reason of his not being a resident of this state or of a contiguous state, or by reason of the number of the directors or acting directors who are officers, acting officers or employees of the organization. Any person may serve as an acting director of a fund who is a director, acting director, officer or acting officer of an organization which is party to the agreement creating the fund. No oath of acting directors shall be required.

 

 

ACTING DIRECTORS: POWERS; COMPENSATION.

 

      Sec. 627.  Acting directors elected pursuant to the provisions of section 624 of this act or appointed pursuant to the provisions of section 629 of this act shall be entitled to notice of and to vote at all meetings of an emergency board of directors equally with directors. Acting directors shall not be entitled to take part in the deliberations or to vote at any meeting of the board which is duly convened in accordance with the applicable provisions of its charter and of law other than this chapter, and at which a quorum is present. Each acting director shall serve until the director or acting director in whose place he was elected or appointed attends a meeting of the board or until a director is duly elected to fill the vacancy in which such acting director has been serving, whichever event occurs earlier. An acting director shall be entitled to the compensation, if any, payable to a director.

 

 

ACTING OFFICERS: POWERS, DUTIES AND COMPENSATION.

 

      Sec. 628.  Acting officers elected pursuant to section 624 of this act shall have such powers and duties and receive such compensation as may from time to time be determined by the board or emergency board of directors. Each acting officer shall serve until the officer in whose place he was elected appears and assumes his duties or until his successor officer or acting officer is elected, whichever event occurs earlier.


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ê1971 Statutes of Nevada, Page 1822 (Chapter 660, AB 416)ê

 

was elected appears and assumes his duties or until his successor officer or acting officer is elected, whichever event occurs earlier.

 

 

DESIGNATION OF ACTING DIRECTORS BY COMMISSIONER.

 

      Sec. 629.  If, at any time during an acute emergency, the number of directors or acting directors of a domestic organization who are capable of acting is less than three, the commissioner may designate additional acting directors in such number as will bring to three the number of directors and acting directors who are capable of acting.

 

 

POWER OF COMMISSIONER TO RESOLVE CONTROVERSY CONCERNING ACTIONS OF EMERGENCY BOARD OF DIRECTORS.

 

      Sec. 630.  To resolve controversy as to the power of any group of persons purporting to act as an emergency board of directors so to act, the commissioner may, upon a determination that such action will tend to promote the safe and sound and orderly conduct of the business of any domestic organization, issue orders declaring that any such group shall or shall not have the powers of an emergency board of directors, or confirming, modifying or vacating in whole or in part any action taken or purportedly taken by any such group, or removing any acting director.

 

 

COMMISSIONER MAY DECLARE CERTAIN PROVISIONS OF LAW OPERATIVE AND INOPERATIVE; POWERS OF COMPANIES, OFFICERS AND DIRECTORS.

 

      Sec. 631.  1.  At any time after an attack, upon his determination that such action will tend to promote certainty as to the powers of organizations or individuals pursuant to this chapter, or that such action is desirable to enable organizations to take preparatory precautions prior to the occurrence of an acute emergency, the commissioner may declare that any provision of this chapter which he may specify shall be operative with respect to any domestic organization or to the Nevada business of any other organization which he may designate. Upon such declaration such organization and its directors, officers, acting directors and acting officers shall have all powers conferred by such provisions of this chapter. The failure of the commissioner so to declare shall not be deemed to limit the powers of any organization or its directors, officers, acting directors or acting officers where an acute emergency exists in fact.

      2.  At any time after the commencement of an acute emergency or after the commissioner has declared any provision of this chapter operative pursuant to subsection 1, upon his determination that an organization is able, in whole or in part, to carry on its business in compliance with its charter and the laws other than this chapter, the commissioner may declare that any provision of this chapter which he may specify shall be inoperative with respect to any domestic organization or to the Nevada business of any other organization which he may designate. Upon such declaration, such organization shall be governed by its charter and the provisions of law other than this chapter except insofar as other provisions of this chapter remain operative.


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ê1971 Statutes of Nevada, Page 1823 (Chapter 660, AB 416)ê

 

declaration, such organization shall be governed by its charter and the provisions of law other than this chapter except insofar as other provisions of this chapter remain operative.

 

 

COMMISSIONER MAY TAKE POSSESSION OF BUSINESS, PROPERTY OF ORGANIZATIONS.

 

      Sec. 632.  Upon the commissioner’s determination that, as a result of an acute emergency, the business and affairs of an organization cannot otherwise be conducted in a safe and sound manner, he may forthwith take possession of the business and property of the organization within this state or, if a domestic organization, its business and property wherever situated. The provisions of sections 815 to 871, inclusive, of this act (conservation, rehabilitation, liquidation) shall be applicable in any case in which the commissioner takes possession of an organization pursuant to this section as though the organization were an insurer of which the commissioner had taken possession pursuant to sections 815 to 871, inclusive, of this act (conservation, rehabilitation, liquidation), except that no such provision shall be applicable which the commissioner has declared inapplicable pursuant to this section. The commissioner shall have power to declare inapplicable any such provision upon his determination that the same is inappropriate or unnecessary to protect the interests of the public or the stock holders or creditors of the organization, in view of the acute emergency and the nature of the organization.

 

 

COMMISSIONER TO EXERCISE POWERS ONLY IF COURT NOT AVAILABLE TO MAKE NECESSARY ORDERS; REGULATIONS, DIRECTIVES AND ORDERS OF COMMISSIONER.

 

      Sec. 633.  1.  The powers given the commissioner by sections 630 and 632 of this act shall be exercised by him only if there is no court of competent jurisdiction available to which an application can be made for an order permitting him to exercise such powers with respect to a particular organization, but the powers conferred by section 632 of this act shall not be exercised in the case of an organization which is not insolvent within the meaning of section 835 of this act, unless the commissioner finds that such organization lacks personnel able to manage its business in the interests of the public, its stock holders and policy holders.

      2.  The commissioner may issue general and specific regulations, directives and orders consistent with and in furtherance of the purposes of this chapter.

 

 

PRESUMPTION OF ACUTE EMERGENCY; POWERS OF BOARD, EMERGENCY BOARD OF DIRECTORS.

 

      Sec. 634.  1.  In any action or proceeding it shall be presumed that an acute emergency existing within any city or county within the state constitutes an acute emergency affecting every organization doing business within such city or county.


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ê1971 Statutes of Nevada, Page 1824 (Chapter 660, AB 416)ê

 

      2.  During an acute emergency:

      (a) The board of a domestic organization which has adopted emergency bylaws, approved by the commissioner, shall have the powers conferred by such bylaws and, except as provided in subsection 1 of section 631 of this act, shall, to the extent that such bylaws relate to the subject matter contained in sections 622 to 628, inclusive, of this act, have no other or different powers with respect to such subject matter.

      (b) The board of a domestic organization which has not adopted emergency bylaws, approved by the commissioner, shall have all powers of an emergency board of directors pursuant to sections 621 to 628, inclusive, of this act.

 

 

EFFECT OF CHAPTER ON ORGANIZATION’S POWERS, FOREIGN OR ALIEN COMPANIES.

 

      Sec. 635.  Nothing in this chapter shall be construed to limit the powers of any organization, or to permit or require any organization which is not domiciled in this state, or any branch, office or agency of such organization, or the directors, officers, policy holders or stock holders of any such organization to act, or fail to act, in such a manner as would violate the laws of the jurisdiction wherein such organization has its domicile.

 

 

CHAPTER 29

 

INSIDER TRADING OF EQUITY SECURITIES

 

      Sec. 636.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 637 to 644, inclusive, of this act.

 

 

“EQUITY SECURITY” DEFINED.

 

      Sec. 637.  The term “equity security” when used in this chapter means:

      1.  Any stock or similar security; or

      2.  Any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or

      3.  Any such warrant or right; or

      4.  Any other security which the commissioner deems to be of similar nature and considers necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security.

 

 

BENEFICIAL OWNER, DIRECTOR, OFFICER REQUIRED TO FILE STATEMENTS CONCERNING EQUITY SECURITIES WITH COMMISSIONER.

 

      Sec. 638.  Every person who is directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security of a domestic stock insurer, or who is a director or an officer of such insurer, shall:

 


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ê1971 Statutes of Nevada, Page 1825 (Chapter 660, AB 416)ê

 

domestic stock insurer, or who is a director or an officer of such insurer, shall:

      1.  File in the office of the commissioner within 10 days after he becomes such beneficial owner, director or officer, a statement, in such form as the commissioner may prescribe, of the amount of all equity securities of such insurer of which he is the beneficial owner; and

      2.  Within 10 days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, file in the office of the commissioner a statement, in such form as the commissioner may prescribe, indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month.

 

 

PROFITS REALIZED BY BENEFICIAL OWNER, DIRECTOR, OFFICER FROM PURCHASE, SALE OF EQUITY SECURITIES RECOVERABLE BY INSURER; ACTIONS, LIMITATIONS AND EXCEPTIONS.

 

      Sec. 639.  1.  For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such insurer, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such insurer within any period of less than 6 months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the insurer, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding 6 months.

      2.  Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the insurer, or by the owner of any security of the insurer in the name and in behalf of the insurer if the insurer fails or refuses to bring such suit within 60 days after request or fails diligently to prosecute the same thereafter; but no such suit shall be brought more than 2 years after the date such profit was realized.

      3.  This section shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the commissioner by rules and regulations may exempt as not comprehended within the purpose of this section.

 

 

UNLAWFUL SALES OF EQUITY SECURITIES BY BENEFICIAL OWNER, DIRECTOR, OFFICER.

 

      Sec. 640.  It is unlawful for any such beneficial owner, director or officer, directly or indirectly, to sell any equity security of such insurer if the person selling the security or his principal:

      1.  Does not own the security sold; or

      2.  If the owner of the security, does not deliver it against such sale within 20 days thereafter, or does not within 5 days after such sale deposit it in the mails or other usual channels of transportation, but no person shall be deemed to have violated this section if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.


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ê1971 Statutes of Nevada, Page 1826 (Chapter 660, AB 416)ê

 

but no person shall be deemed to have violated this section if he proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.

 

 

INVESTMENT ACCOUNTS AND TRANSACTIONS.

 

      Sec. 641.  1.  The provisions of section 639 of this act do not apply to any purchase and sale, or sale and purchase, and the provisions of section 640 of this act do not apply to any sale, of an equity security of a domestic stock insurer not then or theretofore held by him in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market (otherwise than on an exchange as defined in the Securities Exchange Act of 1934) for such security.

      2.  The commissioner may, by such rules and regulations as he deems necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.

 

 

FOREIGN OR DOMESTIC ARBITRAGE TRANSACTIONS.

 

      Sec. 642.  The provisions of sections 638, 639 and 640 of this act do not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the commissioner may adopt in order to carry out the purposes of this chapter.

 

 

INAPPLICABILITY OF SECTIONS 638 TO 640 TO EQUITY SECURITIES OF DOMESTIC STOCK INSURERS.

 

      Sec. 643.  The provisions of sections 638, 639 and 640 of this act do not apply to equity securities of a domestic stock insurer if:

      1.  Such securities are registered, or are required to be registered, pursuant to section 12 of the Securities Exchange Act of 1934, as amended; or

      2.  Such domestic stock insurer has not any class of its equity securities held of record by 100 or more persons on the last business day of the year next preceding the year in which equity securities of the insurer would be subject to the provisions of sections 638, 639 and 640 of this act except for the provisions of this subsection.

 

 

REGULATIONS OF COMMISSIONER; CLASSIFICATION OF INSURERS, SECURITIES; ACTS DONE, OMITTED IN GOOD FAITH.

 

      Sec. 644.  1.  The commissioner shall have the power to make such rules and regulations as may be necessary for the execution of the functions vested in him by sections 637 to 643, inclusive, of this act, and may for such purpose classify domestic stock insurers, securities and other persons or matters within his jurisdiction.


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ê1971 Statutes of Nevada, Page 1827 (Chapter 660, AB 416)ê

 

for such purpose classify domestic stock insurers, securities and other persons or matters within his jurisdiction.

      2.  No provision of sections 638, 639 and 640 of this act imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the commissioner, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

 

 

CHAPTER 30

 

RECIPROCAL INSURERS

 

      Sec. 645.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 646 to 671, inclusive, of this act.

 

 

“RECIPROCAL” INSURANCE DEFINED.

 

      Sec. 646.  As used in this code, “reciprocal” insurance is that resulting from an interchange among persons, known, as “subscribers,” of reciprocal agreements of indemnity, the interchange being effectuated through an attorney-in-fact common to all such persons.

 

 

SCOPE OF CHAPTER; EXISTING INSURERS.

 

      Sec. 647.  1.  All authorized reciprocal insurers shall be governed by those sections of this chapter not expressly made applicable to domestic reciprocals.

      2.  After the effective date of this act existing authorized reciprocal insurers shall comply with the provisions of this chapter, and shall make such amendments to their subscribers’ agreement, power of attorney, policies and other documents and accounts and perform such other acts as may be required for such compliance.

 

 

INSURING POWERS OF RECIPROCALS.

 

      Sec. 648.  1.  A reciprocal insurer may, upon qualifying therefor as provided for by this code, transact any kind or kinds of insurance defined by this code other than life or title insurances.

      2.  Such an insurer may purchase reinsurance upon the risk of any subscriber, and may grant reinsurance as to any kind of insurance it is authorized to transact directly.

 

 

NAME; SUITS.

 

      Sec. 649.  A reciprocal insurer shall:

      1.  Have and use a business name. The name shall include the word “reciprocal,” or “interinsurer,” or “interinsurance,” or “exchange,” or “underwriters,” or “underwriting,” or “association.”

      2.  Sue and be sued in its own name.


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ê1971 Statutes of Nevada, Page 1828 (Chapter 660, AB 416)ê

 

ATTORNEY.

 

      Sec. 650.  1.  “Attorney,” as used in this chapter, refers to the attorney-in-fact of a reciprocal insurer. The attorney may be an individual, firm or corporation.

      2.  The attorney of a foreign reciprocal insurer, which insurer is duly authorized to transact insurance in this state, shall not, by virtue of the discharge of its duties as such attorney with respect to the insurer’s transactions in this state, be thereby deemed to be doing business in this state within the meaning of any laws of this state applying to foreign persons, firms or corporations.

      3.  The subscribers and the attorney-in-fact comprise a reciprocal insurer and a single entity for the purposes of sections 90 to 101, inclusive, of this act as to all operations under the insurer’s certificate of authority.

 

 

ORGANIZATION OF RECIPROCAL INSURER.

 

      Sec. 651.  1.  Twenty-five or more persons domiciled in this state may organize a domestic reciprocal insurer and make application to the commissioner for a certificate of authority to transact insurance.

      2.  The proposed attorney shall fulfill the requirements of and shall execute and file with the commissioner when applying for a certificate of authority a declaration setting forth:

      (a) The name of the insurer;

      (b) The location of the insurer’s principal office, which shall be the same as that of the attorney and shall be maintained within this state;

      (c) The kinds of insurance proposed to be transacted;

      (d) The names and addresses of the original subscribers;

      (e) The designation and appointment of the proposed attorney and a copy of the power of attorney;

      (f) The names and addresses of the officers and directors of the attorney, if a corporation, or its members, if a firm;

      (g) The powers of the subscribers’ advisory committee, and the names and terms of office of the members thereof;

      (h) That all moneys paid to the reciprocal shall, after deducting therefrom any sum payable to the attorney, be held in the name of the insurer and for the purposes specified in the subscribers’ agreement;

      (i) A statement that each of the original subscribers has in good faith applied for insurance of a kind proposed to be transacted, and that the insurer has received from each such subscriber the full premium or premium deposit required for the policy applied for, for a term of not less than 6 months at an adequate rate theretofore filed with and approved by the commissioner;

      (j) A statement of the financial condition of the insurer, a schedule of its assets, and a statement that the surplus as required by section 68 of this act is on hand; and

      (k) A copy of each policy, endorsement and application form it then proposes to issue or use.

      3.  The declaration shall be acknowledged by the attorney in the manner required for the acknowledgment of deeds.


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ê1971 Statutes of Nevada, Page 1829 (Chapter 660, AB 416)ê

 

CERTIFICATE OF AUTHORITY.

 

      Sec. 652.  1.  The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer.

      2.  The commissioner may refuse, suspend or revoke the certificate of authority, in addition to other grounds therefor, for failure of the attorney to comply with any applicable provision of this code.

 

 

POWER OF ATTORNEY.

 

      Sec. 653.  1.  The rights and powers of the attorney of a reciprocal insurer shall be as provided in the power of attorney given it by the subscribers.

      2.  The power of attorney must set forth:

      (a) The powers of the attorney;

      (b) If a domestic insurer, that the attorney is empowered to accept service of process on behalf of the insurer in actions against the insurer upon contracts exchanged;

      (c) The general services to be performed by the attorney;

      (d) The maximum amount, if any, to be deducted from advance premiums or deposits to be paid to the attorney and the general items of expense, if any, in addition to losses, to be paid by the insurer; and

      (e) Except as to nonassessable policies, a provision for a contingent several liability of each subscriber in a specified amount which amount shall be not less than one nor more than 10 times the premium or premium deposit stated in the policy.

      3.  The power of attorney may:

      (a) Provide for the right of substitution of the attorney and revocation of the power of attorney and rights thereunder;

      (b) Impose such restrictions upon the exercise of the power as are agreed upon by the subscribers;

      (c) Provide for the exercise of any right reserved to the subscribers directly or through their advisory committee; and

      (d) Contain other lawful provisions deemed advisable.

      4.  The terms of any power of attorney or agreement collateral thereto shall be reasonable and equitable, and no such power or agreement shall be used or be effective in this state until approved by the commissioner.

 

 

MODIFICATIONS.

 

      Sec. 654.  Modifications of the terms of the subscribers’ agreement or of the power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney and the subscribers’ advisory committee. No such modification shall be effective retroactively, or as to any insurance contract issued prior thereto.

 

 

ATTORNEY’S BOND.

 

      Sec. 655.  1.  Concurrently with the filing of the declaration provided for in section 651 of this act, the attorney of a domestic reciprocal insurer shall file with the commissioner a bond in favor of this state for the benefit of all persons damaged as a result of breach by the attorney of the conditions of this bond as set forth in subsection 2.


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ê1971 Statutes of Nevada, Page 1830 (Chapter 660, AB 416)ê

 

shall file with the commissioner a bond in favor of this state for the benefit of all persons damaged as a result of breach by the attorney of the conditions of this bond as set forth in subsection 2. The bond shall be executed by the attorney and by an authorized corporate surety, and shall be subject to the commissioner’s approval.

      2.  The bond shall be in the penal sum of $25,000, aggregate in form, conditioned that the attorney will faithfully account for all moneys and other property of the insurer coming into his hands, and that he will not withdraw or appropriate to his own use from the funds of the insurer any moneys or property to which he is not entitled under the power of attorney.

      3.  The bond shall provide that it is not subject to cancellation unless 30 days’ advance notice in writing of cancellation is given both the attorney and the commissioner.

 

 

DEPOSIT IN LIEU OF BOND.

 

      Sec. 656.  In lieu of the bond required under section 655 of this act, the attorney may maintain on deposit through the commissioner, a like amount in cash or in market value of United States Government bonds, subject to the same conditions as the bond.

 

 

ACTION ON BOND.

 

      Sec. 657.  An action on the attorney’s bond or to recover against any such deposit made in lieu thereof may be brought by one or more subscribers suffering loss through a violation of its conditions, or by a receiver or liquidator of the insurer. Amounts recovered on the bond shall be deposited in and become part of the insurer’s funds. The total aggregate liability of the surety shall be limited to the amount of the penalty of such bond.

 

 

SERVICE OF PROCESS; JUDGMENT.

 

      Sec. 658.  1.  Legal process shall be served upon a domestic reciprocal insurer by serving the insurer’s attorney at his principal offices or by serving the commissioner as the insurer’s process agent under sections 81 and 82 of this act.

      2.  Any judgment based upon legal process so served shall be binding upon each of the insurer’s subscribers as their respective interests may appear, but in an amount not exceeding their respective contingent liabilities, if any, the same as though personal service of process was had upon each such subscriber.

 

 

CONTRIBUTIONS TO INSURER.

 

      Sec. 659.  1.  The attorney or other parties may advance to a domestic reciprocal insurer upon reasonable terms such funds as it may require from time to time in its operations. Sums so advanced shall not be treated as a liability of the insurer, and, except upon liquidation of the insurer, shall not be withdrawn or repaid except out of the insurer’s realized earned surplus in excess of its minimum required surplus.


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ê1971 Statutes of Nevada, Page 1831 (Chapter 660, AB 416)ê

 

insurer, shall not be withdrawn or repaid except out of the insurer’s realized earned surplus in excess of its minimum required surplus. No such withdrawal or repayment shall be made without the advance approval of the commissioner.

      2.  This section does not apply to bank loans or to other loans made upon security.

 

 

FINANCIAL CONDITION: METHOD OF DETERMINING.

 

      Sec. 660.  In determining the financial condition of a reciprocal insurer the commissioner shall apply the following rules:

      1.  He shall charge as liabilities the same reserves as are required of incorporated insurers issuing nonassessable policies on a reserve basis.

      2.  The surplus deposits of subscribers shall be allowed as assets, except that any premium deposits delinquent for 90 days shall first be charged against such surplus deposit.

      3.  The surplus deposits of subscribers shall not be charged as a liability.

      4.  All premium deposits delinquent less than 90 days shall be allowed as assets.

      5.  An assessment levied upon subscribers, and not collected, shall not be allowed as an asset.

      6.  The contingent liability of subscribers shall not be allowed as an asset.

      7.  The computation of reserves shall be based upon premium deposits other than membership fees and without any deduction for expenses and the compensation of the attorney.

 

 

WHO MAY BE SUBSCRIBERS.

 

      Sec. 661.  1.  Individuals, partnerships and corporations of this state may make application, enter into an agreement for and hold policies or contracts in or with and be a subscriber of any domestic, foreign or alien reciprocal insurer. Any corporation organized under the laws of this state prior to or after the effective date of this act shall, in addition to the rights, powers and franchises specified in its articles of incorporation, have full power and authority as a subscriber to exchange insurance contracts through such reciprocal insurer. The right to exchange such contracts is hereby declared to be incidental to the purposes for which such corporations are organized and to be as fully granted as the rights and powers expressly conferred upon such corporations.

      2.  Government or governmental agencies, a state or political subdivisions thereof, boards, associations, estates, trustees or fiduciaries are authorized to exchange nonassessable reciprocal interinsurance contracts with each other and with individuals, partnerships and corporations to the same extent that individuals, partnerships and corporations are authorized in this chapter to exchange reciprocal interinsurance contracts.

      3.  Any officer, representative, trustee, receiver or legal representative of any such subscriber shall be recognized as acting for or on its behalf for the purpose of such contract but shall not be personally liable upon such contract by reason of acting in such representative capacity.


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ê1971 Statutes of Nevada, Page 1832 (Chapter 660, AB 416)ê

 

SUBSCRIBERS’ ADVISORY COMMITTEE.

 

      Sec. 662.  1.  The advisory committee of a domestic reciprocal insurer exercising the subscribers’ rights shall be selected under such rules as the subscribers adopt.

      2.  Not less than two-thirds of such committee shall be subscribers other than the attorney, or any person employed by, representing or having a financial interest in the attorney.

      3.  The committee shall:

      (a) Supervise the finances of the insurer;

      (b) Supervise the insurer’s operations to such extent as to assure conformity with the subscribers’ agreement and the power of attorney;

      (c) Procure the audit of the accounts and records of the insurer and of the attorney at the expense of the insurer; and

      (d) Have such additional powers and functions as may be conferred by the subscribers’ agreement.

 

 

SUBSCRIBERS’ LIABILITY.

 

      Sec. 663.  1.  The liability of each subscriber, other than as to a nonassessable policy, for the obligations of the reciprocal insurer shall be an individual, several and proportionate liability, and not joint.

      2.  Except as to a nonassessable policy, each subscriber shall have a contingent assessment liability, in the amount provided for in the power of attorney or in the subscribers’ agreement, for payment of actual losses and expenses incurred while his policy was in force. Such contingent liability may be at the rate of not less than one nor more than 10 times the premium or premium deposit stated in the policy, and the maximum aggregate thereof shall be computed in the manner set forth in section 667 of this act.

      3.  Each assessable policy issued by the insurer shall contain a statement of the contingent liability, set in type of the same prominence as the insuring clause.

 

 

SUBSCRIBERS’ LIABILITY ON JUDGMENT.

 

      Sec. 664.  1.  No action shall lie against any subscriber upon any obligation claimed against the insurer until a final judgment has been obtained against the insurer and remains unsatisfied for 30 days.

      2.  Any such judgment shall be binding upon each subscriber only in such proportion as his interests may appear and in an amount not exceeding his contingent liability, if any.

 

 

ASSESSMENTS.

 

      Sec. 665.  1.  Assessments may from time to time be levied upon subscribers of a domestic reciprocal insurer liable therefor under the terms of their policies by:

      (a) The attorney upon approval in advance by the subscribers’ advisory committee and the commissioner; or

      (b) The commissioner in liquidation of the insurer.


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ê1971 Statutes of Nevada, Page 1833 (Chapter 660, AB 416)ê

 

      2.  Each subscriber’s share of a deficiency for which an assessment is made, but not exceeding in any event his aggregate contingent liability as computed in accordance with section 667 of this act, shall be computed by applying to the premium earned on the subscriber’s policy or policies during the period to be covered by the assessment, the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to the assessment.

      3.  In computing the earned premiums for the purposes of this section, the gross premium received by the insurer for the policy shall be used as a base, deducting therefrom solely charges not recurring upon the renewal or extension of the policy.

      4.  No subscriber shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium or losses payable.

 

 

TIME LIMIT FOR ASSESSMENTS.

 

      Sec. 666.  Every subscriber of a domestic reciprocal insurer having contingent liability shall be liable for, and shall pay his share of any assessment, as computed and limited in accordance with this chapter, if:

      1.  While his policy is in force or within 1 year after its termination, he is notified by either the attorney or the commissioner of his intentions to levy such assessment; or

      2.  If an order to show cause why a receiver, conservator, rehabilitator or liquidator of the insurer should not be appointed is issued while his policy is in force or within 1 year after its termination.

 

 

AGGREGATE LIABILITY.

 

      Sec. 667.  No one policy or subscriber to such policy, shall be assessed or charged with an aggregate of contingent liability as to obligations incurred by a domestic reciprocal insurer in any 1 calendar year, in excess of the amount provided for in the power of attorney or in the subscribers’ agreement, computed solely upon the premium earned on such policy during that year.

 

 

NONASSESSABLE POLICIES.

 

      Sec. 668.  1.  If a reciprocal insurer has a surplus of assets over all liabilities at least equal to the minimum capital stock and surplus required to be maintained by a domestic stock insurer authorized to transact like kinds of insurance, upon application of the attorney and as approved by the subscribers’ advisory committee the commissioner shall issue his certificate authorizing the insurer to extinguish the contingent liability of subscribers under its policies then in force in this state, and to omit provisions imposing contingent liability in all policies delivered or issued for delivery in this state for so long as all such surplus remains unimpaired.

      2.  Upon impairment of such surplus, the commissioner shall forthwith revoke the certificate. Such revocation shall not render subject to contingent liability any policy then in force and for the remainder of the period for which the premium has theretofore been paid; but after such revocation no policy shall be issued or renewed without providing for contingent assessment liability of the subscriber.


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ê1971 Statutes of Nevada, Page 1834 (Chapter 660, AB 416)ê

 

revocation no policy shall be issued or renewed without providing for contingent assessment liability of the subscriber.

      3.  The commissioner shall not authorize a domestic reciprocal insurer so to extinguish the contingent liability of any of its subscribers or in any of its policies to be issued, unless it qualifies to and does extinguish such liability of all its subscribers and in all such policies for all kinds of insurance transacted by it; but if required by the laws of another state in which the insurer is transacting insurance as an authorized insurer, the insurer may issue policies providing for the contingent liability of such of its subscribers as may acquire such policies in such state, and need not extinguish the contingent liability applicable to policies theretofore in force in such state.

 

 

SUBSCRIBERS’ SHARE IN ASSETS.

 

      Sec. 669.  Upon the liquidation of a domestic reciprocal insurer, its assets remaining after the discharge of its indebtedness and policy obligations, the return of any contributions of the attorney or other persons to its surplus, and the return of any unused premiums, savings or credits then standing on subscribers’ accounts shall be distributed to its subscribers who were such within the 12 months prior to the last termination of its certificate of authority, according to such reasonable formula as the commissioner may approve.

 

 

MERGER OR CONVERSION.

 

      Sec. 670.  1.  A domestic reciprocal insurer upon the affirmative vote of not less than two-thirds of its subscribers who vote on such merger pursuant to due notice and the approval of the commissioner of the terms therefor may merge with another reciprocal insurer or be converted to a stock or mutual insurer.

      2.  Such a stock or mutual insurer shall be subject to the same capital or surplus requirements and shall have the same rights as a like domestic insurer transacting like kinds of insurance.

      3.  The commissioner shall not approve any plan for such merger or conversion which is inequitable to subscribers, or which, if for conversion to a stock insurer, does not give each subscriber preferential right to acquire stock of the proposed insurer proportionate to his interest in the reciprocal insurer as determined in accordance with section 669 of this act and a reasonable length of time within which to exercise such right.

 

 

IMPAIRED RECIPROCALS.

 

      Sec. 671.  1.  Subject to the limitation set forth in the power of attorney or policy, if the assets of a domestic reciprocal insurer are at any time insufficient to discharge its liabilities, other than any liability on account of funds contributed by the attorney or others, and to maintain the required surplus, its attorney shall forthwith make up the deficiency or levy an assessment upon the subscribers for the amount needed to make up the deficiency.


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ê1971 Statutes of Nevada, Page 1835 (Chapter 660, AB 416)ê

 

or levy an assessment upon the subscribers for the amount needed to make up the deficiency.

      2.  If the attorney fails to make up such deficiency or to make the assessment within 30 days after the commissioner orders him to do so, or if the deficiency is not fully made up within 60 days after the date the assessment was made, the insurer shall be deemed insolvent and shall be proceeded against as authorized by this code.

      3.  If liquidation of such an insurer is ordered, an assessment shall be levied upon the subscribers for such an amount, subject to the limits provided by this chapter, as the commissioner determines to be necessary to discharge all liabilities of the insurer, exclusive of any funds contributed by the attorney or other persons, but including the reasonable cost of the liquidation.

 

 

CHAPTER 31

 

FRATERNAL BENEFIT SOCIETIES

 

      Sec. 672.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 673 to 730, inclusive, of this act.

 

 

“FRATERNAL BENEFIT SOCIETY” DEFINED.

 

      Sec. 673.  Any incorporated society, order or supreme lodge, without capital stock, including one exempted under the provisions of paragraph (b) of subsection 1 of section 729 of this act whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with this chapter, is hereby declared to be a fraternal benefit society.

 

 

“LODGE SYSTEM” DEFINED.

 

      Sec. 674.  A society having a supreme legislative or governing body and subordinate lodges or branches by whatever name known, into which members are elected, initiated or admitted in accordance with its constitution, laws, ritual and rules, which subordinate lodges or branches shall be required by the laws of the society to hold regular meetings at least once in each month, shall be deemed to be operating on the lodge system.

 

 

“PREMIUMS,” “SOCIETY” DEFINED.

 

      Sec. 675.  As used in this chapter, unless the context otherwise requires:

      1.  “Premiums” means premiums, rates or other required contributions by whatever name known.

      2.  “Society” means a fraternal benefit society.


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ê1971 Statutes of Nevada, Page 1836 (Chapter 660, AB 416)ê

 

“REPRESENTATIVE FORM OF GOVERNMENT” DEFINED.

 

      Sec. 676.  A society shall be deemed to have a representative form of government when:

      1.  It provides in its constitution or laws for a supreme legislative or governing body, composed of representatives elected either by the members or by delegates elected directly or indirectly by the members, together with such other members of such body as may be prescribed by the society’s constitution and laws;

      2.  The representatives elected constitute a majority in number and have not less than two-thirds of the votes nor less than the votes required to amend its constitution and laws;

      3.  The meetings of the supreme legislative or governing body and the election of officers, representatives or delegates are held as often as once in 4 calendar years;

      4.  Each insured member shall be eligible for election to act or serve as a delegate to such meeting;

      5.  The society has a board of directors charged with the responsibility of managing its affairs in the interim between meetings of its supreme legislative or governing body, subject to control by such body and having powers and duties delegated to it in the constitution or laws of the society;

      6.  The board of directors is elected by the supreme legislative or governing body, except in case of filling a vacancy in the interim between meetings of such body;

      7.  The officers are elected either by the supreme legislative or governing body or by the board of directors; and

      8.  The members, officers, representatives or delegates shall not vote by proxy.

 

 

ORGANIZATION: ARTICLES OF INCORPORATION; CONTENTS; SIGNATURES.

 

      Sec. 677.  Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer, competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated:

      1.  The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurer as to be misleading or confusing;

      2.  The purposes for which it is being formed, which shall not include more liberal powers than are granted by this chapter, but any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society;

      3.  The mode in which its corporate powers are to be exercised; and

      4.  The names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body, which election shall be held not later than 1 year from the date of the issuance of the permanent certificate.


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ê1971 Statutes of Nevada, Page 1837 (Chapter 660, AB 416)ê

 

legislative or governing body, which election shall be held not later than 1 year from the date of the issuance of the permanent certificate.

 

 

ORGANIZATION: PRELIMINARY CERTIFICATE ISSUED BY COMMISSIONER; BOND.

 

      Sec. 678.  1.  The articles of incorporation, duly certified copies of the constitution, laws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within 1 year shall be filed with the commissioner, who may require such further information as he deems necessary. The bond with sureties approved by the commissioner shall be in such amount, not less than $5,000 nor more than $25,000, as required by the commissioner. All documents filed shall be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the commissioner shall so certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate authorizing the society to solicit members as provided in this chapter.

      2.  No preliminary certificate granted under the provisions of this section shall be valid after 1 year from its date or after such further period, not exceeding 1 year, as may be authorized by the commissioner upon cause shown, unless 500 applicants have been secured and the organization has been completed as provided in this chapter. The articles of incorporation and all proceedings thereunder shall become void in 1 year from the date of the preliminary certificate, or at the expiration of the extended period, unless the society has completed its organization and received a certificate of authority to do business.

 

 

ORGANIZATION: SOLICITATION OF MEMBERS; COLLECTION OF ADVANCE PREMIUMS; REPORTS TO COMMISSIONER.

 

      Sec. 679.  1.  Upon receipt of a preliminary certificate from the commissioner, the society:

      (a) May solicit members for the purpose of completing its organization;

      (b) Shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates as provided by its constitution and laws; and

      (c) Shall issue to each such applicant a receipt for the amount so collected.

      2.  No society shall incur any liability other than for the return of such advance premium, or issue any certificate, or pay, allow, or offer or promise to pay or allow, any death or disability benefit to any person until:

      (a) Actual bona fide applications for death benefits have been secured aggregating at least $500,000 on not less than 500 lives;

      (b) All such applicants for death benefits have furnished evidence of insurability satisfactory to the society;


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ê1971 Statutes of Nevada, Page 1838 (Chapter 660, AB 416)ê

 

      (c) Certificates of examinations or acceptable declarations of insurability have been duly filed and approved by the chief medical examiner of the society;

      (d) Ten subordinate lodges or branches have been established into which the 500 applicants have been admitted.

      (e) There has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted and premiums therefor; and

      (f) It has been shown to the commissioner, by sworn statement of the treasurer or corresponding officer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as provided in this chapter, which premiums in the aggregate shall amount to at least $2,500, all of which shall be credited to the fund or funds from which benefits are to be paid and no part of which may be used for expenses.

      3.  The advance premiums provided for in subsection 2 shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within 1 year, as provided in this chapter, such premiums shall be returned to such applicants.

 

 

CERTIFICATE OF COMPLIANCE; AUTHORIZATION TO TRANSACT BUSINESS.

 

      Sec. 680.  1.  The commissioner may make such examination and require such further information as he deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to the society a certificate to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter.

      2.  The certificate shall be prima facie evidence of the existence of the society at the date of such certificate.

      3.  The commissioner shall cause a record of such certificate to be made. A certified copy of such record may be given in evidence with like effect as the original certificate.

 

 

CONSTITUTION AND LAWS OF SOCIETY: ADOPTION AND AMENDMENT; ADDITIONAL POWERS.

 

      Sec. 681.  Every society shall have the power to:

      1.  Adopt a constitution and laws for the government of the society, the admission of its members, the management of its affairs and the fixing and readjusting of the rates of its members from time to time.

      2.  Change, alter, add to or amend such constitution and laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.


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ê1971 Statutes of Nevada, Page 1839 (Chapter 660, AB 416)ê

 

CORPORATE POWERS RETAINED BY SOCIETIES AUTHORIZED TO TRANSACT BUSINESS IN STATE BEFORE JULY 1, 1963.

 

      Sec. 682.  1.  Any incorporated society authorized to transact business in this state before July 1, 1963, may thereafter exercise all the rights, powers and privileges prescribed in this chapter and in its charter or articles of incorporation as far as consistent with this chapter.

      2.  A domestic society shall not be required to reincorporate.

 

 

UNINCORPORATED, VOLUNTARY ASSOCIATION PROHIBITED.

 

      Sec. 683.  No unincorporated or voluntary association shall be permitted to transact business in this state as a fraternal benefit society.

 

 

LOCATION OF PRINCIPAL OFFICE, PRINCIPAL PLACE OF BUSINESS; PLACE OF MEETINGS.

 

      Sec. 684.  1.  The principal office and principal place of business of any domestic society shall be located in this state.

      2.  The meetings of its supreme legislative or governing body may be held in any state, district, province or territory wherein such society has at least five subordinate branches, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this state.

 

 

CONSOLIDATION; MERGER.

 

      Sec. 685.  1.  A domestic society may consolidate or merge with any other society by complying with the provisions of this section.

      2.  Such society shall file with the commissioner:

      (a) A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger;

      (b) A sworn statement by the president and secretary or corresponding officers of each society showing the financial condition thereof on a date fixed by the commissioner, but not earlier than December 31, next preceding the date of the contract;

      (c) A certificate of such officers, duly verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme legislative or governing body of each society; and

      (d) Evidence that at least 60 days prior to the action of the supreme legislative or governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official organ of each society.

      3.  If the commissioner finds that the contract is in conformity with the provisions of this section, that the financial statements are correct and that the consolidation or merger is just and equitable to the members of each society, he shall approve the contract and issue his certificate to such effect.


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ê1971 Statutes of Nevada, Page 1840 (Chapter 660, AB 416)ê

 

each society, he shall approve the contract and issue his certificate to such effect.

      4.  Upon such approval, the contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. In such event the consolidation or merger shall not become effective unless and until it has been approved as provided by the laws of such state or territory and a certificate of such approval has been filed with the commissioner of this state or, if the laws of such state or territory contain no such provision, the consolidation or merger shall not become effective unless and until it has been approved by the insurance supervisory officer of such state or territory and a certificate of such approval has been filed with the commissioner.

      5.  Upon the consolidation or merger becoming effective as provided in this chapter, all the rights, franchises and interests of the consolidated or merged societies in and to every species of property, real, personal or mixed, and things in action belonging thereto shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument, except that conveyances of real property may be evidenced by proper deeds. The title to any real property or interest therein, vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger but shall vest absolutely in the society resulting from or remaining after such consolidation or merger.

      6.  The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that such notice or document has been duly addressed and mailed, shall be prima facie evidence that such notice or document has been furnished the addressees.

 

 

CONVERSION OF FRATERNAL BENEFIT SOCIETY INTO MUTUAL LIFE INSURANCE COMPANY.

 

      Sec. 686.  1.  Any domestic fraternal benefit society may be converted and licensed as a mutual life insurer by compliance with all the applicable requirements of sections 580 to 617, inclusive, of this code if such plan of conversion has been approved by the commissioner.

      2.  Such plan shall be prepared in writing setting forth in full the terms and conditions thereof.

      3.  The board of directors shall submit such plan to the supreme legislative or governing body of such society at any regular or special meeting thereof, by giving a full, true and complete copy of such plan with the notice of such meeting. The notice shall be given as provided in the laws of the society for the convocation of a regular or special meeting of such body, as the case may be. The affirmative vote of two-thirds of all members of such body shall be necessary for the approval of such agreement.

      4.  No such conversion shall take effect unless and until approved by the commissioner, who may give such approval if he finds that the proposed change is in conformity with the requirements of law and not prejudicial to the certificate holders of the society.


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ê1971 Statutes of Nevada, Page 1841 (Chapter 660, AB 416)ê

 

QUALIFICATIONS FOR MEMBERSHIP.

 

      Sec. 687.  1.  A society may admit to benefit membership any person not less than 14½ years of age who has furnished evidence of insurability acceptable to the society.

      2.  Any such member who applies for additional benefits more than 6 months after becoming a benefit member shall furnish additional evidence of insurability acceptable to the society, unless such additional benefits are issued pursuant to an existing contract under the terms of which such member is entitled to purchase such additional benefits without furnishing evidence of insurability.

      3.  Any person admitted prior to attaining the age of 21 years shall be bound by the terms of the application and certificate and by all the laws and rules of the society and shall be entitled to all the rights and privileges of membership therein to the same extent as though the age of majority had been attained at the time of application.

      4.  A society may also admit general or social members, who shall have no voice or vote in the management of its insurance affairs.

 

 

AMENDMENT OF ARTICLES OF INCORPORATION, CONSTITUTION AND LAWS: PROCEDURE.

 

      Sec. 688.  1.  A domestic society may amend its articles of incorporation, constitution or laws in accordance with the provisions thereof by action of its supreme legislative or governing body at any regular or special meeting thereof or, if its articles of incorporation, constitution or laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its articles of incorporation, constitution or laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges or branches. No amendment submitted for adoption by referendum shall be adopted unless, within 6 months from the date of submission thereof, a majority of all of the voting members of the society have signified their consent to such amendment by one of the methods specified in this section.

      2.  No amendment to the articles of incorporation, constitution or laws of any domestic society shall take effect unless approved by the commissioner, who shall approve such amendment if he finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects and purposes of the society. Unless the commissioner disapproves any such amendment within 60 days after the filing of same, such amendment shall be considered approved. The approval or disapproval of the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. If the commissioner disapproves such amendment, the reasons therefor shall be stated in such written notice.

      3.  Within 90 days from the approval thereof by the commissioner, all such amendments, or a synopsis thereof, shall be furnished to all members of the society either by mail or by publication in full in the official organ of the society. The affidavit of any officer of the society or of anyone authorized by it to mail any amendments or synopsis thereof, stating facts which show that such amendments or synopsis thereof have been duly addressed and mailed, shall be prima facie evidence that such amendments or synopsis thereof have been furnished the addressee.


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ê1971 Statutes of Nevada, Page 1842 (Chapter 660, AB 416)ê

 

facts which show that such amendments or synopsis thereof have been duly addressed and mailed, shall be prima facie evidence that such amendments or synopsis thereof have been furnished the addressee.

      4.  Every foreign or alien society authorized to do business in this state shall file with the commissioner a duly certified copy of all amendments of, or additions to, its articles of incorporation, constitution or laws within 90 days after enactment.

      5.  Printed copies of the constitution or laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.

 

 

SOCIETY MAY CREATE, MAINTAIN AND OPERATE CHARITABLE, BENEVOLENT OR EDUCATIONAL INSTITUTIONS; OWNERSHIP, OPERATION OF FUNERAL HOMES, UNDERTAKING ESTABLISHMENTS PROHIBITED.

 

      Sec. 689.  1.  It is lawful for a society to create, maintain and operate charitable, benevolent or educational institutions for the benefit of its members and their families and dependents and for the benefit of children insured by the society. For such purpose it may own, hold or lease personal property or real property located within or without this state, with necessary buildings thereon. Such property shall be reported in every annual statement but shall not be allowed as an admitted asset of such society.

      2.  Maintenance, treatment and proper attendance in any such institution may be furnished free or a reasonable charge may be made therefor, but no such institution shall be operated for profit.

      3.  The society shall maintain a separate accounting of any income and disbursements under this section and report them in its annual statement.

      4.  No society shall own or operate funeral homes or undertaking establishments.

 

 

BENEFITS.

 

      Sec. 690.  1.  A society authorized to do business in this state may provide for the payment of:

      (a) Death benefits in any form;

      (b) Endowment benefits;

      (c) Annuity benefits;

      (d) Temporary or permanent disability benefits as a result of disease or accident;

      (e) Hospital, medical or nursing benefits due to sickness or bodily infirmity or accident; and

      (f) Monument or tombstone benefits to the memory of deceased members not exceeding in any case the sum of $300.

      2.  Such benefits may be provided on the lives of members or, upon application of a member, on the lives of the member’s family, including the member, the member’s spouse and minor children, in the same or separate certificates.


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ê1971 Statutes of Nevada, Page 1843 (Chapter 660, AB 416)ê

 

the member, the member’s spouse and minor children, in the same or separate certificates.

      3.  The officers and members of the supreme, grand or any subordinate body of a society shall not be personally liable for payment of any benefits provided by a society.

 

 

BENEFITS ON LIVES OF CHILDREN.

 

      Sec. 691.  1.  A society may provide for benefits on the lives of children under the minimum age for adult membership but not more than 21 years of age at the time of application therefor, upon the application of some adult person, as its laws or rules may provide. Such benefits shall be in accordance with the provisions of subsection 1 of section 690 of this act. A society may, at its option, organize and operate branches for such children. Membership and initiation in local lodges shall not be required of such children, nor shall they have a voice in the management of the society.

      2.  A society shall have power to provide for the designation and changing of designation of beneficiaries in the certificates providing for such benefits and to provide in all other respects for the regulation, government and control of such certificates and all rights, obligations and liabilities incident thereto and connected therewith.

 

 

NONFORFEITURE BENEFITS, CASH SURRENDER VALUES, CERTIFICATE LOANS AND OTHER OPTIONS.

 

      Sec. 692.  1.  A society may grant paid-up nonforfeiture benefits, cash surrender values, certificate loans and such other options as its laws may permit. As to certificates issued on and after July 1, 1963, a society shall grant at least one paid-up nonforfeiture benefit, except in the case of pure endowment, annuity or reversionary annuity contracts, reducing term insurance contracts or contracts of term insurance of uniform amount of 15 years or less expiring before age 66.

      2.  In the case of certificates other than those for which reserves are computed on the Commissioners 1941 Standard Ordinary Mortality Table, the Commissioners 1941 Standard Industrial Mortality Table or the Commissioners 1958 Standard Ordinary Mortality Table, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the excess, if any, of:

      (a) The reserve under the certificate determined on the basis specified in the certificate; over

      (b) The sum of any indebtedness to the society on the certificate including interest due and accrued, and a surrender charge equal to 2.5 percent of the face amount of the certificate, which, in the case of insurance on the lives of children, shall be the ultimate face amount of the certificate, if death benefits provided therein are graded.

      3.  In the case of certificates issued on a substandard basis or in the case of certificates the reserve for which are computed upon the American Men Ultimate Table of Mortality, the term of any extended insurance benefit granted, including accompanying pure endowment, if any, may be computed upon the rates of mortality not greater than 130 percent of those shown by the mortality table specified in the certificate for the computation of the reserve.


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ê1971 Statutes of Nevada, Page 1844 (Chapter 660, AB 416)ê

 

benefit granted, including accompanying pure endowment, if any, may be computed upon the rates of mortality not greater than 130 percent of those shown by the mortality table specified in the certificate for the computation of the reserve.

      4.  In the case of certificates for which reserves are computed on the Commissioners 1941 Standard Ordinary Mortality Table, the Commissioners 1941 Standard Industrial Mortality Table or the Commissioners 1958 Standard Ordinary Mortality Table, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the corresponding amount ascertained in accordance with the provisions of the laws of this state applicable to life insurance companies issuing policies containing like insurance benefits based upon such tables.

 

 

BENEFICIARIES; FUNERAL BENEFITS.

 

      Sec. 693.  1.  A member shall have the right at all times to change the beneficiary or beneficiaries in accordance with the constitution, laws or rules of the society. Every society by its constitution, laws or rules may limit the scope of beneficiaries and shall provide that no beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the insurance contract.

      2.  A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member, but the portion so paid shall not exceed the sum of $500.

      3.  If, at the death of any member, there is no lawful beneficiary to whom the insurance benefits are payable, the amount of such benefits, except to the extent that funeral benefits may be paid as provided in subsection 2, shall be payable to the personal representative of the deceased member.

 

 

BENEFITS NOT LIABLE TO ATTACHMENT, GARNISHMENT, OTHER PROCESS.

 

      Sec. 694.  No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society shall be liable to attachment, garnishment or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.

 

 

THE CONTRACT.

 

      Sec. 695.  1.  Every society authorized to do business in this state shall issue to each benefit member a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached thereto, the charter or articles of incorporation, the constitution and laws of the society, the application for membership, and declaration of insurability, if any, signed by the applicant, and all amendments to each thereof, shall constitute the agreement, as of the date of issuance, between the society and the member, and the certificate shall so state.


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ê1971 Statutes of Nevada, Page 1845 (Chapter 660, AB 416)ê

 

the constitution and laws of the society, the application for membership, and declaration of insurability, if any, signed by the applicant, and all amendments to each thereof, shall constitute the agreement, as of the date of issuance, between the society and the member, and the certificate shall so state. A copy of the application for membership and of the declaration of insurability, if any, shall be endorsed upon or attached to the certificate.

      2.  All statements purporting to be made by the member shall be representations and not warranties. Any waiver of this provision is void.

      3.  Any changes, additions or amendments to the charter or articles of incorporation, constitution or laws duly made or enacted subsequent to the issuance of the certificate shall bind the member and the beneficiaries, and shall govern and control the agreement in all respects in the same manner as though such changes, additions or amendments had been made prior to and were in force at the time of the application for membership, except that no change, addition or amendment shall destroy or diminish benefits which the society contracted to give the members as of the date of issuance.

      4.  Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.

      5.  A society shall provide in its constitution or laws that if its reserves as to all or any class of certificates become impaired its board of directors or corresponding body may require that there shall be paid by the member to the society the amount of the member’s equitable proportion of such deficiency as ascertained by its board, and that if the payment is not made it shall stand as an indebtedness against the certificate and draw interest not to exceed 5 percent per annum compounded annually.

 

 

FILING OF CERTIFICATE, APPLICATION, RIDER, ENDORSEMENT FORMS WITH COMMISSIONER; STANDARD LIFE BENEFIT CERTIFICATE PROVISIONS; WITHDRAWAL OF APPROVAL; HEARINGS.

 

      Sec. 696.  1.  No fraternal benefit certificate may be delivered or issued for delivery in this state unless a copy of the form of such certificate has been filed with the commissioner. No application form may be used with and no rider and no endorsement, except as stated in subsection 2, may be attached to or printed or stamped upon such certificate unless the form of such application, rider or endorsement has been filed with the commissioner. No certificates may be delivered or issued for delivery in this state and no application, riders or endorsements may be used in connection with such certificates unless approved by the commissioner as conforming to the requirements of the laws of this state and not inconsistent therewith.

      2.  The provisions of this section do not apply to any special rider or endorsement on any such certificate which relates only to the manner of distribution of benefits or to the reservation of rights and benefits under such certificate and which is used at the request of the individual certificate holder.


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ê1971 Statutes of Nevada, Page 1846 (Chapter 660, AB 416)ê

 

such certificate and which is used at the request of the individual certificate holder.

      3.  The commissioner may disapprove any such certificate if he finds the same contains any provision, or has any title, heading, backing or other indication or the contents of any or all of its provisions, which is likely to mislead the certificate holder or be prejudicial to his interests.

      4.  Every filing required to be made under this section shall be made not less than 30 days in advance of any delivery to a policy holder, contract holder or certificate holder. At the expiration of such 30 days the form so filed shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the commissioner. Approval of any such form by the commissioner shall constitute a waiver of any unexpired portion of such waiting period. The commissioner may extend by not more than an additional 30 days the period within which he may so affirmatively approve or disapprove any such form, by giving notice to the insurer of such extension before expiration of the initial 30-day period. At the expiration of such period as so extended, and in the absence of such prior affirmative approval or disapproval, any such form shall be deemed approved.

      5.  The certificate shall contain in substance the following standard provisions or, in lieu thereof, provisions which are more favorable to the member.

      (a) A title on the face and filing page of the certificate clearly and correctly describing its form.

      (b) A provision stating the amount of rates, premiums or other required contributions, by whatever name known, which are payable by the insured under the certificate.

      (c) A provision that the member is entitled to a grace period of not less than a full month, or 30 days at the option of the society, in which the payment of any premium after the first may be made. During such grace period the certificate shall continue in full force, but in case the certificate becomes a claim during the grace period before the overdue payment is made, the amount of such overdue payment or payments may be deducted in any settlement under the certificate.

      (d) A provision that the member shall be entitled to have the certificate reinstated at any time within 3 years from the due date of the premium in default, unless the certificate has been completely terminated through the application of a nonforfeiture benefit, cash surrender value or certificate loan, upon the production of evidence of insurability satisfactory to the society and the payment of all overdue premiums and any other indebtedness to the society upon the certificate, together with interest on such premiums and such indebtedness, if any, at a rate not exceeding 6 percent per annum compounded annually.

      (e) Except in the case of pure endowment, annuity or reversionary annuity contracts, reducing term insurance contracts, or contracts of term insurance of uniform amount of 15 years or less expiring before age 66, a provision that, in the event of default in payment of any premium after 3 full years’ premiums have been paid or after premiums for a lesser period have been paid if the contract so provides, the society will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on the plan stipulated in the certificate, effective as of such due date, of such value as specified in this chapter.


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ê1971 Statutes of Nevada, Page 1847 (Chapter 660, AB 416)ê

 

the certificate, effective as of such due date, of such value as specified in this chapter. The certificate may provide, if the society’s laws so specify or if the member so elects prior to the expiration of the grace period of any overdue premium, that default shall not occur so long as premiums can be paid under the provisions of an arrangement for automatic premium loan as may be set forth in the certificate.

      (f) A provision that one paid-up nonforfeiture benefit as specified in the certificate shall become effective automatically unless the member elects another available paid-up nonforfeiture benefit, not later than 60 days after the due date of the premium in default.

      (g) A statement of the mortality table and rate of interest used in determining all paid-up nonforfeiture benefits and cash surrender options available under the certificate, and a brief general statement of the method used in calculating such benefits.

      (h) A table showing in figures the value of every paid-up nonforfeiture benefit and cash surrender option available under the certificate for each certificate anniversary either during the first 20 certificate years or during the term of the certificate, whichever is shorter.

      (i) A provision that the certificate shall be incontestable after it has been in force during the lifetime of the member for a period of 2 years from its date of issue except for nonpayment of premiums, violation of the provisions of the certificate relating to military, aviation or naval service and violation of the provisions relating to suspension or expulsion as substantially set forth in the certificate. At the option of the society, supplemental provisions relating to benefits in the event of temporary or permanent disability or hospitalization, and provisions which grant additional insurance specifically against death by accident or accidental means, may also be excepted. The certificate shall be incontestable on the ground of suicide after it has been in force during the lifetime of the member for a period of 2 years from date of issue. The certificate may provide, as to statements made to procure reinstatement, that the society shall have the right to contest a reinstated certificate within a period of 2 years from date of reinstatement with the same exceptions as provided in this section.

      (j) A provision that in case the age or sex of the member or of any other person is considered in determining the premium and it is found at any time before final settlement under the certificate that the age or sex has been misstated, and the discrepancy and premium involved have not been adjusted, the amount payable shall be such as the premium would have purchased at the correct age and sex. If the correct age or sex was not an insurable age or sex under the society’s charter or laws, only the premiums paid to the society, less any payments previously made to the member, shall be returned or, at the option of the society, the amount payable under the certificate shall be such as the premium would have purchased at the correct age and sex according to the society’s promulgated rates and any extension thereof based on actuarial principles.

      (k) A provision or provisions which recite fully, or which set forth the substance of, all sections of the charter, constitution, laws, rules or regulations of the society, in force at the time of issuance of the certificate, the violation of which will result in the termination of, or in the reduction of, the benefit or benefits payable under the certificate.

      (l) If the constitution or laws of the society provide for expulsion or suspension of a member, any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentations in such member’s application for membership shall have the privilege of maintaining his insurance in force by continuing payment of the required premium.


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ê1971 Statutes of Nevada, Page 1848 (Chapter 660, AB 416)ê

 

suspension of a member, any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentations in such member’s application for membership shall have the privilege of maintaining his insurance in force by continuing payment of the required premium.

      6.  Any of the provisions, or portions thereof, provided for in subsection 5 which are not applicable by reason of the plan of insurance or because the certificate is an annuity certificate may, to the extent inapplicable, be omitted from the certificate.

      7.  The commissioner may, after giving 30 days’ written notice with his reasons therefor to the fraternal benefit society, withdraw his approval. It is not lawful for the fraternal benefit society to issue such forms or use them after the effective date of such withdrawal of approval.

      8.  Upon request, the commissioner shall grant a hearing to the fraternal benefit society affected by any order under this section, in accordance with sections 21 to 55, inclusive, of this act.

 

 

PROHIBITED PROVISIONS IN LIFE BENEFIT CERTIFICATES.

 

      Sec. 697.  After July 1, 1964, no life benefit certificate shall be delivered or issued for delivery in this state containing in substance any of the following provisions:

      1.  Any provision limiting the time within which any action at law or in equity may be commenced to less than 2 years after the cause of action accrues;

      2.  Any provision by which the certificate purports to be issued or to take effect more than 6 months before the original application for the certificate was made, except in case of transfer from one form of certificate to another in connection with which the member is to receive credit for any reserve accumulation under the form of certificate from which the transfer is made; or

      3.  Any provision for forfeiture of the certificate for failure to repay any loan thereon or to pay interest on such loan while the total indebtedness, including interest, is less than the loan value of the certificate.

 

 

ACCIDENT AND HEALTH INSURANCE CERTIFICATES; TOTAL AND PERMANENT DISABILITY INSURANCE CERTIFICATES; FILING AND APPROVAL.

 

      Sec. 698.  1.  No domestic, foreign or alien society authorized to do business in this state shall issue or deliver in this state any certificate or other evidence of any contract of accident insurance or health insurance or of any total and permanent disability insurance contract unless and until the form thereof, together with the form of application and all riders or endorsements for use in connection therewith, have been filed with the commissioner.

      2.  The commissioner shall have power, from time to time, to make, alter and supersede reasonable regulations prescribing the required, optional and prohibited provisions in such contracts, and such regulations shall conform, as far as practicable, to the provisions of sections 473 to 509, inclusive, of this act (health insurance contracts).


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ê1971 Statutes of Nevada, Page 1849 (Chapter 660, AB 416)ê

 

      3.  Where the commissioner deems inapplicable, either in part or in their entirety, the provisions of the foregoing sections, he may prescribe the portions or summary thereof of the contract to be printed on the certificate issued to the member.

 

 

WAIVER OF PROVISIONS OF CONSTITUTION, LAWS.

 

      Sec. 699.  1.  The constitution and laws of the society may provide that no subordinate body or any of its subordinate officers or members shall have the power or authority to waive any of the provisions of the laws and constitution of the society.

      2.  Such provisions shall be binding on the society and every member and beneficiary of a member.

 

 

REINSURANCE.

 

      Sec. 700.  1.  A domestic society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state, or if not so authorized, one which is approved by the commissioner, but no such society may reinsure substantially all of its insurance in force without the written permission of the commissioner.

      2.  A society may take credit for the reserves on such ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a deduction from liability to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after July 1, 1963, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.

 

 

LICENSES.

 

      Sec. 701.  1.  Societies which are authorized on the effective date of this act to transact business in this state may continue such business until the 1st day of May next succeeding the effective date of this act. The authority of such societies and all societies licensed after the effective date of this act may thereafter be renewed annually, but in all cases shall terminate on the 1st day of the succeeding May; but a license so issued shall continue in full force and effect until the new license is issued or specifically refused.

      2.  For each such license or renewal the society shall pay to the commissioner a fee of $10.

      3.  A duly certified copy or duplicate of such license shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter.

 

 

ADMISSION OF FOREIGN OR ALIEN SOCIETY.

 

      Sec. 702.  1.  No foreign or alien society shall transact business in this state without a license issued by the commissioner.


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ê1971 Statutes of Nevada, Page 1850 (Chapter 660, AB 416)ê

 

      2.  Any such society may be licensed to transact business in this state upon a showing that its assets are invested in accordance with the provisions of this chapter and upon filing with the commissioner:

      (a) A duly certified copy of its charter or articles of incorporation;

      (b) A copy of its constitution and laws, certified by its secretary or corresponding officer;

      (c) A power of attorney to the commissioner as prescribed in section 712 of this act;

      (d) A statement of its business under oath of its president and secretary or corresponding officers in a form prescribed by the commissioner, duly verified by an examination made by the supervising insurance officer of its home state or other state, territory, province or country, satisfactory to the commissioner of this state;

      (e) A certificate from the proper officer of its home state, territory, province or country that the society is legally incorporated and licensed to transact business therein;

      (f) Copies of its certificate forms; and

      (g) Such other information as the commissioner may deem necessary.

      3.  Any foreign or alien society desiring admission to this state shall have the qualifications required of domestic societies organized under this chapter.

 

 

INJUNCTIONS; LIQUIDATION, RECEIVERSHIP OF DOMESTIC SOCIETY.

 

      Sec. 703.  1.  When the commissioner upon investigation finds that a domestic society:

      (a) Has exceeded its powers;

      (b) Has failed to comply with any provision of this chapter;

      (c) Is not fulfilling its contracts in good faith;

      (d) Has a membership of less than 400 after an existence of 1 year or more; or

      (e) Is conducting business fraudulently or in a manner hazardous to its members, creditors, the public or the business,

he shall notify the society of his findings, state in writing the reasons for his dissatisfaction, and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of has been corrected, or why an action in quo warranto should not be commenced against the society.

      2.  If on such date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the commissioner may present the facts relating thereto to the attorney general, who shall, if he deems the circumstances warrant, commence an action to enjoin the society from transacting business or an action in quo warranto.

      3.  The court shall thereupon notify the officers of the society of a hearing. If, after a full hearing, it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order.

      4.  No society so enjoined shall have the authority to do business until:


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ê1971 Statutes of Nevada, Page 1851 (Chapter 660, AB 416)ê

 

      (a) The commissioner finds that the violation complained of has been corrected;

      (b) The costs of such action have been paid by the society, if the court finds that the society was in default as charged;

      (c) The court has dissolved its injunction; and

      (d) The commissioner has reinstated the certificate of authority.

      5.  If the court orders the society liquidated, it shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money and other assets of the society and, under the direction of the court, proceed forthwith to close the affairs of the society and to distribute its funds to those entitled thereto.

      6.  No action under this section shall be recognized in any court of this state unless brought by the attorney general upon request of the commissioner. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the commissioner as such receiver.

      7.  The provisions of this section relating to hearing by the commissioner, action by the attorney general at the request of the commissioner, hearing by the court, injunction and receivership shall be applicable to a society which voluntarily determines to discontinue business.

 

 

SUSPENSION, REVOCATION OR REFUSAL OF LICENSE OF FOREIGN OR ALIEN SOCIETY.

 

      Sec. 704.  1.  When the commissioner upon investigation finds that a foreign or alien society transacting or applying to transact business in this state:

      (a) Has exceeded its powers;

      (b) Has failed to comply with any of the provisions of this chapter;

      (c) Is not fulfilling its contracts in good faith; or

      (d) Is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public,

he shall notify the society of his findings, state in writing the reasons for his dissatisfaction and require the society to show cause on a date named why its license should not be suspended, revoked or refused.

      2.  If on such date the society does not present good and sufficient reason why its authority to do business in this state should not be suspended, revoked or refused, the commissioner may suspend or refuse the license of the society to do business in this state until satisfactory evidence is furnished to him that such suspension or refusal should be withdrawn, or he may revoke the authority of the society to do business in this state.

      3.  Nothing contained in this section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this state during the time such society was legally authorized to transact business herein.

 

 

INSURANCE AGENTS: DEFINITION.

 

      Sec. 705.  The term “insurance agent” as used in sections 705 to 711, inclusive, of this act means any authorized or acknowledged agent of a society who acts as such in the solicitation, negotiation or procurement or making of a life insurance, accident and health insurance or annuity contract, except that the term “insurance agent” shall not include:

 


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ê1971 Statutes of Nevada, Page 1852 (Chapter 660, AB 416)ê

 

making of a life insurance, accident and health insurance or annuity contract, except that the term “insurance agent” shall not include:

      1.  Any regular salaried officer or employee of a licensed society who devotes substantially all of his services to activities other than the solicitation of fraternal insurance contracts from the public, and who receives for the solicitation of such contracts no commission or other compensation directly dependent upon the amount of business obtained; or

      2.  Any agent or representative of a society who devotes, or intends to devote, less than 50 percent of his time to the solicitation and procurement of insurance contracts for such society. Any person who in the preceding calendar year has solicited and procured life insurance contracts on behalf of any society in an amount of insurance in excess of $50,000, or, in the case of any other kind or kinds of insurance which the society might write, on the persons of more than 25 individuals, and who has received or will receive a commission or other compensation therefor, shall be presumed to be devoting, or intending to devote, 50 percent of his time to the solicitation or procurement of insurance contract for such society.

 

 

INSURANCE AGENTS: LICENSE REQUIRED.

 

      Sec. 706.  Any person who in this state acts as insurance agent for a society without having authority so to do by virtue of a license issued and in force pursuant to the provisions of sections 705 to 711, inclusive, of this act, is, except as provided in section 705 of this act, guilty of a misdemeanor.

 

 

INSURANCE AGENTS: PAYMENT OF COMMISSIONS

PROHIBITED EXCEPT TO LICENSED AGENTS.

 

      Sec. 707.  No society doing business in this state shall pay any commission or other compensation to any person for any services in obtaining in this state any new contract of life, accident or health insurance, or any new annuity contract, except to a licensed insurance agent of such society or to an agent exempted under section 705 of this act.

 

 

INSURANCE AGENTS: PREREQUISITES OF LICENSES.

 

      Sec. 708.  1.  The commissioner may issue a license to any person who has paid an annual license fee of $5 and who has complied with the requirements of this chapter authorizing such licensee to act as an insurance agent on behalf of any society named in such license, which society is authorized to do business in this state.

      2.  Before any insurance agent’s license shall be issued there shall be on file in the office of the commissioner the following documents:

      (a) A written application by the prospective licensee in such form or forms and supplements thereto, and containing such information, as the commissioner may prescribe.

      (b) A certificate by the society which is to be named in such license, stating that such society has satisfied itself that the named applicant is trustworthy and competent to act as such insurance agent and that the society will appoint such applicant to act as its agent if the license applied for is issued by the commissioner.


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ê1971 Statutes of Nevada, Page 1853 (Chapter 660, AB 416)ê

 

trustworthy and competent to act as such insurance agent and that the society will appoint such applicant to act as its agent if the license applied for is issued by the commissioner. Such certificates shall be executed and acknowledged by an officer or managing agent of such society.

      3.  No written or other examination shall be required of any individual seeking to be named as a licensee to represent a fraternal benefit society as its agent.

 

 

INSURANCE AGENTS: ISSUANCE, RENEWAL OF LICENSES.

 

      Sec. 709.  1.  The commissioner may refuse to issue or renew any insurance agent’s license if in his judgment the proposed licensee is not trustworthy and competent to act as such agent, or has given cause for revocation or suspension of such license, or has failed to comply with any prerequisite for the issuance or renewal, as the case may be, of such license.

      2.  Every license issued pursuant to sections 705 to 711, inclusive, of this act, and every renewal thereof, shall expire on June 30 of the calendar year following the calendar year in which such license or renewal license was issued.

      3.  If the application for a renewal license has been filed with the commissioner on or before June 30 of the year in which the existing license is to expire, such applicant named in such existing license may continue to act as insurance agent under such existing license, unless such license is revoked or suspended, until the issuance by the commissioner of the renewal license or until the expiration of 5 days after he has refused of renew such license and has served written notice of such refusal on the applicant. If the applicant, within 30 days after such notice is given, notifies the commissioner in writing of his request for a hearing on such refusal, the commissioner shall, within a reasonable time after receipt of such notice, grant such hearing, and he may, in his discretion, reinstate such license.

      4.  Any such renewal license of an insurance agent may be issued upon the application of the society named in the existing license. Such application shall be in the form or forms prescribed by the commissioner and shall contain such information as he may require. Such application shall contain a certificate executed by the president, or by a vice president, a secretary, an assistant secretary, or corresponding officer by whatever name known, or by an employee expressly designated and authorized to execute such certificate of a domestic or foreign society or by the United States manager of an alien society, stating that the addresses therein given of the agents of such society for whom renewal licenses are requested therein have been verified in each instance immediately preceding the preparation of the application. Notwithstanding the filing of such application, the commissioner may, after reasonable notice to any such society, require that any or all agents of such society to be named as licensees in renewal licenses execute and file separate applications for the renewal of such licenses and he may also require that each such application be accompanied by the certificate specified in paragraph (b) of subsection 2 of section 708 of this act.


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ê1971 Statutes of Nevada, Page 1854 (Chapter 660, AB 416)ê

 

INSURANCE AGENTS: NOTICE OF TERMINATION OF APPOINTMENT FILED WITH COMMISSIONER.

 

      Sec. 710.  Every society doing business in this state shall, upon the termination of the appointment of any insurance agent licensed to represent it in this state, forthwith file with the commissioner a statement, in such form as he may prescribe, of the facts relative to such termination and the cause thereof. Every statement made pursuant to this section is a privileged communication.

 

 

INSURANCE AGENTS: REVOCATION, SUSPENSION OF LICENSES.

 

      Sec. 711.  1.  The commissioner may revoke or may suspend for such period as he may determine any insurance agent’s license if, after notice and hearing as provided for in section 709 of this act, he determines that the licensee has:

      (a) Violated any provision of, or any obligation imposed by sections 708 to 711, inclusive, of this act, or has violated any law in the course of his dealings as agent;

      (b) Made a material misstatement in the application for such license;

      (c) Been guilty of fraudulent or dishonest practices;

      (d) Demonstrated his incompetency or untrustworthiness to act as an insurance agent; or

      (e) Been guilty of rebating as defined by the laws of this state applicable to life insurers.

      2.  The revocation or suspension of any insurance agent’s license shall terminate forthwith the license of such agent.

      3.  No individual whose license has been revoked shall be entitled to obtain any insurance agent’s license under the provisions of this section for a period of 1 year after such revocation or, if such revocation is judicially reviewed, for 1 year after the final determination thereof affirming the action of the commissioner in revoking such license.

 

 

SERVICE OF PROCESS ON SOCIETY.

 

      Sec. 712.  1.  Every society authorized to do business in this state shall appoint in writing the commissioner and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served, and shall agree in such writing that any lawful process against it which is served on such attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by the commissioner, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted.

      2.  Service shall be made only upon the commissioner, or if absent, upon the person in charge of his office. It shall be made in duplicate and shall constitute sufficient service upon the society. When legal process against a society is served upon the commissioner, he shall forthwith forward one of the duplicate copies by registered or certified mail, prepaid, directed to the secretary or corresponding officer.


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ê1971 Statutes of Nevada, Page 1855 (Chapter 660, AB 416)ê

 

against a society is served upon the commissioner, he shall forthwith forward one of the duplicate copies by registered or certified mail, prepaid, directed to the secretary or corresponding officer.

      3.  No such service shall require a society to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of the service to a society.

      4.  Legal process shall not be served upon a society except in the manner herein provided.

      5.  At the time of serving any process upon the commissioner, the plaintiff or complainant in the action shall pay to the commissioner a fee of $5.

 

 

INJUNCTIONS AGAINST SOCIETIES.

 

      Sec. 713.  No application or petition for injunction against any domestic, foreign or alien society, or branch thereof, shall be recognized in any court of this state unless made by the attorney general upon request of the commissioner.

 

 

JUDICIAL REVIEW OF COMMISSIONER’S FINDINGS, DECISIONS.

 

      Sec. 714.  All decisions and findings of the commissioner made under the provisions of this chapter shall be subject to review by proper proceedings in any court of competent jurisdiction in this state.

 

 

FUNDS.

 

      Sec. 715.  1.  All assets shall be held, invested and disbursed for the use and benefit of the society and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment or the surrender of any part thereof, except as provided in the contract.

      2.  A society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.

      3.  Every society, the admitted assets of which are less than the sum of its accrued liabilities and reserves under all of its certificates when valued according to standards required for certificates issued after July 1, 1964, shall, in every provision of the laws of the society for payments by members of such society, in whatever form made, distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes or the net accretions thereto shall be used for expenses.

 

 

INVESTMENTS.

 

      Sec. 716.  1.  A society shall invest its funds only in such investments as are authorized by the laws of this state for the investment of assets of life insurers and subject to the limitations thereon.


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ê1971 Statutes of Nevada, Page 1856 (Chapter 660, AB 416)ê

 

      2.  Any foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country or province in which it is incorporated shall be held to meet the requirements of this section for the investment of funds.

 

 

REPORTS.

 

      Sec. 717.  1.  Reports shall be filed and synopses of annual statements shall be published in accordance with the provisions of sections 717 to 721, inclusive, of this act.

      2.  Every society transacting business in this state shall annually, on or before the 1st day of March, unless for cause shown such time has been extended by the commissioner, file with the commissioner a true statement of its financial condition, transactions and affairs for the preceding calendar year and pay a filing fee of $5. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the commissioner.

      3.  A synopsis of its annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society not later than June 1 of each year, or, in lieu thereof, such synopsis may be published in the society’s official publication.

      4.  As a part of the annual statement required by subsection 2, each society shall, on or before the 1st day of March, file with the commissioner a valuation of its certificates in force on December 31 last preceding, but the commissioner may, in his discretion for cause shown, extend the time for filing such valuation for not more than 2 calendar months. Such report of valuation shall show, as reserve liabilities, the difference between the present midyear value of the promised benefits provided in the certificates of such society in force and the present midyear value of the future net premiums as such premiums are in practice actually collected, not including therein any value for the right to make extra assessments and not including any amount by which the present midyear value of future net premiums exceeds the present midyear value of promised benefits on individual certificates.

      5.  At the option of any society, in lieu of the requirements of subsection 4, the valuation may show the net tabular value. Such net tabular value as to certificates issued prior to July 1, 1964, shall be determined in accordance with the provisions of law applicable prior to July 1, 1963, and as to certificates issued on or after July 1, 1964, shall not be less than the reserves determined according to the Commissioners Reserve Valuation method as defined in section 719 of this act.

      6.  If the premium charged is less than the tabular net premium according to the basis of valuation used, an additional reserve equal to the present value of the deficiency in such premiums shall be set up and maintained as a liability. The reserve liabilities shall be properly adjusted in the event that the midyear or tabular values are not appropriate.


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ê1971 Statutes of Nevada, Page 1857 (Chapter 660, AB 416)ê

 

PENALTIES FOR FAILURE TO FILE ANNUAL STATEMENT.

 

      Sec. 718.  A society neglecting to file the annual statement in the form and within the time provided by section 717 of this act shall forfeit $100 for each day during which such neglect continues, and, upon notice by the commissioner to that effect, its authority to do business in this state shall cease while such default continues.

 

 

VALUATIONS: RESERVES.

 

      Sec. 719.  1.  Reserves according to the Commissioners Reserve Valuation method for the life insurance and endowment benefits of certificates providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such certificates, over the then-present value of any future modified net premiums therefor. The modified net premiums for any such certificate shall be such a uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the certificate, of all such modified net premiums shall be equal to the sum of the then-present value of such benefits provided for by the certificate and the excess of:

      (a) A net level premium equal to the present value, at the date of issue, of such benefits provided for after the first certificate year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such certificate on which a premium falls due; over

      (b) A net 1-year term premium for such benefits provided for in the first certificate year.

      2.  The net level annual premium referred to in paragraph (a) of subsection 1 shall not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age 1 year higher than the age at issue of such certificate.

      3.  Reserves according to the Commissioners Reserve Valuation method for:

      (a) Life insurance benefits for varying amounts of benefits or requiring the payment of varying premiums;

      (b) Annuity and pure endowment benefits;

      (c) Disability and accidental death benefits in all certificates and contracts; and

      (d) All other benefits except life insurance and endowment benefits,

shall be calculated by a method consistent with the principles of this section.

 

 

VALUATIONS: DEFERRED PAYMENTS DUE UNDER INCURRED CLAIMS, MATURED CERTIFICATES.

 

      Sec. 720.  The present value of deferred payments due under incurred claims or matured certificates shall be deemed a liability of the society and shall be computed upon mortality and interest standards prescribed in section 721 of this act.


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ê1971 Statutes of Nevada, Page 1858 (Chapter 660, AB 416)ê

 

society and shall be computed upon mortality and interest standards prescribed in section 721 of this act.

 

 

VALUATIONS: STANDARDS; CERTIFICATION OF VALUATION, UNDERLYING DATA.

 

      Sec. 721.  1.  The valuation and underlying data shall be certified by a competent actuary or, at the expense of the society, verified by the actuary of the department of insurance of the state of domicile of the society.

      2.  The minimum standards of valuation for certificates issued prior to July 1, 1964, shall be those provided by the law applicable immediately prior to July 1, 1963, but not lower than the standards used in the calculating of rates for such certificates.

      3.  The minimum standard of valuation for certificates issued after July 1, 1964, shall be 3.5 percent interest and the following:

      (a) For certificates of life insurance, American Men Ultimate Table of Mortality, with Bowerman’s or Davis’ Extension thereof or with the consent of the commissioner, the Commissioners 1941 Standard Ordinary Mortality Table, the Commissioners 1941 Standard Industrial Mortality Table or the Commissioners 1958 Standard Ordinary Mortality Table, using actual age of the insured for male risks and an age not more than 3 years younger than the actual age of the insured for female risks;

      (b) For annuity and pure endowment certificates, excluding any disability and accidental death benefits in such certificates, the 1937 Standard Annuity Mortality Table or the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the commissioner;

      (c) For total and permanent disability benefits in or supplementary to life insurance certificates, Hunter’s Disability Table, or the Class III Disability Table (1926) modified to conform to the contractual waiting period, or the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries with due regard to the type of benefit. Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance certificates;

      (d) For accidental death benefits in or supplementary to Life Insurance Certificates, the Inter-Company Double Indemnity Mortality Table or the 1959 Accidental Death Benefits Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance certificates; and

      (e) For noncancellable accident and health benefits, the Class III Disability Table (1926) with conference modifications or, with the consent of the commissioner, tables based upon the society’s own experience.

      4.  The commissioner may, in his discretion:

      (a) Accept other standards for valuation if he finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard herein prescribed.

      (b) Vary the standards of mortality applicable to all certificates of insurance on substandard lives or other extra-hazardous lives by any society authorized to do business in this state.


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ê1971 Statutes of Nevada, Page 1859 (Chapter 660, AB 416)ê

 

insurance on substandard lives or other extra-hazardous lives by any society authorized to do business in this state.

      5.  Whenever the mortality experience under all certificates valued on the same mortality table is in excess of the expected mortality according to such table for a period of 3 consecutive years, the commissioner may require additional reserves when deemed necessary in his judgment on account of such certificates.

      6.  Any society, with the consent of the commissioner of insurance of the state of domicile of the society and under such conditions, if any, as he may impose, may establish and maintain reserves on its certificates in excess of the reserves required thereunder, but the contractual rights of any insured member shall not be affected thereby.

 

 

EXAMINATIONS OF DOMESTIC SOCIETIES.

 

      Sec. 722.  1.  The commissioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic society and he shall make such examination at least once in every 3 years. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society. The minutes of the proceedings of the supreme legislative or governing body and of the board of directors or corresponding body of a society shall be in the English language.

      2.  In making any such examination the commissioner may summon and qualify as witnesses under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and condition of the society.

      3.  A summary of the report of the commissioner and such recommendations or statements of the commissioner as may accompany such report shall be read at the first meeting of the board of directors or corresponding body of the society following the receipt thereof, and, if so directed by the commissioner, shall also be read at the first meeting of the supreme legislative or governing body of the society following the receipt thereof.

      4.  A copy of the report, recommendations and statements of the commissioner shall be furnished by the society to each member of such board of directors or other governing body.

      5.  The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the commissioner.

 

 

EXAMINATIONS OF FOREIGN AND ALIEN SOCIETIES.

 

      Sec. 723.  1.  The commissioner, or any person whom he may appoint, may examine any foreign or alien society transacting or applying for admission to transact business in this state. He may employ assistants and he, or any person he may appoint, shall have free access to all books, papers and documents that relate to the business of the society.


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ê1971 Statutes of Nevada, Page 1860 (Chapter 660, AB 416)ê

 

      2.  The commissioner may in his discretion accept, in lieu of such examination, the examination of the insurance department of the state, territory, district, province or country where such society is organized.

      3.  The compensation and actual expenses of the examiners making any examination or general or special valuation shall be paid by the society examined or by the society whose certificate obligations have been valued, upon statements furnished by the commissioner.

 

 

COMMISSIONER NOT TO MAKE PUBLIC ANY FINANCIAL STATEMENT, REPORT OR FINDING UNTIL SOCIETY AFFORDED OPPORTUNITY TO ANSWER.

 

      Sec. 724.  Pending, during or after an examination or investigation of a society, either domestic, foreign or alien, the commissioner shall make public no financial statement, report or finding, nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any society, until a copy thereof has been served upon the society at its principal office and the society has been afforded a reasonable opportunity to answer any such financial statement, report or finding and to make such showing in connection therewith as it may desire.

 

 

MISREPRESENTATION; FALSE OR MISLEADING STATEMENTS PROHIBITED; CRIMINAL, CIVIL PENALTIES.

 

      Sec. 725.  1.  No person shall cause or permit to be made, issued or circulated in any form:

      (a) Any misrepresentation or false or misleading statement concerning the terms, benefits or advantages of any fraternal insurance contract now issued or to be issued in this state, or the financial condition of any society;

      (b) Any false or misleading estimate or statement concerning the dividends or shares of surplus paid or to be paid by any society on any insurance contract; or

      (c) Any incomplete comparison of an insurance contract of one society with an insurance contract of another society or insurer for the purpose of inducing the lapse, forfeiture or surrender of any insurance contract.

      2.  A comparison of insurance contracts is incomplete if it does not compare in detail:

      (a) The gross rates, and the gross rates less any dividend or other reduction allowed at the date of the comparison; and

      (b) Any increase in cash values, and all the benefits provided by each contract for the possible duration thereof as determined by the life expectancy of the insured.

      3.  A comparison of insurance contracts is incomplete if it omits from consideration:

      (a) Any benefit or value provided in the contract;

      (b) Any differences as to amount or period of rates; or


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ê1971 Statutes of Nevada, Page 1861 (Chapter 660, AB 416)ê

 

      (c) Any differences in limitations or conditions or provisions which directly or indirectly affect the benefits.

      4.  In any determination of the incompleteness or misleading character of any comparison or statement, it shall be presumed that the insured had no knowledge of any of the contents of the contract involved.

      5.  Any person who violates any provision of this section or knowingly receives any compensation or commission by or in consequence of such violation is guilty of a gross misdemeanor, and shall in addition be liable for a civil penalty in the amount of three times the sum received by such violator as compensation or commission, which penalty may be recovered in a civil action by any person or society aggrieved for his or its own use and benefit.

 

 

DISCRIMINATION AND REBATES.

 

      Sec. 726.  1.  No society doing business in this state shall make or permit any unfair discrimination between insured members of the same class and equal expectation of life in the premiums charged for certificates of insurance, in the dividends or other benefits payable thereon or in any other of the terms and conditions of the contracts it makes.

      2.  No society, by itself, or any other person, and no agent or solicitor, personally, or by any other person, shall offer, promise, allow, give, set off or pay, directly or indirectly, any valuable consideration or inducement to or for insurance, on any risk authorized to be taken by such society which is not specified in the certificate.

      3.  No member shall receive or accept, directly or indirectly, any rebate of premium, or part thereof, or agent’s or solicitor’s commission thereon, payable on any certificate or receive or accept any favor or advantage or share in the dividends or other benefits to accrue on, or any valuable consideration or inducement not specified in, the contract of insurance.

 

 

TAXATION.

 

      Sec. 727.  Every society organized or licensed under this chapter is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from every state, county, district, municipal and school tax other than taxes on real property and office equipment.

 

 

SOCIETIES EXEMPT FROM OTHER INSURANCE LAWS.

 

      Sec. 728.  Except as provided in this chapter, societies shall be governed by this chapter and shall be exempt from all other provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose. No law hereafter enacted shall apply to them, unless they are expressly designated therein.

 

 

EXEMPTION OF CERTAIN SOCIETIES.

 

      Sec. 729.  1.  Nothing contained in this chapter shall be construed to affect or apply to:


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ê1971 Statutes of Nevada, Page 1862 (Chapter 660, AB 416)ê

 

      (a) Grand or subordinate lodges of societies, orders or associations now doing business in this state which provide benefits exclusively through local or subordinate lodges;

      (b) Orders, societies or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring only their own members and their families and the ladies’ societies or ladies’ auxiliaries to such orders, societies or associations;

      (c) Domestic societies which limit their membership to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than $400 or disability benefits of not more than $350 to any person in any 1 year, or both; or

      (d) Domestic societies or association of a purely religious, charitable or benevolent description, which provide for a death benefit of not more than $400 or for disability benefits of not more than $350 to any one person in any 1 year, or both.

      2.  Any society or association described in paragraphs (c) or (d) of subsection 1 which provides for death or disability benefits for which benefit certificates are issued, and any such society or association included in paragraph (d) of subsection 1 which has more than 1,000 members, shall not be exempted from the provisions of this chapter but shall comply with all requirements thereof.

      3.  No society which, by the provisions of this section, is exempt from the requirements of this chapter, except any society described in paragraph (b) or subsection 1, shall give or allow, or promise to give or allow, to any person any compensation for procuring new members.

      4.  Every society which provides for benefits in case of death or disability resulting solely from accident and which does not obligate itself to pay natural death or sick benefits shall have all of the privileges and be subject to all the applicable provisions and regulations of this chapter, except that the provisions thereof relating to medical examination, valuations of benefit certificates and incontestability shall not apply to such society.

      5.  The commissioner may require from any society or association, by examination or otherwise, such information as will enable him to determine whether such society or association is exempt from the provisions of this chapter.

      6.  Societies, exempted under the provisions of this section, shall also be exempt from all other provisions of the insurance laws of this state.

 

 

PENALTIES.

 

      Sec. 730.  1.  Any person who willfully makes a false or fraudulent statement in or relating to an application for membership or for the purpose of obtaining money from or a benefit in any society is guilty of a gross misdemeanor.

      2.  Any person who willfully makes a false or fraudulent statement in any verified report or declaration under oath required or authorized by this chapter, or of any material fact or thing contained in a sworn statement concerning the death or disability of a member for the purpose of procuring payment of a benefit named in the certificate, shall be guilty of perjury and shall be subject to the penalties therefor prescribed by law.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1863 (Chapter 660, AB 416)ê

 

procuring payment of a benefit named in the certificate, shall be guilty of perjury and shall be subject to the penalties therefor prescribed by law.

      3.  Any person who solicits membership for, or in any manner assists in procuring membership in, any society not licensed to do business in this state shall be punished by a fine of not more than $200.

      4.  Any person convicted of a willful violation of, or neglect or refusal to comply with, any provision of this chapter for which a penalty is not otherwise prescribed shall be punished by a fine of not more than $200.

 

 

CHAPTER 32

 

NONPROFIT HOSPITAL, MEDICAL AND DENTAL SERVICE CORPORATIONS

 

      Sec. 731.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 732 to 763, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 732.  This chapter may be cited as the Nonprofit Hospital, Medical and Dental Service Corporation Law.

 

 

SCOPE OF CHAPTER.

 

      Sec. 733.  1.  This chapter shall not:

      (a) Apply to or govern any corporation which is organized for profit, which contemplates any pecuniary gain to its shareholders or members, or which conducts or is authorized by its articles of incorporation to conduct any business whatsoever on a profit basis.

      (b) Authorize or be construed to authorize, directly or indirectly, any corporation to operate a hospital or a medical or dental service plan on a profit basis.

      2.  No corporation subject to the provisions of this chapter shall own or operate any hospital or engage in any business other than that of establishing, maintaining and operating a nonprofit hospital, medical or dental service plan.

 

 

DEFINITIONS.

 

      Sec. 734.  As used in this chapter:

      1.  “Dental services” means general and special dental services ordinarily provided by dentists licensed under the provisions of chapter 631 of NRS to practice in the State of Nevada in accordance with the generally accepted practices of the community at the time the service is rendered, and the furnishing of necessary appliances, drugs, medicines and supplies, prosthetic appliances, orthodontic appliances, metal, ceramic and other restorations.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1864 (Chapter 660, AB 416)ê

 

      2.  “Hospital services” means the furnishing or providing of any or all of the following:

      (a) Maintenance and care in the hospital, including but not limited to, nursing care, drugs, medicines, supplies, physiotherapy, transportation and use of facilities and appliances.

      (b) Reimbursement of the beneficiary or subscriber for, but without requiring that he first pay, expenses incurred for any of the items included in paragraph (a).

      (c) Reimbursement, at a uniform rate, of the beneficiary or subscriber for, but without requiring that he first pay, the costs and expenses incurred for medical supplies.

      (d) Reimbursement for expenses incurred outside of the hospital for continued care and treatment following the subscriber’s discharge from the hospital, for nursing service, necessary appliances, drugs, medicines, supplies and any other services which would have been available in the hospital (excluding physicians’ services), whether or not provided through a hospital.

      (e) Reimbursement for ambulance service expenses.

      3.  “Medical services” means the furnishing or providing of any or all of the following:

      (a) Medical or surgical services, in or out of a hospital, by a physician and surgeon licensed to practice under the laws of Nevada.

      (b) Reimbursement for expenses incurred for nursing services, necessary appliances, drugs, medicines, supplies and any other health care services.

 

 

CORPORATIONS AUTHORIZED TO UNDERTAKE AND OPERATE PLANS.

 

      Sec. 735.  Any corporation which is organized under the laws of the State of Nevada, or the laws of any other state, without capital stock, for the sole purpose of maintaining and operating a hospital, medical or dental service plan, and which does not contemplate pecuniary gain or profit to its members, may undertake and operate a hospital, medical or dental service plan for rendering hospital, medical or dental service to its subscribers under and subject to the provisions of this chapter.

 

 

MANNER OF INCORPORATION.

 

      Sec. 736.  Persons desiring to form a nonprofit hospital, medical or dental service corporation shall incorporate pursuant to the provisions of this chapter, and the provisions of the nonprofit corporation laws of the State of Nevada, so far as the provisions of such laws are applicable and not inconsistent with this chapter.

 

 

DIRECTORS: QUALIFICATIONS.

 

      Sec. 737.  1.  A majority of the board of directors of a corporation providing or rendering hospital services shall be composed of duly appointed representatives of hospitals with which the corporation has contracts for the rendering of hospital services.


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ê1971 Statutes of Nevada, Page 1865 (Chapter 660, AB 416)ê

 

      2.  A majority of the board of directors of a corporation providing medical services shall be composed of duly appointed representatives of the physicians who have signed participating agreements with the corporation for the rendering of medical services.

      3.  A majority of the board of directors of a corporation providing dental services shall be composed of duly appointed representatives of the dentists who have signed participating agreements with the corporation for the rendering of dental services.

 

 

MERGER AND CONSOLIDATION: PROCEDURE.

 

      Sec. 738.  Any corporation operating under this chapter may merge and consolidate with any other corporation operating or to operate under this chapter as follows:

      1.  The agreement of merger and consolidation shall be submitted to and approved by a two-thirds vote of the members of the ceding corporation present in person or by proxy at a meeting called to consider that agreement. A written or printed notice of such meeting shall be mailed or personally delivered to each member at last 30 days before the day fixed for the meeting.

      2.  Before the merger and consolidation is effected, the corporation which proposes to assume the liabilities of the ceding corporation shall submit to its members the question of merger and consolidation and a similar notice shall be given and a similar vote required as in the case of members of the ceding corporation.

      3.  If the vote in the case of both corporations is in the affirmative by the required majority, a certified copy of all proceedings relating to the proposed merger and consolidation shall be filed with the commissioner. If the commissioner finds that the proceedings have been in accordance with law, he shall approve the agreement.

      4.  Upon the approval by the commissioner of such agreement, the consolidated corporation shall issue certificates of assumption to each and every subscriber of the ceding corporation. Such certificates shall be in a form approved by the commissioner.

      5.  The approval of the commissioner of the agreement of merger and consolidation shall operate to dissolve the ceding corporation, and all its liability upon its insurance contracts or benefit certificates shall thereupon cease, but its officers may thereafter perform any act necessary to close its affairs. The officers of the ceding corporation shall file a certified copy of the agreement in the office of the secretary of state. Such certified copy shall be in lieu of any certificate of dissolution required by the provisions of the general corporation law.

      6.  The consolidated corporation shall be entitled to all the assets of the ceding corporation and shall assume all its liabilities.

 

 

MERGER AND CONSOLIDATION: CONTINUANCE OF CONTRACTS AND CONTRIBUTION CERTIFICATES.

 

      Sec. 739.  In the event of any merger and consolidation as provided by this chapter, contracts and contribution certificates issued in compliance with the provisions of this chapter and outstanding at the time of the date of the merger and consolidation may be continued in force, reinstated, renewed and repaid without change of provisions, except as such change may be necessary or advisable at or following the next renewal or reinstatement.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1866 (Chapter 660, AB 416)ê

 

date of the merger and consolidation may be continued in force, reinstated, renewed and repaid without change of provisions, except as such change may be necessary or advisable at or following the next renewal or reinstatement.

 

 

MERGER AND CONSOLIDATION: WITHDRAWAL OF PRIOR DEPOSIT OF SECURITIES.

 

      Sec. 740.  Upon approval by the commissioner of any such merger and consolidation, the merged and consolidated corporation may withdraw any securities therefore deposited pursuant to any requirements of this chapter.

 

 

CONSENT OF LICENSED GENERAL HOSPITALS, LICENSED PHYSICIANS REQUIRED.

 

      Sec. 741.  1.  No corporation subject to the provisions of this chapter shall establish, maintain and operate its hospital service plan until it has procured the consent, in writing, of at least 75 percent of the licensed general hospitals doing business in the State of Nevada.

      2.  No corporation subject to the provisions of this chapter shall establish, maintain and operate its medical service plan until it has procured in writing participating agreements with at least 51 percent of the licensed physicians practicing in the State of Nevada.

      3.  No corporation subject to the provisions of this chapter shall establish, maintain and operate its dental service plan until it has procured in writing participating agreements with at least 51 percent of the licensed dentists practicing in the State of Nevada.

 

 

CERTIFICATE OF AUTHORITY REQUIRED; LICENSE FEE.

 

      Sec. 742.  No corporation shall establish, maintain or operate a nonprofit service plan as authorized by the provisions of this chapter unless it has:

      1.  Procured a certificate of authority from the commissioner for the establishment, maintenance and operation of such plan.

      2.  Paid the annual certificate of authority fee in the amount of $100.

 

 

CERTIFICATE OF AUTHORITY FOR NONPROFIT HOSPITAL, MEDICAL OR DENTAL SERVICE PLAN: QUALIFICATIONS.

 

      Sec. 743.  The commissioner shall not issue or renew his certificate of authority to any corporation proposing to establish, maintain or operate a nonprofit hospital, medical or dental service plan until such corporation establishes:

      1.  If a nonprofit hospital service corporation, that it has entered into contracts with hospitals in the State of Nevada having an aggregate bed capacity sufficient to render the services contemplated to be furnished under the hospital service plan to persons in the State of Nevada.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1867 (Chapter 660, AB 416)ê

 

contracts with hospitals in the State of Nevada having an aggregate bed capacity sufficient to render the services contemplated to be furnished under the hospital service plan to persons in the State of Nevada.

      2.  That the hospital, medical or dental service contract proposed to be entered into by such corporation with those who may become subscribers is not such as will work a fraud or injustice upon such subscribers or any person.

      3.  That a schedule of the rates, dues, fees or other periodic charges to be paid by subscribers has been filed with the commissioner and the same are not such as will, after providing for such legal reserves as are required by section 744 of this act, result in profit to, or in the accumulation of excessive reserves or surpluses by, such corporation and are such as will enable such corporation to furnish or provide the hospital, medical or dental services which it proposes to make available to its beneficiaries and subscribers without impairment of its legal reserves and without a constant depletion of the assets of such corporation. A reserve or surplus over and above all approved and required reserves in an amount in excess of the average annual gross income of such corporation for the immediately preceding 3 calendar years shall be prima facie an excessive accumulation.

 

 

APPLICATION FOR, ISSUANCE OF CERTIFICATE OF AUTHORITY.

 

      Sec. 743.5.  1.  Application for a certificate of authority shall be filed with the commissioner in writing by the applicant corporation on forms furnished or accepted by the commissioner. The application shall set forth such information concerning the applicant and its qualifications and in other respects as the commissioner may reasonably require.

      2.  The application shall be accompanied by:

      (a) A copy of the applicant’s charter or articles of incorporation, certified by the public officer with whom the original is required to be filed in its state of domicile;

      (b) A copy of the applicant’s bylaws, certified by the corporate secretary;

      (c) A copy of each contract the applicant has made or proposed to make with hospitals or physicians in this state;

      (d) A copy of each service contract proposed to be issued to its subscribers in this state;

      (e) The schedule of rates, dues, fees or other periodical charges proposed to be charged for such service contracts; and

      (f) The fee for certificate of authority as specified in section 742 of this act.

      3.  If upon completion of the application the commissioner determines that the applicant is fully qualified and entitled thereto under this chapter, he shall promptly issue a certificate of authority to the applicant; otherwise, the commissioner shall refuse to issue the certificate of authority and give the applicant written notice of such refusal setting forth the grounds therefor.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1868 (Chapter 660, AB 416)ê

 

RESERVE FUND: MINIMUM AMOUNTS; COMPUTATION; CONTRACTS WITH HOSPITALS; PARTICIPATION OF PHYSICIANS.

 

      Sec. 744.  1.  No corporation subject to the provisions of this chapter shall establish, maintain or operate a hospital, medical or dental service plan unless it has and at all times maintains a reserve fund equal to the following minimum amounts in relation to the number of individuals entitled to hospital, medical or dental services under contracts issued by such corporation:

                                                                                                              Amount of

  Number of Individuals                                                                           Reserve

     Entitled to Benefits                                                                                Fund

2,500 or less......................................................................................   $10,000

2,501 to 3,500, inclusive................................................................     12,500

3,501 to 4,500, inclusive................................................................     15,000

4,501 to 5,500, inclusive................................................................     17,500

5,501 and above.............................................................................     20,000

 

      2.  In computing such reserve fund, the commissioner shall include the amounts agreed to be paid by contracting hospitals to the corporation or its equivalent value of hospital service to be rendered without charge by the contracting hospital to the hospital service corporation.

      3.  In addition to the reserve fund provided for in this chapter, the commissioner shall require every corporation subject to this chapter to make, and to maintain in force, such contracts with enough hospitals in the State of Nevada to be adequate, in the opinion of the commissioner, to provide care for all individuals entitled to hospital benefits in the State of Nevada under contracts issued by such corporation.

      4.  In addition, the commissioner shall require medical or dental service corporations to give evidence of the participation of a sufficient number of physicians or dentists, in his judgment, to render the medical or dental services specified under the contract.

 

 

INSOLVENCY; DETERMINATION OF FINANCIAL CONDITION.

 

      Sec. 745.  A corporation organized under this chapter shall be deemed to be insolvent if its reserve fund is impaired so as to be less than the amounts set forth in section 744 of this act. For the purposes of determining such insolvency and the financial condition of such a corporation, for the purposes of preparation of annual statements, and for all other purposes not otherwise expressly provided for in this chapter, such a corporation shall be subject to all requirements of the laws of the State of Nevada as to assets, liabilities and reserves which are applicable to mutual nonassessable legal reserve disability insurers.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1869 (Chapter 660, AB 416)ê

 

ANNUAL STATEMENT OF CONDITION AND AFFAIRS; EXAMINATIONS BY COMMISSIONER.

 

      Sec. 746.  1.  Every corporation subject to the provisions of this chapter shall annually:

      (a) On or before March 1, file in the office of the commissioner a statement verified by at least two of the principal officers of such corporation, showing its condition and affairs as of December 31 of the next-preceding calendar year. The statement shall be in such form as shall be required by the commissioner and shall contain statements relative to the matters required to be established as a condition precedent to maintaining or operating a nonprofit hospital, medical or dental service plan and to other matters which the commissioner may prescribe.

      (b) Pay the annual certificate of authority fee in the amount required by section 742 of this act.

      2.  The commissioner may examine, as often as he deems it desirable, the affairs of every corporation subject to the provisions of this chapter. He shall, if practicable, examine each such corporation at least once in every 3 years, and in any event, at least once in every 5 years, as to condition, fulfillment of its contractual obligations and compliance with applicable laws. For examining the financial condition of every such corporation the commissioner shall collect the actual expenses of the examination. Such expenses shall be paid by the corporation. The commissioner shall refuse to issue a certificate of authority or shall revoke his certificate of authority issued to any corporation which neglects or refuses to pay such expenses.

 

 

ACQUISITION COSTS AND ADMINISTRATIVE EXPENSES; EFFECT OF FINDING OF EXCESS COSTS.

 

      Sec. 747.  All acquisition costs in connection with the solicitation of subscribers to such hospital, medical or dental service plan shall at all times be subject to the approval of the commissioner, and the administrative expenses for any calendar year, excluding the first full year of operation, of any such corporation, including acquisition costs, shall be limited to 25 percent of the aggregate amount of rates, dues, fees and other periodic charges actually received during that year. If the commissioner finds that acquisition costs of any corporation operating under the provisions of this chapter are excessive, or that the administrative expenses exceed the amount above stated, such finding shall be sufficient ground to justify the commissioner in revoking his consent to the establishment, maintenance and operation by such corporation of the hospital, medical or dental service plan.

 

 

REQUIRED PROVISIONS OF CONTRACT.

 

      Sec. 748.  No hospital, medical or dental service contract shall be entered into between a corporation proposing to furnish or provide any one or more of the services authorized under this chapter and a subscriber:

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1870 (Chapter 660, AB 416)ê

 

one or more of the services authorized under this chapter and a subscriber:

      1.  Unless the entire consideration therefor is expressed in the contract.

      2.  Unless the times at which the benefits or services to the subscriber take effect and terminate are stated in a portion of the contract above the evidence of its execution.

      3.  If the contract purports to entitle more than one person to benefits or services, except for family hospital or medical or dental service contracts issued under section 749 of this act, group hospital, medical or dental service contracts issued under section 750 of this act, and blanket contracts issued under section 753 of this act.

      4.  Unless every printed portion and any endorsement or attached papers are plainly printed in type of which the face is not smaller than 10 points.

      5.  Except for group hospital or group medical or dental service contracts and blanket contracts issued under section 753 of this act, unless the exceptions of the contract are printed with greater prominence than the benefits to which they apply.

      6.  Except for group hospital or group medical or dental service contracts and blanket contracts issued under section 754 of this, unless, if any portion of such contract purports, by reason of the circumstances under which an illness, injury or disablement is incurred to reduce any service to less than that provided for the same illness, injury or disablement incurred under ordinary circumstances, such portion is printed in boldface type and with greater prominence than any other text of the contract.

      7.  If the contract contains any provisions purporting to make any portion of the charter, constitution or bylaws of such nonprofit corporation a part of the contract unless such portion is set forth in full in the contract.

      8.  Unless such contract for hospital service contains in blackface type, not less than 10 points, the following provisions:

 

       Nothing contained in this contract shall in any manner restrict or interfere with the right of any individual entitled to hospital service and care hereunder to select the contracting hospital or to make a free choice of his attending physician, who shall be the holder of a valid and unrevoked physician’s and surgeon’s license and who is a member of, or acceptable to, the attending staff and board of directors of the hospital in which such hospital services are to be provided and rendered.

 

 

FAMILY CONTRACTS.

 

      Sec. 749.  Family hospital or family medical or dental service contracts may be issued to a family consisting of an individual and one or more persons dependent upon him, or of one or more persons dependent upon an individual, and may include his spouse, whether or not dependent upon him. Such contracts shall contain a provision to the effect that to the family originally covered may be added from time to time all new members of the family group eligible for coverage and that the head of the family shall give the corporation notice of the addition to the family of any person eligible for coverage under the contracts.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1871 (Chapter 660, AB 416)ê

 

members of the family group eligible for coverage and that the head of the family shall give the corporation notice of the addition to the family of any person eligible for coverage under the contracts.

 

 

GROUP CONTRACTS WRITTEN UNDER MASTER CONTRACT: CONDITIONS REQUIRED FOR ISSUANCE.

 

      Sec. 750.  1.  Group hospital or group medical or dental service contracts written under a master hospital or medical or dental service contract may be issued to cover groups of two or more persons, formed for a purpose other than of obtaining insurance.

 

      Sec. 751.  [There is no section 751.]

 

 

GROUP MASTER SERVICE CONTRACT: REQUIRED PROVISIONS.

 

      Sec. 752.  Every group master hospital or group medical or dental service contract issued shall contain the following provisions:

      1.  A provision that the contract, the application of the employer, or executive officer or trustee of any association or trustees, and the individual applications, if any, of the employees or members covered shall constitute the entire contract between the parties, and that all statements made by the employer, or the executive officer, or trustee or trustees, or by the individual employee or member shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall be used in defense to a claim under the contract, unless it is contained in a written application.

      2.  A provision that the corporation will issue to the employer or to the executive officer or trustee of the association or to the trustees, for delivery to each of the employees or members who are covered under such contract, an individual certificate setting forth a statement as to the hospital or medical or dental service to which he is entitled.

      3.  A provision that to the group or class thereof originally covered shall be added from time to time all new employees of the employer or members of the association eligible to and applying for coverage in such group or class.

      4.  A statement that such contract is not in lieu of workmen’s compensation insurance.

      5.  Such provisions as may be promulgated by the commissioner from time to time.

 

 

BLANKET SERVICE CONTRACTS: ISSUANCE TO COLLEGE, SCHOOL, SCHOOL PERSONNEL; PUPILS NOT TO BE COMPELLED TO ACCEPT SERVICE.

 

      Sec. 753.  Blanket hospital or blanket medical or dental service contracts may be issued to a college or school or to the head or principal thereof or to the governing board of any school district providing for services to pupils of such schools when such services are required as the result of accident to such pupils while they are required to be in or on buildings or other premises of the school or district during the time they are required to be therein or thereon by reason of their attendance upon a college or regular day school or any regular day school of a school district or while being transported to and from school or other place of instruction.


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ê1971 Statutes of Nevada, Page 1872 (Chapter 660, AB 416)ê

 

services to pupils of such schools when such services are required as the result of accident to such pupils while they are required to be in or on buildings or other premises of the school or district during the time they are required to be therein or thereon by reason of their attendance upon a college or regular day school or any regular day school of a school district or while being transported to and from school or other place of instruction. No pupil shall be compelled to accept such service without the consent of his parent or guardian.

 

 

FILING AND APPROVAL OF CONTRACT AND CERTIFICATE FORM.

 

      Sec. 754.  A hospital or medical or dental service contract or certificate of individual coverage under a group contract shall not be issued or delivered in this state until a copy of the form thereof, and, if more than one class of risk is written, of the classification of risks, and the consideration payable by the subscriber pertaining thereto are filed with the commissioner and either:

      1.  Thirty days expires without notice from the commissioner after such a copy is filed; or

      2.  The commissioner gives his written approval prior to that time.

 

 

AUTHORITY TO PROVIDE GROUP SERVICE COVERAGE PRIOR TO APPROVAL OF FORM OF CONTRACT OR CERTIFICATE; CONDITIONS.

 

      Sec. 755.  1.  A corporation subject to the provisions of this chapter is permitted to provide group hospital or group medical or dental service coverage prior to the approval of the form of the contract or certificate if all the conditions of subsection 2 of this section are met prior thereto and if thereafter it acts as required by subsection 3.

      2.  The conditions referred to in subsection 1 are that:

      (a) The group is one eligible for coverage pursuant to the provisions of this chapter.

      (b) An executed memorandum has been or is concurrently delivered to the subscriber containing a provision that unless a group hospital or group medical or dental service certificate, the form of which has been approved by the commissioner, which is issued under a group hospital or group medical or dental service contract the form of which has been approved by the commissioner, and which embodies the coverage, has been issued and delivered to the subscriber within 90 days after the date on which the coverage is provided or agreed to be provided, the coverage provided pursuant to such memorandum terminates 120 days after such date. The memorandum shall contain a specification in either complete or summary form of:

             (1) The class or classes of employees eligible for coverage.

             (2) The benefits to be provided.

             (3) The exceptions and reductions to such benefits, if any.

      3.  A corporation subject to the provisions of this chapter providing coverage pursuant to this section shall:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1873 (Chapter 660, AB 416)ê

 

      (a) Within 60 days after the date on which the coverage is provided or agreed to be provided, submit to the commissioner for approval a form of a group hospital or group medical or dental service contract, and a form of a certificate of individual coverage, drafted to provide the coverage provided by such memorandum and to meet all requirements of law.

      (b) Make such revisions in the contract and certificate submitted as the commissioner may lawfully require.

      (c) Terminate such coverage in accordance with the provisions of paragraph (b) of subsection 2 of this section if approval of such contract and certificate is not secured within the time specified therein.

 

 

EXTENSIONS OF TIME; AUTOMATIC APPROVAL OF CONTRACT, CERTIFICATE.

 

      Sec. 756.  1.  Upon written request from the corporation subject to the provisions of this chapter filed within 50 days after the date on which the coverage is provided or agreed to be provided and upon proof satisfactory to him that the corporation is acting with due diligence and that hardship will result unless an extension is granted, the commissioner may extend the time set forth in paragraph (a) of subsection 3 of section 755 of this act for a period of not to exceed 30 days. Upon such extension, the corporation with the consent of the subscriber may amend the memorandum referred to in paragraph (b) of subsection 2 of section 755 of this act to extend the time within which the certificate must be issued and delivered to the subscriber to 30 days after the date to which the commissioner has extended the time within which a form of contract and certificate must be submitted to him for approval and to extend the date for termination of coverage to 30 days thereafter.

      2.  A contract and certificate submitted to the commissioner with a letter from the corporation stating that coverage has been provided in accordance with this section shall be automatically approved unless the commissioner disapproves the same within 30 days of the date of its submission to him.

 

 

SUSPENSION OR REVOCATION OF PERMISSION TO PROVIDE COVERAGE PRIOR TO APPROVAL OF FORM OF CONTRACT OR CERTIFICATE.

 

      Sec. 757.  The commissioner may suspend or revoke the permission granted by section 755 of this act if, after notice and hearing, he finds that the corporation has:

      1.  Misrepresented the conditional nature of the coverage.

      2.  Neglected or refused either to cancel or otherwise terminate such coverage within the time required by such section.

      3.  Delivered any such memorandum which did not comply with such section.

      4.  Shown a lack of diligence in making revisions in the contract or certificate necessary to obtain its approval by the commissioner.

      5.  Failed so often in so many important respects in drafting any such contract or certificate to conform to the applicable requirements of the insurance laws that a conclusion of lack of good faith or competency in drafting is reasonably justified.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1874 (Chapter 660, AB 416)ê

 

insurance laws that a conclusion of lack of good faith or competency in drafting is reasonably justified.

      6.  Circulated announcements of coverage to individual subscribers which failed to advise them of the conditional nature of the coverage.

      7.  In any other manner so negligently or carelessly handled the effecting of group hospital or group medical or dental service coverage under section 755 of this act or the administration thereof that the subscriber or the persons covered by the contract or certificate have been misled or exposed to the danger of loss.

 

 

DISAPPROVAL OF FORMS; ISSUANCE UNLAWFUL.

 

      Sec. 758.  If the commissioner notifies the corporation, in writing, that the filed form does not comply with the requirements of law, specifying the reasons for his opinion, it is unlawful for the corporation thereafter to issue any contract in such form.

 

 

RULES AND REGULATIONS; LIMITATIONS.

 

      Sec. 759.  The commissioner may after notice and hearing promulgate such reasonable rules and regulations, not inconsistent with the provisions of this chapter, relating to the substance, form and issuance of any contract covering the furnishing of hospital or medical or dental services and required to be approved by him as are necessary or desirable. Such rules and regulations shall not prohibit the use in any such contract or agreement of:

      1.  The word “subscriber” as a designation of the obligee.

      2.  The phrase “a family member” as a designation for the members of the family of the obligee.

      3.  The word “contract” or “agreement” as a designation for the undertakings of the hospital or medical or dental service corporation.

      4.  The phrases “furnishing of service” or “payment of benefits” as a designation for the commitments of the hospital or medical or dental service corporation.

      5.  The phrase “the service” as a designation for the corporate obligor in any such contract or agreement.

 

 

AGENT’S LICENSE REQUIRED.

 

      Sec. 760.  Any agent of a nonprofit hospital or medical or dental service corporation who acts as such in the solicitation, negotiation, procurement or making of a hospital service or medical or dental care contract shall be qualified, examined and licensed in the same manner and pay the same fees as provided for health insurance agents in sections 90 (fee schedule) and 191 to 238, inclusive, of this act.

 

 

CONTRACTS WITH AGENCIES, POLITICAL SUBDIVISIONS OF UNITED STATES, STATE OF NEVADA; ACCEPTANCE OF FUNDS; SUBCONTRACTS.

 

      Sec. 761.  Any nonprofit hospital or medical or dental service corporation organized and created under the provisions of this chapter and engaged in the operation of a hospital or medical or dental service plan may contract, without regard to the limitations in respect to contracts imposed by this chapter, with any agency, instrumentality or political subdivision of the United States of America or of the State of Nevada for the furnishing of hospital or medical or dental service and care and, in aid or furtherance of such contract, may accept, receive and administer, in trust, funds directly or indirectly made available by such agency, instrumentality or political subdivision.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1875 (Chapter 660, AB 416)ê

 

engaged in the operation of a hospital or medical or dental service plan may contract, without regard to the limitations in respect to contracts imposed by this chapter, with any agency, instrumentality or political subdivision of the United States of America or of the State of Nevada for the furnishing of hospital or medical or dental service and care and, in aid or furtherance of such contract, may accept, receive and administer, in trust, funds directly or indirectly made available by such agency, instrumentality or political subdivision. Any such nonprofit hospital or medical or dental service corporation may subcontract with any organization which has contracted with any agency, instrumentality or political subdivision of the United States of America or of the State of Nevada for the furnishing of medical, dental and hospital services, by which subcontract such hospital or medical or dental service corporation undertakes to furnish the hospital or medical or dental services required by the basic contract.

 

 

CORPORATION SUBJECT TO SAME TAXES, LICENSES, FEES, SUPERVISION AS DOMESTIC MUTUAL INSURER.

 

      Sec. 762.  Any nonprofit hospital or medical or dental service corporation subject to the provisions of this chapter shall be subject to the same taxes, licenses, fees and, to the extent not regulated by the provisions of this chapter, the same supervision as a mutual insurer organized under the laws of the State of Nevada.

 

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 763.  Nonprofit hospital and medical or dental service corporations are subject to the provisions of this chapter, and to the following provisions of this code, to the extent applicable and not in conflict with the express provisions of this chapter:

      1.  Sections 2 to 19, inclusive (scope and definitions);

      2.  Sections 21 to 55, inclusive (commissioner of insurance);

      3.  Sections 310 to 339, inclusive (trade practices and frauds); and

      4.  Sections 815 to 871, inclusive (delinquent insurers: conservation, rehabilitation and liquidation).

 

 

CHAPTER 33

 

MOTOR CLUBS

 

      Sec. 764.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 765 to 813, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 765.  This chapter constitutes and may be cited as the Motor Club Law.


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ê1971 Statutes of Nevada, Page 1876 (Chapter 660, AB 416)ê

 

TERMS TO BE GIVEN MEANINGS SET FORTH IN SECTIONS 767 TO 771.

 

      Sec. 766.  Except where the context otherwise requires, the terms used in this chapter shall be given the meanings set forth in sections 767 to 771, inclusive, of this act, but such meaning shall not, merely by reason of the enactment of sections 767 to 771, inclusive, of this act govern the interpretation of any other provision of this code.

 

 

ACTS CONSTITUTING SERVICE.

 

      Sec. 767.  Any act by a motor club for the purpose of rendering a service defined in this chapter constitutes such service, whether or not the service as defined is completed.

 

 

“CLUB AGENT” DEFINED.

 

      Sec. 768.  “Club agent” means a person other than the motor club itself who acts or aids in any manner in the solicitation, delivery or negotiation of any service contract, or of the renewal or continuance thereof.

 

 

“MOTOR CLUB” DEFINED.

 

      Sec. 769.  “Motor club” means any person who in consideration of dues, assessments or periodic payments of money, promises its members or subscribers to assist them in matters relating to travel and the operation, use and maintenance of a motor vehicle in the supply of features or services or reimbursement thereof, which may include:

      1.  Such services as community traffic safety services, travel and touring service, theft or reward service, map service, towing service, buying and selling service, discount service, emergency road service, bail bond service and legal fee reimbursement service in the defense of traffic offenses, none of which enumerated services, if provided by motor club itself, shall be subject to the insurance laws of this state.

      2.  The purchase of accidental injury and death benefits insurance coverage, as provided by applicable statutes, by an insurer authorized to do business in this state.

      3.  Other features or services not deemed by the commissioner to constitute the business of insurance.

 

 

“PERSON” DEFINED.

 

      Sec. 770.  “Person” means any person, firm, partnership, corporation or association which conducts a motor club business in this state.

 

 

“SERVICE CONTRACT” DEFINED.

 

      Sec. 771.  “Service contract” means a written contract whereby any person promises for a consideration to render, furnish or procure motor club service for any other person.


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ê1971 Statutes of Nevada, Page 1877 (Chapter 660, AB 416)ê

 

      Secs. 772 to 783.  [There are no sections 772 to 783, inclusive.]

 

DEPOSIT AND MAINTENANCE OF SECURITY: FORM; AMOUNT.

 

      Sec. 784.  1.  A person shall not render or agree to render motor club service without first depositing and thereafter continuously maintaining security in one of the following forms with the commissioner:

      (a) The sum of $100,000 in cash.

      (b) Securities approved by the commissioner, having a market value of $100,000 and being of a type approved by the commissioner and legal for investment by admitted insurers issuing nonassessable policies on a reserve basis.

      (c) A surety bond in the principal sum of $100,000 with an admitted surety insurer as surety.

      2.  In lieu of the deposit required by subsection 1, a foreign or alien motor club may deposit evidence satisfactory to the commissioner that it has on deposit with an officer of a state of the United States of America, authorized by the law of such state to accept such deposit:

      (a) Securities which meet the requirements of paragraph (b) of subsection 1 of at least a like amount for the benefit and security of all members and creditors of such motor club; or

      (b) A surety bond, in the principal sum of $100,000, which meets the requirements of section 785 of this act, issued by a bonding company authorized to do business in the State of Nevada and in the state where the bond is posted.

 

 

PURPOSE, CONDITIONS OF DEPOSIT, SECURITY.

 

      Sec. 785.  Such security shall:

      1.  Be for the protection, use and benefit of all persons whose applications for membership in a motor club have been accepted by such club or its representative.

      2.  Be subject to the following conditions and, if a bond, shall be so expressly conditioned:

      (a) The club will faithfully furnish and render to such persons any and all of the motor club services sold or offered for sale by it.

      (b) The club will pay any fines, fees or penalties imposed upon it under or pursuant to this chapter.

 

 

WHO MAY SUE ON BOND.

 

      Sec. 786.  If such bond or evidence that such bond is filed in another state is filed, any person defrauded or injured by any wrongful act, misrepresentation or failure on the part of a motor club with respect to the selling or rendering of any of its services may bring suit on such bond in his own name; but the aggregate liability of the surety for all such suits shall, in no event, exceed the sum of such bond.


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ê1971 Statutes of Nevada, Page 1878 (Chapter 660, AB 416)ê

 

DEPOSIT IN LIEU OF BOND: CONDITIONS; EXECUTION ON JUDGMENTS AGAINST CLUB.

 

      Sec. 787.  A deposit of cash or securities, in lieu of such bond, shall be subject to the conditions applying to the bond and is also subject to execution on judgments against the club.

 

 

NAME OF CLUB: SUBMISSION TO COMMISSIONER; REJECTION OF SIMILAR NAME.

 

      Sec. 788.  The name of a motor club shall be submitted to the commissioner for approval pursuant to section 790 of this act, before the commencement of business under the provisions of this chapter. The commissioner may reject any name so submitted when the proposed name would interfere with the transactions of a motor club already doing business in this state or is so similar to one already appropriated as to confuse or is likely to mislead the public in any respect. In such case a name not liable to such objections shall be chosen.

 

 

NECESSITY FOR CERTIFICATE.

 

      Sec. 789.  A person shall not render or agree to render motor club service in this state without first procuring from the commissioner a certificate of authority so to act.

 

 

PREREQUISITES TO ISSUANCE OF CERTIFICATE.

 

      Sec. 790.  The commissioner shall not issue a certificate of authority to any motor club until:

      1.  It files with him the following:

      (a) A formal application for the certificate in such form and detail as the commissioner requires, executed under oath by its president or other principal officer.

      (b) A certified copy of its charter or articles of incorporation and its bylaws.

      2.  It pays to the commissioner an annual license fee of $100.

      3.  It deposits the required cash, securities, bond or evidence of such deposit in another state as provided in section 784 of this act with the commissioner.

      4.  Its name is approved by the commissioner under the provisions of section 788 of this act.

 

 

EXPIRATION.

 

      Sec. 791.  Every certificate of authority issued to a motor club shall expire annually on July 1, of each year, unless sooner revoked or suspended.


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ê1971 Statutes of Nevada, Page 1879 (Chapter 660, AB 416)ê

 

REVOCATION OR SUSPENSION: GROUNDS; NOTICE TO PUBLIC.

 

      Sec. 792.  1.  The commissioner shall revoke or suspend the certificate of authority of a motor club whenever, after a hearing, he finds in accordance with the procedure provided in sections 48 to 54, inclusive, of this act that any of the following circumstances exist:

      (a) The club has violated any provision of this chapter.

      (b) It is insolvent.

      (c) Its assets are less than its liabilities.

      (d) It or its officers refuse to submit to an examination.

      (e) It is transacting business fraudulently.

      2.  The commissioner shall give notice of such revocation or suspension to the public in such manner as he deems proper.

 

 

EXAMINATION.

 

      Sec. 793.  1.  Every motor club shall be subject to examination by the commissioner in the manner and under the conditions provided for examination of insurers contained in sections 40 to 46, inclusive, of this act.

      2.  The expense of such examination shall be paid by the motor club.

 

 

COMMISSIONER TO BE APPOINTED ATTORNEY UPON WHOM PROCESS MAY BE SERVED; DUTIES OF COMMISSIONER.

 

      Sec. 794.  1.  Every motor club desiring to transact business in this state shall file with the commissioner a duly executed instrument whereby the motor club shall appoint and constitute the commissioner and his successor or successors in office the true and lawful attorney of such motor club upon whom all lawful process in any action or legal proceeding against it on a contract issued or cause of action arising in this state may be served, and shall agree that any such lawful process against it which may be served upon its attorney as provided in this section shall be of the same force and validity as if served upon the motor club and that the authority thereof shall continue in force irrevocably so long as any liability of the motor club in the state remains outstanding. The fee for filing such power of attorney shall be $5.

      2.  Process authorized by such instrument or by any similar instrument executed prior to the effective date of the act shall be served in the manner and under the conditions provided in section 82 of this act.

 

 

MEMBERSHIP, SERVICE INFORMATION FOR MEMBERS; SERVICE CONTRACT.

 

      Sec. 795.  1.  Every motor club shall furnish to its members a service contract or a membership card and the following information:


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ê1971 Statutes of Nevada, Page 1880 (Chapter 660, AB 416)ê

 

      (a) The exact name of the motor club;

      (b) The exact location of the motor club’s home office, and of its usual place of business in this state, giving street, number and city; and

      (c) A description of the services or benefits to which the member is entitled.

      2.  A completed application for membership and the description of services shall constitute the service contract.

 

 

APPROVAL OF MEMBERSHIP, SERVICE FORMS.

 

      Sec. 796.  1.  No motor club shall issue for delivery or deliver in this state any evidence of membership, or statement of services and benefits, or service contract until the form thereof has been filed with and approved in writing by the commissioner. The commissioner shall approve any such form found by him to be in compliance with law and free of ambiguous, inequitable and misleading provisions.

      2.  Every motor club having met the requirements of subsection 1 shall thereafter file with the commissioner every revision or modification of any document required in subsection 1. Such revision or modification shall be effective when filed and shall be deemed to meet the requirements of this chapter until disapproved by the commissioner.

 

 

REQUIRED PROVISIONS.

 

      Sec. 797.  A service contract as defined in section 771 of this act shall not be executed, issued or delivered in this state unless it contains the following:

      1.  The exact corporate or other name of the club.

      2.  The exact location of its home office and of its usual place of business in this state, giving street number and city.

      3.  A provision that the contract may be canceled at any time by either the club or the holder, and that the holder will, if he has actually paid the consideration, thereupon be entitled to the unused portion of the consideration paid for such contract, calculated on a pro rata basis over the period of the contract, without any deductions.

      4.  A provision plainly specifying:

      (a) The services promised.

      (b) That the holder will not be required to pay any sum, in addition to the amount specified in the contract, for any services thus specified.

      (c) The territory wherein such services are to be rendered.

      (d) The date when such service will commence.

      5.  A statement in not less than 14-point modern type at the head of the contract stating, “This is not an insurance contract.”

 

 

SOLICITATION FOR CLUB WITHOUT CERTIFICATE OF AUTHORITY.

 

      Sec. 798.  A person shall not solicit or aid in the solicitation of another person to purchase a service contract issued by a club not having a certificate of authority procured pursuant to this chapter.


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ê1971 Statutes of Nevada, Page 1881 (Chapter 660, AB 416)ê

 

MISREPRESENTATION.

 

      Sec. 799.  A club or an officer or agent thereof shall not in any manner misrepresent the terms, benefits or privileges of any service contract issued or to be issued by it.

 

 

CONTRACT CONTRARY TO PROVISIONS OF LAW VALID

 

      Sec. 800.  Any service contract made, issued or delivered contrary to any provision of this chapter, shall nevertheless be valid and binding on the club.

 

 

NECESSITY FOR AGENT’S LICENSE.

 

      Sec. 801.  No person shall act as a club agent in this state without first procuring a license so to act from the commissioner.

 

 

APPLICATION FOR LICENSE: CONTENTS.

 

      Sec. 802.  1.  Application for a license as a club agent shall be made to the commissioner upon forms prescribed and furnished by him. As a part of, or in connection with, any application, the applicant shall furnish information concerning his identity, personal history, experience, business record and other pertinent facts which the commissioner may reasonably require.

      2.  If the applicant is a firm, partnership or corporation, the application, in addition to the requirements of subsection 1, shall:

      (a) Contain the names of all members and officers of the firm, partnership or corporation; and

      (b) Designate who is to exercise the powers to be conferred by the license on such firm, partnership or corporation.

      3.  The commissioner shall require each individual of a firm, partnership or corporation to furnish information to him as though applying for an individual license.

      4.  Any person willfully misrepresenting any fact required to be disclosed in any application shall be subject to the penalties provided in section 812 of this act.

 

 

CONDITIONS FOR ISSUANCE, RENEWAL OF LICENSE.

 

      Sec. 803.  For the protection of the people of this state, the commissioner shall not:

      1.  Issue or renew any club agent’s license except in compliance with this chapter.

      2.  Issue or renew any club agent’s license to, or to be exercised by, any person found by him to be untrustworthy or incompetent, or who has not established to the satisfaction of the commissioner that he is qualified therefor in accordance with this chapter.


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ê1971 Statutes of Nevada, Page 1882 (Chapter 660, AB 416)ê

 

QUALIFICATIONS FOR LICENSE.

 

      Sec. 804.  The commissioner shall license as a club agent only an individual who has otherwise complied with this chapter, and who has furnished evidence satisfactory to the commissioner that he:

      1.  Is at least 21 years of age.

      2.  Has been a bona fide resident of this state or is a resident of a state which will permit residents of this state to act as club agents in such other state.

      3.  Is a trustworthy person with a good reputation.

 

 

FORM, CONTENTS OF LICENSE.

 

      Sec. 805.  The commissioner shall prescribe the form of the club agent’s license, but it shall contain:

      1.  The name of the licensee and his business address.

      2.  The date of issuance and the date of expiration.

      3.  The name of the represented motor club.

 

 

TERM OF LICENSE: FEE.

 

      Sec. 806.  1.  Club agents’ licenses shall be renewable on July 1 of each year.

      2.  The license fee is $5 a year.

 

 

GROUNDS FOR SUSPENSION, REVOCATION, REFUSAL TO RENEW LICENSE.

 

      Sec. 807.  The commissioner may suspend, revoke or refuse to renew any club agent’s license issued under this chapter for any cause specified in any other provision of this chapter, or for any of the same applicable grounds and in the manner provided for agents of insurers in sections 234 to 236, inclusive, of this act.

 

 

REVOCATION, SUSPENSION, REFUSAL OF LICENSES OF FIRMS, PARTNERSHIPS AND CORPORATIONS.

 

      Sec. 808.  The club agent’s license of any firm, partnership or corporation may be suspended, revoked or refused for any cause which relates to any individual designated in the license to exercise its powers.

 

 

SURRENDER OF LICENSE CERTIFICATE AFTER REVOCATION, SUSPENSION.

 

      Sec. 809.  The holder of any club agent’s license which has been revoked or suspended shall immediately surrender the license certificate to the commissioner.

 

 

      Sec. 810.  [There is no section 810.]


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ê1971 Statutes of Nevada, Page 1883 (Chapter 660, AB 416)ê

 

EXEMPTIONS.

 

      Sec. 811.  This chapter does not apply to:

      1.  A duly authorized attorney at law acting in the usual course of his profession.

      2.  Any authorized insurer.

      3.  Any motor carrier association providing one or more of the services described in section 769 of this act to its members.

 

 

PENALTIES.

 

      Sec. 812.  1.  Any person violating the provisions of sections 784 to 787, inclusive, of this act is guilty of a gross misdemeanor.

      2.  Any person violating any other provisions of sections 765 to 811, inclusive, of this act, other than sections 784 to 787, inclusive, of this act, is guilty of a misdemeanor.

 

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 813.  Motor clubs are also subject, in the same manner as insurers, to the following provisions of this code to the extent reasonably applicable:

      1.  Sections 2 to 19, inclusive (scope and definitions);

      2.  Sections 21 to 55, inclusive (commissioner of insurance);

      3.  Section 229 (fiduciary funds);

      4.  Sections 298 to 308, inclusive (unauthorized insurers);

      5.  Sections 310 to 339, inclusive (trade practices and frauds); and

      6.  Sections 815 to 871, inclusive (delinquent insurers).

 

 

CHAPTER 34

 

DELINQUENT INSURERS: CONSERVATION, REHABILITATION AND LIQUIDATION

 

      Sec. 814.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 815 to 871, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 815.  This chapter constitutes and may be cited as the Insurers Conservation, Rehabilitation and Liquidation Law.

 

 

SCOPE OF PROVISIONS.

 

      Sec. 816.  The applicable provisions of this chapter apply to:

      1.  All insurers authorized to transact insurance in this state;

      2.  All insurers having policy holders resident in this state;

      3.  All insurers against whom a claim under an insurance contract may arise in this state;


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ê1971 Statutes of Nevada, Page 1884 (Chapter 660, AB 416)ê

 

      4.  All persons in the process of organization, or holding themselves out as organizing, or proposing to organize in this state for the purpose of becoming an insurer; and

      5.  All other persons to whom such provisions are otherwise expressly made applicable by law.

 

 

DEFINITIONS.

 

      Sec. 817.  As used in this chapter, unless the context otherwise requires, the words and terms defined in sections 818 to 832, inclusive, of this act shall have the meanings ascribed to them in sections 818 to 832, inclusive, of this act.

 

 

“ANCILLARY STATE” DEFINED.

 

      Sec. 818.  “Ancillary state” means any state other than a domiciliary state.

 

 

“CREDITOR” DEFINED.

 

      Sec. 819.  “Creditor” means a person having a claim, whether matured or unmatured, liquidated or unliquidated, secured or unsecured, or absolute, fixed or contingent.

 

 

“DELINQUENCY PROCEEDING” DEFINED.

 

      Sec. 820.  “Delinquency proceeding” means:

      1.  Any proceeding commenced against an insurer pursuant to this chapter for the purpose of conserving, rehabilitating, reorganizing or liquidating the insurer; or

      2.  The summary proceedings authorized by sections 864 to 870, inclusive, of this act.

 

 

“DOMICILIARY STATE” DEFINED.

 

      Sec. 821.  “Domiciliary state” means the state in which an insurer is incorporated or organized or, as to an alien insurer, the state in which at the commencement of delinquency proceedings the larger amount of the insurer’s assets are held in trust or on deposit for the benefit of policy holders and creditors in the United States of America.

 

 

“FOREIGN COUNTRY” DEFINED.

 

      Sec. 822.  “Foreign country” means territory not in any state.

 

 

“GENERAL ASSETS” DEFINED.

 

      Sec. 823.  1.  “General assets” means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum secured thereby.


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ê1971 Statutes of Nevada, Page 1885 (Chapter 660, AB 416)ê

 

class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum secured thereby.

      2.  Assets held in trust or on deposit for the security or benefit of all policy holders or all policy holders and creditors in the United States of America are deemed general assets.

 

 

“IMPAIRMENT” DEFINED.

 

      Sec. 824.  “Impairment” exists as to:

      1.  A stock insurer when the insurer’s assets do not at least equal the sum of its liabilities, including also its paid-in capital stock account and the minimum surplus required to be maintained under this code for authority to transact the kinds of insurance transacted.

      2.  A mutual insurer when the insurer’s assets do not at least equal the sum of the insurer’s liabilities and the minimum surplus required under this code to be maintained for authority to transact the kinds of insurance transacted.

 

 

“INSOLVENCY” DEFINED.

 

      Sec. 825.  “Insolvency” exists:

      1.  When the insurer fails to meet its obligations as they mature; or

      2.  When a stock insurer’s assets are less than the sum of its liabilities and its paid-in capital stock account; or

      3.  When a mutual insurer’s assets are less than the sum of its liabilities and the minimum basic surplus required to be maintained by the insurer under this code for authority to transact the kinds of insurance transacted; or

      4.  As otherwise expressly provided in this code.

 

 

“INSURER” DEFINED.

 

      Sec. 826.  “Insurer,” in addition to persons so defined under section 11 of the act, includes also persons purporting to be insurers, or organizing or holding themselves out as organizing in this state for the purpose of becoming insurers.

 

 

“PREFERRED CLAIM” DEFINED.

 

      Sec. 827.  “Preferred claim” means any claim accorded priority of payment from the insurer’s general assets under applicable law.

 

 

“RECEIVER” DEFINED.

 

      Sec. 828.  “Receiver” means a receiver, liquidator, rehabilitator or conservator, as the context requires.

 

 

“RECIPROCAL STATE” DEFINED.

 

      Sec. 829.  “Reciprocal state” means any state other than this state in which in substance and effect the provisions of the Uniform Insurers Liquidation Act, are in force, including provisions requiring that the commissioner of insurance or the equivalent insurance supervisory officer be the receiver of a delinquent insurer, and in which effective provisions exist for avoidance of fraudulent conveyances and unlawful preferential transfers.


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ê1971 Statutes of Nevada, Page 1886 (Chapter 660, AB 416)ê

 

Liquidation Act, are in force, including provisions requiring that the commissioner of insurance or the equivalent insurance supervisory officer be the receiver of a delinquent insurer, and in which effective provisions exist for avoidance of fraudulent conveyances and unlawful preferential transfers.

 

 

“SECURED CLAIM” DEFINED.

 

      Sec. 830.  1.  “Secured claim” means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow or otherwise, but not including special deposit claims or claims against general assets.

      2.  “Secured claim” includes claims which have become liens upon specific assets through judicial process and not invalidated.

 

 

“SPECIAL DEPOSIT CLAIM” DEFINED.

 

      Sec. 831.  “Special deposit claim” means any claim secured by a deposit made under a statute for the security or benefit of a limited class or classes of persons, but not including any general assets.

 

 

“STATE” DEFINED.

 

      Sec. 832.  “State” has the meaning ascribed to it in section 13 of this act.

 

 

JURISDICTION OF DELINQUENCY PROCEEDINGS; VENUE; EXCLUSIVENESS OF REMEDY; APPEAL.

 

      Sec. 833.  1.  The district court shall have original jurisdiction of delinquency proceedings under sections 815 to 870, inclusive, of this act, and any court with jurisdiction is authorized to make all necessary or proper orders to carry out the purposes of such sections.

      2.  The venue of delinquency proceedings against a domestic insurer shall be in the county in this state of the insurer’s principal place of business or, if the principal place of business is located in another state, in any county in this state selected by the commissioner for the purpose. The venue of proceedings against foreign insurers shall be in any county in this state selected by the commissioner for the purpose.

      3.  At any time after commencement of a proceeding, the commissioner or any other party may apply to the court for an order changing the venue of, and removing, the proceeding to any other county of this state in which the proceeding may most conveniently, economically and efficiently be conducted.

      4.  No court shall have jurisdiction to entertain, hear or determine any petition or complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation or receivership of any insurer, or for an injunction or restraining order or other relief preliminary, incidental or relating to such proceedings, other than in accordance with sections 815 to 870, inclusive, of this act.

      5.  An appeal shall lie to the supreme court from any court granting or refusing rehabilitation, liquidation, conservation or receivership, and from every order in delinquency proceedings having the character of a final order as to the particular portion of the proceedings embraced therein.


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ê1971 Statutes of Nevada, Page 1887 (Chapter 660, AB 416)ê

 

or refusing rehabilitation, liquidation, conservation or receivership, and from every order in delinquency proceedings having the character of a final order as to the particular portion of the proceedings embraced therein.

 

 

JURISDICTION OVER RELATED PERSONS AND TRANSACTIONS.

 

      Sec. 834.  1.  A court of this state in which an order of rehabilitation or liquidation has been entered in delinquency proceedings against a domestic insurer or alien insurer domiciled in this state, has jurisdiction also over persons, served as provided in subsection 2, in an action brought by the insurer’s receiver on or arising out of such obligation or relationship, as follows:

      (a) Persons obligated to the insurer as a result of agency or brokerage or transactions between such persons and the insurer;

      (b) Reinsurers of the insurer and their representatives; and

      (c) Past or present officers, managers, trustees, directors, organizers and promoters of the insurer, and other persons in positions of similar responsibility with the insurer.

      2.  As to those of such persons who are in this state, personal service of process shall be made as in other civil actions. As to those of such persons who cannot be found in this state at the time process is to be served, personal service of process shall be made thereon by a public officer of the jurisdiction in which such person may be found, in the same manner as personal service of process is required to be made within this state under the Nevada Rules of Civil Procedure; and the affidavit or certificate under oath setting forth the facts of such service shall be filed in the court in this state in which the action is pending.

 

 

GROUNDS FOR CONSERVATION OR REHABILITATION OF DOMESTIC INSURER OR DOMICILED ALIEN INSURER.

 

      Sec. 835.  The commissioner may petition for an order directing him to conserve the assets of or to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds:

      1.  On any ground for liquidation of the insurer under section 836 of this act, if the commissioner believes conservation or rehabilitation possible without substantial increase of risk to creditors, policy holders or the public;

      2.  If the insurer is in unsound condition, or is using, or has been subject to such methods and practices in the conduct of its business as to render its further transaction of insurance presently or prospectively hazardous to its policy holders, or creditors, or the public;

      3.  If the insurer’s solvency is endangered by illegal action;

      4.  For material falsification of the insurer’s records, reports or financial condition;

      5.  If the commissioner finds after hearing that any individual exercising executive power with respect to or otherwise materially influencing or controlling the insurer, directly or indirectly, is dishonest or untrustworthy in matters affecting the insurer, and has not been or cannot effectively and permanently be removed from such power, influence or control;

 


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ê1971 Statutes of Nevada, Page 1888 (Chapter 660, AB 416)ê

 

or controlling the insurer, directly or indirectly, is dishonest or untrustworthy in matters affecting the insurer, and has not been or cannot effectively and permanently be removed from such power, influence or control;

      6.  For unlawful concealment or removal by the insurer of any of its records or assets;

      7.  For failure of the insurer, or its parent corporation, or subsidiary or affiliated person controlled by the insurer, to submit its books, accounts, records and affairs to the reasonable inspection or examination of the commissioner or his examiner as authorized under this code;

      8.  If any individual exercising any executive authority in the affairs of the insurer, or parent corporation, or subsidiary or affiliated person has refused to be examined under oath, by the commissioner or his examiner thereunto duly authorized, whether within this state or otherwise, concerning the pertinent affairs of the insurer, or parent corporation, or subsidiary, or affiliated person, or if examined under oath refuses to divulge pertinent information reasonably known to him;

      9.  For failure of officers, employees and other representatives of the insurer, or parent corporation, or subsidiary, or affiliated person to comply promptly with the reasonable requests of the commissioner or his examiner for the purposes of and during the conduct of any examination;

      10.  That a deadlock exists in the insurer’s board of directors relative to the general management of the insurer’s affairs, that the insurer’s stock holders or members (as to a mutual insurer) are unable to break the deadlock, and that the same threatens irreparable injury to the insurer, or its creditors, or its policy holders, or to the public;

      11.  If the insurer has transferred or attempted to transfer substantially its entire property or business, or has entered into any transaction the effect of which is to merge or consolidate substantially its entire property or business in that of any other insurer, without first having obtained the written approval of the commissioner as required under this code;

      12.  If the controlling stock of the insurer has been transferred to others without compliance with the requirements of section 612 of this act (transfer of controlling stock), except where such transfer is by testamentary bequest or inheritance;

      13.  If the insurer has willfully violated its charter or a law of this state, or has willfully exceeded its corporate powers;

      14.  If the insurer has requested or consented to conservation or rehabilitation by a vote or written authorization of a majority of its directors, or stock holders, or members (as to mutual insurers); or

      15.  If the insurer has failed to pay any valid judgment against it within 30 days after the judgment became final.

 

 

GROUNDS FOR LIQUIDATION OF DOMESTIC INSURER OR DOMICILED ALIEN INSURER.

 

      Sec. 836.  The commissioner may apply to the court for an order appointing him as receiver (if his appointment as receiver is not then in effect) and directing him to liquidate the business of a domestic insurer or of the United States branch of an alien insurer having trusteed assets in this state, whether or not there has been a prior order directing him to conserve or rehabilitate the insurer, upon any one or more of the following grounds:

 


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ê1971 Statutes of Nevada, Page 1889 (Chapter 660, AB 416)ê

 

of the United States branch of an alien insurer having trusteed assets in this state, whether or not there has been a prior order directing him to conserve or rehabilitate the insurer, upon any one or more of the following grounds:

      1.  That the insurer has failed to cure an impairment of surplus, or capital, or assets within the time allowed therefor by any lawful order of the commissioner;

      2.  That the insurer is insolvent, or has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute or is the object, in this state or elsewhere, of any action or proceeding to liquidate its business or affairs, or to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian or sequestrator under any law except this code. This subsection does not apply to the conversion of a stock insurer to an ordinary business corporation as authorized under section 610 of this act, or to voluntary dissolution of the insurer pursuant to section 577 of this act;

      3.  That the insurer has ceased for a period of 1 year to transact insurance business;

      4.  If a proposed insurer has not completed its organization and obtained a certificate of authority as an insurer within the time allowed therefor under any applicable solicitation permit issued by the commissioner;

      5.  That efforts to rehabilitate the insurer and remove the causes or adverse effects thereof for which rehabilitation was instituted have failed despite all reasonable efforts by the commissioner, or cannot be continued without material increase of risk of loss to the insurer’s creditors or policy holders; or

      6.  If the insurer has requested or consented to liquidation by a vote or written authorization of a majority of its directors, or stock holders, or members (if a mutual insurer).

 

 

GROUNDS FOR CONSERVATION: FOREIGN AND ALIEN INSURERS.

 

      Sec. 837.  The commissioner may apply to the court for an order appointing him as receiver or ancillary receiver, and directing him to conserve the assets within this state, of a foreign or alien insurer:

      1.  Upon any of the applicable grounds specified in sections 835 or 836 of this act; or

      2.  Upon the ground that the insurer’s property has been sequestrated in its domiciliary sovereignty or in any other sovereignty; or

      3.  In the case of an alien insurer, upon the ground that the insurer has failed to make good an impairment of its trusteed funds within the time required therefor by order of the commissioner.

 

 

GROUNDS FOR ANCILLARY LIQUIDATION: FOREIGN AND ALIEN INSURERS.

 

      Sec. 838.  The commissioner may apply to the court for an order appointing him as ancillary receiver of and directing him to liquidate the business of a foreign or alien insurer having assets, business or claims in this state upon the appointment in the domiciliary sovereignty of such insurer of a receiver, liquidator, conservator, rehabilitator or other officer by whatever name called for the purpose of liquidating the business of the insurer.


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ê1971 Statutes of Nevada, Page 1890 (Chapter 660, AB 416)ê

 

business of a foreign or alien insurer having assets, business or claims in this state upon the appointment in the domiciliary sovereignty of such insurer of a receiver, liquidator, conservator, rehabilitator or other officer by whatever name called for the purpose of liquidating the business of the insurer.

 

 

COMMENCEMENT OF PROCEEDING.

 

      Sec. 839.  1.  The commissioner shall commence a delinquency proceeding authorized under sections 815 to 871, inclusive, of this act, the attorney general representing him, by filing a petition in a court of proper jurisdiction praying for appointment of the commissioner as receiver of the insurer.

      2.  Upon the filing of the petition the court shall issue an order directing the insurer to appear in court on the day fixed in the order and show cause why the petition should not be granted. Unless good cause is shown for a shorter period, the order shall require the insurer so to show cause not less than 15 days nor more than 30 days from the date of the order.

      3.  The order to show cause and service thereof on the insurer shall constitute due and legal process and shall be in lieu of any other process otherwise provided by law or court rule.

 

 

SERVICE OF PROCESS.

 

      Sec. 840.  A certified copy of any order to show cause issued under section 839 of this act, and a copy of the petition upon which the order is made shall be served upon the insurer by delivering the same to its president, vice president, secretary, treasurer, director, resident agent for service or process, or to its managing agent, or attorney-in-fact (if a reciprocal insurer). If no such officer or functionary can readily be found in this state, then such process may be served upon the insurer by service thereof upon the commissioner pursuant to sections 81 and 82 of this act, and in which case the additional 10 days provided by subsection 3 of section 82 of this act shall not apply.

 

 

INJUNCTIONS.

 

      Sec. 841.  1.  Upon application by the commissioner for such an order to show cause, or at any time thereafter, the court may without notice issue an injunction restraining the insurer, its officers, directors, stock holders, members, subscribers, agents and all other persons from the transaction of its business or the waste or disposition of its property until the further order of the court.

      2.  The court may at any time during a proceeding under sections 815 to 870, inclusive, of this act issue such other injunctions or orders as may be deemed necessary to prevent interference with the commissioner or the proceeding, or waste of the assets of the insurer, or the commencement or prosecution of any actions, or the obtaining of preferences, judgments, attachments or other liens, or the making of any levy against the insurer or against its assets or any part thereof.


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ê1971 Statutes of Nevada, Page 1891 (Chapter 660, AB 416)ê

 

      3.  Notwithstanding any other provision of law, no bond shall be required of the commissioner as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.

 

 

UNIFORM INSURERS LIQUIDATION ACT: COMPOSITION; SEVERABILITY; INTERPRETATION.

 

      Sec. 842.  1.  This section, sections 817 to 832, inclusive, (definitions) and sections 843 to 848, inclusive, of this act comprise and may be cited as the Uniform Insurers Liquidation Act.

      2.  If any provision of the Uniform Insurers Liquidation Act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of the act are declared to be severable.

      3.  The Uniform Insurers Liquidation Act shall be so interpreted as to effectuate its general purpose to make uniform the laws of those states which enact it. To the extent that its provisions, when applicable, conflict with other provisions of this code, the provisions of the Uniform Insurers Liquidation Act shall control.

 

 

CONDUCT OF DELINQUENCY PROCEEDINGS AGAINST DOMESTIC INSURERS AND CERTAIN ALIEN INSURERS.

 

      Sec. 843.  1.  Whenever under this chapter a receiver is to be appointed in delinquency proceedings for an insurer, the court shall appoint the commissioner as such receiver. The court shall order the commissioner forthwith to take possession of the assets of the insurer and to administer the assets under the orders of the court.

      2.  As a domiciliary receiver, the commissioner shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books and records of the insurer, wherever located, as of the date of entry of the order directing him to conserve, rehabilitate or liquidate a domestic insurer or to liquidate the United States branch of an alien insurer domiciled in this state, and he shall have the right to recover the same and reduce the same to possession; but ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are prescribed in this chapter for ancillary receivers appointed in this state as to assets located in this state.

      3.  The filing or recording of the order directing possession to be taken, or a certified copy thereof, in any office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale or other evidence of title duly filed or recorded.

      4.  The commissioner as domiciliary receiver shall be responsible for the proper administration of all assets coming into his possession or control. The court may at any time require a bond from him or his deputies if deemed desirable for the protection of such assets.

      5.  Upon taking possession of the assets of an insurer, the domiciliary receiver shall immediately proceed to conduct the business of the insurer or to take such steps as are authorized by this chapter for the purpose of rehabilitating, liquidating or conserving the affairs or assets of the insurer.


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ê1971 Statutes of Nevada, Page 1892 (Chapter 660, AB 416)ê

 

receiver shall immediately proceed to conduct the business of the insurer or to take such steps as are authorized by this chapter for the purpose of rehabilitating, liquidating or conserving the affairs or assets of the insurer.

      6.  In connection with delinquency proceedings, the commissioner may appoint one or more special deputy commissioners to act for him and he may employ such counsel, clerks and assistants as he deems necessary. The compensation of the special deputies, counsel, clerks or assistants and all expenses of taking possession of the insurer and of conducting the proceedings shall be fixed by the receiver and shall be paid out of the funds or assets of the insurer. Within the limits of duties imposed upon them, special deputies shall possess all the powers given to and, in the exercise of those powers, shall be subject to all of the duties imposed upon the receiver with respect to such proceedings.

      7.  During such receivership the commissioner shall file in the court, at regular intervals not less frequently than quarterly, his true reports in summary form of the insurer’s affairs under the receivership, and of progress being made in accomplishing the objectives of the receivership. All such reports, together with such additional or special reports as the court may reasonably require, shall be subject to review by the court; and all actions of the receiver therein reported shall be subject to the court’s approval, but the court shall not withhold approval or disapprove any such action unless found by the court after a hearing thereon in open court to be unlawful, arbitrary or capricious.

 

 

CONDUCT OF DELINQUENCY PROCEEDINGS AGAINST FOREIGN INSURERS.

 

      Sec. 844.  1.  Whenever under this chapter an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this state, the court shall appoint the commissioner as ancillary receiver. The commissioner shall file a petition requesting the appointment on the grounds set forth in section 837 or 838 of this act:

      (a) If he finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver; or

      (b) If 10 or more persons resident in this state having claims against such insurer file a petition with the commissioner requesting the appointment of such ancillary receiver.

      2.  The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property, contracts and rights of action, and all of the books and records of the insurer located in this state, and he shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. He shall also be entitled to recover the other assets of the insurer located in this state, except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this state, and shall pay the necessary expenses of the proceedings.


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ê1971 Statutes of Nevada, Page 1893 (Chapter 660, AB 416)ê

 

pay the necessary expenses of the proceedings. All remaining assets he shall promptly transfer to the domiciliary receiver. Subject to the provisions of this section, the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets as a receiver of an insurer domiciled in this state.

      3.  The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of such insurer to which he may be entitled under the laws of this state.

 

 

CLAIMS OF NONRESIDENTS AGAINST DOMESTIC INSURERS.

 

      Sec. 845.  1.  In a delinquency proceeding begun in this state against a domestic insurer, claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

      2.  Controverted claims belonging to claimants residing in reciprocal states may either:

      (a) Be proved in this state; or

      (b) If ancillary proceedings have been commenced in such reciprocal states, be proved in those proceedings. If a claimant elects to prove his claim in ancillary proceedings and if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state, as provided in section 846 of this act with respect to ancillary proceedings in this state, the final allowance of such claim by the courts in the ancillary state shall be accepted in this state as conclusive as to its amount and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary state.

 

 

CLAIMS AGAINST FOREIGN INSURERS.

 

      Sec. 846.  1.  In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, claimants against such insurer who reside within this state may file claims either with the ancillary receiver, if any, appointed in this state, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.

      2.  Controverted claims belonging to claimants residing in this state may either:

      (a) Be proved in the domiciliary state as provided by the law of that state; or

      (b) If ancillary proceedings have been commenced in this state, be proved in those proceedings. If any such claimant elects to prove his claim in this state, he shall file his claim with the ancillary receiver and shall give notice in writing to the receiver in the domiciliary state, either by registered or certified mail or by personal service at least 40 days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any.


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ê1971 Statutes of Nevada, Page 1894 (Chapter 660, AB 416)ê

 

of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver within 30 days after the giving of such notice gives notice in writing to the ancillary receiver and to the claimant, either by registered or certified mail or by personal service, of his intention to contest such claim, he shall be entitled to appear or to be represented in any proceeding in this state involving adjudication of the claim. The final allowance of the claim by the courts of this state shall be accepted as conclusive as to its amount and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this state.

 

 

FORM OF CLAIM; NOTICE; HEARING.

 

      Sec. 847.  1.  All claims against an insurer against which delinquency proceedings have been begun shall set forth in reasonable detail the amount of the claim, or the basis upon which such amount can be ascertained, the facts upon which the claim is based, and the priorities asserted, if any. All such claims shall be verified by the affidavit of the claimant, or someone authorized to act on his behalf and having knowledge of the facts, and shall be supported by such documents as may be material thereto.

      2.  All claims filed in this state shall be filed with the receiver, whether domiciliary or ancillary, in this state, on or before the last date for filing as specified in this chapter.

      3.  Within 10 days of the receipt of any claim, or within such further period as the court may fix for good cause shown, the receiver shall report the claim to the court, specifying in such report his recommendation with respect to the action to be taken thereon. Upon receipt of such report, the court shall fix a time for hearing the claim and shall direct that the claimant or the receiver, as the court shall specify, shall give such notice as the court determines to such persons as appear to the court to be interested therein. All such notices shall specify the time and place of the hearing and shall concisely state the amount and nature of the claim, the priorities asserted, if any, and the recommendation of the receiver with reference thereto.

      4.  At the hearing, all persons interested shall be entitled to appear, and the court shall enter an order allowing, allowing in part, or disallowing the claim. Any such order is an appealable order.

 

 

ATTACHMENT AND GARNISHMENT OF ASSETS; EXECUTION.

 

      Sec. 848.  During the pendency of delinquency proceedings in this or any reciprocal state, no action or proceeding in the nature of an attachment, garnishment or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within 4 months prior to the commencement of any such delinquency proceedings or at any time thereafter is void as against any rights arising in such delinquency proceedings.


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ê1971 Statutes of Nevada, Page 1895 (Chapter 660, AB 416)ê

 

LIMITATIONS ON APPOINTMENT OF RECEIVER; ACTION BY JUDGMENT CREDITOR.

 

      Sec. 849.  1.  Except as provided in subsection 2, no order, judgment or decree enjoining, restraining or interfering with the prosecution of the business of any insurer or for the appointment of a temporary or permanent receiver of a domestic insurer shall be made or granted otherwise than upon the petition of the commissioner represented by the attorney general as provided in this chapter.

      2.  A judgment creditor may commence an action for the enforcement and protection of his judgment or institute proceedings supplementary to execution against any such debtor insurer, giving 30 days’ notice to the commissioner of his intention so to do, and in any such action or proceeding the court may, subject to section 848 of this act, appoint a receiver for the purposes thereof as the court may deem necessary.

 

 

DEPOSIT OF MONEYS.

 

      Sec. 850.  1.  The moneys collected by the commissioner in a proceeding under this chapter shall be from time to time deposited in one or more state or national banks, savings banks or trust companies, and in the case of the insolvency or voluntary or involuntary liquidation of any such depositary which is an institution organized and supervised under the laws of this state, such deposits shall be entitled to priority of payment on an equality with any other priority given by the banking laws of this state.

      2.  The commissioner may in his discretion deposit such moneys or any part thereof in a national bank or trust company as a trust fund.

 

 

EXEMPTION FROM FEES.

 

      Sec. 851.  The commissioner shall not be required to pay any fee to any public officer in this state for service of process, or for filing, recording, issuing a transcript or certificate or authenticating any paper or instrument pertaining to the exercise by the commissioner of any of the powers or duties conferred upon him under this chapter, whether or not such paper or instrument is executed by the commissioner or his deputies, employees or attorneys of record and whether or not it is connected with the commencement of any action or proceeding by or against the commissioner, or with the subsequent conduct of such action or proceeding.

 

 

BORROWING ON PLEDGE OF ASSETS.

 

      Sec. 852.  1.  For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution of an insurer pursuant to sections 815 to 870, inclusive, of this act, the commissioner may, subject to the approval of the court, borrow money and execute, acknowledge and deliver notes or other evidences of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust or hypothecation of any or all of the property, whether real, personal or mixed, of such insurer, and the commissioner, subject to the approval of the court, shall have power to take any and all other action necessary and proper to consummate any such loan and to provide for the repayment thereof.


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ê1971 Statutes of Nevada, Page 1896 (Chapter 660, AB 416)ê

 

trust or hypothecation of any or all of the property, whether real, personal or mixed, of such insurer, and the commissioner, subject to the approval of the court, shall have power to take any and all other action necessary and proper to consummate any such loan and to provide for the repayment thereof.

      2.  The commissioner shall be under no obligation personally or in his official capacity to repay any loan made pursuant to this section.

 

 

TERMINATION OF CONSERVATION, REHABILITATION.

 

      Sec. 853.  If at any time the court finds, after a hearing in open court, upon petition of the commissioner or of the insurer or of its own motion, that the objectives of an order to conserve or rehabilitate a domestic insurer or an alien insurer domiciled in this state have been accomplished, and that the insurer can be returned to its own management without further jeopardy to the insurer and its creditors or policy holders or stock holders or to the public, the court may, upon a full report and accounting by the commissioner relative to the conduct of the insurer’s affairs during the conservation or rehabilitation and of the insurer’s current financial condition, terminate the conservation or rehabilitation and by order return the insurer, its assets and affairs, to the insurer’s management.

 

 

DATE RIGHTS FIXED ON LIQUIDATION.

 

      Sec. 854.  The rights and liabilities of the insurer and of its creditors, policy holders, stock holders, members, subscribers and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date on which the order directing the liquidation of the insurer is filed in the office of the clerk of the court which made the order, subject to the provisions of this chapter with respect to the rights of claimants holding contingent claims.

 

 

PROHIBITED AND VOIDABLE TRANSFERS, LIENS.

 

      Sec. 855.  1.  No insurer shall make any transfer of or create any lien upon any of its property with the intent of giving to or enabling any creditor or policy holder to obtain a greater percentage of his debt than any other creditor or policy holder of the same class.

      2.  Any transfer of, or lien upon, any property of any insurer made or created within 4 months prior to the filing of a petition for an order to show cause under this chapter, which gives to any creditor or policy holder or enables him to obtain a greater percentage of his debt than any other creditor or policy holder in the same class, and which is accepted by a creditor or policy holder having reasonable cause to believe that such a preference will occur, is voidable. Where the preference consists of a transfer, such period of 4 months shall not expire until 4 months after the date of the recording or registering of the transfer if by law such recording or registering is required.

      3.  Every director, officer, employee, stock holder, member or any other person acting on behalf of such insurer, who, within 2 years prior to the filing of a petition for an order to show cause against such insurer under this chapter, knowingly participates in the making of any transfer or the creation of any lien prohibited by subsection 1, and every person receiving any property of, or cash surrender from, such insurer or the benefit thereof as a result of a transaction voidable under subsection 2, shall be jointly and severally liable therefor and shall be bound to account to the commissioner as receiver, rehabilitator, liquidator or conservator, as the case may be.


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ê1971 Statutes of Nevada, Page 1897 (Chapter 660, AB 416)ê

 

to the filing of a petition for an order to show cause against such insurer under this chapter, knowingly participates in the making of any transfer or the creation of any lien prohibited by subsection 1, and every person receiving any property of, or cash surrender from, such insurer or the benefit thereof as a result of a transaction voidable under subsection 2, shall be jointly and severally liable therefor and shall be bound to account to the commissioner as receiver, rehabilitator, liquidator or conservator, as the case may be.

      4.  The commissioner as receiver, rehabilitator, liquidator or conservator may avoid any transfer of or lien upon the property of an insurer which any creditor, stock holder or member of such insurer might have avoided and may recover the property so transferred or its value from the person to whom it was transferred unless he was a bona fide holder for value prior to the date of the entry of an order to show cause under this chapter. Such property may be recovered or its value collected from whoever may have received it except a bona fide holder for value.

 

 

ORDER OF DISTRIBUTION.

 

      Sec. 856.  The order of distribution of claims from the insurer’s estate on liquidation of the insurer shall be as stated in this section. The first $50 of the amount allowed on each claim in the classes under subsections 2 to 6, inclusive, shall be deducted from the claim and included in the class under subsection 8. Claims may not be cumulated by assignment to avoid application of the $50 deductible provision. Subject to the $50 deductible provision, every claim in each class shall be paid in full or adequate funds retained for the payment before the members of the next class receive any payment. No subclasses shall be established within any class. The order of distribution and of priority shall be as follows:

      1.  Administration costs.  The costs and expenses of administration, including but not limited to the following: The actual and necessary costs of preserving or recovering the assets of the insurer; compensation for all services rendered in the liquidation; any necessary filing fees; the fees and mileage payable to witnesses; and reasonable attorney’s fees.

      2.  Wages.  Debts due to employees for services performed, not to exceed $1,000 to each employee, which have been earned within 1 year before the filing of the petition for liquidation. Officers of the insurer shall not be entitled to the benefit of this priority. Such priority shall be in lieu of any other similar priority authorized by law as to wages or compensation of employees.

      3.  Loss claims.  All claims under policies for losses incurred, including third party claims, and all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which are not under policies, except the first $200 of losses otherwise payable to any claimant under this subsection. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds or investment values, shall be treated as loss claims. Claims may not be cumulated by assignment to avoid application of the $200 deductible provision. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities.


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ê1971 Statutes of Nevada, Page 1898 (Chapter 660, AB 416)ê

 

included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to his employee shall be treated as a gratuity.

      4.  Unearned premiums and small loss claims.  Claims under nonassessable policies for unearned premiums or other premium refunds and the first $200 of loss excepted by the deductible provision in subsection 3.

      5.  Residual classification.  All other claims, including claims of the federal or any state or local government, not falling within other classes under this section. Claims, including those of any governmental body, for a penalty or forfeiture, shall be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under subsection 8.

      6.  Judgments.  Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered by the liquidator, who shall give the judgment such weight as he deems appropriate. The claim as allowed shall receive the priority it would receive in the absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment.

      7.  Interest on claims already paid.  Interest at the legal rate compounded annually on all claims in the classes under subsections 1 to 6, inclusive, from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the approval of the court, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations and may ignore certain classifications and time periods as de minimis.

      8.  Miscellaneous subordinated claims.  The remaining claims or portions of claims not already paid, with interest as in subsection 7:

      (a) The first $50 of each claim in the classes under subsections 2 to 6, inclusive, subordinated under this section;

      (b) Claims subordinated by section 857 of this act;

      (c) Claims filed late;

      (d) Portions of claims subordinated under subsection 5;

      (e) Claims or portions of claims the payment of which is provided by other benefits or advantages recovered or recoverable by the claimant; and

      (f) Claims not otherwise provided for in this section.

      9.  Preferred ownership claims.  Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in subsections 7 and 8.

      10.  Proprietary claims.  The claims of share holders or other owners.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1899 (Chapter 660, AB 416)ê

 

SUBORDINATION OF CLAIMS FOR FAILURE TO COOPERATE.

 

      Sec. 857.  If an ancillary receiver in another state or foreign country, by whatever name called, fails to transfer to the domiciliary liquidator in this state any assets within his control other than special deposits, diminished only by the expenses, if any, of the ancillary receivership, claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be placed in the class of claims under subsection 8 of section 856 of this act.

 

 

OFFSETS.

 

      Sec. 858.  1.  Except as provided in subsection 2, in all cases of mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this chapter, such credits and debts shall be set off and the balance only shall be allowed or paid.

      2.  No offset shall be allowed in favor of any such person where:

      (a) The obligation of the insurer to such person would not at the date of the entry of any liquidation order or otherwise, as provided in section 854 of this act, entitle him to share as a claimant in the assets of the insurer; or

      (b) The obligation of the insurer to such person was purchased by or transferred to such person with a view of its being used as an offset; or

      (c) The obligation of such person is to pay an assessment levied against the members of a mutual insurer, or against the subscribers of a reciprocal insurer, or is to pay a balance upon the subscription to the capital stock of a stock insurer.

 

 

ALLOWANCE OF CERTAIN CLAIMS.

 

      Sec. 859.  1.  No contingent and unliquidated claim shall share in a distribution of the assets of an insurer which has been adjudicated to be insolvent by an order made pursuant to this chapter, except that such claim shall be considered, if properly presented, and may be allowed to share where:

      (a) Such claim becomes absolute against the insurer on or before the last day for filing claims against the assets of such insurer; or

      (b) There is a surplus and the liquidation is thereafter conducted upon the basis that such insurer is solvent.

      2.  Where an insurer has been so adjudicated to be insolvent any person who has a cause of action against an insured of such insurer under a liability insurance policy issued by such insurer shall have the right to file a claim in the liquidation proceeding, regardless of the fact that such claim may be contingent, and such claim may be allowed:

      (a) If it may be reasonably inferred from the proof presented upon such claim that such person would be able to obtain a judgment upon such cause of action against such insured;

      (b) If such person furnishes suitable proof, unless the court for good cause shown otherwise directs, that no further valid claim against such insurer arising out of his cause of action other than those already presented can be made; and

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1900 (Chapter 660, AB 416)ê

 

cause shown otherwise directs, that no further valid claim against such insurer arising out of his cause of action other than those already presented can be made; and

      (c) If the total liability of such insurer to all claimants arising out of the same act of its insured is no greater than its maximum liability would be were it not in liquidation.

      3.  No judgment against such an insured taken after the date of entry of the liquidation order shall be considered in the liquidation proceedings as evidence of liability, or of the amount of damages, and no judgment against an insured taken by default, or by collusion prior to the entry of the liquidation order shall be considered as conclusive evidence in the liquidation proceedings, either of the liability of such insured to such person upon such cause of action or of the amount of damages to which such person is therein entitled.

      4.  No claim of any secured claimant shall be allowed at a sum greater than the difference between the value of the claim without security and the value of the security itself as of the date of the entry of the order of liquidation or such other date set by the court for determining rights and liabilities as provided in section 854 of this act unless the claimant surrenders his security to the commissioner, in which event the claim shall be allowed in the full amount for which it is valued.

 

 

TIME TO FILE CLAIMS.

 

      Sec. 860.  1.  If upon the entry of an order of liquidation under this chapter or at any time thereafter during liquidation proceedings the insurer is not clearly solvent, the court shall, upon a hearing after such notice as it deems proper, make and enter an order adjudging the insurer to be insolvent.

      2.  After the entry of the order of insolvency, regardless of any prior notice that may have been given to creditors, the commissioner shall notify all persons who may have claims against the insurer to file such claims with him, at a place and within the time specified in the notice, or that such claims shall be forever barred. The time specified in the notice shall be as fixed by the court for filing of claims, which shall be not less than 6 months after the entry of the order of insolvency. The notice shall be given in such manner and for such reasonable period of time as may be ordered by the court.

 

 

REPORT AND PETITION FOR ASSESSMENT.

 

      Sec. 861.  Within 3 years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a domestic reciprocal insurer, the commissioner may make and file his report and petition to the court setting forth:

      1.  The reasonable value of the assets of the insurer;

      2.  The liabilities of the insurer to the extent thus far ascertained by the commissioner;

      3.  The aggregate amount of the assessment, if any, which the commissioner deems reasonably necessary to pay all claims, the costs and expenses of the collection of the assessments and the costs and expenses of the delinquency proceedings in full; and

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1901 (Chapter 660, AB 416)ê

 

expenses of the collection of the assessments and the costs and expenses of the delinquency proceedings in full; and

      4.  Any other information relative to the affairs or property of the insurer that the commissioner deems material.

 

 

ORDER AND LEVY OF ASSESSMENT.

 

      Sec. 862.  1.  Upon the filing and reading of the report and petition provided for in section 861 of this act, the court, ex parte, may order the commissioner to assess all members or subscribers of the insurer who may be subject to such an assessment, in such an aggregate amount as the court finds reasonably necessary to pay all such valid claims as may be timely filed and proved in the delinquency proceedings, together with the costs and expenses of levying and collecting assessments and the costs and expenses of the delinquency proceedings in full. Any such order shall require the commissioner to assess each such member or subscriber for his proportion of the aggregate assessment, according to such reasonable classification of such members or subscribers and formula as may be made by the commissioner and approved by the court.

      2.  The court may order additional assessments upon the filing and reading of any amendment or supplement to the report and petition referred to in subsection 1, if such amendment or supplement is filed within 3 years after the date of the entry of the order of rehabilitation or liquidation.

      3.  After the entry of the order to levy and assess members or subscribers of an insurer referred to in subsections 1 or 2, the commissioner shall levy and assess members or subscribers in accordance with the order.

      4.  The total of all assessments against any member or subscriber with respect to any policy, whether levied pursuant to this chapter or pursuant to any other provision of this code, shall be for no greater amount than that specified in the policy or policies of the member or subscriber and as limited under this code, except as to any policy which was issued at a rate of premium below the minimum rate lawfully permitted for the risk insured, in which event the assessment against any such policy holder shall be upon the basis of the minimum rate for such risk.

      5.  No assessment shall be levied against any member or subscriber with respect to any nonassessable policy issued in accordance with this code.

 

 

ASSESSMENT PRIMA FACIE CORRECT; NOTICE; PAYMENT; PROCEEDINGS TO COLLECT.

 

      Sec. 863.  1.  Any assessment of a subscriber or member of an insurer made by the commissioner pursuant to the order of court fixing the aggregate amount of the assessment against all members or subscribers and approving the classification and formula made by the commissioner under subsection 1 of section 862 of this act shall be prima facie correct.

      2.  Each member or subscriber shall be notified of the amount of the assessment to be paid by him by written notice mailed to the address of the member or subscriber last of record with the insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1902 (Chapter 660, AB 416)ê

 

of the member or subscriber last of record with the insurer. Failure of the member or subscriber to receive the notice so mailed, within the time specified therein or at all, shall be no defense in any proceeding to collect the assessment.

      3.  If any such member or subscriber fails to pay the assessment within the period specified in the notice, which period shall not be less than 20 days after mailing, the commissioner may obtain an order in the delinquency proceedings requiring the member or subscriber to show cause at a time and place fixed by the court whey judgment should not be entered against such member or subscriber for the amount of the assessment together with all costs, and a copy of the order and a copy of the petition therefor shall be served upon the member or subscriber within the time and in the manner designated in the order.

      4.  If the subscriber or member, after due service of a copy of the order and petition referred to in subsection 3 is made upon him:

      (a) Fails to appear at the time and place specified in the order, judgment shall be entered against him as prayed for in the petition; or

      (b) Appears in the manner and form required by law in response to the order, the court shall hear and determine the matter and enter a judgment in accordance with its decision.

      5.  The commissioner may collect any such assessment through any other lawful means.

 

 

SUMMARY PROCEEDINGS: COMMISSIONER’S CORRECTIVE ORDERS AUTHORIZED.

 

      Sec. 864.  1.  If the commissioner determines after a hearing that any insurer has committed or engaged in, or is committing or engaging in, or is about to commit or engage in any act, practice or transaction that would subject it to formal delinquency proceedings under this chapter, he may make and serve upon the insurer and other persons involved, such orders (other than seizure orders under sections 867 and 868 of this act) as he deems reasonably necessary to correct, eliminate or remedy such conduct, condition or ground. Orders to cure impairment of capital or surplus of a domestic insurer are subject to sections 606 and 607 of this act.

      2.  If the commissioner believes that irreparable harm to the insurer, or its policy holders, creditors or the public may occur unless his order is issued with immediate effect, he may make and serve his order without notice and before hearing, and shall simultaneously therewith serve upon the insurer and other persons involved the notice of hearing as required under subsection 3.

      3.  The commissioner’s order and notice of hearing shall be served by personal service in any manner provided by the Nevada Rules of Civil Procedure.

 

 

SUMMARY PROCEEDINGS: APPEAL FROM COMMISSIONER’S ORDER.

 

      Sec. 865.  1.  If the commissioner has issued a summary order before hearing as provided in subsection 2 of section 864 of this act, any person upon whom such order is served may waive the commissioner’s hearing and apply for any immediate judicial relief available under law and without first exhausting his administrative remedies.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1903 (Chapter 660, AB 416)ê

 

upon whom such order is served may waive the commissioner’s hearing and apply for any immediate judicial relief available under law and without first exhausting his administrative remedies.

      2.  Section 54 of this act (appeal from commissioner) applies to appeals from the commissioner’s order made after hearing.

 

 

SUMMARY PROCEEDINGS: ENFORCEMENT; PENALTY.

 

      Sec. 866.  1.  The commissioner may apply for and any district court may grant such restraining orders, temporary and permanent injunctions and other orders as may be deemed necessary to enforce the commissioner’s order.

      2.  A violation of any order of the commissioner issued under section 864 of this act by any person as to whom the order is in effect shall subject such person to a penalty of not more than $10,000, to be collected in a civil action brought by the attorney general in the name of the State of Nevada. The attorney general shall deposit all funds so collected with the state treasurer to the credit of the insurance division regulatory revolving fund.

 

 

SUMMARY PROCEEDINGS: SEIZURE UNDER COURT ORDER.

 

      Sec. 867.  1.  Upon filing by the commissioner in any district court of this state of his verified petition alleging any ground for a formal delinquency proceeding against an insurer under this chapter and that the interests of the insurer’s policy holders or creditors or the public will be jeopardized by delay, and setting forth the order deemed necessary by the commissioner, the court shall, ex parte and without notice or hearing, issue the requested order. The requested order may:

      (a) Direct the commissioner to take possession and control of all or part of the property, books, accounts and records of the insurer and the premises occupied by it for transaction of its business; and

      (b) Until further order of the court, enjoin the insurer and its officers, managers, agents and employees from removal, concealment or other disposition of its property, and from the transaction of its business, except with the commissioner’s written consent.

      2.  The court’s order shall be for such duration, specified in the order, as the court deems necessary to enable the commissioner to ascertain the insurer’s condition. On motion of any party or on its own motion, the court may hold such hearings as it deems desirable after such notice as it deems appropriate, and extend or shorten the duration or modify the terms of the order. The court shall vacate the seizure order if the commissioner fails to commence a formal proceeding under this chapter after reasonable opportunity to do so; and a seizure order is automatically vacated by issuance of the court’s order pursuant to formal delinquency proceedings under this chapter.

      3.  Entry of a seizure order under this section does not constitute an anticipatory breach of any contract of the insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1904 (Chapter 660, AB 416)ê

 

SUMMARY PROCEEDINGS: SEIZURE UNDER THE COMMISSIONER’S ORDER.

 

      Sec. 868.  1.  If it appears to the commissioner that the interests of policy holders, creditors or the public will be jeopardized by delay incident to requesting a court seizure order, then on any ground which would justify a court seizure order under section 867 of this act, and without notice and without applying to the court, the commissioner may issue a seizure order which must contain a statement verified by him of the grounds of his action. As directed by the seizure order, the commissioner’s representatives shall forthwith take possession and control of all or part of the property, books, accounts and records of the insurer, and of the premises occupied by the insurer for transaction of its business. The commissioner shall retain possession and control until the order is vacated or is replaced by an order of court pursuant to subsection 2, or pursuant to a formal proceeding under this chapter.

      2.  At any time after seizure under subsection 1, the insurer may apply to the district court for Ormsby County. The court shall thereupon order the commissioner to appear forthwith and shall thereafter proceed as if the order were a court seizure order issued under section 867 of this act.

      3.  Every peace officer of this state shall assist the commissioner in making and enforcing any such seizure, and every sheriff and police department shall furnish him with such deputies, patrolmen or officers as are necessary for the purpose.

      4.  Entry of a seizure order under this section does not constitute an anticipatory breach of any contract of the insurer.

 

 

SUMMARY PROCEEDINGS: CONDUCT OF ADMINISTRATIVE AND JUDICIAL HEARINGS.

 

      Sec. 869.  1.  The commissioner shall hold all hearings in summary proceedings privately unless the insurer requests a public hearing, in which case the hearing shall be public.

      2.  The court may hold all hearings in summary proceedings and judicial reviews thereof privately in chambers, and shall do so on request of the insurer proceeded against.

      3.  In all summary proceedings and judicial reviews thereof, all records of the insurer, other documents and all division files and court records and papers, so far as they pertain to or are part of the record of the summary proceedings, shall be and remain confidential except as necessary to obtain compliance therewith, unless the court after hearing arguments by the parties in chambers, orders otherwise, or unless the insurer requests that the matter be made public. Until the court otherwise orders, all papers filed with the clerk of the court shall be held by him in a confidential file.

      4.  If at any time it appears to the court that any person whose interest is or will be substantially affected by an order did not appear at the hearing and has not been served, the court may order that notice be given and the proceedings be adjourned to give such person an opportunity to appear, on such terms as may be reasonable and just.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1905 (Chapter 660, AB 416)ê

 

SUMMARY PROCEEDINGS: PENALTY FOR REFUSAL TO DELIVER PROPERTY, RECORDS.

 

      Sec. 870.  Any person having possession or custody of and refusing to deliver to the commissioner or his representative upon request any of the property, books, accounts, documents or other records of an insurer against which a seizure order or a summary order has been issued by the commissioner or by the court, as provided in sections 864 to 869, inclusive, of this act, is guilty of a misdemeanor.

 

 

FEDERAL RECEIVERSHIP.

 

      Sec. 871.  1.  If the commissioner believes that rehabilitation or liquidation of a domestic insurer or alien insurer domiciled in this state upon grounds for such rehabilitation or liquidation set forth in this chapter would thereby be facilitated, and whether or not delinquency proceedings against the insurer are already pending in the courts of this state, he may cause or consent to the filing of a petition in a federal district court in another state for the appointment of a federal receiver of the insurer. The commissioner may intervene in any such action, and may accept appointment as the federal receiver if so designated. Upon the designation of a federal receiver in any such action, the courts of this state shall relinquish jurisdiction of the rehabilitation or liquidation of the insurer upon the commissioner’s motion therefor.

      2.  The provisions of this chapter relating to delinquency proceedings in courts of this state shall apply to such a federal receivership to the extent applicable and appropriate.

      3.  If the commissioner is appointed a federal receiver under this section, he shall comply with any requirements necessary to give him title to and control over the insurer’s assets and affairs.

 

 

CHAPTER 35

 

BAIL BONDSMEN

 

      Sec. 872.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 873 to 887, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 873.  This chapter shall be known and may be cited as the Bail Bondsman Law.

 

 

DEFINITIONS.

 

      Sec. 873.2.  As used in this code, unless the context otherwise requires, the words and terms defined in sections 873.4 to 874.4, inclusive, of this act have the meanings ascribed to them in sections 873.4 to 874.4, inclusive, of this act.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1906 (Chapter 660, AB 416)ê

 

“BAIL” DEFINED.

 

      Sec. 873.4.  “Bail” means that which is deposited with a court or other governmental agency to secure or continue the release from custody of the defendant in a criminal proceeding. Bail includes bail bonds, undertakings of bail and any pledge or deposit of the matters described in section 882 of this chapter.

 

 

“BAIL AGENT” DEFINED.

 

      Sec. 873.6.  “Bail agent” means any individual appointed by an authorized surety insurer by power of attorney to execute or countersign undertakings of bail in connection with judicial proceedings and who receives or is promised money or other things of value therefor.

 

 

“BAIL BONDSMAN” DEFINED.

 

      Sec. 873.8.  “Bail bondsman” means a bail agent or property bondsman.

 

 

“BAIL SOLICITOR” DEFINED.

 

      Sec. 874.  “Bail solicitor” means an individual employed by a bail bondsman to solicit bail transactions as a representative of such bail bondsman.

 

 

“GENERAL AGENT” DEFINED.

 

      Sec. 874.2.  1.  “General agent” means any individual or person appointed by an insurer to supervise or manage the bail bond business written by bail agents of such insurer.

      2.  A general agent shall not solicit or negotiate undertakings of bail or bail bonds unless licensed as a bail agent by this state.

 

 

“PROPERTY BONDSMAN” DEFINED.

 

      Sec. 874.4.  “Property bondsman” means any individual who pledges United States currency, United States postal money orders, cashiers’ checks or other property as security for a bail bond in connection with judicial proceedings and who receives or is promised money or other things of value therefor.

 

 

LICENSE REQUIRED.

 

      Sec. 874.6.  1.  No individual in this state shall act in the capacity of a bail bondsman or bail solicitor, or perform any of the functions, duties or powers prescribed for a bail bondsman or bail solicitor under the provisions of this chapter unless that individual is qualified and licensed as provided in this chapter.

      2.  No person, whether or not located in this state, shall be, act as or hold himself out to be a general agent unless qualified and licensed as such under the provisions of this chapter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1907 (Chapter 660, AB 416)ê

 

hold himself out to be a general agent unless qualified and licensed as such under the provisions of this chapter.

      3.  For the protection of the people of this state, the commissioner shall not issue nor renew, nor permit to exist, any license except in compliance with this chapter. The commissioner shall not issue nor renew, nor permit to exist, a license for any individual found to be untrustworthy or incompetent, or who has not established to the satisfaction of the commissioner that he is qualified therefor in accordance with this chapter.

 

 

LICENSING OF INDIVIDUALS, FIRMS, CORPORATIONS.

 

      Sec. 874.8.  1.  No license shall be issued except in compliance with this chapter and none shall be issued to a bail bondsman or bail solicitor except to an individual.

      2.  A firm or corporation shall be licensed only as a general agent.

      3.  This section shall not prohibit two or more licensed bail bondsmen to enter into a partnership for the conduct of their bail business. No person shall be a member of a partnership unless he is licensed pursuant to this chapter in the same capacity as all other members of the partnership. Limited partnerships are prohibited and no person may have any proprietary interest directly or indirectly in such partnership or the conduct of business thereunder except licensed bail bondsmen as provided in this chapter.

 

 

BAIL AGENT, PROPERTY BONDSMAN: CONCURRENCY PROHIBITED.

 

      Sec. 875.  The commissioner may license an individual as either a bail agent or property bondsman. No individual shall be licensed concurrently under the same license or separate licenses as a bail agent and as a property bondsman.

 

 

EXEMPTIONS.

 

      Sec. 875.2.  This chapter shall not:

      1.  Prevent any duly licensed general lines agent, as defined in section 195 of this code, from writing bail bonds for any insurer authorized to write surety which he represents as agent, providing such agent shall be subject to and governed by all laws, rules and regulations relating to bail bondsmen when engaged in the activities thereof.

      2.  Affect the negotiation for or the execution or delivery of a bail bond which is authorized by sections 764 to 813 of this code (Motor Clubs).

 

 

LICENSING AND APPOINTMENT FORMS.

 

      Sec. 875.4.  The commissioner shall prescribe and furnish all forms in connection with licensing and appointments required under this chapter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1908 (Chapter 660, AB 416)ê

 

FEE SCHEDULE.

 

      Sec. 875.6.  The commissioner shall collect in advance all license and appointment fees for the issuance and continuance of any license to a general agent, bail bondsman or bail solicitor as follows:

      1.  Bail agent’s license and appointments:

      (a) Application for original license and issuance of license, if issued............      $10

      (b) Appointment of limited surety agent:

             (1) Each insurer.................................................................................................           2

             (2) Annual continuation of appointment, each insurer.............................           2

      2.  Property bondsman:

      (a) Application for original license and issuance of license, if issued............      $50

      (b) Annual continuation........................................................................................        50

      3.  General agent:

      (a) Application for original license and issuance of license, if issued............        $5

      (b) Annual continuation........................................................................................           5

      4.  Bail solicitor:

      (a) Application for original license and issuance of license, if issued............        $5

      (b) Annual continuation........................................................................................           5

      5.  Examination fee for license...........................................................................      $10

 

 

BAIL AGENT QUALIFICATIONS.

 

      Sec. 875.8.  No individual shall be entitled to receive, renew or hold a license as a bail agent unless he:

      1.  Is a bona fide resident of and resides within this state, and must have so resided for not less than 1 year immediately preceding the application for the license.

      2.  Is a natural person not less than 21 years of age.

      3.  Has been appointed as a bail agent by an authorized surety insurer, subject to issuance of the license.

      4.  Is competent, trustworthy and financially responsible.

      5.  Has passed any written examination required under this chapter.

      6.  Has filed the bond required by section 876.6 of this act.

 

 

PROPERTY BONDSMAN: QUALIFICATIONS.

 

      Sec. 876.  No individual shall be entitled to receive, renew or hold a license as a property bondsman unless he:

      1.  Is a natural person not less than 21 years of age.

      2.  Is and has been a bona fide resident within this state for not less than 1 year immediately preceding the application for the license.

      3.  Is of good personal and business reputation.

      4.  Is financially responsible and financially capable of conducting the business of a bondsman.

      5.  Has filed the bond required by section 876.6 of this act.

      6.  Has passed any written examination required under this chapter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1909 (Chapter 660, AB 416)ê

 

      7.  Has filed a detailed financial statement under oath.

      8.  Has filed the rating plan he proposes to use in writing bail bonds. Such rating plan and subsequent amendments thereto must be approved by the commissioner.

 

 

BAIL SOLICITOR: QUALIFICATIONS.

 

      Sec. 876.2.  No individual shall be entitled to receive, renew or hold a license as a bail solicitor unless he:

      1.  Is a natural person not less than 21 years of age.

      2.  Is and has been a bona fide resident within this state for not less than 3 months immediately preceding the application for the license.

      3.  Is the bona fide employee of a licensed bail bondsman as a bail solicitor, or is to be so employed subject to the issuance of the license.

      4.  Has passed any written examination required under this chapter.

 

 

APPLICATION FOR BAIL AGENT’S, GENERAL AGENT’S, PROPERTY BONDSMAN’S OR BAIL SOLICITOR’S LICENSE.

 

      Sec. 876.4.  1.  Written application for a bail agent’s, general agent’s, property bondsman’s or bail solicitor’s license shall be filed with the commissioner by the applicant, accompanied by the appropriate fees specified in section 875.6 of this act. The application form shall be accompanied by the applicant’s fingerprints, and shall require full answers to questions reasonably necessary to determine the applicant’s:

      (a) Identity and residence.

      (b) Business record or occupations for not less than the 2 years next preceding with the name and address of each employer, if any.

      (c) Experience or instruction in the bail bond business and relative to the laws of this state governing bail.

      2.  The commissioner may reasonably require other facts to determine the applicant’s qualifications for the license applied for.

      3.  If for a bail agent’s license, the application shall be accompanied by a written appointment by an authorized insurer as agent for bail bonds, subject to issuance of the license.

      4.  If for a general agent’s license, the application shall be accompanied by a written appointment by an authorized insurer as general agent, subject to issuance of the license.

      5.  If for a bail solicitor’s license, the application shall be accompanied by a written requisition and certification by a licensed bail agent that the applicant is his bona fide employee and that he will exercise reasonable supervision over the conduct of the applicant and be responsible for the applicant’s conduct in the bail bond business.

      6.  If the applicant for a general agent’s license is a firm or corporation, the application shall also show the names of all members, officers and directors, and shall designate each individual who is to exercise the license powers; and each such individual shall furnish information as to himself as though for an individual license.

      7.  The application shall be verified by the applicant, and no applicant for a license under this chapter shall knowingly misrepresent or withhold any fact or information called for in the application form or in connection therewith.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1910 (Chapter 660, AB 416)ê

 

withhold any fact or information called for in the application form or in connection therewith.

 

 

BONDS.

 

      Sec. 876.6.  1.  Every applicant for a property bondsman’s, bail agent’s or bail solicitor’s license shall file with the application, and thereafter maintain in force while so licensed, a bond in favor of the people of the State of Nevada executed by an authorized surety insurer. The bond may be continuous in form with total aggregate liability limited to payment as follows:

      (a) Property bondsman....................................................................................    $50,000

      (b) Bail agent.....................................................................................................                         2,500

      (c) Bail solicitor.................................................................................................         1,000

      2.  The bond shall be conditioned upon full accounting and payment to the person entitled thereto of funds, property or other matters coming into the licensee’s possession through bail bond transactions under the license.

      3.  The bond shall remain in force until released by the commissioner, or canceled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond upon 30 days’ advance written notice to both the licensee and the commissioner.

 

 

EXAMINATION FOR BAIL BONDSMAN’S AND BAIL SOLICITOR’S LICENSE.

 

      Sec. 876.8.  1.  After completion and filing of the application with the commissioner as required in section 876.4 of this act, the commissioner shall subject each applicant for a license as a bail bondsman or bail solicitor to a written examination personally as to his competence to act as such bail bondsman or bail solicitor.

      2.  The scope of the examination shall be as broad as the bail bond business.

      3.  Written application shall be filed with the commissioner by or on behalf of the applicant not less than 7 days prior to the date fixed for the examination, as provided in section 210 (conduct of examinations) of this act, and shall be accompanied by the examination fee as specified in section 875.6 (fee schedule) of this act. The fee shall be deemed earned when paid and shall not be refundable. The fee shall be applicable to an examination given within 3 months after the date of the application for examination but not thereafter.

 

 

ISSUANCE, REFUSAL OF LICENSE; REFUNDABILITY OF FEES.

 

      Sec. 877.  1.  If the commissioner finds that the application is complete, that the applicant has passed all required examinations and is otherwise qualified for the license applied for, he shall promptly issue the license. Otherwise, the commissioner shall refuse the license and promptly notify the applicant and the appointing insurer (if the application is for a bail agent’s or general agent’s license) or the employer (if the application is for a bail solicitor’s license) of such refusal, stating the grounds thereof.


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ê1971 Statutes of Nevada, Page 1911 (Chapter 660, AB 416)ê

 

promptly notify the applicant and the appointing insurer (if the application is for a bail agent’s or general agent’s license) or the employer (if the application is for a bail solicitor’s license) of such refusal, stating the grounds thereof.

      2.  If a license is refused, the commissioner shall promptly refund the applicable appointment fee tendered with the application for the license. The application fee shall be deemed earned when paid and shall not be refunded.

 

 

LICENSE CONTENTS.

 

      Sec. 877.2.  1.  The license shall state the name and address of the licensee, the date of issue, general conditions relative to expiration or termination, and such other information and conditions as the commissioner may deem proper and consistent with law.

      2.  The license of a bail solicitor shall show also the name and address of the employer bail bondsman.

 

 

CONTINUATION, EXPIRATION OF LICENSE.

 

      Sec. 877.4.  1.  Each general agent’s, bail bondsman’s and bail solicitor’s license issued under this chapter shall continue in force until it expires or is suspended, revoked or otherwise terminated, but subject to payment to the commissioner at his office in Carson City, Nevada, annually on or before April 30 of the applicable continuation fee stated in section 875.6 of this act (fee schedule), accompanied by a written request for such continuation. A request for continuation shall be made as follows:

      (a) For general agent’s and property bondsman’s licenses, the request shall be made and signed by the licensee.

      (b) For bail solicitors’ licenses, the request shall be made and signed by the employer bail bondsman.

      2.  Any license referred to in subsection 1 and not so continued on or before April 30 shall be deemed to have expired at 12 p.m. on April 30; but the commissioner may effectuate a request for continuation received by him within 30 days thereafter, if accompanied by an annual continuation fee of 150 percent of the fee otherwise required.

      3.  A bail agent’s license shall continue in force while there is in effect, as to the licensee, as shown by the commissioner’s records, an appointment or appointments as bail agent of authorized insurers. Upon termination of the licensee’s bail agent’s appointment and failure to replace such appointment within 60 days thereafter, the license shall thereon expire and terminate; and the licensee shall promptly deliver his license to the commissioner.

      4.  The license of a general agent as to a particular insurer shall be terminated by the commissioner upon written request by any of such persons.

      5.  Any property bondsman who discontinues writing bail bonds during the period for which he is licensed shall notify the clerk of the district court and the sheriff with whom he has registered and return his license to the commissioner for cancellation within 30 days from such discontinuance.


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ê1971 Statutes of Nevada, Page 1912 (Chapter 660, AB 416)ê

 

to the commissioner for cancellation within 30 days from such discontinuance.

      6.  This section does not apply to temporary licenses issued under section 219 of this act.

 

 

APPOINTMENT OF BAIL AGENTS; CONTINUATION.

 

      Sec. 877.6.  1.  Each insurer appointing a bail agent shall file with the commissioner a written appointment and pay the appointment fee as specified in section 875.6 (fee schedule) of this act.

      2.  Subject to annual continuation by the insurer as provided in subsection 3, each appointment shall remain in effect until the bail agent’s license is revoked or otherwise terminated, or there is an earlier termination of the appointment.

      3.  As soon as reasonably possible after commencement of each calendar year, the commissioner shall furnish to each authorized insurer an alphabetical list of the names of all bail agents of the insurer in this state then of record in the division. The insurer shall indicate on such list those bail agents whose appointments are not to be continued in effect, and on or before April 30 of the same year return the list to the commissioner, together with the payment of the annual continuation of appointment fee in amounts as specified in section 875.6 of this act (fee schedule) as to those appointments not being terminated. Any appointment not so continued and not otherwise expressly terminated shall be deemed to have expired on April 30.

 

 

TERMINATION OF APPOINTMENT: BAIL AGENTS, BAIL SOLICITORS.

 

      Sec. 877.8.  1.  An insurer may terminate an appointment at any time. The insurer shall promptly give written notice of termination and the effective date thereof to the commissioner, on forms furnished by the commissioner, and to the bail agent if reasonably possible. The list of appointments not being continued referred to in section 877.6 of this act shall constitute such notice to the commissioner as to termination so listed. The commissioner may require of the insurer reasonable proof that the insurer has also given such notice to the agent if reasonably possible.

      2.  Accompanying the notice of termination given the commissioner, the insurer shall file with him a statement of the cause, if any, for each termination. Any information or documents so disclosed to the commissioner shall be deemed an absolutely privileged communication and shall not be admissible as evidence in any action or proceedings unless so permitted by the insurer in writing.

      3.  A bail bondsman terminating the appointment and license as such of a bail solicitor shall give like notice of such termination, with like status as a privileged communication unless such privilege is waived in writing by the bail agent.

      4.  No agreement between the insurer and the bail agent, or between employer bail bondsman and licensed bail solicitor, shall effect the commissioner’s termination of the appointment or license if so requested by the insurer, or by the employer bail agent, as the case may be.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1913 (Chapter 660, AB 416)ê

 

employer bail bondsman and licensed bail solicitor, shall effect the commissioner’s termination of the appointment or license if so requested by the insurer, or by the employer bail agent, as the case may be.

 

 

BAIL SOLICITORS: SPECIAL REQUIREMENTS.

 

      Sec. 878.  1.  A bail solicitor shall not concurrently be employed or licensed as to more than one bail bondsman.

      2.  The bail bondsman shall be responsible for the acts or omissions of the bail solicitors within the scope of his employment.

      3.  The bail solicitor shall maintain his office with that of the employer bail bondsman.

      4.  The bail solicitor’s license shall remain in the custody of the employer bail bondsman. Upon termination of such employment as a bail solicitor, the bail bondsman shall give written notice thereof to the commissioner, as provided in section 877.8 of this act, and deliver the license to the commissioner for cancellation.

 

 

REGISTRATION OF BAIL BONDSMAN.

 

      Sec. 878.2.  No bail bondsman shall become a surety on an undertaking unless he has registered in the office of the sheriff and with the clerk of the district court in which the bondsman resides, and he may register in like manner in any other county. Any bail agent shall file a certified copy of his appointment by power of attorney from each insurer which he represents as agent with each of such officers. Registration and filing of a certified copy of renewed power of attorney shall be performed annually on July 1. The clerk of the district court and the sheriff shall not permit the registration of a bail bondsman unless such bondsman is duly licensed by the commissioner.

 

 

PLACE OF BUSINESS; DISPLAY OF LICENSES.

 

      Sec. 878.4.  1.  Every bail bondsman shall have and maintain in this state a place of business accessible to the public, wherein the licensee principally conducts transactions under his license. The address of such place shall appear upon the application for a license and upon the license, when issued, and the licensee shall promptly notify the commissioner relative to any change thereof. Nothing in this section prohibits the maintenance of such place in the licensee’s residence in this state.

      2.  The licenses of the licensee, and those of others employed by him, shall be conspicuously displayed in such place of business in a part or area customarily open to the public.

      3.  The bail bondsman shall keep at such place of business the records required under section 879 of this act.

 

 

BAIL BONDSMAN’S RECORDS.

 

      Sec. 879.  Every bail bondsman must maintain in his office such records of bail bonds, and such additional information as the commissioner may reasonably require, executed or countersigned by him to enable the public to obtain all necessary information concerning such bail bonds for at least 1 year after the liability of the surety has been terminated.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1914 (Chapter 660, AB 416)ê

 

may reasonably require, executed or countersigned by him to enable the public to obtain all necessary information concerning such bail bonds for at least 1 year after the liability of the surety has been terminated. Such records shall be open to examination by the commissioner or his representatives at all times, and the commissioner at any time may require the licensee to furnish to him, in such manner or form as he requires, any information kept or required to be kept in such records.

 

 

COLLECTIONS AND CHARGES PERMITTED.

 

      Sec. 880.  No bail bondsman shall, in any bail transaction or in connection therewith, directly or indirectly, charge, collect money or other valuable consideration from any person except for the following purposes:

      1.  To pay the premium at the rates established by the insurer, in accordance with sections 340 to 372, inclusive, of this act, or to pay the charges for the bail bond filed in connection with such transaction at the rates filed in accordance with the provisions of this code.

      2.  To provide collateral.

      3.  To reimburse himself for actual expenses incurred in connection with the individual bail transaction, including:

      (a) Guard and like fees,

      (b) Notary public fees, recording fees, necessary long distance telephone expenses, telegram charges and travel expenses incurred more than 25 miles from the bondsman’s principal place of business, such travel expense not to exceed a charge of 10 cents per mile in excess of such 25 miles; and

      (c) Any other actual expenditure necessary to the bail transaction which is not usually and customarily incurred in connection with bail transactions.

      4.  To reimburse himself, or have a right of action against the principal or any indemnitor, for actual expenses incurred in good faith, by reason of breach by the defendant of any of the terms of the written agreement under which and pursuant to which the undertaking of bail or bail bond was written. Should there be no written agreement, or an incomplete writing, the surety may, at law, enforce its equitable rights against the principal and his indemnitors, in exoneration. Such reimbursement, or right of action, shall not exceed the principal sum of the bond or undertaking and reasonable attorney’s fees and expenses incurred in good faith by the surety, its agents, licensees and employees by reason of the principal’s breach.

      5.  Nothing in this section shall be construed as preventing the full and unlimited right of a bail agent to execute undertaking of bail on behalf of a nonresident agent of the surety he represents. The licensed resident bail agent shall be entitled to a minimum countersignature charge of $5, with a maximum countersignature fee not to exceed $10 per $1,000 on the face amount of the bond plus expenses incurred in accordance with subsections 3 and 4. Such countersignature fees may be charged in addition to the premium of the undertaking.


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ê1971 Statutes of Nevada, Page 1915 (Chapter 660, AB 416)ê

 

PROHIBITED SERVICE CHARGES.

 

      Sec. 881.  Except to the extent permitted by subsections 3, 4 and 5 of section 880 of this act, no bail licensee shall make any charge for his services in a bail transaction in addition to the premium or the charge for a bail bond at the rates filed in accordance with the provisions of this code.

 

 

COLLATERAL; FIDUCIARY RELATIONSHIP.

 

      Sec. 882.  1.  A bail bondsman may accept collateral security in connection with a bail transaction, provided such collateral security is reasonable in relation to the face amount of the bond.

      2.  Such collateral security shall be received by the bail bondsman in his fiduciary capacity, and prior to any forfeiture of bail shall keep it separate and apart from any other funds or assets of such licensee. Any collateral received shall be returned to the person who deposited it with the bail bondsman or any assignee other than the bail bondsman as soon as the obligation, the satisfaction of which was secured by the collateral, is discharged. If the collateral is deposited to secure the obligation of a bond, it shall be returned upon the entry of any order by an authorized official by virtue of which liability under the bond is terminated. A certified copy of the minute order from the court wherein the bail or undertaking was ordered exonerated shall be deemed prima facie evidence of exoneration or termination of liability.

      3.  When a bail bondsman accepts collateral he shall give a written receipt for the same, and this receipt shall give in detail a full account of the collateral received.

 

 

SURRENDER OF DEFENDANT TO CUSTODY; RETURN OF PREMIUMS.

 

      Sec. 883.  If a bail bondsman or bail solicitor, without good cause, surrenders a defendant to custody prior to the time specified in the undertaking of bail or the bail bond for the appearance of the defendant, or prior to any other occasion where the presence of the defendant in court is lawfully required, the premium shall be returnable in full.

 

 

PROHIBITIONS.

 

      Sec. 884.  1.  No bail bondsman, general agent or bail solicitor shall:

      (a) Suggest or advise the employment of or name for employment any particular attorney to represent his principal.

      (b) Solicit business in or about any place where prisoners are confined or in or about any court.

      (c) Pay a fee or rebate or give or promise anything of value to any person in order to secure a settlement, compromise, remission or reduction of the amount of any undertaking or bail bond.

      (d) Pay a fee or rebate or give anything of value to an attorney in bail bond matters, except for legal services actually rendered.


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ê1971 Statutes of Nevada, Page 1916 (Chapter 660, AB 416)ê

 

      (e) Pay a fee or rebate or give or promise anything of value to the principal or anyone in his behalf.

      (f) Participate in the capacity of an attorney at a trial or hearing of one on whose bond he is surety, except for the purposes of surrendering the defendant, making motions to set aside orders of bail forfeitures and motions to exonerate bails and protecting his financial interest in such bond.

      2.  The following persons or classes shall not be bail bondsmen or bail solicitors and shall not directly or indirectly receive any benefits from the execution of any bail bond:

      (a) Jailers;

      (b) Police officers;

      (c) Justices of the peace;

      (d) Municipal or police judges;

      (e) Sheriffs, deputy sheriffs and constables; and

      (f) Any person having the power to arrest or having anything to do with the control of federal, state, county or municipal prisoners.

      (g) Trustees or prisoners incarcerated in any jail, prison or any other place used for the incarceration of persons.

      3.  A bail bondsman shall not sign nor countersign in blank any bond, nor shall he give the power of attorney to, or otherwise authorize, anyone to countersign his name to bonds unless the person so authorized is a licensed bondsman directly employed by the bondsman giving such power of attorney.

      4.  No bail bondsman, bail solicitor or general agent shall advertise or hold himself out to be a surety insurance company.

 

 

PROPERTY BONDSMAN; BAIL AGENTS; JUSTIFICATION OF SURETIES.

 

      Sec. 885.  1.  A property bondsman shall justify the sufficiency of his undertaking by attaching to each bail bond only United States currency, a United States postal money order, a cashier’s check or an affidavit or real property as security in the amount of such bond. Such affidavit shall be on a form prescribed by the commissioner.

      2.  A bail agent shall justify his suretyship by attaching a copy of the power of attorney issued to him by the surety insurer to each bond.

      3.  This section applies to bail bondsmen notwithstanding any other provision of law.

 

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 886.  Licensed bail bondsmen, bail solicitors and general agents shall also be subject to the following provisions of this code, to the extent reasonably applicable:

      1.  Sections 2 to 19, inclusive (scope and definitions);

      2.  Sections 21 to 55, inclusive (commissioner of insurance);

      3.  Section 213 (true, fictitious names);

      4.  Section 219 (temporary license);

      5.  Section 229 (fiduciary funds);


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ê1971 Statutes of Nevada, Page 1917 (Chapter 660, AB 416)ê

 

      6.  Section 230 (remittance of premiums);

      7.  Sections 234 to 237, inclusive (grounds, procedure for suspension, revocation, refusal of license);

      8.  Sections 310 to 339, inclusive (trade practices and frauds).

 

 

PENALTIES.

 

      Sec. 887.  1.  The commissioner may inform the appropriate district attorney of any violation of any provision of this chapter.

      2.  In addition to any other penalty provided in this chapter any person violating any provision of this chapter is guilty of a misdemeanor.

 

 

CHAPTER 36

 

UNCLAIMED FUNDS OF LIFE INSURERS

 

      Sec. 888.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 889 to 901, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 889.  This chapter shall be known as the Unclaimed Funds Act for Life Insurance Companies.

 

 

SCOPE.

 

      Sec. 890.  This chapter applies to unclaimed funds, as defined in section 891 of this act, of any life insurer doing business in this state where the last-known address, according to the records of the insurer, of the person entitled to the funds is within this state; but if a person other than the insured or annuitant is entitled to the funds and no address of such person is known to the insurer, or if it is not definite and certain from the records of the insurer what person is entitled to the funds, then in either event it shall be presumed for the purposes of this chapter that the last-known address of the person entitled to the funds is the same as the last-known address of the insured or annuitant according to the records of the insurer.

 

 

DEFINITIONS.

 

      Sec. 891.  1.  As used in this chapter:

      (a) “Life insurer” or “insurer” means any association or corporation, including a fraternal benefit society as defined by section 673 of this act, transacting within this state the business of insurance on the lives of persons or insurance appertaining thereto, including, but not by way of limitation, endowments and annuities.

      (b) “Unclaimed funds” means all moneys held and owing by any life insurer doing business in this state which have remained unclaimed and unpaid for 7 years or more after it is established from the records of the insurer that such moneys became due and payable under any life or endowment insurance policy or annuity contract which has matured or terminated.


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ê1971 Statutes of Nevada, Page 1918 (Chapter 660, AB 416)ê

 

insurer that such moneys became due and payable under any life or endowment insurance policy or annuity contract which has matured or terminated.

      2.  A life insurance policy not matured by actual proof of the prior death of the insured shall be deemed to be matured and the proceeds thereof shall be “due and payable” within the meaning of this chapter, if the policy is in force when the insured has attained the limiting age under the mortality table on which the reserve is based.

      3.  Moneys otherwise admittedly due and payable shall be deemed to be “held and owing” within the meaning of this chapter, although the policy or contract has not been surrendered as required.

 

 

REPORTS.

 

      Sec. 892.  1.  Every life insurer shall on or before May 1 of each year make to the commissioner a written report of all unclaimed funds, as defined in section 891 of this act, held and owing by it on December 31 next preceding.

      2.  The report shall be signed and sworn to by an officer of the insurer and shall set forth:

      (a) In alphabetical order, the full name of the insured or annuitant, his last-known address according to the insurer’s records, and the policy or contract number.

      (b) The amount appearing from the insurer’s records to be due on the policy or contract.

      (c) The date the unclaimed funds became payable.

      (d) The name and last-known address of each beneficiary or other person who, according to the insurer’s records, may have an interest in the unclaimed funds.

      (e) Such other identifying information as the commissioner may require.

      3.  Items of value under $25 each may be reported in the aggregate.

 

 

NOTICE OF UNCLAIMED FUNDS; PUBLICATION.

 

      Sec. 893.  1.  On or before September 1 following the making of the reports under section 892 of this act, the commissioner shall cause to be published notices based on the information contained in the reports and entitled “Notice of Certain Unclaimed Funds Held and Owing by Life Insurers.” Such a notice shall be published once a week for 2 successive weeks in a newspaper published or having a general circulation in each county of this state in which is located the last-known address of a person appearing to be entitled to such funds.

      2.  Each notice shall set forth in alphabetical order the names of the insureds or annuitants under policies or contracts where the last-known address of the person appearing to be entitled to such funds is in the county of publication or general circulation, together with:

      (a) The amount reported due and the date it became payable.

      (b) The name and last-known address of each beneficiary or other person who, according to the insurer’s reports, may have an interest in the unclaimed funds.


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ê1971 Statutes of Nevada, Page 1919 (Chapter 660, AB 416)ê

 

person who, according to the insurer’s reports, may have an interest in the unclaimed funds.

      (c) The name and address of the insurer.

      3.  The notice shall also state that the unclaimed funds will be paid by the insurer to persons establishing to its satisfaction before the following December 1 their right to receive the same, and that not later than the following December 20 such unclaimed funds still remaining will be paid to the commissioner, who shall thereafter be liable for the payment thereof.

      4.  It shall not be obligatory upon the commissioner to publish any item of less than $50 in such notice, unless the commissioner deems such publication to be in the public interest.

      5.  The expenses of publication shall be charged against the special trust fund provided for in section 897 of this act.

 

 

PAYMENT TO COMMISSIONER.

 

      Sec. 894.  1.  All unclaimed funds contained in the report required to be filed by section 892 of this act, excepting those which have ceased to be unclaimed funds, shall be paid over to the commissioner on or before the following December 20.

      2.  The commissioner shall have the power, for cause shown, to extend for a period of not more than 1 year the time within which a life insurer shall file any report and in such event the time for publication and payment required by this chapter shall be extended for a like period.

 

 

CUSTODY OF UNCLAIMED FUNDS IN STATE; INSURERS INDEMNIFIED.

 

      Sec. 895.  Upon the payment of unclaimed funds to the commissioner, the state shall assume, for the benefit of those entitled to receive the same and for the safety of the money so paid, the custody of the unclaimed funds, and the life insurer making such payment shall immediately and thereafter be relieved of and held harmless by the state from any and all liability for any claim or claims which exist at such time with reference to the unclaimed funds or which thereafter may be made or may come into existence on account of or in respect to any such unclaimed funds.

 

 

REIMBURSEMENT FOR CLAIMS PAID BY INSURERS.

 

      Sec. 896.  Any life insurer which has paid moneys to the commissioner pursuant to the provisions of this chapter may make payment to any person appearing to such insurer to be entitled thereto, and upon proof of such payment the commissioner shall forthwith reimburse such insurer for such payment out of the special trust fund in his custody or, if the special trust fund is insufficient, out of the general fund of the state.


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ê1971 Statutes of Nevada, Page 1920 (Chapter 660, AB 416)ê

 

SPECIAL TRUST FUND; ADMINISTRATION.

 

      Sec. 897.  Upon receipt of any unclaimed funds from life insurers by the commissioner, he shall pay forthwith three-fourths of the amount thereof into the general fund of the state for the use of the state. The remaining one-fourth shall be administered by him as a special trust fund for the purposes of this chapter, and deposited in the manner provided by law for the deposit of such funds. At the end of each calendar year, any unclaimed funds which have been a part of such special trust fund for a period of 7 years or more shall be paid into the general fund of the state for the use of the state, but the special trust fund shall never be so reduced to less than $1,000.

 

 

DETERMINATION AND REVIEW OF CLAIMS.

 

      Sec. 898.  Any person claiming to be entitled to unclaimed funds paid to the commissioner may file a claim at any time with the commissioner. The commissioner shall possess full and complete authority to accept or reject any such claim. If he rejects a claim or fails to act thereon within 90 days after receipt of the claim, the claimant may make application to the district court of Ormsby County, upon not less than 30 days’ notice to the commissioner, for an order to show cause why he should not accept and pay the claim.

 

 

PAYMENT OF ALLOWED CLAIMS.

 

      Sec. 899.  Any claim which is accepted by the commissioner or ordered to be paid by him by a court of competent jurisdiction shall be paid out of the special trust fund in his custody or, if such special trust fund shall be insufficient, it shall be paid out of the general fund of the state.

 

 

RECORDS REQUIRED.

 

      Sec. 900.  The commissioner shall keep in his office a public record of each payment of unclaimed funds received by him from any life insurer. The record shall show in alphabetical order the name and last-known address of each insured or annuitant, and of each beneficiary or other person who, according to the insurer’s reports, may have an interest in such unclaimed funds, and with respect to each policy or contract, its number, the name of the insurer and the amount due.

 

 

INAPPLICABILITY OF OTHER STATUTES.

 

      Sec. 901.  No other statute of this state relating to escheat or unclaimed funds in force on the effective date of this act shall apply to life insurers, nor shall any such statute enacted after the effective date of this act so apply unless specifically made applicable by its terms.


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ê1971 Statutes of Nevada, Page 1921 (Chapter 660, AB 416)ê

 

CHAPTER 37

 

AMENDATORY AND TRANSITORY PROVISIONS

 

STATEMENT REQUIREMENTS INAPPLICABLE TO SECURITIES OF CERTAIN INSURERS.

 

      Sec. 902.  NRS 90.153 is hereby amended to read as follows:

      90.153  The requirements of NRS 90.140 and 90.150 do not apply to the securities of any [insurance company] insurer which is subject to the provisions of [chapter 682 of NRS.] sections 553 to 578, inclusive, of this amendatory act.

 

 

LICENSING, REGULATION OF LAWFUL TRADES, BUSINESSES BY CITIES INCORPORATED UNDER GENERAL LAW.

 

      Sec. 903.  NRS 266.355 is hereby amended to read as follows:

      266.355  1.  The city council shall have the power to fix, impose and collect a license tax on and to regulate all character of lawful trades, callings, industries, occupations, professions and business conducted in whole or part within the city, including:

      (a) Hotels, lodginghouses accommodating four or more lodgers, and taverns.

      (b) Cafes, chophouses, eating houses, lunch counters and restaurants.

      (c) Bakeries, butcher shops, cold storage plants, delicatessens, flour mills, grocers, ice peddlers, manufacturers of soda water or other or any soft drinks, and slaughterhouses.

      (d) Boot stores, cobblers, dressmaking establishments, milliners, shoe shops and stores, tailors and tailor shops.

      (e) Bicycle shops, blacksmith shops, brickyards, car shops, contracting mechanics, contractors, builders, electric supply houses, foundries, garages, ironworks, machine shops, manufacturers, oil refineries, oil wells or tanks, paint or oil stores, planing mills, plumbing shops, pressed brick yards, repair shops, sash and door factories, soap factories, tanneries, tinkers, and tin shops when separate from hardware stores.

      (f) Barbershops, cigar stores, confectionery stores, drugstores, dry goods stores of every, any and all kinds, furniture stores, gun stores, gunsmith shops, glass and crockery stores, jewelry stores, notions and notion stores, pipe and tobacco stores, secondhand stores, sporting, hunting and fishing tackle stores, and stationery stores.

      (g) Bootblacks and bootblack stands, fruit stands, lemonade stands, newspaper stands, peanut stands, popcorn stands, refreshment or coffee stands, tamale stands or shops, and booths and sheds.

      (h) Patent medicine agencies, sewing machine agents, and agencies of any and all kinds.

      (i) Advertising by billboards, placards and the like, coal dealers, collection agencies and collectors, cycleries, daily, weekly, semiweekly, monthly and semimonthly newspapers or publications, marble or stone dealers, messenger service establishments, or purchasers or brokers, sampling works, warehouses, and wood and fuel dealers.


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ê1971 Statutes of Nevada, Page 1922 (Chapter 660, AB 416)ê

 

dealers, messenger service establishments, or purchasers or brokers, sampling works, warehouses, and wood and fuel dealers.

      (j) Abstract of title companies or persons furnishing abstracts of title, bankers, brokers of any, every and all kinds, building and loan companies and agents and solicitors for the same.

      (k) Insurance agents [who solicit, negotiate or effect contracts of insurance in any of the classifications listed in chapter 681 of NRS, but only for revenue purposes and only if the principal place of business of such agents is located within the city.] , brokers, analysts, adjusters and managing general agents within the limitations and under the conditions prescribed in section 91 of this amendatory act.

      (l) Auctioneers, job printers, photographers, real estate agents, real estate solicitors, stockbrokers, undertakers, and upholsterers.

      (m) Cabs, drays, express wagons, hackney coaches, hacks, job wagons, omnibuses and other public vehicles, and to require schedules of charges to be posted in and upon such public vehicles.

      (n) Carpet cleaners, cloth cleaning and dyeing establishments, laundries, and steam renovating works.

      (o) Electric light companies, express companies, power companies, street railway companies operating in whole or in part within the city, telegraph companies, telephone companies, and water companies.

      (p) Cattle or horse corrals, horseshoeing shops, livery stables, saddle or harness makers or shops, sale stables, wagonmakers, and wheelwrights.

      (q) Billiard tables, bowling alleys, circuses, melodeon performances, pool tables, resorts for amusements of all kinds, shooting galleries, shows, table games played with cue and balls or other mechanical device, theaters, theatrical performances, all exhibitions and amusements, and performances of any, every and all kinds for which an admission fee is charged or which may be held in any house, place or enclosure where wines, spirituous, malt, vinous or intoxicating liquors are sold or given away.

      (r) Barrooms, brewery agencies, brewing companies, manufacturers of beer, malt, spirituous or vinous liquors or other or any alcoholic beverages, saloons, and wholesale liquor houses.

      (s) Games and gaming houses.

      (t) Merchants of any, every and all kinds.

      (u) Trades and traders of all kinds.

      (v) All and singular each, every and any business, and all trades and professions, including attorneys, doctors, physicians and dentists, and all character of lawful business or callings not herein specifically named.

      2.  In fixing licenses the council must make the same uniform as to each trade, calling, business, occupation or profession.

 

 

LICENSING, REGULATION OF LAWFUL TRADES, BUSINESSES BY UNINCORPORATED TOWNS.

 

      Sec. 904.  NRS 269.170 is hereby amended to read as follows:

      269.170  1.  In addition to the powers and jurisdiction conferred by other laws, the town board or board of county commissioners shall have the power in any unincorporated town or city:

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1923 (Chapter 660, AB 416)ê

 

other laws, the town board or board of county commissioners shall have the power in any unincorporated town or city:

      (a) To fix and collect a license tax on, and regulate, having due regard to the amount of business done by each person or firm so licensed, all places of business and amusement so licensed, as follows:

             (1) Artisans, artists, assayers, auctioneers, bakers, banks and bankers, barbers, boilermakers, cellars and places where soft drinks are kept or sold, clothes cleaners, foundries, laundries, lumberyards, manufacturers of soap, soda, borax or glue, markets, newspaper publishers, pawnbrokers, undertakers, wood and coal dealers.

             (2) Bootmakers, cobblers, dressmakers, milliners, shoemakers, tailors.

             (3) Boardinghouses, hotels, lodginghouses, restaurants and refreshment saloons.

             (4) Barrooms, gaming, manufacturers of liquors and other beverages, saloons.

             (5) Billiard tables, bowling alleys, caravans, circuses, concerts and other exhibitions, dancehouses, melodeons, menageries, shooting galleries, skating rinks, theaters.

             (6) Corrals, hayyards, livery and sale stables, wagonyards.

             (7) Electric light companies, illuminating gas companies, power companies, telegraph companies, telephone companies, water companies.

             (8) Carts, drays, express companies, freight companies, job wagons, omnibuses and stages.

             (9) Brokers, commission merchants, factors, general agents, mercantile agents, merchants and traders, stockbrokers.

             (10) Drummers, hawkers, peddlers, solicitors.

             (11) Insurance agents [who solicit, negotiate or effect contracts of insurance in any of the classifications listed in chapter 681 of NRS, but only for revenue purposes and only if the principal place of business of such agents is located in such unincorporated town or city.] , brokers, analysts, adjusters and managing general agents within the limitations and under the conditions prescribed in section 91 of this amendatory act.

      (b) To fix and collect a license tax upon all professions, trades or business within the town or city not heretofore specified.

      2.  Any license tax levied for the purposes of NRS 244.640 to 244.780, inclusive, shall constitute a lien upon the real and personal property of the business upon which the tax was levied until the tax is paid. The lien shall be enforced in the same manner as liens for ad valorem taxes on real and personal property. The town board or other governing body of the unincorporated town may delegate the power to enforce such liens to the country fair and recreation board.

 

 

INVESTMENT RESPONSIBILITY OF STATE BOARD OF FINANCE FOR INSURANCE SECURITY FUND.

 

      Sec. 904.5.  Chapter 355 of NRS is hereby amended by adding thereto a new section which shall read as follows:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1924 (Chapter 660, AB 416)ê

 

      As provided in section 366 of this act, the state board of finance shall invest the moneys in the insurance security fund.

 

 

CONSTRUCTION CONTROL’S BOND.

 

      Sec. 905.  NRS 627.180 is hereby amended to read as follows:

      627.180  1.  Except for savings and loan associations, state banks and national banking associations, licensed to do business in the State of Nevada, under laws of the State of Nevada, or under the laws of the United States, or title insurers or underwritten title insurance companies authorized to do business in the State of Nevada, every construction control doing business in the State of Nevada shall, within 30 days immediately following July 1, 1965, file with the [real estate administrator] state contractors’ board a bond, executed by some corporation authorized to issue surety bonds in this state, in a penal sum equal to 1¼ times the amount of capital in the business but in no event less than $20,000, and such bond shall be kept in full force and effect or replaced by a like bond as a condition to continuing to do business as a construction control in the State of Nevada.

      2.  The form of bond required is as follows:

 

      Bond No.

 

CONSTRUCTION CONTROL BOND

 

Know All Men by These Presents:

      That I, ..........................................., having a principal place of business in ........................., Nevada, as principal, and ........................., a corporation licensed to execute surety bonds under the provisions of [NRS 693.100,] the Nevada Insurance Code, as surety, are held and firmly bound to the State of Nevada, for the use of any person by whom funds are entrusted to the principal or to whom funds are payable by the principal, in the sum of ............... Dollars, lawful money of the United States of America, to be paid to the State of Nevada, for which payment well and truly to be made we bind ourselves, our heirs, executors and successors, jointly and severally, firmly by these presents:

      The Condition of the Above Obligation Is Such That:

      Whereas, Under the Construction Control Law, certain duties, obligations and requirements are imposed upon all persons, copartnerships, associations or corporations acting as construction controls;

      Now, Therefore, If the principal and its agents and employees shall faithfully and in all respects conduct business as a construction control in accordance with the provisions of the Construction Control Law, this obligation shall be void, otherwise to remain in full force and effect;

      Provided, However, That the surety or sureties may cancel this bond and be relieved of further liability hereunder by delivering 30 days’ written notice of cancellation to the principal; however, such cancellation shall not affect any liability incurred or accrued hereunder prior to the termination of such 30-day period;

      Provided Further, That the total aggregate liability of the surety or sureties herein for all claims which may arise under this bond shall be limited to the payment of ...............


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ê1971 Statutes of Nevada, Page 1925 (Chapter 660, AB 416)ê

 

sureties herein for all claims which may arise under this bond shall be limited to the payment of ............... Dollars.

      In Witness Whereof, The principal and surety have hereunto set their hands this .............. day of ..............................., 19 .........

                                                                                .........................................................

                                                                                By....................................................

                                                                                                                        Principal

                                                                                (Surety)

                                                                                By....................................................

                                                                                                                        Attorney

 

 

DISHONORABLE, UNPROFESSIONAL CONDUCT OF DENTISTS.

 

      Sec. 905.5.  NRS 631.050 is hereby amended to read as follows:

      631.050  1.  As used in this chapter, “dishonorable or unprofessional conduct” is declared to include:

      (a) Conviction of a felony or misdemeanor involving moral turpitude, or conviction of any criminal violation of this chapter; or

      (b) Employing, directly or indirectly any student or any suspended or unlicensed dentist to perform operations of any kind in treating or correction of the teeth or jaws, except as provided in this chapter; or

      (c) The publication or circulation, directly or indirectly, of any fraudulent, false or misleading statement as to the skill or method of practice of any dentists; or

      (d) The use of advertising in which reference is made to any anesthetic, drug, formula, material, medicine, method or system used or to be used; or the advertising of the performance of any dental operation without causing pain; or the advertising of any free dental service or examination as an inducement to secure dental patronage; or the advertising of price, cost, charge, fee or terms of credit for the services performed or to be performed, or for material used or to be used, by any person engaged as principal or agent in the practice of dentistry; or the advertising of a guarantee for any dental services; or the advertising of artificial teeth or dentures with or without the use of any representation of a tooth, teeth, bridgework or denture, or of any portion of the human head, or the exhibition or use of specimens of dental work, large display signs, glaring light signs, electric or neon, or any signs, posters or other media calling attention of the public to any person engaged in the practice of dentistry. Any person taking up or retiring from the practice of dentistry, changing his place of business or business telephone, or who intends to absent himself from, or return to, his place of business may advertise such fact in a newspaper for not more than 3 successive publications, which advertisement shall not exceed 2 column inches; or

      (e) The claiming or inferring of professional superiority over neighboring practitioners; or

      (f) The giving of a public demonstration of skill or methods of practicing upon or along the streets or highways or any place other than the office where the licensee is known to be regularly engaged in his practice; or


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ê1971 Statutes of Nevada, Page 1926 (Chapter 660, AB 416)ê

 

      (g) Fraud or misrepresentation in connection with the securing of a license; or

      (h) Willful or repeated violations of the rules of the board of health; or

      (i) Division of fees or agreeing to split or divide the fees received for services with any person for bringing or referring a patient, without the knowledge of the patient or his legal representative, but this shall not be construed to forbid licensed dentists from practicing in a partnership and sharing professional fees, to forbid a licensed dentist from employing another licensed dentist or dental hygienist, or to forbid a licensed dentist from rendering services as a member of a nonprofit professional service corporation which has been formed pursuant to chapters 81 and [696 of NRS;] sections 732 to 763, inclusive, of this amendatory act; or

      (j) Employing, procuring, inducing, aiding or abetting a person not licensed or registered as a dentist to engage in the practice of dentistry; but the patient practiced upon shall not be deemed an accomplice, employer, procurer, inducer, aider, or abettor within the meaning of this chapter; or

      (k) Professional connection or association with, or lending his name to, anyone who is engaged in the illegal practice of dentistry; professional connection or association with any person, firm or corporation holding himself, themselves, or itself out in any manner contrary to this chapter; or

      (l) Use of the name “clinic,” “institute,” or other title or designation that may suggest a public or semipublic activity; or

      (m) Failure to pay license fees; or

      (n) Chronic or persistent inebriety, or addiction to drugs, to such an extent as to render him unsafe or unreliable as a practitioner, or such gross immorality as tends to bring reproach upon the dental profession; or

      (o) Willful negligence in the practice of dentistry or dental hygiene; or

      (p) Practice by a dental hygienist in any place not authorized by this chapter; or

      (q) Practicing while his license is suspended or without a renewal certificate; or

      (r) Practicing under a false or assumed name.

      2.  The enumeration of the acts in subsection 1 shall not be construed as a complete definition of dishonorable or unprofessional conduct, or as authorizing or permitting the performance of other and similar acts, or as limiting or restricting the board from holding that other or similar acts constitute unprofessional or dishonorable conduct.

 

 

APPLICABILITY OF PRIVATE INVESTIGATORS’ LAW TO ADJUSTERS.

 

      Sec. 906.  NRS 648.190 is hereby amended to read as follows:

      648.190  This chapter shall not apply:

      1.  To any detective or officer belonging to the law enforcement agencies of the State of Nevada or the United States, or of any county or city of the State of Nevada.

      2.  To special police officers appointed by the police department of any city, county, or city and county within the State of Nevada while any such officer is engaged in the performance of his official duties, or employed as a repossessor by any bank which is organized under the laws of this state or by a national bank which does a banking business in this state.


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ê1971 Statutes of Nevada, Page 1927 (Chapter 660, AB 416)ê

 

any city, county, or city and county within the State of Nevada while any such officer is engaged in the performance of his official duties, or employed as a repossessor by any bank which is organized under the laws of this state or by a national bank which does a banking business in this state.

      3.  To insurance adjusters [licensed pursuant to, or to associate adjusters as defined in, chapter 685 of NRS] and their associate adjusters licensed pursuant to the Nevada Insurance Adjusters Law who are not otherwise engaged in the business of private investigators.

      4.  To any person employed as special agent, detective or private investigator for one employer exclusively in connection with the affairs of that employer.

      5.  To a person engaged exclusively in the business of obtaining and furnishing information as to the financial rating of persons.

      6.  To a charitable philanthropic society or association duty incorporated under the laws of this state which is organized and maintained for the public good and not for private profit.

      7.  To an attorney at law in performing his duties as such.

      8.  To a collection agency unless engaged in business as a repossessor, licensed by the superintendent of banks, or an employee thereof while acting within the scope of his employment while making an investigation incidental to the business of the agency, including an investigation of the location of a debtor or his assets and of property which the client has an interest in or lien upon.

      9.  To admitted insurers and agents and insurance brokers licensed by the state, performing duties in connection with insurance transacted by them.

 

 

INSURANCE ON PROPERTY, OBLIGORS’ LIVES UNDER NEVADA INSTALLMENT LOAN AND FINANCE ACT.

 

      Sec. 907.  NRS 675.300 is hereby amended to read as follows:

      675.300  1.  A licensee may require a borrower to insure tangible personal property when offered as security for a loan under this chapter against any substantial risk of loss, damage or destruction for an amount not to exceed the actual value of such property and for a term and upon conditions which are reasonable and appropriate considering the nature of the property and the maturity and other circumstances of the loan.

      2.  A licensee may provide, obtain or take as security for a loan insurance on the life and on the health or disability, or both, of one party obligated on the loan provided that any such insurance provided or obtained by the licensee shall comply with the applicable provisions of [NRS 684.020, 690.310 to 690.450, inclusive, and 692.500 to 692.630, inclusive.] sections 522 to 535, inclusive, of this amendatory act.

      3.  In accepting any insurance provided by this section as security for a loan, the licensee may deduct the premiums or identifiable charge therefor from the proceeds of the loan, which premium or identifiable charge shall not exceed those filed with and approved by the commissioner of insurance, and remit such premiums to the insurance company writing such insurance, and any gain or advantage to the licensee, any employee, officer, director, agent, affiliate or associate from such insurance or its sale shall not be considered as additional or further charge in connection with any loan made under this chapter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1928 (Chapter 660, AB 416)ê

 

sale shall not be considered as additional or further charge in connection with any loan made under this chapter. Not more than one policy of life insurance and one policy providing accident and health coverage shall be written by a licensee in connection with any loan transaction under this chapter, and a licensee shall not require the borrower to be insured as a condition of any loan. If the unpaid balance of the loan is prepaid in full by cash or other thing of value, refinancing, renewal, a new loan or otherwise, the charge for any credit life insurance and any credit accident and health insurance shall be refunded or credited in accordance with the method established in NRS 675.290 for refunding or computing credit charges. Whenever insurance is written in connection with a loan transaction pursuant to this section, the licensee shall deliver or cause to be delivered to the borrower the certificate, instrument or other memorandum showing the cost thereof to the borrower, within 30 days from the date of the loan. All such insurance shall be written by a company authorized to conduct such business in this state, and the licensee shall not require the purchase of such insurance from any agent or broker designated by the licensee.

      4.  Every insurance policy or certificate written in connection with a loan transaction, pursuant to subsection 2 shall provide for cancellation of the coverage and a refund of the premium or identifiable charge unearned, upon the discharge of the loan obligation for which such insurance is security, without prejudice to any claim. Such refund shall be under a formula filed by the insurer with the [department of insurance.] insurance division of the department of commerce.

 

 

EXISTING CERTIFICATES OF AUTHORITY: CONTINUATION.

 

      Sec. 908.  1.  Every certificate of authority of an insurer in force immediately prior to the effective date of this act and existing under any law repealed by this act shall be valid until midnight of May 31 next following such effective date, unless earlier terminated in accordance with this act.

      2.  Every certificate of authority of a motor club or fraternal benefit society in force immediately prior to the effective date of this act and existing under any law repealed by this act shall be valid until midnight on June 30 next following such effective date, unless earlier terminated in accordance with this act.

      3.  Such certificate of authority upon first renewal under this act shall be replaced by a certificate of authority in a form consistent with this act, and shall thereafter be subject to continuance, suspension, revocation or termination as though originally issued under this act.

 

 

EXISTING LICENSES AND APPOINTMENTS: CONTINUATION.

 

      Sec. 909.  1.  Every appointment of a life, health or general lines agent or of a solicitor, or limited license, or license of a broker or surplus lines broker or professional bondsman, in force immediately prior to the effective date of this act under any law repealed by this act shall be valid until midnight of April 30 next following such effective date, unless earlier suspended, revoked or terminated in accordance with this act.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1929 (Chapter 660, AB 416)ê

 

      2.  Every license of an adjuster, associate adjuster, managing general agent, fraternal benefit society agent, or motor club agent in force immediately prior to the effective date of this act under any law repealed by this act shall be valid until midnight of June 30 next following such effective date, unless earlier suspended, revoked or terminated in accordance with this act.

      3.  Upon first renewal or continuance under this act every such license shall be replaced by, and every such continuance shall be effectuated in the manner provided for, a license or appointment in form or manner consistent with this act, and shall thereafter be subject to continuation, suspension, revocation or termination as though originally issued or made under this act.

      4.  If application of any of the above provisions results in the shortening by 60 days or more of the license period of a particular existing license or appointment for which the fee has been paid, the commissioner shall allow a credit of the unearned pro rata portion of such fee upon the fee payable under this code for the continuation of the appointment or for the new license, as the case may be.

 

 

EXISTING FORMS AND FILINGS.

 

      Sec. 910.  Every form of insurance document and every rate or other filing lawfully in use immediately prior to the effective date of this act may continue to be used or is effective until the commissioner otherwise prescribes pursuant to this act; but before expiration of 1 year from and after such effective date neither this act nor the commissioner shall prohibit the use of any such document, rate or filing because of any power, prohibition or requirement contained in this act which did not exist under laws in force immediately prior to such effective date.

 

 

INSURANCE DIVISION, COMMISSIONER’S TENURE PRESERVED.

 

      Sec. 911.  Continuation by this act of the insurance division of the department of commerce and the office of commissioner of insurance, existing under any law repealed by this act, preserves such division and the tenure of the individual holding such office on the effective date of this act.

 

 

CONTINUATION OF DEPOSITS.

 

      Sec. 912.  Any deposit made in this state under any law repealed by this act, with or through the commissioner, or by any insurer in compliance with a condition precedent to or in connection with its certificate of authority to transact insurance in this state, and so on deposit immediately prior to the effective date of this act, shall be given full recognition as fulfillment, to the extent of such deposit, of any deposit so required for similar purposes under this act. The deposit shall hereafter be held for the purpose applicable thereto as specified in this act, and shall be subject in all respects to the provisions of this act applicable to similar deposits newly made under this act.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1930 (Chapter 660, AB 416)ê

 

APPLICABILITY OF CODE UNDER UNREPEALED LAWS.

 

      Sec. 913.  Any laws of Nevada, other than this act, remaining in force after the effective date of this act which refer to certain provisions of law repealed under section 916 of this act, shall be deemed to refer to those provisions of this act which are in substance the same or substantially the same as such repealed provisions.

 

 

SAVING CLAUSE.

 

      Sec. 914.  This act shall not impair or affect any act done, offense committed or right accruing, accrued or acquired, or liability, penalty, forfeiture or punishment incurred, prior to the time this act takes effect, but the same may be enjoyed, asserted, enforced, prosecuted or inflicted, as fully and to the same extent as if this act had not been passed.

 

 

CONSTITUTIONALITY AND SEVERABILITY.

 

      Sec. 915.  If any section, subsection, paragraph, subparagraph, sentence, part or provision of this act is found to be invalid or ineffective by any court it shall be conclusively presumed that this act would have been passed by the legislature without such invalid section, subsection, paragraph, subparagraph, sentence, part or provision, and this act as a whole shall not be declared invalid by reason of the fact that one or more sections, subsections, paragraphs, subparagraphs, sentences, parts or provisions may be so found invalid.

 

 

DESCRIPTIVE HEADINGS, CATCHLINES NO PART OF ACT.

 

      Sec. 915.5.  The various chapter numbers and titles, the descriptive headings and subheadings and the catchlines immediately preceding the texts of individual sections do not constitute part of this act and are included only for the purpose of convenient reference.

 

 

REPEALS.

 

      Sec. 916.  1.  Chapter 687 of NRS is repealed on passage and approval of this act.

      2.  Chapters 679, 680, 681, 682, 683, 684, 685, 686, 688, 690, 691, 692, 693, 694, 695 and 696 of NRS are repealed effective on January 1, 1972.

 

 

EFFECTIVE DATE.

 

      Sec. 917.  1.  Except as provided in subsection 2 of this section and in subsection 1 of section 916 of this act, this act shall become effective on January 1, 1972.

      2.  Sections 815 to 871, inclusive, of this act, relating to conservation, rehabilitation and liquidation of delinquent insurers, and this section shall become effective upon passage and approval.

 

________


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1931ê

 

CHAPTER 661, AB 806

Assembly Bill No. 806–Committee on Commerce

CHAPTER 661

AN ACT to amend an act entitled “An Act relating to insurance and the insurance business; enacting the Nevada Insurance Code, which, among other things, defines words and terms; provides powers and duties of the commissioner of insurance; imposes fees and taxes; regulates agents, brokers, solicitors, adjusters, motor vehicle physical damage appraisers, analysts, bail bondsmen, motor clubs, nonprofit hospital and medical and dental service corporations, fraternal benefit societies, reciprocal insurers and rates and rate service organizations; authorizes insurers and restricts unauthorized insurers; provides for the disposition of unclaimed funds of life insurers; specifies the kinds of insurance and the limits of risk; provides for reinsurance and surplus lines; regulates casualty, health, property, surety, title and life insurance and annuity contracts; provides for the formation, capitalization and financing of domestic stock and mutual insurers, their assets, liabilities, investments, deposits and powers; regulates and prohibits certain trade practices, fraud and insider trading of equity securities; provides for continuity of management of insurers during emergencies and the conservation, rehabilitation and liquidation of delinquent insurers; and provides penalties; repealing chapters 679 to 688, inclusive, and chapters 690 to 696, inclusive, of NRS, relating to insurance and the insurance business; and providing other matters properly relating thereto,” being Assembly Bill No. 416 of the 56th session of the Nevada legislature.

 

[Approved May 5, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  Section 10 of the above-entitled act is hereby repealed.

      Sec. 2.  Section 17 of the above-entitled act is hereby amended to read as follows:

      Section  17.  [No] Unless otherwise provided, no provision of this code shall apply to:

      1.  Fraternal benefit societies (as identified in sections 673 to 730, inclusive, of this act) except as stated in sections 673 to 730, inclusive, of this act (fraternal benefit societies).

      2.  Hospital, medical or dental service corporations (as identified in sections 732 to 763, inclusive, of this act) except as stated in sections 732 to 763, inclusive, of this act (hospital, medical or dental service corporations).

      3.  Motor clubs (as identified in sections 765 to 813, inclusive, of this act) except as stated in sections 765 to 813, inclusive, of this act (motor clubs).

      4.  Bail bondsmen (as identified in sections 873 to 887, inclusive, of this act) except as stated in section 92 (general premium tax) and sections 873 to 887, inclusive, of this act (bail bondsmen).

      Sec. 3.  The above-entitled act is hereby amended by adding thereto a new section designated section 22.5, to follow section 22, and to read as follows:

      Section 22.5.  1.  The commissioner shall have had at least 2 years’ responsible experience in the field of insurance, including but not limited to one or more of the following endeavors: Administration, sales, law, counseling and education.

      2.  He shall not be a stockholder in or directly or indirectly connected with the management or affairs of any insurance company or insurance brokerage or agency.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1932 (Chapter 661, AB 806)ê

 

with the management or affairs of any insurance company or insurance brokerage or agency.

      Sec. 4.  Section 30 of the above-entitled act is hereby amended to read as follows:

      Section 30.  1.  The commissioner, his deputy or any examiner, assistant or employee of the division shall not be connected with the management or be a stockholder, or be otherwise financially interested in any insurer, insurance holding company or its parent, subsidiaries or affiliates, insurance agency or broker, insurance trade association, premium finance company, adjuster or other licensee under this code, or be pecuniarily interested in any insurance transaction except as a policyholder or claimant under a policy, except that as to matters wherein a conflict of interests does not exist on the part of any such individual, the commissioner may employ or retain from time to time insurance actuaries, examiners, accountants, attorneys or other technicians who are independently practicing their professions even though from time to time similarly employed or retained by insurers or others.

      2.  Subsection 1 shall not be deemed to prohibit:

      (a) Receipt by any such individual of fully vested commissions or fully vested retirement benefits to which he is entitled by reason of services performed prior to becoming commissioner or prior to employment by the commissioner; or

      (b) Investment in shares of regulated diversified investment companies; or

      (c) Mortgage loans made under customary terms and in the ordinary course of business.

      3.  [The commissioner shall not accept employment with any insurer, insurance holding company, its parent, subsidiaries or affiliates, insurance agency or broker, insurance trade association, premium finance company, adjuster or other licensee under this code for 1 year after leaving office.

      4.] Any person knowingly violating this section is guilty of a misdemeanor.

      Sec. 5.  Section 34.3 of the above-entitled act is hereby amended to read as follows:

      Section 34.3.  1.  The commissioner [shall:

      (a) Take measures to enhance the public understanding of insurance coverages purchased by consumers and encourage price competition among insurers.

      (b) Develop, promulgate and revise as he deems appropriate standard policies in each of the several areas of insurance appropriate for sale in the State of Nevada. These policies shall be known officially as the Standard Policies of the Commissioner of Insurance of the State of Nevada (short title: Nevada Standard Policies). The commissioner will give these policies and their effectiveness in loss instances appropriate publicity accompanied by such disseminations of supporting and explanatory information as he deems necessary for a progressively better public understanding of the insurance coverage purchased by the consumers.

      2.  The sale or offer for sale of any policy of any type by an insurer is conditioned upon an offer by the insurer also to sell the applicable Nevada Standard Policy or Policies together with a clear and prominent indication of the price quoted for the standard policy.


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ê1971 Statutes of Nevada, Page 1933 (Chapter 661, AB 806)ê

 

Nevada Standard Policy or Policies together with a clear and prominent indication of the price quoted for the standard policy.

      3.  Endorsements changing or adding to coverage may be added to the standard policy and the price of the total insurance package may then differ from the price indicated for the standard policy.] may:

      (a) Take measures to enhance the public understanding of insurance coverages purchased by consumers and encourage price competition among insurers and a public understanding of the standards promulgated under paragraph (b).

      (b) Develop, promulgate and revise as he deems appropriate, standards in each of the several areas of insurance appropriate to be applied to policies sold in the State of Nevada. The standards shall seek to ensure that policies shall not be unjust, unfair, inequitable, unfairly discriminatory, misleading, deceptive, obscure or encourage misrepresentation or misunderstanding of the contract.

      2.  Nothing in this section shall prohibit an insurer from offering policies encompassing standards more favorable to the insured than those promulgated under this section.

      Sec. 6.  Section 34.7 of the above-entitled act is hereby amended to read as follows:

      Section 34.7.  The commissioner may by rule or regulation require any or all [licensees or classes thereof] insurers to designate a special complaint representative, who may be an officer, employee or agent, to investigate and report on complaints received from insureds or other persons. In order to achieve some degree of independence and authority in such representatives, the commissioner may require that they report directly to the board of directors or other specified office, or that they have additional authority or status.

      Sec. 7.  Section 79 of the above-entitled act is hereby amended to read as follows:

      Section 79.  The general corporation laws of this state shall not apply to foreign insurers holding certificates of authority to transact insurance in this state [.] , except as required by NRS 80.190.

      Sec. 8.  Section 84.5 of the above-entitled act is hereby amended to read as follows:

      Section 84.5.  1.  Every insurer except life insurers shall, if requested by the commissioner, submit an annual report to the commissioner on September 15, concerning its loss prevention and control programs, and on new conclusions it has reached as to the loss implications of its statistics, underwriting, claims files and operations.

      2.  Based on the reports of subsection 1, as well as other available information, the commissioner shall prepare each year a report on the loss prevention programs of insurers with recommendations for more effective loss prevention activity.

      Sec. 9.  Section 90 of the above-entitled act is hereby amended to read as follows:

      Section 90.  The commissioner shall collect in advance and receipt for, and persons so served shall pay to the commissioner, fees, licenses and miscellaneous charges as follow:


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ê1971 Statutes of Nevada, Page 1934 (Chapter 661, AB 806)ê

 

      1.  Insurer’s certificate of authority:

      (a) Insurance, and each annual continuation:

             (1) For any one kind of insurance as defined in sections 103 to 110, inclusive, of this act.......................................................................................      $100

             (2) For two or more kinds of insurance as so defined................        200

      (b) Reinstatement (section 74 of this act), 50 percent of the annual continuation fee otherwise required.

      (c) Registration of additional title (section 80 of this act)...............           25

             Annual renewal..................................................................................           25

      2.  Charter documents (other than those filed with application for certificate of authority). Filing amendments to articles of incorporation, charter, bylaws, power of attorney (as to reciprocal insurers), and other constituent documents of the insurer, each document...............................................................................................        $10

      3.  Annual statement of insurer. For filing annual statement........        $25

      4.  Service of process:

      (a) Filing of power of attorney.............................................................           $5

      (b) Acceptance of service of process..................................................             5

      5.  Agent’s licenses and appointments:

      (a) Application for original resident agent’s license and issuance of license, if issued                                                                                                            $5

      (b) Appointment of resident agent:

             (1) Each insurer.................................................................................             2

             (2) Annual continuation of appointment, each insurer.............             2

      (c) Temporary license............................................................................             3

      (d) Limited license (section 215 of this act), each insurer, each year            2

      (e) Nonresident agents:

             (1) Nonresident agent’s license, other than as specified in paragraph (f), application and issuance, if issued...................................................... [15]          25

             (2) Appointment of such agent, each insurer....................... [10]          25

             (3) Annual continuation of appointment, each insurer..... [10]          25

      (f) Nonresident agent’s license qualifying under subsection 3 of section 223 of this act; same as for resident agent license under paragraphs (a) and (b).

      6.  Brokers:

      (a) Resident broker’s license:

             (1) Application for original resident broker’s license and issuance of license, if issued     ................................................................................................. $25

             (2) Annual continuation..................................................................           25

      (b) Nonresident broker’s license:

             (1) Nonresident broker’s license (other than as specified in paragraph (c) below), application for original license and issuance, if issued..............           75

             (2) Annual continuation..................................................................           75

      (c) Nonresident broker’s license, qualifying under subsection 4 of section 223 of this act, same as for resident broker’s license under paragraph (a).

      (d) Surplus lines broker’s license:

             (1) Surplus lines broker’s license, application and issuance, if issued     10


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ê1971 Statutes of Nevada, Page 1935 (Chapter 661, AB 806)ê

 

             (2) Annual continuation..................................................................        $10

      7.  Solicitors:

      (a) Application for original license and issuance of license, if issued            $2

      (b) Annual continuation........................................................................             2

      8.  Managing general agents. Annual continuation, each insurer.           $5

      9.  Adjusters:

      (a) Adjuster’s license:

             (1) Application for original adjuster’s license and issuance of license, if issued        $10

             (2) Annual continuation of license................................................           10

      (b) Associate adjuster’s license:

             (1) Associate adjuster’s license (as defined in section 251 of this act), application and issuance of license, if issued............................................             5

             (2) Annual continuation..................................................................             5

      10.  Motor vehicle physical damage appraisers:

      (a) Application for original license and issuance of license, if issued            $10

      (b) Annual continuation of license......................................................           10

      11.  Life insurance analysts:

      (a) Application for original license and issuance of license, if issued            $25

      (b) Annual continuation of license......................................................           25

      12.  Examination for license:

      (a) Filing application for each examination, other than life insurance analyst, each kind of insurance..................................................................................        $10

      (b) Life insurance analysts, filing application, each examination.           25

      13.  Additional title, property insurers (section 80 of this act):

      (a) Original registration..........................................................................        $25

      (b) Annual continuation of registration..............................................           25

      14.  Insurance vending machines:

      (a) Filing application for license and issuance, if issued, each machine       $20

      (b) Annual continuation of license, each machine...........................           20

      15.  Securities solicitation permit:

      (a) Application for permit.....................................................................      $100

      (b) Extension of permit..........................................................................           50

      16.  Securities salesman, domestic insurers:

      (a) Filing application for license and issuance, if issued..................        $10

      (b) Annual continuation of license......................................................           10

      17.  Rating organizations:

      (a) Filing application for license and issuance, if issued..................      $100

      (b) Annual continuation of license......................................................        100

      18.  Insurance laws, each copy, not less than cost.

      19.  Certified copy of insurer certificate of authority or of any license issued under this code................................................................................................           $2

      20.  Copies of other documents on file in the division: A reasonable charge as fixed by the commissioner; and for certifying and affixing official seal             $1


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ê1971 Statutes of Nevada, Page 1936 (Chapter 661, AB 806)ê

 

      21.  Letter of clearance as to agent or broker..................................           $2

      22.  Certificate of license status, agent or broker............................           $2

      Sec. 10.  Section 92 of the above-entitled act is hereby amended to read as follows:

      Section 92.  1.  Each insurer and each formerly authorized insurer with respect to insurance transacted while an authorized insurer and property bondsman shall, on or before March 1 each year, or within any reasonable extension of time therefor which the commissioner may for good cause have granted on or before such date, file with the commissioner a report in such form as prescribed by the commissioner showing total premium income, including policy, membership and other fees and assessments, and all other considerations for insurance, bail or annuity contracts received by it during the next preceding calendar year on account of policies and contracts covering property, subjects or risks located, resident or to be performed in this state (with proper proportionate allocation of premiums as to such persons, property, subjects or risks in this state insured under policies and contracts covering persons, property, subjects or risks located or resident in more than one state), after deducting from such total premium income:

      (a) The amount of return premiums;

      (b) Premiums received for reinsurance on such property or risks; and

      (c) Dividends, savings and unabsorbed premium deposits returned to policyholders in cash or credited to their accounts.

      The report shall be verified by the oath or affirmation of the insurer’s president, vice president, secretary, treasurer or manager.

      2.  As used in subsection 1, “total premium income” does not include premiums or considerations received from life insurance policies or annuity contracts issued in connection with the funding of a pension, annuity or profit-sharing plan qualified or exempt under sections 401, 403, 404 or 501 of the United States Internal Revenue Code as now or hereafter amended or renumbered from time to time.

      3.  Funds accepted by a life insurer under an agreement which provides for an accumulation of funds to purchase annuities at future dates may for the purposes of the tax imposed by this section be considered as “total premium income” either upon receipt or upon the actual application of such funds to the purchase of annuities. However, any interest credited to funds accumulated while under the latter alternative shall also be included in “total premium income,” and any funds taxed upon receipt, including any interest later credited thereto, shall not be subject to taxation upon the purchase of annuities. Each life insurer shall signify on its premium tax return covering premiums for the calendar year 1971 its election between such two alternatives. Thereafter an insurer shall not change such election without the consent of the commissioner. Any such funds taxed as “total premiums” shall, in the event of withdrawal of the funds before their actual application to the purchase of annuities, be eligible to be included as “return premiums” under the provisions of subsection 1.

      4.  For the purposes of this section, “total premium income” as to title insurance [includes the amount charged the insured for abstracting, title searching and title examination services performed by, or on behalf of, the insurer, its agent or underwritten title company.] shall consist of the total amount received by the company from the sale of policies of title insurance.


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ê1971 Statutes of Nevada, Page 1937 (Chapter 661, AB 806)ê

 

total amount received by the company from the sale of policies of title insurance.

      5.  For purposes of this section factory mutuals shall pay 2 percent on all gross premiums upon policies on risks located in this state in force on December 31 next preceding, after deducting from such gross premiums dividends and returns to policyholders computed at the average rate on annual policies expiring during the preceding year, whether actually paid or applied in part payment of any renewal premiums.

      6.  The commissioner may require at any time verified supplemental statements with reference to any matter pertinent to the proper assessment of the tax.

      7.  Coincidentally with the filing of such report each such insurer shall pay to the commissioner, for the privilege of transacting business in this state, a tax of 2 percent upon such net premiums and net considerations.

      8.  A domestic insurer doing business in a state in which such insurer is not licensed and to which the insurer does not pay a premium tax, shall report and pay the tax on such business to the State of Nevada as though such business were transacted in this state.

      9.  Payment, by an insurer, of the tax required in this section shall be in lieu of all taxes imposed by the state or any city, town or county upon premiums or upon income of insurers and of franchise, privilege or other taxes measured by income of the insurer. This subsection shall not be modified or repealed by any law of general application enacted after the effective date of this act unless expressly referred to or expressly repealed therein.

      10.  Any insurer that fails to file the report or pay the tax as required by this section within the time for filing and payment as provided in this section shall in addition to any other applicable penalty pay a penalty equal to the rate of 10 percent upon the amount of tax assessed against it.

      Sec. 11.  Section 93 of the above-entitled act is hereby amended to read as follows:

      Section 93.  1.  A domestic or foreign insurer which owns and substantially occupies and uses any building in this state as its home office or as a regional home office, as defined in subsection 2, shall be entitled to the following credits and deductions against the tax otherwise imposed under section 92 of this act:

      (a) An amount equal to 50 percent of the aggregate amount of the tax as determined under section 92 of this act; and

      (b) An amount equal to the full amount of ad valorem taxes paid by the insurer during the calendar year next preceding the filing of the report required by section 92 of this act, upon such home office or regional home office together with the land, as reasonably required for the convenient use of such office, upon which such home office or regional home office is situated.

      However, in no event shall such credits and deductions reduce the amount of tax payable to less than 20 percent of the tax otherwise payable by the insurer under section 92 of this act.

      2.  For the purposes of this section a “regional home office” means an office of the insurer performing for an area covering three or more states, with a minimum of 25 employees on its office staff, the sales supervision, underwriting, issuing and servicing of the insurance business of the insurer, including also the following related functions: Actuarial, medical (where required), law, approval or rejection of applications for insurance and issuance of policies thereon, approval of payment of claims, maintenance of records to provide policy-holder information and service, advertising, publications, public relations and supervision and training of sales and service personnel.


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ê1971 Statutes of Nevada, Page 1938 (Chapter 661, AB 806)ê

 

underwriting, issuing and servicing of the insurance business of the insurer, including also the following related functions: Actuarial, medical (where required), law, approval or rejection of applications for insurance and issuance of policies thereon, approval of payment of claims, maintenance of records to provide policy-holder information and service, advertising, publications, public relations and supervision and training of sales and service personnel.

      3.  The insurer shall on or before March 1 of each year furnish proof to the commissioner’s satisfaction, on forms furnished by or acceptable to the commissioner, as to its entitlement to the tax reduction provided for in this section.

      4.  Tax credit or reduction shall be allowed only with respect to calendar years during the entirety of which the insurer owned, occupied and used its home office or regional home office in this state.

      5.  If two or more insurers under common ownership or management and control jointly own in equal interest, and jointly occupy and use such a home office or regional home office in this state for the conduct and administration of their respective insurance businesses as provided in this section, each of such insurers shall be entitled to the credits and reductions provided for by this section if otherwise qualified therefor hereunder.

      Sec. 11.5.  Section 141 of the above-entitled act is hereby amended to read as follows:

      Section 141.  An insurer may invest in the obligations, and in stock where stated, issued, assumed or guaranteed by the following agencies of the Government of the United States of America, or in which such government is a participant, whether or not such obligations are guaranteed by such government:

      1.  Farm Loan Bank.

      2.  Commodity Credit Corporation.

      3.  Federal Intermediate Credit Banks.

      4.  Federal Land Banks.

      5.  Central Bank for Cooperatives.

      6.  Federal Home Loan Banks, and stock thereof.

      7.  Federal National Mortgage Association, and stock thereof when acquired in connection with the sale of mortgage loans to such association.

      8.  United States Postal Service.

      9.  International Bank for Reconstruction and Development.

      [9.] 10.  Inter-American Development Bank.

      [10.] 11.  Asian Development Bank.

      [11.] 12.  Any other similar agency of, or participated in by, the Government of the United States of America and of similar financial quality.

      Sec. 12.  Section 218 of the above-entitled act is hereby amended to read as follows:

      Section 218.  1.  Subject to the agent’s contract rights, if any, an insurer may terminate an agency appointment, resident or nonresident, at any time. The insurer shall promptly give written notice of termination and the effective date thereof to the commissioner, on forms furnished by the commissioner, and to the agent if reasonably possible. The list of appointments not being continued referred to in section 217 of this act shall constitute such notice to the commissioner as to terminations so listed.


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ê1971 Statutes of Nevada, Page 1939 (Chapter 661, AB 806)ê

 

appointments not being continued referred to in section 217 of this act shall constitute such notice to the commissioner as to terminations so listed. The commissioner may require of the insurer reasonable proof that the insurer has also given such notice to the agent if reasonably possible.

      2.  Accompanying the notice of termination given the commissioner, the insurer shall, upon written request of the commissioner, file with him a statement of the cause, if any, for each termination. Any information or document so disclosed or furnished to the commissioner shall be deemed a [absolutely] qualifiedly privileged communication and shall not be admissible as evidence in any action or proceeding unless so permitted by the insurer in writing.

      3.  An agent or broker terminating the employment and license as such of a solicitor shall give like notice of such termination and proof to the commissioner, like information as to the reasons for such termination, with like status as a privileged communication unless such privilege is waived in writing by the agent or broker.

      4.  No agreement between the insurer and agent, or between employer agent or broker and licensed solicitor, shall affect the commissioner’s termination of the appointment or license if so requested by the insurer, or by the employer agent or broker, as the case may be.

      Sec. 13.  Section 255 of the above-entitled act is hereby amended to read as follows:

      Section 255.  For the protection of the people of this state, the commissioner shall not issue or continue any license as an adjuster except in compliance with the provisions of this chapter. Any individual for whom such a license is issued or continued must:

      1.  Be at least 21 years of age;

      2.  Be a bona fide resident of this state, and have so resided therein for at least 90 days prior to his application for the license. The commissioner may, in his discretion, waive this residence requirement as to:

      (a) An adjuster theretofore licensed as such under the laws of another state and brought to Nevada by an employer firm or corporation licensed as an adjuster in this state to fill a vacancy in such firm or corporation in this state; or

      (b) An adjuster licensed as such in an adjoining state whose principal place of business is located within 50 miles of the boundary of this state;

      3.  Be competent, trustworthy, financially responsible and of good reputation;

      4.  Never have been convicted of a felony;

      5.  Have had at least 2 years’ recent experience with respect to handling of loss claims of sufficient character reasonably to enable him to fulfill the responsibilities of an adjuster;

      6.  Pass successfully all examinations required under this chapter;

      7.  Post the bond or bonds required under section 264 of this act; and

      8.  Not concurrently be licensed as an agent, broker, solicitor or surplus lines broker [.] , except as a bail bondsman.

      Sec. 14.  Section 278 of the above-entitled act is hereby amended to read as follows:

      Section 278.  If certain insurance coverages cannot be procured from authorized insurers, such coverages, designated in this chapter as “surplus lines,” may be procured from unauthorized insurers, subject to the following conditions:

 


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ê1971 Statutes of Nevada, Page 1940 (Chapter 661, AB 806)ê

 

authorized insurers, such coverages, designated in this chapter as “surplus lines,” may be procured from unauthorized insurers, subject to the following conditions:

      1.  The insurance must be procured through a surplus lines broker licensed as such under this chapter.

      2.  The full amount of insurance required must not be procurable, after diligent effort has been made to do so. [, from a majority of insurers authorized to transact and actually transacting the particular class of insurance business in this state.]

      3.  The insurance must not be so exported for the purpose of procuring it at a premium rate lower than would be accepted by any authorized insurer; difference in rates alone will not support the export of the insurance if any authorized insurer is able and willing to carry the risk.

      4.  Differences, bearing directly upon the cost of insurance, in the terms of policies which otherwise provide substantially the same coverage will not support the export of the insurance.

      Sec. 15.  Section 300 of the above-entitled act is hereby amended to read as follows:

      Section 300.  1.  As used in this section unless otherwise indicated, “insurer” includes:

      (a) All corporations, associations, partnerships and individuals engaged as principals in the business of insurance; and

      (b) Interinsurance exchanges and mutual benefit societies.

      2.  It is unlawful for any insurer to transact insurance business in this state as set forth in subsection [2,] 3, without a certificate of authority from the commissioner; but this section does not apply to:

      (a) The lawful transaction of surplus lines insurance pursuant to subsection 4 of section 63 of this act.

      (b) The lawful transaction of reinsurance by insurers pursuant to subsection 6 of section 63 of this act.

      (c) Transactions in this state involving a policy lawfully solicited, written and delivered outside of this state covering only subjects of insurance not resident, located or expressly to be performed in this state at the time of issuance, and which transactions are subsequent to the issuance of such policy.

      (d) Attorneys at law acting in the ordinary relation of attorney and client in the adjustment of claims or losses.

      (e) Transactions in this state involving group life and group sickness and accident or blanket sickness and accident insurance or group annuities where the master policy of such groups was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer was authorized to do an insurance business, to a group organized for purposes other than the procurement of insurance, and where the policyholder is domiciled or otherwise has a bona fide situs pursuant to subsection 7 of section 63 of this act.

      (f) Transactions in this state involving any policy of insurance or annuity contract issued prior to the effective date of this act.

      (g) Transactions in this state relative to a policy issued or to be issued outside this state involving insurance on vessels, craft or hulls, cargos, marine builder’s risk, marine protection and indemnity or other risk, including strikes and war risks commonly insured under ocean or wet marine forms of policy.


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ê1971 Statutes of Nevada, Page 1941 (Chapter 661, AB 806)ê

 

including strikes and war risks commonly insured under ocean or wet marine forms of policy.

      [(h) Transactions in this state involving contracts of insurance issued to one or more industrial insureds, but nothing in this section shall relieve an industrial insured from taxation lawfully imposed upon independently procured insurances. An “industrial insured” is defined as an insured:

             (1) Which procures the insurance of any risk or risks other than life and annuity contracts by use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant;

             (2) Whose aggregate annual premiums for insurance on all risks total at least $25,000; and

             (3) Which has at least 25 full-time employees.]

      3.  Any of the following acts in this state effected by mail or otherwise by or on behalf of an unauthorized insurer is deemed to constitute the transaction of an insurance business in this state:

      (a) The making of or proposing to make, as an insurer, an insurance contract.

      (b) The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety.

      (c) The taking or receiving of any application for insurance.

      (d) The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof.

      (e) The issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state.

      (f) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurer in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a fixing of rates or investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and arising out of it, or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state. The provisions of this paragraph shall not operate to prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of such employer.

      (g) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance.

      (h) The transacting or proposing to transact any insurance business in substance equivalent to any of the provisions of paragraphs (a) to (g), inclusive, in a manner designed to evade the provisions of the statutes.

      4.  The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect.


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ê1971 Statutes of Nevada, Page 1942 (Chapter 661, AB 806)ê

 

      5.  The failure of an insurer transacting insurance business in this state to obtain a certificate of authority shall not impair the validity of any act or contract of such insurer and shall not prevent such insurer from defending any action at law or suit in equity in any court of this state, but no insurer transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action in any court of this state to enforce any right, claim or demand arising out of the transaction of such business until such insurer has obtained a certificate of authority.

      In the event of failure of any such unauthorized insurer to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of such insurance contract shall be liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of such insurance contract.

      Sec. 16.  Section 329 of the above-entitled act is hereby repealed.

      Sec. 17.  The above-entitled act is hereby amended by adding thereto a new section, designated section 331.5, following section 331, to read as follows:

      Section 331.5.  1.  No officer or employee of this state, or of any public agency, public authority or public corporation (except a public corporation or public authority created pursuant to agreement or compact with another state), and no person acting or purporting to act on behalf of such officer or employee, or public agency or public authority or public corporation, shall, with respect to any public building or construction contract which is about to be or which has been competitively bid, require the bidder to make application or furnish financial data to, or to obtain or procure any of the surety bonds or contracts of insurance specified in connection with such contracts or by any law from, a particular insurer or agent or broker.

      2.  No such officer or employee or any person acting or purporting to act on behalf of such officer or employee shall negotiate, make application for, obtain or procure any of such surety bonds or contracts of insurance (except contracts of insurance for builder’s risk or owner’s protective liability) which can be obtained or procured by the bidder, contractor or subcontractor.

      3.  This section does not, however, prevent the exercise by such officer or employee on behalf of the state or such public agency, public authority or public corporation of its right to approve the form, sufficiency or manner of execution of the surety bonds or contracts of insurance furnished by the insurer selected by the bidder to underwrite such bonds or contracts of insurance.

      4.  Any provisions in any invitation for bids or in any of the contract documents in conflict with this section are declared to be contrary to the public policy of this state.

      5.  A violation of this section is subject to the penalties provided by section 19 of this act (general penalty).

      Sec. 18.  The above-entitled act is hereby amended by adding thereto a new section, designated section 333.5, following section 333, to read as follows:

      Section 333.5.  1.  No form or plan of insurance covering any group or combination of persons or risks shall be written or delivered within or outside this state to cover persons or risks in this state at any preferred rate or on any form other than as offered to persons not in such group or combination and to the public generally, unless such form, plan of insurance, and the rates or premiums to be charged therefor have been submitted to and approved by the commissioner.


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ê1971 Statutes of Nevada, Page 1943 (Chapter 661, AB 806)ê

 

or combination of persons or risks shall be written or delivered within or outside this state to cover persons or risks in this state at any preferred rate or on any form other than as offered to persons not in such group or combination and to the public generally, unless such form, plan of insurance, and the rates or premiums to be charged therefor have been submitted to and approved by the commissioner.

      2.  Any such plan of insurance described in subsection 1 shall not be approved by the commissioner unless it is made available to all individuals of the group who seek to be insured. No insurer or agent shall deny coverage to any individual of such group who seeks the type of insurance which is being made available to other members of the group.

      3.  This section does not apply to life insurance, health insurance, annuity contracts or wet marine and transportation insurance.

      Sec. 19.  Section 343 of the above-entitled act is hereby amended to read as follows:

      Section 343.  This chapter applies to all kinds and lines of direct insurance written on risks or operations in this state by any insurer authorized to do business in this state, except:

      1.  Ocean marine insurance;

      2.  Workmen’s compensation insurance;

      3.  Contracts issued by fraternal benefit societies;

      4.  Life insurance [other than] and credit life insurance;

      5.  Variable and fixed annuities; and

      6.  Group and blanket [accident and sickness] health insurance [other than] and credit [accident and sickness] health insurance.

      Sec. 20.  Sections 361 to 372.5, inclusive, of the above-entitled act are hereby repealed.

      Sec. 21.  The above-entitled act is hereby amended by adding thereto the following provisions, designated sections 361.1 to 361.9, inclusive, and sections 362.1 to 362.8, inclusive, which shall respectively follow section 360 and shall read as follows:

      Section 361.1.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 361.2 to 361.9, inclusive, and sections 362.1 to 362.8, inclusive, of this act.

      Section 361.2.  This chapter shall be known and may be cited as the Nevada Insurance Guaranty Association Act.

      Section 361.3.  This chapter shall apply to all kinds of direct insurance, except life, title, surety, disability, accounts receivable, mortgage guaranty and ocean marine insurance.

      Section 361.4.  As used in this chapter unless the context otherwise requires:

      1.  “Association” means the Nevada insurance guaranty association created pursuant to section 361.5 of this act.

      2.  “Commissioner” means the commissioner of insurance.

      3.  “Covered claim” means an unpaid claim or judgment excluding unearned premium claims, which arises out of and is within the coverage of an insurance policy to which this chapter applies issued by an insurer, if such insurer becomes an insolvent insurer after the effective date of this act and one of the following conditions exists:

      (a) The claimant or insured is a resident of this state at the time of the insured event.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1944 (Chapter 661, AB 806)ê

 

      (b) The property from which the claim arises is permanently located in this state.

      (c) Such term does not include any amount due any reinsurer, insurer, insurance pool or underwriting association, as subrogation recoveries or otherwise; and

      (d) There is a supplementary payment obligation, including but not limited to adjustment fees and expenses, attorney fees and expenses, court costs, interest and bond premiums, prior to the appointment of a liquidator, except that to the extent that such obligation is a valid claim against an insured it is a covered claim.

      4.  “Insolvent insurer” means an insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, which is determined to be insolvent by a court of competent jurisdiction.

      5.  “Member insurer” means any person, except a fraternal or nonprofit service corporation who:

      (a) Writes any kind of insurance to which this chapter applies, including the exchange of reciprocal or interinsurance agreements of indemnity.

      (b) Is licensed to transact insurance in this state.

      6.  “Net direct written premiums” means direct gross premiums written in this state on insurance policies to which this chapter applies, less return premiums and dividends paid or credited to policyholders on such direct business. Such term does not include premiums on contracts between insurers or reinsurers.

      7.  “Person” means any individual, corporation, partnership, association, voluntary organization, reciprocals or insurance exchanges.

      Section 361.5.  There is created a nonprofit unincorporated legal entity to be known as the Nevada insurance guaranty association. All member insurers as defined in subsection 5 of section 361.4 of this act shall be and remain members of the association as a condition of their authority to transact insurance in this state. The association shall perform its functions under a plan of operation established and approved pursuant to section 361.8 of this act and shall exercise its powers through a board of directors established under section 361.6 of this act.

      Section 361.6.  1.  The board of directors of the association shall consist of not less than five nor more than nine persons serving terms as established in the plan of operation. The members of the board shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board shall be filled for the remaining period of the term in the same manner as initial appointments. If no members are selected within 60 days after the effective date of this act, the commissioner may appoint the initial members of the board of directors.

      2.  In approving selections to the board the commissioner shall consider among other things whether all member insurers are fairly represented.

      3.  Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors.

      Section 361.7.  1.  The association shall:

      (a) Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency, or before the policy expiration date if less than 30 days after the determination, or before the insured replaces the policy or on request effects cancellation if he does so within 30 days of the determination.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1945 (Chapter 661, AB 806)ê

 

determination of insolvency, or before the policy expiration date if less than 30 days after the determination, or before the insured replaces the policy or on request effects cancellation if he does so within 30 days of the determination. Such obligation shall include only that amount of each covered claim which is in excess of $100 and less than $300,000. In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises.

      (b) Be deemed the insurer to the extent of its obligations on the covered claims and to such extent shall have all rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent.

      (c) Assess member insurers amounts necessary to pay the obligations of the association under paragraph (a) of this subsection subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under section 362.3 of this act, and other expenses authorized by this chapter. The assessment of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year bear to the net direct written premiums of all member insurers for the preceding calendar year. Each member insurer shall be notified of the assessment not later than 30 days before it is due. No member insurer may be assessed in any year an amount greater than 2 percent of that member insurer’s net direct written premiums for the preceding calendar year. If the maximum assessment, together with the other assets of the association, does not provide in any 1 year an amount sufficient to make all necessary payments, the funds available shall be prorated and the unpaid portion shall be paid as soon as funds become available. The association may exempt or defer, in whole or in part, the assessment of any member insurer if the assessment would cause the member insurer’s financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance; but during the period of deferment, no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when such payment will not reduce capital or surplus below required minimums. Such payments shall be refunded to those companies receiving larger assessments by virtue of such deferment, or, in the discretion of any such company, credited against future assessments. Each member insurer shall be allowed a premium tax credit at the rate of 20 percent per year for 5 successive years following the final order in the liquidation period for any amounts paid under this chapter.

      (d) Investigate claims brought against the fund and adjust, compromise, settle and pay covered claims to the extent of the association’s obligation and deny all other claims.

      (e) Notify such persons as the commissioner directs under paragraph (a) of subsection 2 of section 361.9 of this act.

      (f) Process claims through its employees or through one or more member insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commissioner, but such designation may be declined by a member insurer.

      (g) Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association, and pay the other expenses of the association authorized by this chapter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1946 (Chapter 661, AB 806)ê

 

paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association, and pay the other expenses of the association authorized by this chapter.

      2.  The association may:

      (a) Appear in, defend and appeal any action on a claim brought against the association.

      (b) Employ or retain persons necessary to handle claims and perform other duties of the association.

      (c) Borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation.

      (d) Sue or be sued.

      (e) Negotiate and become a party to contracts necessary to carry out the purposes of this chapter.

      (f) Perform such other acts as are necessary or proper to effectuate the purposes of this chapter.

      (g) If, at the end of any calendar year, the board of directors finds that the assets of the association exceed its liabilities as estimated by the board of directors for the coming year, refund to the member insurers in proportion to the contribution of each that amount by which the assets of the association exceed the liabilities.

      Section 361.8.  1.  The association shall submit a plan of operation to the commissioner, together with any amendments necessary or suitable to assure the fair, reasonable and equitable administration of the association. The plan of operation and any amendments shall become effective upon approval in writing by the commissioner. If the association fails to submit a suitable plan of operation within 90 days following the effective date of this act or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and opportunity for hearing, adopt and promulgate reasonable rules necessary or advisable to effectuate the provisions of this chapter. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.

      2.  All member insurers shall comply with the plan of operation.

      3.  The plan of operation shall:

      (a) Establish the procedures for performance of all the duties and powers of the association under section 361.7 of this act.

      (b) Establish procedures for managing assets of the association.

      (c) Establish the amount and method of reimbursing members of the board of directors under section 361.6 of this act.

      (d) Establish procedures by which claims may be filed with the association and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to the association or its agent and a list of such claims shall be periodically submitted to the association or similar organization in another state by the receiver or liquidator.

      (e) Establish regular places and times for meetings of the board of directors.

      (f) Establish procedures for keeping records of all financial transactions of the association, its agent and the board of directors.

      (g) Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the commissioner within 30 days after the action or decision.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1947 (Chapter 661, AB 806)ê

 

decision of the association may appeal to the commissioner within 30 days after the action or decision.

      (h) Establish procedures for submission to the commissioner of selections for the board of directors.

      (i) Contain additional provisions necessary or proper for the execution of the duties and powers of the association.

      4.  The plan of operation may provide that any or all duties and powers of the association, except those under paragraph (c) of subsection 1 and paragraph (c) of subsection 2 of section 361.7 of this act, are delegated to a person who performs or will perform functions similar to those of this association in two or more states. Such person shall be reimbursed as a servicing facility and shall be paid for performance of any other functions of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a person who extends protection not substantially less favorable and effective than that provided by this chapter.

      Section 361.9.  1.  The commissioner shall:

      (a) Notify the association of the existence of an insolvent insurer not later than 3 days after he receives notice of the determination of the insolvency.

      (b) Upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer.

      2.  The commissioner may:

      (a) Require that the association notify the insured of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this chapter. Such notification shall be by mail at their last-known address, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation is sufficient.

      (b) Suspend or revoke, after notice and opportunity for hearing, the certificate of authority to transact insurance in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a fine on any member insurer which fails to pay an assessment when due. Such fine shall not exceed 5 percent of the unpaid assessment per month, except that no fine shall be less than $100 per month.

      (c) Revoke the designation of any servicing facility if he finds claims are being processed unsatisfactorily.

      Section 362.1.  1.  Any person recovering under this chapter shall be deemed to have assigned his rights under the policy to the association to the extent of his recovery from the association. Every insured or claimant seeking the protection of this chapter shall cooperate with the association to the same extent as such person would have been required to cooperate with the insolvent insurer. The association shall have no cause of action against the insured of the insolvent insurer for any sums it has paid out.

      2.  The receiver, liquidator or statutory successor of an insolvent insurer shall be bound by settlements of covered claims by the association or a similar organization in another state. The court having jurisdiction shall grant such claims priority equal to that to which the claimant would have been entitled in the absence of this chapter against the assets of the insolvent insurer. The expenses of the association or similar organization in handling claims shall be accorded the same priority as the liquidator’s expenses.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1948 (Chapter 661, AB 806)ê

 

organization in handling claims shall be accorded the same priority as the liquidator’s expenses.

      3.  The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association, which statements shall preserve the rights of the association against the assets of the insolvent insurer.

      Section 362.2.  1.  Any person having a claim against his insurer, under any provision in his insurance policy, which is also a covered claim shall be required to exhaust first his right under the policy. Any amount payable on a covered claim under this chapter shall be reduced by the amount of recovery under the claimant’s insurance policy.

      2.  Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured. However, if such claim is a first party claim for damage to property with a permanent location, recovery shall be first sought from the association of the location of the property; and if such claim is a workman’s compensation claim, recovery shall be first sought from the association of the residence of the claimant. Any recovery under this chapter shall be reduced by the amount of the recovery from any other insurance guaranty association or its equivalent.

      Section 362.3.  To aid in the detection and prevention of insurer insolvencies:

      1.  The board of directors shall, upon majority vote, notify the commissioner of any information indicating any member insurer may be solvent or in a financial condition hazardous to the policyholders or the public.

      2.  The board of directors may, upon majority vote, request that the commissioner order an examination of any member insurer which the board in good faith believes may be in a financial condition hazardous to the policyholders or the public. Within 30 days of the receipt of such request, the commissioner shall begin such examination. The examination may be conducted as a national association of insurance commissioners’ examination or may be conducted by such persons as the commissioner designates. The cost of such examination shall be paid by the association and the examination report shall be treated as are other examination reports. In no event shall such examination report be released to the board of directors prior to its release to the public, but this shall not preclude the commissioner from complying with subsection 3 of this section. The commissioner shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the commissioner, but it shall not be open to public inspection prior to the release of the examination report to the public.

      3.  The commissioner shall report to the board of directors when he has reasonable cause to believe that any member insurer examined or being examined at the request of the board of directors may be insolvent or in a financial condition hazardous to the policyholders or the public.

      4.  The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer.


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ê1971 Statutes of Nevada, Page 1949 (Chapter 661, AB 806)ê

 

and recommendations to the commissioner upon any matter germane to the solvency, liquidation, rehabilitation or conservation of any member insurer. Such reports and recommendations are not public documents.

      5.  The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of insurer insolvencies.

      6.  The board of directors shall, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report on the history and causes of such insolvency, based on the information available to the association, and submit such report to the commissioner.

      Section 362.4.  The association is subject to examination and regulation by the commissioner. The board of directors shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the commissioner.

      Section 362.5.  The association is exempt from payment of all fees and all taxes levied by this state or any of its subdivisions, except taxes levied on real or personal property.

      Section 362.6.  The rates and premiums charged for insurance policies to which this chapter applies shall include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association, or less any premium tax credits allowed under this chapter, and such rates shall not be deemed excessive as a result of containing such recoupment allowances.

      Section 362.7.  There is no liability, and no cause of action of any nature shall arise against any member insurer, the association, its agents or employees, the board of directors, the commissioner or his representatives, for any reasonable action taken by them in the performance of their duties and powers under this chapter.

      Section 362.8.  All proceedings in which the insolvent insurer is a party in any court in this state shall be stayed for 60 days from the date the insolvency is determined to permit proper defense by the association of all pending causes of action.

      Sec. 22.  Section 403.1 of the above-entitled act is hereby amended to read as follows:

      Section 403.1.  1.  Sections 403.1 to 403.9, inclusive, of this act apply to all contracts of insurance the general terms of which are required to be approved or are subject to disapproval by the commissioner, except as otherwise provided by statute or by rule under subsection 3.

      2.  The contract may provide terms more favorable to policyholders than are required by sections 403.1 to 403.9, inclusive, of this act.

      3.  The commissioner may by rule exempt from sections 403.1 to 403.9, inclusive, of this act classes of insurance contracts where the policyholders do not need protection against arbitrary termination.

      4.  The rights provided by sections 403.1 to 403.9, inclusive, of this act shall be in addition to and shall not prejudice any other rights the policyholder may have at common law or under other statutes.

      5.  Nothing in sections 403.1 to 403.9, inclusive, of this act shall be construed to prevent the rescission or reformation of any life or [disability] health insurance contract not otherwise denied by the terms of the contract or by any other statute.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1950 (Chapter 661, AB 806)ê

 

construed to prevent the rescission or reformation of any life or [disability] health insurance contract not otherwise denied by the terms of the contract or by any other statute.

      Sec. 23.  Section 403.4 of the above-entitled act is hereby amended to read as follows:

      Section 403.4.  1.  Subject to subsection 2, a policyholder has a right to have his policy renewed, on the terms then being applied by the insurer to persons, similarly situated, for an additional period of time equivalent to the expiring term if the agreed term is 1 year or less, [or for 1 year if the agreed term is 1 year or less,] or for 1 year if the agreed term is longer than 1 year, unless at least 30 days prior to the date of expiration provided in the policy the insurer mails first class or delivers to him a notice of intention not to renew the policy beyond the agreed expiration date.

      2.  This section does not apply if the policyholder has accepted replacement coverage or has requested or agreed to nonrenewal, or if the policy is expressly designated as nonrenewable by a clause approved or deemed to be approved by the commissioner.

      Sec. 24.  Section 403.6 of the above-entitled act is hereby amended to read as follows:

      Section 403.6.  If a notice of cancellation or nonrenewal under sections 403.1 to 403.9, inclusive, of this act does not state with reasonable precision the facts on which the insurer’s decision is based, the insurer must supply that information within [5] 6 days after receipt of a written request by the policyholder. No notice shall be effective unless it contains adequate information about the policyholder’s right to make such request.

      Sec. 25.  Section 415 of the above-entitled act is hereby amended to read as follows:

      Section 415.  1.  There shall be a provision that after 3 full years’ premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a [specified] fixed or variable rate of interest as [shall] may be [specified] approved by the commissioner, an amount equal to or, at the option of the party entitled thereto, less than the loan value of the policy. The loan value of the policy shall be at least equal to the cash surrender value at the end of the then-current policy year, and the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then the policy shall terminate and become void, but not until at least 30 days’ notice has been mailed by the insurer to the last address of record with the insurer, of the insured or other policy owner and of any assignee of record at the insurer’s home office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for [3] 6 months after application therefor.


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ê1971 Statutes of Nevada, Page 1951 (Chapter 661, AB 806)ê

 

for the payment of any premium to the insurer, for [3] 6 months after application therefor. Such provision shall also contain a table showing in figures the loan values each year during the first 20 years of the policy, or during the term of the policy, whichever is shorter. The policy, at the insurer’s option, may provide for an automatic premium loan.

      2.  This section does not apply to term policies, or to term insurance benefits provided by rider or supplemental policy provisions or to industrial life insurance policies.

      Sec. 26.  Section 443 of the above-entitled act is hereby amended to read as follows:

      Section 443.  1.  A domestic life insurer may establish one or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and benefits incidental thereto), payable in fixed or variable amounts or both, subject to the following:

      (a) The income, gains and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains or losses of the company.

      (b) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in paragraph (c):

             (1) Amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies; and

             (2) The investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.

      (c) Except with the approval of the commissioner and under such conditions as to investments and other matters as he may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for:

             (1) Benefits guaranteed as to dollar amount and duration; and

             (2) Funds guaranteed as to principal amount or stated rate of interest,

shall not be maintained in a separate account.

      (d) Unless otherwise approved by the commissioner, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account; but unless otherwise approved by the commissioner, the portion [of] if any of the assets of such separate account equal to the company’s reserve liability with regard to the guaranteed benefits and funds referred to in paragraph (c) shall be valued in accordance with the rules otherwise applicable to the company’s assets.

      (e) Amounts allocated to a separate account in the exercise of the power granted by this section shall be owned by the company, and the company shall not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.


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ê1971 Statutes of Nevada, Page 1952 (Chapter 661, AB 806)ê

 

the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

      (f) No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, such transfer is made solely to establish the account pursuant to subsection 6 or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made:

             (1) By a transfer of cash; or

             (2) By a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the commissioner.

The commissioner may approve other transfers among such accounts if, in his opinion, such transfers would not be inequitable.

      (g) To the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of such account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account.

      2.  Any contract providing benefits payable in variable amounts delivered or issued for delivery in this state, including a group contract and any certificate issued thereunder, shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state that such dollar amount will so vary and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.

      3.  No company shall deliver or issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the commissioner shall consider among other things:

      (a) The history and financial condition of the company;

      (b) The character, responsibility and fitness of the officers and directors of the company; and

      (c) The law and regulations under which the company is authorized in the state of domicile to issue variable contracts.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1953 (Chapter 661, AB 806)ê

 

If the company is a subsidiary of an admitted life insurance company, or affiliated with such company through common management or ownership, it may be deemed by the commissioner to have met the provisions of this subsection if either it or the parent or the affiliated company meets the requirements hereof.

      4.  Notwithstanding any other provision of law, the commissioner has sole authority to regulate the issuance and sale of variable contracts, and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this section.

      5.  Except for sections 423, 428 and 429 of this act in the case of a variable annuity contract and sections 410, 415, 416, 417, 433 through 440, inclusive, and 458 of this act in the case of a variable life insurance policy and except as otherwise provided in this code, all pertinent provisions of this code shall apply to separate accounts and contracts relating thereto. Any individual variable life insurance contract, delivered or issued for delivery in this state, shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract. Any individual variable annuity contract, delivered or issued for delivery in this state, shall contain grace and reinstatement provisions appropriate to such a contract. The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and may mortality guarantees.

      6.  A domestic life insurer which establishes one or more separate accounts pursuant to this section may participate therein by allocating and contributing to such separate account funds which otherwise might be invested pursuant to subsection 1 of section 139, and section 145 of this act. The insurer shall have a proportionate interest in any such account, along with all other participating contract holders, to the extent of its participation therein, and with respect thereto shall also be subject to all the provisions of section 155 of this act applicable to separate account contract holders generally. The aggregate amount so allocated or contributed by such an insurer to one or more separate accounts shall not, without the consent of the commissioner, exceed the greater of:

      (a) One hundred thousand dollars;

      (b) One percent of its admitted assets as of December 31 next preceding; or

      (c) Five percent of its surplus as to policyholders as of December 31 next preceding.

      All funds allocated or contributed by the insurer to a separate account for the purpose of participation therein shall be included in applying the limitations upon investments otherwise specified in this code. The insurer shall be entitled to withdraw at any time in whole or in part its participation in any separate account to which funds have been allocated or contributed and to receive upon withdrawal its proportional share of the value of the assets of the separate account at the time of withdrawal.

      Sec. 26.5.  Section 508 of the above-entitled act is hereby amended to read as follows:

      Section 508.  As used in any policy of health insurance delivered, issued for delivery or used in this state, unless otherwise provided in the policy or in an endorsement thereon or in a rider attached thereto:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1954 (Chapter 661, AB 806)ê

 

      1.  “Accidental death” means death by accident exclusively and independently of all other causes.

      2.  “Confinement to house” or “house confinement” includes the activities of a convalescent not able to be gainfully employed.

      3.  “Medical or surgical services” includes also services within the scope of his license rendered by any individual while duly licensed by the State of Nevada under any of the following chapters of NRS: 631 (dentistry); 633 (osteopathy); 634 (chiropractic); 635 (podiatry); or 636 (optometry). No policy of health insurance shall exclude coverage for services of any licensee provided for in this subsection.

      4.  “Total disability” means inability to perform the duties of any gainful occupation for which the insured is reasonably fitted by training, experience and accomplishment.

      Sec. 27.  Section 512 of the above-entitled act is hereby amended to read as follows:

      Section 512.  1.  “Group health insurance” is hereby declared to be that form of health insurance covering groups of two or more persons, formed for a purpose other than obtaining insurance.

      2.  Any group health policy which contains provisions for the payment by the insurer of benefits for expenses incurred on account of hospital, nursing, medical, dental or surgical services for members of the family or dependents of a person in the insured group may provide for the continuation of such benefit provisions, or any part or parts thereof, after the death of the person in the insured group.

      3.  The commissioner may, in his discretion, require the form of each certificate proposed to be delivered in this state under a group health policy not made under the laws of this state to be filed with him by the insurer for informational purposes only.

      Sec. 27.5.  Section 538 of the above-entitled act is hereby amended to read as follows:

      Section 538.  1.  No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any such motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, resulting from the ownership, maintenance or use of such uninsured or hit-and-run motor vehicle; but no such coverage shall be required in or supplemental to a policy issued to the State of Nevada or any political subdivision thereof, or where rejected in writing, on a form furnished by the insurer describing the coverage being rejected, by an insured named therein, or upon any renewal of such policy unless the coverage is then requested in writing by the named insured. The coverage required in this section may be referred to as “uninsured vehicle coverage.”

      2.  The amount of coverage to be so provided shall be not less than the minimum limits for bodily injury liability insurance provided for under the Motor Vehicle Safety Responsibility Act (chapter 485 of NRS) [.] , but may be in an amount not to exceed the bodily injury coverage purchased by the policyholder.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1955 (Chapter 661, AB 806)ê

 

      3.  For the purposes of this section the term “uninsured motor vehicle” [also includes,] means a motor vehicle:

      (a) With respect to which there is not available at the department of motor vehicles evidence of financial responsibility as required by chapter 485 of NRS.

      (b) With respect to the ownership, maintenance or use of which there is no bodily injury liability insurance or bond applicable at the time of the accident, or, to the extent of such deficiency, any bodily injury liability insurance or bond in force is less than the amount required by NRS 485.210;

      (c) With respect to the ownership, maintenance or use of which the company writing any applicable bodily injury liability insurance or bond denies coverage or is insolvent;

      (d) Used without the permission of its owner if there is no bodily injury liability insurance or bond applicable to the operator; or

      (e) The owner or operator of which is unknown or after reasonable diligence cannot be found if:

             (1) The bodily injury or death has resulted from physical contact of such automobile with the named insured or the person claiming under him or with an automobile which the named insured or such person is occupying; and

             (2) The named insured or someone on his behalf has reported the accident within the time required by NRS 484.223 to 484.227, inclusive, to the policy department of the city where it occurred, or if it occurred in an unincorporated area, to the sheriff of the county or to the Nevada highway patrol.

      4.  For the purposes of this section the term “uninsured motor vehicle” also includes, subject to the terms and conditions of such coverage, an insured other motor vehicle where:

      (a) The liability insurer of such other motor vehicle is unable because of its insolvency to make payment with respect to the legal liability of its insured within the limits specified in its policy; and

      (b) The occurrence out of which such legal liability arose took place while the uninsured motor vehicle coverage required under paragraph (a) was in effect; and

      (c) The insolvency of the liability insurer of such other motor vehicle existed at the time of, or within 1 year after, such occurrence.

      Nothing contained in this subsection shall be deemed to prevent any insurer from providing insolvency protection to its insureds under more favorable terms.

      [4.] 5.  In the event of payment to any person under uninsured motor vehicle coverage, and subject to the terms of such coverage, to the extent of such payment the insurer shall be entitled to the proceeds of any settlement or recovery from any person legally responsible for the bodily injury as to which such payment was made, and to amounts recoverable from the assets of the insolvent insurer of the other motor vehicle.

      6.  A vehicle involved in a collision which results in bodily injury or death shall be presumed to be an uninsured motor vehicle if no evidence of financial responsibility is supplied to the department of motor vehicles in the manner required by chapter 485 of NRS within 60 days after the collision occurs.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1956 (Chapter 661, AB 806)ê

 

      Sec. 27.7.  Section 712 of the above-entitled act is hereby amended to read as follows:

      Section 712.  1.  Every society authorized to do business in this state shall appoint in writing the commissioner and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served, and shall agree in such writing that any lawful process against it which is served on such attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. [Copies of such appointment, certified by the commissioner, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted.]

      2.  Service shall be made only upon the commissioner, or if absent, upon the person in charge of his office. It shall be made in duplicate and shall constitute sufficient service upon the society. When legal process against a society is served upon the commissioner, he shall forthwith forward one of the duplicate copies by registered or certified mail, prepaid, directed to the secretary or corresponding officer.

      3.  No such service shall require a society to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of the service to a society.

      4.  Legal process shall not be served upon a society except in the manner herein provided.

      5.  At the time of serving any process upon the commissioner, the plaintiff or complainant in the action shall pay to the commissioner a fee of $5.

      Sec. 28.  Section 737 of the above-entitled act is hereby amended to read as follows:

      Section 737.  1.  A majority of the board of directors of a corporation providing or rendering hospital services shall be composed of duly appointed representatives of hospitals with which the corporation has contracts for the rendering of hospital services.

      2.  A majority of the board of directors of a corporation providing medical services shall be composed of duly appointed representatives of the physicians who have signed participating agreements with the corporation for the rendering of medical services.

      3.  A majority of the board of directors of a corporation providing dental services shall be composed of and selected from among duly appointed representatives of the dentists who have signed participating agreements with the corporation for the rendering of dental services.

      Sec. 29.  Section 743.5 of the above-entitled act is hereby amended to read as follows:

      Section 743.5.  1.  Application for a certificate of authority shall be filed with the commissioner in writing by the applicant corporation on forms furnished or accepted by the commissioner. The application shall set forth such information concerning the applicant and its qualifications and in other respects as the commissioner may reasonably require.

      2.  The application shall be accompanied by:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1957 (Chapter 661, AB 806)ê

 

      (a) A copy of the applicant’s charter or articles of incorporation, certified by the public officer with whom the original is required to be filed in its state of domicile;

      (b) A copy of the applicant’s bylaws, certified by the corporate secretary;

      (c) A copy of each contract the applicant has made or proposed to make with hospitals, or physicians or dentists in this state;

      (d) A copy of each service contract proposed to be issued to its subscribers in this state;

      (e) The schedule of rates, dues, fees or other periodical charges proposed to be charged for such service contracts; and

      (f) The fee for certificate of authority as specified in section 742 of this act.

      3.  If upon completion of the application the commissioner determines that the applicant is fully qualified and entitled thereto under this chapter, he shall promptly issue a certificate of authority to the applicant; otherwise, the commissioner shall refuse to issue the certificate of authority and give the applicant written notice of such refusal setting forth the grounds therefor.

      Sec. 30.  Section 744 of the above-entitled act is hereby amended to read as follows:

      Section 744.  1.  No corporation subject to the provisions of this chapter shall establish, maintain or operate a hospital, medical or dental service plan unless it has and at all times maintains a reserve fund equal to the following minimum amounts in relation to the number of individuals entitled to hospital, medical or dental services under contracts issued by such corporation:

                                                                                                              Amount of

  Number of Individuals                                                                           Reserve

     Entitled to Benefits                                                                                Fund

2,500 or less......................................................................................   $10,000

2,501 to 3,500, inclusive................................................................     12,500

3,501 to 4,500, inclusive................................................................     15,000

4,501 to 5,500, inclusive................................................................     17,500

5,501 and above.............................................................................     20,000

 

but such reserve fund shall not be required of a corporation acting only as a fiscal administrator of programs funded by public agencies, authorized insurers and other authorized health service plans.

      2.  In computing such reserve fund, the commissioner shall include the amounts agreed to be paid by contracting hospitals to the corporation or its equivalent value of hospital service to be rendered without charge by the contracting hospital to the hospital service corporation.

      3.  In addition to the reserve fund provided for in this chapter, the commissioner shall require every corporation subject to this chapter to make, and to maintain in force, such contracts with enough hospitals in the State of Nevada to be adequate, in the opinion of the commissioner, to provide care for all individuals entitled to hospital benefits in the State of Nevada under contracts issued by such corporation.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1958 (Chapter 661, AB 806)ê

 

      4.  In addition, the commissioner shall require medical or dental service corporations to give evidence of the participation of a sufficient number of physicians or dentists, in his judgment, to render the medical or dental services specified under the contract.

      Sec. 31.  Section 874.4 of the above-entitled act is hereby amended to read as follows:

      Section 874.4.  “Property bondsman” means any individual who pledges United States currency, United States postal money orders [,] or cashiers’ checks [or other property] as security for a bail bond in connection with judicial proceedings and who receives or is promised money or other things of value therefor.

      Sec. 32.  Section 885 of the above-entitled act is hereby amended to read as follows:

      Section 885.  1.  A property bondsman shall justify the sufficiency of his undertaking by attaching to each bail bond only United States currency, a United States postal money order [,] or a cashiers’ check [or an affidavit or real property] as security in the amount of such bond. [Such affidavit shall be on a form prescribed by the commissioner.]

      2.  A bail agent shall justify his suretyship by attaching a copy of the power of attorney issued to him by the surety insurer to each bond.

      3.  This section applies to bail bondsmen notwithstanding any other provision of law.

      Sec. 32.2.  Section 903 of the above-entitled act is hereby amended to read as follows:

      Section 903.  NRS 266.355 is hereby amended to read as follows:

      266.355  1.  Except as provided in subsection 3, the city council may:

      (a) Regulate all businesses, trades and professions.

      (b) Fix, impose and collect a license tax for revenue upon all businesses, trades and professions.

      2.  The city council may establish any equitable standard to be used in fixing license taxes required to be collected pursuant to this section.

      3.  The city council may license insurance agents [who solicit, negotiate or effect contracts of insurance in any of the classifications listed in chapter 681 of NRS, but only for revenue purposes and only if the principal place of business of such agents is located within the city.] , brokers, analysts, adjusters and managing general agents within the limitations and under the conditions prescribed in section 91 of this amendatory act.

      Sec. 32.3.  Section 905 of the above-entitled act is hereby amended to read as follows:

      Section 905.  NRS 627.180 is hereby amended to read as follows:

      627.180  1.  Except for savings and loan associations, state banks and national banking associations, licensed to do business in the State of Nevada, under laws of the State of Nevada, or under the laws of the United States, or title insurers or underwritten title insurance companies authorized to do business in the State of Nevada, or lenders of construction loan moneys for dwelling units who are approved by the Federal Housing Administration or Veterans Administration and who have been licensed and authorized to do business in the State of Nevada, every construction control doing business in the State of Nevada shall, within 30 days immediately following July 1, 1965, file with the [real estate administrator] state contractors’ board a bond, executed by some corporation authorized to issue surety bonds in this state, in a penal sum equal to 1¼ times the amount of capital in the business but in no event less than $20,000, and such bond shall be kept in full force and effect or replaced by a like bond as a condition to continuing to do business as a construction control in the State of Nevada.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1959 (Chapter 661, AB 806)ê

 

authorized to issue surety bonds in this state, in a penal sum equal to 1¼ times the amount of capital in the business but in no event less than $20,000, and such bond shall be kept in full force and effect or replaced by a like bond as a condition to continuing to do business as a construction control in the State of Nevada.

      2.  The form of bond required is as follows:

 

      Bond No.

 

CONSTRUCTION CONTROL BOND

 

Know All Men by These Presents:

      That I, ..........................................., having a principal place of business in ........................., Nevada, as principal, and ........................., a corporation licensed to execute surety bonds under the provisions of [NRS 693.100,] the Nevada Insurance Code, as surety, are held and firmly bound to the State of Nevada, for the use of any person by whom funds are entrusted to the principal or to whom funds are payable by the principal, in the sum of ............... Dollars, lawful money of the United States of America, to be paid to the State of Nevada, for which payment well and truly to be made we bind ourselves, our heirs, executors and successors, jointly and severally, firmly by these presents:

      The Condition of the Above Obligation Is Such That:

      Whereas, Under the Construction Control Law, certain duties, obligations and requirements are imposed upon all persons, copartnerships, associations or corporations acting as construction controls;

      Now, Therefore, If the principal and its agents and employees shall faithfully and in all respects conduct business as a construction control in accordance with the provisions of the Construction Control Law, this obligation shall be void, otherwise to remain in full force and effect;

      Provided, However, That the surety or sureties may cancel this bond and be relieved of further liability hereunder by delivering 30 days’ written notice of cancellation to the principal; however, such cancellation shall not affect any liability incurred or accrued hereunder prior to the termination of such 30-day period;

      Provided Further, That the total aggregate liability of the surety or

sureties herein for all claims which may arise under this bond shall be limited to the payment of ............... Dollars.

      In Witness Whereof, The principal and surety have hereunto set their hands this .............. day of ..............................., 19 .........

                                                                                .........................................................

                                                                                By....................................................

                                                                                                                        Principal

                                                                                (Surety)

                                                                                By....................................................

                                                                                                                        Attorney

      Sec. 32.4.  Section 905.5 of the above-entitled act is hereby repealed.

      Sec. 32.5.  Section 906 of the above-entitled act is hereby amended to read as follows:

      Section 906.  NRS 648.190 is hereby amended to read as follows:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1960 (Chapter 661, AB 806)ê

 

      648.190  This chapter shall not apply:

      1.  To any detective or officer belonging to the law enforcement agencies of the State of Nevada or the United States, or of any county or city of the State of Nevada, while any such detective or officer is engaged in the performance of his official duties.

      2.  To special police officers appointed by the police department of any city, county, or city and county within the State of Nevada while any such officer is engaged in the performance of his official duties, or employed as a repossessor by any bank which is organized under the laws of this state or by a national bank which does a banking business in this state.

      3.  To insurance adjusters [licensed pursuant to, or to associate adjusters as defined in, chapter 685 of NRS] and their associate adjusters licensed pursuant to the Nevada Insurance Adjusters Law who are not otherwise engaged in the business of private investigators.

      4.  To any person employed as special agent, detective or private investigator for one employer exclusively in connection with the affairs of that employer.

      5.  To a person engaged exclusively in the business of obtaining and furnishing information as to the financial rating of persons.

      6.  To a charitable philanthropic society or association duly incorporated under the laws of this state which is organized and maintained for the public good and not for private profit.

      7.  To an attorney at law in performing his duties as such.

      8.  To a collection agency unless engaged in business as a repossessor, licensed by the superintendent of banks, or an employee thereof while acting within the scope of his employment while making an investigation incidental to the business of the agency, including an investigation of the location of a debtor or his assets and of property which the client has an interest in or lien upon.

      9.  To admitted insurers and agents and insurance brokers licensed by the state, performing duties in connection with insurance transacted by them.

      Sec. 32.6.  Section 907 of the above-entitled act is hereby amended to read as follows:

      Section 907.  NRS 675.300 is hereby amended to read as follows:

      675.300  1.  A licensee may require a borrower to insure tangible personal property when offered as security for a loan under this chapter against any substantial risk of loss, damage or destruction for an amount not to exceed the actual value of such property and for a term and upon conditions which are reasonable and appropriate considering the nature of the property and the maturity and other circumstances of the loan.

      2.  A licensee may provide, obtain or take as security for a loan insurance on the life and on the health or disability, or both, of one party obligated on the loan provided that any such insurance provided or obtained by the licensee shall comply with the applicable provisions of [NRS 684.020, 690.310 to 690.450, inclusive, and 692.500 to 692.630, inclusive.] sections 522 to 535, inclusive, of this amendatory act.

      3.  In accepting any insurance provided by this section as security for


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1961 (Chapter 661, AB 806)ê

 

a loan, the licensee may deduct the premiums or identifiable charge therefor from the proceeds of the loan, which premium or identifiable charge shall not exceed those filed with and approved by the commissioner of insurance, and remit such premiums to the insurance company writing such insurance, and any gain or advantage to the licensee, any employee, officer, director, agent, affiliate or associate from such insurance or its sale shall not be considered as additional or further charge in connection with any loan made under this chapter. Not more than one policy of life insurance and one policy providing accident and health coverage shall be written by a licensee in connection with any loan transaction under this chapter, and a licensee shall not require the borrower to be insured as a condition of any loan. If the unpaid balance of the loan is prepaid in full by cash or other thing of value, refinancing, renewal, a new loan or otherwise, the charge for any credit life insurance and any credit accident and health insurance shall be refunded or credited in accordance with the method established in NRS 675.290 for refunding or computing credit charges. Whenever insurance is written in connection with a loan transaction pursuant to this section, the licensee shall deliver or cause to be delivered to the borrower the certificate, instrument or other memorandum showing the cost thereof to the borrower, within 30 days from the date of the loan. All such insurance shall be written by a company authorized to conduct such business in this state, and the licensee shall not require the purchase of such insurance from any agent or broker designated by the licensee.

      4.  Every insurance policy or certificate written in connection with a loan transaction, pursuant to subsection 2 shall provide for cancellation of the coverage and a refund of the premium or identifiable charge unearned, upon the discharge of the loan obligation for which such insurance is security, without prejudice to any claim. Such refund shall be under a formula filed by the insurer with the insurance division of the department of commerce.

      Sec. 33.  Section 917 of the above-entitled act is hereby amended to read as follows:

      Section 917.  1.  Except as provided in [subsection 2] subsections 2 and 3 of this section and in subsection 1 of section 916 of this act, this act shall become effective on January 1, 1972.

      2.  Sections 20 and 21 of this act, relating to the Nevada Insurance Guaranty Association Act, sections 815 to 871, inclusive, of this act, relating to conservation, rehabilitation and liquidation of delinquent insurers, and this section shall become effective upon passage and approval.

      3.  Section 32.5 of this act shall become effective at 12:01 a.m. on January 1, 1972.

      Sec. 34.  This act shall become effective upon passage and approval.

 

________


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ê1971 Statutes of Nevada, Page 1962ê

 

CHAPTER 662, SB 612

Senate Bill No. 612–Committee on Federal, State and Local Governments

CHAPTER 662

AN ACT incorporating the City of Reno, in Washoe County, Nevada, and defining the boundaries thereof, under a new charter; and providing other matters properly relating thereto.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  The charter of the City of Reno is as follows. Each section of the charter shall be deemed to be a section of this act for the purpose of any subsequent amendment.

 

ARTICLE I

 

Incorporation of City; General Powers; Boundaries; Wards and Annexations; City Offices

 

      Section 1.010  Preamble: Legislative intent.

      1.  In order to provide for the orderly government of the City of Reno and the general welfare of its citizens the legislature hereby establishes this charter for the government of the City of Reno. It is expressly declared as the intent of the legislature that all provisions of this charter be liberally construed to carry out the express purposes of the charter and that the specific mention of particular powers shall not be construed as limiting in any way the general powers necessary to carry out the purposes of the charter.

      2.  Any powers expressly granted by this charter are in addition to any powers granted to a city by the general law of this state. All provisions of Nevada Revised Statutes which are applicable generally to cities (not including, unless otherwise expressly mentioned in this charter, chapter 265, 266 or 267 of NRS) which are not in conflict with the provisions of this charter apply to the City of Reno.

      Sec. 1.020  Incorporation of city.

      1.  All persons who are inhabitants of that portion of the State of Nevada embraced within the limits set forth in section 1.030 shall constitute a political and corporate body by the name of “City of Reno” and by that name they and their successors shall be known in law, have perpetual succession and may sue and be sued in all courts.

      2.  Whenever used throughout this charter, “city” means the City of Reno.

      Sec. 1.030  Description of territory.  The territory embraced in the city is that certain land described in the official plat required by NRS 234.250 to be filed with the county recorder and county assessor of Washoe County, as such plat is amended from time to time.

      Sec. 1.040  Annexations.  The city may annex territory by following the procedure provided for the annexation of cities in those sections of chapter 268 of NRS, as amended from time to time, which apply to counties having a population of less than 200,000.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1963 (Chapter 662, SB 612)ê

 

      Sec. 1.050  Wards: Creation; boundaries.

      1.  The city shall be divided into five wards, which shall be as nearly equal in registered voters as can be conveniently provided. The territory comprising each ward shall be contiguous, except that if any territory of the city which is not contiguous to the remainder of the city does not contain sufficient population to constitute a separate ward, it may be placed in any ward of the city.

      2.  The boundaries of wards shall be established and changed by ordinance, passed by a vote of at least five-sevenths of the city council. The boundaries of wards shall be changed whenever the number of registered voters at the time of any municipal election in any ward exceeds the number of registered voters in any other ward by more than 15 percent.

      3.  Ordinances establishing or changing the boundaries of wards shall not be passed or amended until the county clerk of Washoe County certifies that the number of registered voters in each proposed ward will not exceed the number of registered voters in any other ward by more than 15 percent.

      Sec. 1.060  Elective offices.

      1.  The elective officers of the city consist of:

      (a) Seven councilmen.

      (b) One municipal judge.

      (c) A city attorney.

      2.  Such officers shall be elected as provided by this charter.

      Sec. 1.070  Elective offices: Vacancies.

      1.  A vacancy in the city council or in the office of the city attorney or municipal judge shall be filled by a majority vote of the members of the city council, or the remaining members in the case of a vacancy in the city council, within 30 days after the occurrence of such vacancy. The appointee shall have the same qualifications as are required of the elective official.

      2.  The appointee shall serve the balance of the term of office to which he is appointed and until his successor is duly elected and qualified.

      Sec. 1.080  Councilmen not to hold other office.

      1.  The councilmen, including the mayor, shall not:

      (a) Hold any other elective office or employment with Washoe County or the city, except as provided by law or as a member of a board or commission for which no compensation is received.

      (b) Be elected or appointed to any office created by or the compensation for which was increased or fixed by the city council until 1 year after the expiration of the term for which such person was elected.

      2.  Any person holding any office proscribed by subsection 1 shall automatically forfeit his office.

      Sec. 1.090  Appointive officers.

      1.  The city council shall provide for the appointment of a city manager to perform the duties outlined in section 3.020. A vacancy in the office of city manager shall be filled within 6 months.

      2.  The city council may establish such other appointive offices as it may deem necessary for the operation of the city by designating the position in the salary ordinance. Appointment of such officers shall be made by the city manager and confirmed by the city council.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1964 (Chapter 662, SB 612)ê

 

made by the city manager and confirmed by the city council. Such appointive offices may include:

      (a) City controller.

      (b) City engineer.

      (c) Chief of police.

      (d) Fire chief.

      (e) Assistant city manager.

      (f) Director of public works.

      (g) Director of personnel and finance.

      (h) Director of parks, recreation and public properties.

      (i) Director of public safety.

      (j) Chief license inspector.

      (k) Airport manager.

      (l) Building inspector chief.

      (m) Superintendent of recreation.

      (n) Superintendent of parks.

      (o) Traffic engineer.

      (p) Superintendent of sanitation.

      (q) Superintendent of streets.

      (r) Superintendent of sewers.

      (s) Superintendent of city shops.

      (t) Superintendent of sewer plant.

      3.  A city clerk shall be appointed by the city council.

      Sec. 1.100  Appointive officers: Miscellaneous provisions.

      1.  All appointive officers shall perform such duties as may be designated by the city manager and such other duties as may be directed by the city council.

      2.  Any employee of the city holding a civil service rating under the city and who is appointed to any position provided for in section 1.090 shall not lose his civil service rating while serving in such position.

      3.  All appointive officers shall be entitled to all employment benefits to which civil service employees are entitled.

      4.  The city council may require from all other officers and employees of the city constituted or appointed under this charter, except councilmen, sufficient security for the faithful and honest performance of their respective duties.

      Sec. 1.110  Appointive officers: Duties; salary.

      1.  All appointive officers of the city, except the city manager and the board of health shall perform such duties under the direction of the city manager, as may be designated by the city council.

      2.  All appointive officers of the city shall receive such salary as may be designated by the city council.

      Sec. 1.120  Officers and employees; change in salary.

      1.  The city council may increase or diminish the salary or compensation of any appointive officer or employee.

      2.  No act of the city council directly or indirectly increasing the salary or compensation of any elective officer, except as provided in this charter, shall be valid or effective for any purpose.

      Sec. 1.130  Oath of office.  Every person elected or appointed to fill any office shall subscribe to the official oath as provided by the city council. Every such person shall swear or affirm that he is not under any direct or indirect obligation to vote for, appoint or elect any person to any office, position or employment in the city government.


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ê1971 Statutes of Nevada, Page 1965 (Chapter 662, SB 612)ê

 

direct or indirect obligation to vote for, appoint or elect any person to any office, position or employment in the city government.

 

ARTICLE II

 

Legislative Department

 

      Sec. 2.010  City council: Qualifications; election; term of office; salary.

      1.  The legislative power of the city is vested in a city council consisting of seven councilmen.

      2.  At the first city council meeting after an election at which a councilman is elected, the city council shall elect one of its members to have the title of mayor and another to have the title of assistant mayor. The mayor and assistant mayor shall serve for terms of 2 years or until removed after hearing for cause by a vote of six-sevenths of the city council.

      3.  The councilmen shall be:

      (a) Bona fide residents of the wards they represent, or if elected at large, of the city, for at least 6 months immediately preceding their election.

      (b) Registered voters within the city and taxpayers on real property located within the city.

      4.  All councilmen shall be voted upon by all registered voters of the city but two councilmen shall be elected at large and one councilman shall be elected from each ward. All councilmen shall serve for terms of 4 years.

      5.  The councilmen shall receive a salary in an amount fixed by the city council.

      Sec. 2.020  City council: Contracts.  Members of the city council:

      1.  May vote on any lease, contract or other agreement which extends beyond their terms of office.

      2.  Shall not have any interest, directly or indirectly, in any lease, contract or other agreement entered into with the city.

      Sec. 2.030  City council: Discipline of members, other persons; subpena power.

      1.  The city council may:

      (a) Provide for the punishment of any member for disorderly conduct committed in its presence.

      (b) Order the attendance of witnesses and the production of all papers relating to any business before the city council.

      2.  If any person ordered to appear before the city council fails to obey such order:

      (a) The city council or any member thereof may apply to the clerk of the district court for a subpena commanding the attendance of the person before the city council.

      (b) Such clerk may issue the subpena, and any peace officer may serve it.

      (c) If the person upon whom the subpena is served fails to obey it, the court may issue an order to show cause why such person should not be held in contempt of court and upon hearing of the matter may adjudge such person guilty of contempt and punish him accordingly.


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ê1971 Statutes of Nevada, Page 1966 (Chapter 662, SB 612)ê

 

held in contempt of court and upon hearing of the matter may adjudge such person guilty of contempt and punish him accordingly.

      Sec. 2.040  Meetings: Quorum.

      1.  The city council shall hold regular meetings on the second and fourth Mondays of each month. If such days are legal holidays, the meeting shall be held on the next business day.

      2.  A majority of all members of the city council constitutes a quorum to do business, but a lesser number may meet and recess from time to time, and compel the attendance of the absent members.

      3.  Except as otherwise provided by law, all sessions and all proceedings of the city council shall be public.

      Sec. 2.050  Meetings: Special.

      1.  Special meetings may be held on call of the mayor, city manager or by a majority of the city council, by giving a minimum of 6 hours’ notice of such special meeting to each member of the city council prior to the meeting.

      2.  At a special meeting:

      (a) No business may be transacted except such as has been stated in the call of the meeting.

      (b) No ordinance may be passed except an emergency ordinance, or one specified in section 7.030.

      Sec. 2.060  Meetings: Time and place; rules.  The city council may:

      1.  Fix the time and place of its meetings and judge the qualifications and election of its own members.

      2.  Adopt rules for the government of its members and proceedings.

      Sec. 2.070  Oaths and affirmations.  The mayor, assistant mayor while acting in the place of the mayor, each councilman and the city clerk may administer oaths and affirmations relating to any business pertaining to the city before the city council or to be considered by the city council.

      Sec. 2.080  Powers of city council: Ordinances, resolutions and orders.

      1.  The city council may make and pass all ordinances, resolutions and orders not repugnant to the Constitution of the United States or the State of Nevada, or to the provisions of Nevada Revised Statutes or of this charter, necessary for the municipal government and the management of the affairs of the city, and for the execution of all the powers vested in the city.

      2.  When power is conferred upon the city council to do and perform anything, and the manner of exercising such power is not specifically provided for, the city council may provide by ordinance the manner and details necessary for the full exercise of such power.

      3.  The city council may enforce ordinances by providing penalties not to exceed those established by the legislature for misdemeanors.

      4.  The city council shall have such powers, not in conflict with the express or implied provisions of this charter, as are conferred generally by statute upon the governing bodies of cities organized under a special charter.

      5.  The city council shall not pass any ordinance increasing or diminishing the salary of any elective officer during the term for which he is elected or appointed.


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ê1971 Statutes of Nevada, Page 1967 (Chapter 662, SB 612)ê

 

      Sec. 2.090  Ordinances: Passage by bill; amendments; subject matter; title requirements.

      1.  No ordinance may be passed except by bill and by a majority vote of the city council. The style of all ordinances shall be as follows: “The City Council of the City of Reno does ordain:”.

      2.  No ordinance shall contain more than one subject, which shall be briefly indicated in the title. Where the subject of the ordinance is not so expressed in the title, the ordinance is void as to the matter not expressed in the title.

      3.  Any ordinance which amends an existing ordinance shall set out in full the ordinance or sections thereof to be amended, and shall indicate matter to be omitted by enclosing it in brackets and shall indicate new matter by underscoring or by italics.

      Sec. 2.100  Ordinances: Enactment procedure; emergency ordinances.

      1.  All proposed ordinances when first proposed shall be read to the city council by title and referred to a committee for consideration, after which an adequate number of copies of the proposed ordinance shall be filed with the city clerk for public distribution. Except as otherwise provided in subsection 3, notice of such filing shall be published once in a newspaper qualified pursuant to the provisions of chapter 238 of NRS, as amended from time to time, and published in the city at least 1 week prior to the adoption of the ordinance. The city council shall adopt or reject the ordinance or an amendment thereto, within 30 days from the date of such publication.

      2.  At the next regular meeting or adjourned meeting of the city council following the proposal of an ordinance and its reference to committee, such committee shall report such ordinance back to the city council. Thereafter, it shall be read as first introduced, or as amended, and thereupon the proposed ordinance shall be finally voted upon or action thereon postponed.

      3.  In cases of emergency or where the ordinance is of a kind specified in section 7.030, by unanimous consent of the city council, final action may be taken immediately or at a special meeting called for that purpose, and no notice of the filing of the copies of the proposed ordinance with the city clerk need be published.

      4.  All ordinances shall be signed by the mayor, attested by the city clerk, and shall be published by title, together with the names of the councilmen voting for or against passage, in a newspaper qualified pursuant to the provisions of chapter 238 of NRS, as amended from time to time, and published in the city for at least one publication, before the ordinance shall become effective. The city council may, by majority vote, order the publication of the ordinance in full in lieu of publication by title only.

      5.  The city clerk shall record all ordinances in a book kept for that purpose, together with the affidavits of publication by the publisher.

      Sec. 2.110  Uniform codes: Procedure for adoption.  An ordinance adopting a uniform building, plumbing, electrical, health, traffic or fire code, or any other uniform code or codes, printed in book or pamphlet form, may adopt such code or codes, or any portion thereof, with such changes as may be necessary to make such code or codes applicable to conditions in the city, and with such other changes as may be desirable, by reference thereto.


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ê1971 Statutes of Nevada, Page 1968 (Chapter 662, SB 612)ê

 

conditions in the city, and with such other changes as may be desirable, by reference thereto. Copies of such code or codes, either typewritten or printed, with such changes, if any, shall be filed for use and examination by the public in the office of the clerk at least 1 week prior to the passage of the ordinance adopting such code or codes.

      Sec. 2.120  Codification of ordinances; publication of code.

      1.  The city council may codify and publish a code of its municipal ordinances in the form of a municipal code, which code may, at the election of the city council, have incorporated therein a copy of this charter and such additional data as the city council may prescribe. When such code is published, two copies shall be fined with the librarian at the Nevada state library, and thereafter the code shall be received in all courts of this state as an authorized compilation of the municipal ordinances of the city.

      2.  The ordinances in the code shall be arranged in appropriate chapters, articles and sections, excluding the titles, enacting clauses, signature of the mayor, attestations and other formal parts.

      3.  The codification shall be adopted by an ordinance and shall not contain any substantive changes, modifications or alterations of existing ordinances; and the only title necessary for the ordinance shall be, “An ordinance for codifying and compiling the general ordinances of the City of Reno.”

      4.  The codification may be amended or extended by ordinance.

      Sec. 2.130  Ordinances: Judicial notice.  This charter and all ordinances, rules, resolutions or other regulations of the city shall be received as prima facie evidence in all courts without pleading the contents thereof. Such charter, ordinances, rules, resolutions or other regulations may be pleaded by title only and may be proved by introduction of:

      1.  The original entry thereof on the records of the city council; or

      2.  A copy of such original entry certified by the city clerk; or

      3.  A printed copy published or purported to have been published by authority of the city council.

      Sec. 2.140  Powers of city council: Public property, buildings.

      1.  The city council may:

      (a) Control the property of the corporation.

      (b) Erect and maintain all buildings necessary for the use of the city.

      (c) Purchase, receive, hold, sell, lease, convey and dispose of property, wherever situated, for the benefit of the city, improve and protect such property, and do all other things in relation thereto which natural persons might do.

      2.  No lease, where the term is for more than 1 year or where the rental exceeds $150 per month, or sale of real property belonging to the city may be made until after such lease or sale has been appraised by three disinterested appraisers who are residents and taxpayers within the city. Such appraisal must be at the actual market or rental value of the property. Such property shall not be sold or leased for less than 75 percent of such appraised value. However, any property belonging to the city may be sold to the United States of America, the State of Nevada or any political subdivision thereof at a nominal consideration whenever the public interest requires such a sale.

      3.  The city council may not, except as otherwise specifically provided by this charter or any other law, mortgage, hypothecate or pledge any property of the city for any purpose.


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ê1971 Statutes of Nevada, Page 1969 (Chapter 662, SB 612)ê

 

by this charter or any other law, mortgage, hypothecate or pledge any property of the city for any purpose.

      Sec. 2.150  Powers of city council: Lease of public property.

      1.  The city council may lease any municipal property, or portion thereof, to any person or association for the purpose of providing services to the public or the city.

      2.  Such leased property shall not be used for the direct operation of any industrial or profit-making project not incidental to the public benefit.

      Sec. 2.160  Powers of city council: Eminent domain.  The city council may condemn property for the public use in the manner prescribed by chapter 37 of NRS, as amended from time to time.

      Sec. 2.170  Powers of city council: Licensing, regulation and prohibition of businesses, trades and professions.

      1.  The city council may:

      (a) Regulate all businesses, trades and professions.

      (b) Fix, impose and collect a license tax for revenue upon all businesses, trades and professions.

      2.  The city council may establish any equitable standard to be used in fixing license taxes required to be collected pursuant to this section.

      Sec. 2.180  Powers of city council: Police ordinances.

      1.  The city council may enact and enforce such local police ordinances as are not in conflict with the general laws of the State of Nevada.

      2.  Any offense made a misdemeanor by the laws of the State of Nevada shall also be deemed to be a misdemeanor in the city whenever such offense is committed within the city.

      Sec. 2.190  Powers of city council: Fire protection; regulation of explosives, inflammable materials; fire codes and regulations.  The city council may:

      1.  Organize, regulate and maintain a fire department and construct and obtain all necessary buildings and equipment.

      2.  Prescribe the duties of the fire chief.

      3.  Regulate or prohibit the storage of any explosive, combustible or inflammable material in or transported through the city, and prescribe the distance from any residential or commercial area where it may be kept.

      4.  Establish, by ordinance, a fire code and other regulations necessary to carry out the purposes of this section.

      Sec. 2.200  Powers of city council: Public health; narcotics and dangerous drugs.  The city council may:

      1.  Provide for safeguarding public health in the city.

      2.  Prohibit and suppress the use, possession, sale or other disposition of any narcotic or dangerous drug as those terms are defined in chapters 453 and 454 of NRS, as amended from time to time.

      Sec. 2.210  Powers of city council: Public health; board of health.  The city council may:

      1.  Create a board of health, consisting of not less than three nor more than five persons appointed by the mayor and confirmed by the city council, whose members shall serve for terms of 2 years and shall be:

      (a) Physicians in good standing and licensed for more than 1 year to practice in the State of Nevada.

      (b) Residents of the State of Nevada.


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ê1971 Statutes of Nevada, Page 1970 (Chapter 662, SB 612)ê

 

      (c) Bona fide residents and qualified electors of the city for at least 1 year prior to appointment.

      2.  Provide by ordinance for the enforcement of all regulations and quarantines established by the board of health by imposing adequate penalties for the violation thereof.

      3.  Provide for the appointment of a health officer and fix his salary.

      Sec. 2.220  Powers of city council: Buildings; construction and maintenance regulations; building and safety codes.  The city council may:

      1.  Regulate all matters relating to the construction, maintenance and safety of buildings, structures and property within the city.

      2.  Adopt any building or safety code necessary to carry out the provisions of this section and establish such fees as may be necessary.

      Sec. 2.230  Powers of city council: Zoning and planning.

      1.  The city council may:

      (a) Divide the city into districts and regulate and restrict the erection, construction, reconstruction, alteration, repair or use of buildings, structures or land within such districts.

      (b) Establish and adopt ordinances and regulations relating to the subdivision of land.

      2.  The city council shall carry out the provisions of subsection 1 in the manner prescribed by chapter 278 of NRS, as amended from time to time.

      Sec. 2.240  Powers of city council: Rights-of-way, parks, public buildings and grounds and other public places.  The city council may:

      1.  Acquire for any public purpose, lay out, maintain, alter, improve or vacate all public parks, buildings, grounds, recreation facilities and rights-of-way and prevent the unlawful use thereof.

      2.  Regulate the use of public parks, buildings, grounds, recreation facilities and rights-of-way and prevent the unlawful use thereof.

      3.  Require landowners to keep the adjacent streets, sidewalks and public parks, buildings and grounds free from encroachments or obstructions.

      4.  Regulate and prevent in all public places:

      (a) The distribution and exhibition of handbills or signs.

      (b) Any practice tending to annoy persons passing in such public places.

      (c) Noise of any kind in public places.

      (d) Public demonstrations and processions.

      5.  Prevent riots or any act tending to promote riots in any public place.

      Sec. 2.250  Powers of city council: Traffic control.  The city council may, by ordinance, regulate:

      1.  All vehicular, pedestrian and other traffic within the city and provide generally for the public safety on public streets and rights-of-way.

      2.  The length of time for which vehicles may be parked upon the public streets and publicly owned parking lots.

      Sec. 2.260  Powers of city council: Public transportation.  The city council may grant an exclusive franchise to any person, firm, association or corporation to operate and maintain a busline in the city. Such franchise may be granted only upon terms which are advantageous to the city.


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ê1971 Statutes of Nevada, Page 1971 (Chapter 662, SB 612)ê

 

city. The city council may extend, prior to the expiration of such franchise, the duration or term of such franchise for such additional period and upon such terms as are deemed advantageous to the city, and fix, prescribe and change the fares to be charged by such franchise holder.

      Sec. 2.270  Powers of city council: Parking meters; off-street public parking facilities.

      1.  The city council may acquire, install, maintain, operate and regulate parking meters at the curbs of the streets or upon publicly owned property made available for public parking. The parking fees to be charged for the use of the parking facilities regulated by parking meters shall be fixed by the city council.

      2.  Except as otherwise provided by this charter, the city council may acquire property within the city by any lawful means except eminent domain for the purpose of establishing off-street public parking facilities for vehicles. The city council may, after an election is held in conformity with the provisions of chapter 350 of NRS concerning municipal bond elections, as amended from time to time, and the proposal for the issuance of the bonds is approved as therein provided, issue revenue bonds for the purpose of acquiring such property and erecting such improvements thereon as may be proper. The city council may, in such bonds, pledge the on-street parking revenues, the general credit of the city, or both, to secure the payment of the principal and interest thereon.

      Sec. 2.280  Powers of city council: Railroads.  The city council may:

      1.  License, regulate or prohibit the location, construction or laying of tracks of any railroad or streetcar in any public right-of-way.

      2.  Grant franchises to any person or corporation to operate a railroad or streetcar upon public rights-of-way and adjacent property.

      3.  Declare a nuisance and require the removal of the tracts of any railroad or streetcar in any public right-of-way.

      4.  Condemn rights-of-way for any public purpose across any railroad right-of-way.

      5.  Prescribe the length of time any public right-of-way may be obstructed by trains standing thereon.

      6.  Require railroad companies to fence their tracks and to construct cattle guards and crossings and to keep them in repair.

      Sec. 2.290  Powers of city council: Nuisances.  The city council may:

      1.  Determine by ordinance what shall be deemed nuisances.

      2.  Provide for the abatement, prevention and removal of such nuisances at the expense of the person creating, causing or committing such nuisances.

      3.  Provide that such expense of removal shall be a lien upon the property upon which the nuisance is located. Such lien shall:

      (a) Be perfected by filing with the county treasurer a statement by the city clerk of the amount of expenses due and unpaid and describing the property subject to the lien.

      (b) Be coequal with the latest lien thereon to secure the payment of general taxes.

      (c) Not be subject to extinguishment by the sale of any property on account of the nonpayment of general taxes.


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ê1971 Statutes of Nevada, Page 1972 (Chapter 662, SB 612)ê

 

      (d) Be prior and superior to all liens, claims, encumbrances and titles other than the liens of assessments and general taxes.

      4.  Provide any other penalty or punishment of persons responsible for such nuisances.

      Sec. 2.300  Powers of city council: Animals and poultry.  The city council may:

      1.  Fix, impose and collect an annual license fee on all animals and provide for the capture and disposal of all animals on which the license fee is not paid.

      2.  Regulate or prohibit the running at large and disposal of all kinds of animals and poultry.

      3.  Establish a pound, appoint a poundkeeper and prescribe his duties.

      4.  Prohibit cruelty to animals.

      Sec. 2.310  Powers of city council: Sanitary sewer facilities.  The city council may:

      1.  Provide for a sanitary sewer system or any part thereof, and obtain property therefore either within or without the city.

      2.  Sell any product or byproduct thereof and acquire the appropriate outlets within or without the city and extend the sewerlines thereto.

      3.  Prescribe regulations concerning the discharge of any industrial waste into the sanitary sewer system of the city.

      4.  Establish sewer fees and provide for the enforcement and collection thereof.

      Sec. 2.320  Powers of city council: Provisions of utilities.  The city council may:

      1.  provide, by contract, franchise or public enterprise, for any utility to be furnished to the city for the residents thereof.

      2.  Provide for the construction of any facility necessary for the provision of such utilities.

      3.  Fix the rate to be paid for any utility provided by public enterprise. Any charges due for services, facilities or commodities furnished by any utility owned by the city is a lien upon the property to which the service is rendered and shall be perfected by filing with the county recorder of Washoe County a statement by the city clerk of the amount due and unpaid and describing the property subject to the lien. Each such lien shall:

      (a) Be coequal with the latest lien thereon to secure the payment of general taxes.

      (b) Not be subject to extinguishment by the sale of any property on account of the nonpayment of general taxes.

      (c) Be prior and superior to all liens, claims, encumbrances and titles other than the liens of assessments and general taxes.

      Sec. 2.330  Powers of city council: Cemeteries.  The city council may, by any lawful means, acquire, control, maintain, enlarge or abolish cemeteries.

      Sec. 2.340  Powers of city council: Municipal band.  The city council may maintain and support a municipal band.

      Sec. 2.350  Powers of city council: Advertising fund.  The city council may appropriate from the general fund a reasonable amount each year to be placed in a fund for advertising and publicity.


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ê1971 Statutes of Nevada, Page 1973 (Chapter 662, SB 612)ê

 

ARTICLE III

 

Executive Department

 

      Sec. 3.010  Mayor: Duties; assistant mayor.

      1.  The mayor shall:

      (a) Serve as a member of the city council and preside over its meetings.

      (b) Have no administrative duties.

      (c) Be recognized as the head of the city government for all ceremonial purposes.

      (d) Determine the order of business at meetings pursuant to the rules of the city council.

      (e) Be entitled to vote and shall vote last on all rollcall votes.

      (f) Take all proper measures for the preservation of the public peace and order and for the suppression of riots and all forms of public disturbance, for which he is authorized to appoint extra policemen temporarily and without regard to civil service rules and regulations, and to call upon the sheriff of Washoe County, or, if such force is inadequate, to call upon the governor for assistance.

      (g) Perform such other duties, except administrative duties, as may be prescribed by ordinance or by the provisions of Nevada Revised Statutes which apply to a mayor of a city organized under the provisions of a special charter.

      2.  The city council shall elect one of its members to be assistant mayor. Such person shall:

      (a) Hold such office and title, without additional compensation, during the term for which he was elected.

      (b) Perform the duties of mayor during the absence or disability of the mayor.

      (c) Act as mayor until the next municipal election if the office of mayor becomes vacant.

      Sec. 3.020  City manager: Duties; compensation.

      1.  The city manager shall be the chief executive and administrative officer of the city government. He shall be responsible to the city council for the proper administration of all affairs of the city. His duties and salary shall be fixed by the city council and he shall be reimbursed for all expenses incurred in the performance of his duties.

      2.  The city manager may appoint such clerical and administrative assistants as he may deem necessary, subject to the approval of the city council.

      3.  He may designate an acting city manager to serve in his absence or, if he fails to do so, the city council may appoint an acting city manager.

      4.  No councilman shall be appointed as city manager during the term for which he was elected, or for 1 year thereafter.

      Sec. 3.030  City manager: Removal.

      1.  The city council may remove the city manager from office in accordance with the procedure contained in this section.

      2.  The city council shall adopt by affirmative vote of a majority of all its members a preliminary resolution which shall state the reasons for removal and may suspend the city manager from duty for a period not to exceed 15 days.


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ê1971 Statutes of Nevada, Page 1974 (Chapter 662, SB 612)ê

 

for removal and may suspend the city manager from duty for a period not to exceed 15 days. A copy of the resolution shall be delivered promptly to the city manager.

      3.  Within 5 days after a copy of the resolution is delivered to the city manager, he may file with the city council a written request for a public hearing. The public hearing shall be held at a city council meeting not earlier than 15 days nor later than 30 days after the request is filed. The city manager may file with the city council a written reply not later than 5 days before the hearing.

      4.  The city council may adopt a final resolution of removal, which may be made effective immediately, by affirmative vote of a majority of all its members, at any time after 5 days from the date when a copy of the preliminary resolution was delivered to the city manager, if he has not requested a public hearing or at any time after the public hearing if he has requested one.

      5.  The city manager shall continue to receive his salary until the effective date of the final resolution of removal. The action of the city council in suspending or removing the city manager shall not be subject to review by any agency or court.

      Sec. 3.040  City clerk: Duties; qualifications; salary.

      1.  The city clerk shall:

      (a) Keep the corporate seal and all books and papers belonging to the city.

      (b) Attend all meetings of the city council and keep an accurate journal of its proceedings, including a record of all ordinances, bylaws and resolutions passed or adopted by it. After approval at each meeting of the city council, the city clerk shall attest the journal after it has been signed by the mayor.

      (c) Sign all warrants issued.

      (d) Number and sign all licenses issued by the city. All licenses shall be in a form devised by the city clerk and approved by the city council.

      (e) Enter upon the journal the result of the vote of the city council upon passage of ordinances, or of any resolution appropriating money, abolishing licenses, or increasing or decreasing the rates of licenses.

      (f) Be the official license collector of the city.

      2.  The city clerk shall:

      (a) Serve for a term of 4 years.

      (b) Be a bona fide resident of the city for at least 1 year immediately preceding his appointment.

      (c) Be a registered voter and a taxpayer on real property in the city.

      (d) Be at least 21 years of age.

      3.  The city clerk shall be reimbursed for all expenses incurred in the performance of his duties.

      Sec. 3.050  City clerk’s performance bond.  The city clerk shall be liable and accountable on his official bond for the performance of his duties under the provisions of this charter, and the city council may require from him such additional security as may be necessary from time to time.

      Sec. 3.060  City attorney: Qualifications; duties; salary.

      1.  The city attorney shall be a duly licensed member of the State Bar of Nevada and a resident of the city and taxpayer on real property in the city at the time of his election.


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ê1971 Statutes of Nevada, Page 1975 (Chapter 662, SB 612)ê

 

of Nevada and a resident of the city and taxpayer on real property in the city at the time of his election.

      2.  The city attorney shall be the legal officer of the city and shall perform such duties as may be designated by ordinance. He shall devote his full time to the duties of the office and shall not engage in the private practice of law.

      3.  The city attorney shall receive a salary as fixed by resolution of the city council.

      4.  The city attorney may appoint and remove such assistants as he may require in the discharge of the duties of his office. The council may appropriate such funds as it may deem proper to compensate any such assistants.

      Sec. 3.070  Employment of special counsel.  The city council may, by six-sevenths vote, employ attorneys to perform any civil duty of the city attorney. Such attorneys are responsible only to the city council, and the city attorney shall have no responsibility or authority concerning the subject matter of such employment.

      Sec. 3.080  County assessor to be ex officio city assessor; duties.

      1.  The county assessor of Washoe County shall be ex officio city assessor of the city. The county assessor shall perform such duties for the city without additional compensation.

      2.  Upon request of the ex officio city assessor, the city council may appoint and set the salary of a deputy city assessor to perform such duties relative to city assessments as may be deemed necessary.

      Sec. 3.090  County treasurer to be ex officio city treasurer; duties.

      1.  The treasurer of Washoe County shall be ex officio city treasurer and tax receiver of the city. The county treasurer shall perform such duties for the city without additional compensation.

      2.  The city treasurer shall, with the consent of the city council, appoint the city clerk or other city officer as deputy city treasurer to perform such duties as may be designated by the city council.

      3.  The city shall compensate Washoe County in the amount of $1,800 per year for the services rendered by the treasurer of Washoe County under this section.

      Sec. 3.100  City engineer: Qualifications; office of record.

      1.  The city engineer shall:

      (a) Have a degree in engineering, or the equivalent thereof, from an accredited college.

      (b) Have at least 3 years’ practical experience as a civil or municipal engineer immediately preceding his appointment.

      (c) Be qualified for registration as a professional engineer under the laws of this state and shall be so registered within 1 year after his appointment.

      2.  The city engineer’s office is hereby designated as an office of record for all maps, plans, plats, profiles, drawings, dedications, final estimates, specifications and contracts which in any way relate to the affairs of the city.

      Sec. 3.110  Fire chief: Qualifications.  The fire chief shall:

      1.  Be at least 30 years of age.

      2.  Have at least 5 continuous years’ experience in fire prevention or fire protection work immediately preceding his appointment.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1976 (Chapter 662, SB 612)ê

 

      Sec. 3.120  City officers: Duties restricted and altered.  The city council may prescribe by ordinance the powers and duties of all city officers, where such powers and duties have not been established by this charter, and may add to, alter or restrict such powers and duties.

      Sec. 3.130  City officers: Collection and disposition of moneys.

      1.  All taxes, fines, forfeitures or other moneys collected or recovered by any officer or person pursuant to the provisions of this charter or of any valid ordinance of the city shall be paid by the officer or person collecting or receiving them to the city clerk, who shall dispose of them in accordance with the ordinances, regulations and procedures established by the city council.

      2.  The city council may by proper legal action collect all moneys which are due and unpaid to the city or any office thereof, and the city council may pay from the general fund all fees and expenses necessarily incurred by it in connection with the collection of such moneys.

      Sec. 3.140  Interference by city council.

      1.  The mayor or councilmen shall not dictate the appointment, suspension or removal of any city administrative officer or employee appointment by the city manager or his subordinates unless the city council fully and freely discusses the matter with the city manager. No person covered by the rules and regulations of the civil service commission may be appointed, suspended or removed except as provided in such rules and regulations.

      2.  The city council or its members shall not deal directly with a city official or employee on a matter pertaining to city business but shall deal through the city manager.

      Sec. 3.150  Removal of elective officers.  If any elective officer is adjudged guilty of nonfeasance, misfeasance or malfeasance in office by any court of competent jurisdiction, the city council may declare the office vacant and fill the vacancy so caused, as provided by law.

 

ARTICLE IV

 

Judicial Department

 

      Sec. 4.010  Municipal court.  There shall be a municipal court of the city to which the provisions of chapters 5 and 266 of NRS, relating to municipal courts, as amended from time to time, shall apply.

      Sec. 4.020  Municipal court: Qualifications of municipal judge; salary.

      1.  The municipal court shall be presided over by a municipal judge, who shall be:

      (a) Not less than 25 years of age.

      (b) A citizen of the United States.

      (c) A resident of the city for a continuous 1-year period immediately preceding his election.

      (d) A registered voter for a continuous 1-year period immediately preceding his election.

      (e) An owner of real property in the city for a l-year period immediately preceding his election.

      (f) An attorney licensed to practice law in this state.

      2.  The municipal judge shall not engage in the private practice of law.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1977 (Chapter 662, SB 612)ê

 

      3.  The salary of the municipal judge shall be fixed by resolution of the city council.

      Sec. 4.030  Disposition of fines.  All fines and forfeitures for the violation of ordinances shall be paid to the city clerk in the manner to be prescribed by ordinance.

      Sec. 4.040  Additional imprisonment to satisfy fine or forfeiture. Whenever a person is sentenced to both fine and imprisonment, or to pay a forfeiture in addition to imprisonment, he shall be confined in the city or county jail, whichever is designated in his sentence of imprisonment, for an additional period of 1 day for each $4 of the amount until such fine or forfeiture is satisfied. He shall not be imprisoned beyond the maximum sentence for the offense for which he is confined.

      Sec. 4.050  Registration plates as evidence of traffic violations.  In any proceeding for the violation of the provisions of any ordinance of the city involving a motor vehicle, the registration plate displayed on such vehicle shall be received as prima facie evidence that the registered owner of such vehicle was then operating it. If, at any hearing or proceeding, the registered owner testifies, under oath, that he was not operating the vehicle at the time of the alleged violation of such ordinance and submits himself to an examination as to who, at that time, was operating such motor vehicle and reveals the name of the person, or shows that the vehicle was stolen, then the prima facie evidence arising from the registration plate shall be overcome and renewed and the burden of proof shifted. In any case of violation of a city ordinance in which a motor vehicle is involved it shall be lawful for a police officer to remove the registration plate from such vehicle.

 

ARTICLE V

 

Elections

 

      Sec. 5.010  General municipal elections.

      1.  On the Tuesday after the 1st Monday in June 1975, and at each successive interval of 4 years, there shall be elected by the qualified voters of the city, at a general election to be held for that purpose, councilmen from the second and fourth wards, one councilman at large, a municipal judge and a city attorney, all of whom shall hold office for a term of 4 years and until their successors have been elected and qualified.

      2.  On the Tuesday after the 1st Monday in June 1977, and at each successive interval of 4 years, there shall be elected by the qualified voters of the city, at a general election to be held for that purpose, councilmen from the first, third and fifth wards and one councilman at large, all of whom shall hold office for a term of 4 years and until their successors have been elected and qualified.

      Sec. 5.020  Primary municipal elections; declaration of candidacy.

      1.  A candidate for any office to be voted for at a municipal election shall file an affidavit of candidacy with the city clerk not less than 30 nor more than 40 days before the day of primary election. The city clerk shall charge and collect from the candidate and the candidate shall pay to the city clerk, at the time of filing the affidavit of candidacy, a filing fee of $25 for filing an affidavit of candidacy. All filing fees so collected by the city clerk shall be deposited to the credit of the general fund of the city.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1978 (Chapter 662, SB 612)ê

 

the city clerk shall be deposited to the credit of the general fund of the city.

      2.  If for any general municipal election there are three or more candidates for any office to be filled at such election, a primary election for any such office shall be held on the Tuesday following the 1st Monday in May preceding such general election. If for any general municipal election there are two or less candidates for any office to be filled at such election, their names shall not be placed on the ballot for the primary municipal election but shall be placed on the ballot for the general election.

      3.  In the primary election, the names of the two candidates for municipal judge, city attorney, or a particular city council seat, as the case may be, who receive the highest number of votes shall be placed on the ballot for the general election.

      Sec. 5.030  Applicability of state election laws; elections under city council control.

      1.  All elections held under this charter shall be governed by the provisions of the election laws of this state, so far as such laws can be made applicable and are not inconsistent herewith.

      2.  The conduct of all municipal elections shall be under the control of the city council. For the conduct of municipal elections, for the prevention of fraud in such elections, and for the recount of ballots in cases of doubt or fraud, the city council shall adopt by ordinance all regulations which it considers desirable and consistent with law and this charter.

      Sec. 5.040  Qualifications, registration of voters.

      1.  Every person who resides within the city at the time of holding any municipal election, and whose name appears upon the official register of voters in and for the city, is entitled to vote at each municipal election, whether special, primary or general, and for all officers to be voted for and on all questions that may be submitted to the people at any such primary, general or special city elections, except as otherwise provided in this article.

      2.  Nothing in this charter shall be so construed as to deny or abridge the power of the city council to provide for supplemental registration.

      Sec. 5.050  Names on ballots.  The full names of all candidates, except those who have withdrawn, died or become ineligible, shall be printed on the official ballots without party designation or symbol. The use of nicknames in conjunction with the candidates’ legal names is allowed and the nicknames may be printed on the official ballots. If two or more candidates have the same surname or surnames so similar as to be likely to cause confusion, their residence addresses shall be printed with their names on the ballot.

      Sec. 5.060  Ballots for ordinances and charter amendments.  An ordinance for charter amendment to be voted on in the city shall be presented for voting by ballot title. The ballot title of a measure may differ from its legal title and shall be a clear, concise statement describing the substance of the measure without argument or prejudice. Below the ballot title shall appear the following question: “Shall the above described (ordinance) (amendment) be adopted?” The ballot or voting machine or device shall be so marked as to indicate clearly in what manner the voter may cast his vote, either for or against the ordinance or amendment.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1979 (Chapter 662, SB 612)ê

 

      Sec. 5.070  Availability of lists of registered voters.  If, for any purpose relating to a municipal election or to candidates or issues involved in such an election, any organization, group or person requests a list of registered voters of the city, the department, office or agency which has custody of the official register of voters shall either permit the organization, group or person to copy the voters’ names and addresses from the official register of voters or furnish such a list.

      Sec. 5.080  Watchers and challengers.  A candidate is entitled upon written application to the election authorities at least 5 days before the election to appoint two persons to represent him as watchers and challengers at each polling place where voters may cast their ballots for him. A person so appointed has all the rights and privileges prescribed by watchers and challengers under the election laws of this state. The watchers and challengers may exercise their rights throughout the voting and until the ballots have been counted.

      Sec. 5.090  Voting machines.  The city council may provide for the use of mechanical or other devices for voting or counting the voters not inconsistent with law or regulations of the secretary of state.

      Sec. 5.100  Election returns; canvass; certificates of election; entry of officers upon duties; tie vote procedure.

      1.  The election returns from any special, primary or general municipal election shall be filed with the city clerk, who shall immediately place such returns in a safe or vault, and no person shall be permitted to handle, inspect or in any manner interfere with such returns until canvassed by the city council.

      2.  The city council and city manager shall meet within 5 days after any election and canvass the returns and declare the result. The election returns shall then be sealed and kept by the city clerk for 6 months, and no person shall have access thereto except on order of a court of competent jurisdiction or by order of the city council.

      3.  The city clerk, under his hand and official seal, shall issue to each person declared to be elected a certificate of election. The officers so elected shall qualify and enter upon the discharge of their respective duties on the 1st Monday in July next following their election.

      4.  If any election should result in a tie, the city council shall summon the candidates who received the tie vote and determine the tie by lot. The clerk shall then issue to the winner a certificate of election.

      Sec. 5.110  Contest of election.  A contested election for any municipal office shall be determined according to the law of the state regulating proceedings in contested elections in political subdivisions.

 

ARTICLE VI

 

Local Improvements

 

      Sec. 6.010  Local improvement law.  The city council, on behalf of the city and in its name, without any election, may from time to time acquire, improve, equip, operate and maintain:

      1.  Curb and gutter projects;

      2.  Drainage projects;

      3.  Off-street parking projects;


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1980 (Chapter 662, SB 612)ê

 

      4.  Overpass projects;

      5.  Park projects;

      6.  Sanitary sewer projects;

      7.  Sidewalk projects;

      8.  Storm sewer projects;

      9.  Street projects;

      10.  Underpass projects;

      11.  Water projects; and

      12.  Underground utility and communication lines.

      Sec. 6.020  Local improvement law: Collateral powers.  The city council on behalf of the city for the purpose of defraying all the costs of acquiring or improving any project authorized by section 6.010, or any portion of the cost thereof not to be defrayed with moneys otherwise available therefor, is vested with the powers granted to municipalities by chapter 271 of NRS, as amended from time to time.

      Sec. 6.030  Local improvement law: Assessments on public property. When an assessment is made for any improvement pursuant to sections 6.010 and 6.020 and there is public property located within the district formed and otherwise assessable, the city council may pay all or any part of the cost of such improvement that would be apportionable to such public property from the general fund of the city or from any other proper fund.

 

ARTICLE VII

 

Local Bonds and Franchises

 

      Sec. 7.010  Debt limit.

      1.  The city shall not incur an indebtedness in excess of 15 percent of the total assessed valuation of the taxable property within the boundaries of the city.

      2.  In determining any debt limitation under this section, there shall not be counted as indebtedness:

      (a) Warrants or other securities which are payable upon presentation or demand or within 1 year from the date thereof.

      (b) Securities payable from special assessments against benefited property, whether issued pursuant to any general or special law and irrespective of whether such special assessment securities are payable from general ad valorem taxes.

      (c) Securities issued pursuant to any general or special law the principal and interest of which are payable solely from revenues of the city derived from other than general ad valorem taxes.

      Sec. 7.020  Acquisition, operation of municipal utilities.  The city may, in the manner and for the purposes provided in this charter and Nevada Revised Statutes as they apply to cities, grant franchises and acquire in any manner any public utility and hold, manage and operate it, either alone or jointly, with any level of government or instrumentality or subdivision thereof.

      Sec. 7.030  Borrowing money.

      1.  Subject to the limitations imposed by this article, the city may borrow money for any corporate purpose, including, without limitation any purpose authorized by this charter or by Nevada Revised Statutes for a city, and for such purpose may issue bonds or other securities.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1981 (Chapter 662, SB 612)ê

 

borrow money for any corporate purpose, including, without limitation any purpose authorized by this charter or by Nevada Revised Statutes for a city, and for such purpose may issue bonds or other securities. The Local Government Securities Law, as amended from time to time, applies to all securities so issued, except for securities issued under section 6.020.

      2.  The city council shall submit any proposal to borrow money, except an emergency loan as defined and authorized by chapter 354 of NRS, as amended from time to time, and except for any securities issued under section 6.020, but including any securities payable from pledged revenues, to the registered voters of the city in the manner provided by NRS 350.010 to 350.070, inclusive, as amended from time to time.

      3.  Any property tax levied to pay the principal of or interest on such indebtedness authorized under subsection 2 shall be levied upon all taxable property within the city.

      4.  Any ordinance pertaining to the sale or issuance of bonds or other securities, including without limitation securities issued under section 6.020, may be adopted in the same manner as is provided for cases of emergency. A declaration by the city council in any ordinance that it is of this kind shall be conclusive in the absence of fraud or gross abuse of discretion.

      Sec. 7.040  Franchises.

      1.  Before granting any franchise the city council shall first adopt a resolution setting forth fully and in detail the applicant for, purpose and character of, terms and time and conditions of the proposed franchise. Such resolution shall be published in full in a newspaper qualified pursuant to the provisions of chapter 238 of NRS, as amended from time to time.

      2.  On the first regular meeting of the council after the expiration of the period of such publication, the council shall proceed to pass an ordinance for the granting of the franchise; but such franchise shall be granted only on substantially the same terms and conditions as expressed in the resolution as published. Otherwise such ordinance shall be void.

      Sec. 7.050  Investment of funds.

      1.  The city council may, by resolution, direct the city treasurer to invest any part of the funds of the city in obligations of any kind issued by the United States of America.

      2.  All such funds so invested shall be considered as part of the fund from which it was taken.

      Sec. 7.060  Investment of money realized from bond sales.

      1.  The city council may direct the city treasurer to invest all moneys realized from the sale of bonds issued by the city in bonds or other securities issued by the United States of America until such moneys are actually required for the purposes for which such bonds were issued.

      2.  All interest received from such investments shall be used only for the payment of principal or interest on the bonds issued by the city.

      Sec. 7.070  Refunding bonds.

      1.  The city council may, by ordinance, refund any municipal bonded indebtedness and issue refunding bonds.

      2.  The ordinance shall set forth fully and in detail the bonded indebtedness to be refunded and the terms, amount, maximum rate of interest and time within which redeemable, and on what fund.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1982 (Chapter 662, SB 612)ê

 

indebtedness to be refunded and the terms, amount, maximum rate of interest and time within which redeemable, and on what fund. Such ordinance shall also set forth substantially the form of the refunding bonds to be issued but need not provide for the manner of their sale, or for any other matter, except as specified in this charter.

      3.  Such ordinance may be passed and adopted in accordance with the provisions of section 2.100 without election. The city council may in a like manner issue bonds in place of or to supply means to meet maturing bonds.

 

ARTICLE VIII

 

Revenue

 

      Sec. 8.010  Municipal taxes.

      1.  The city council shall annually, at the time prescribed by law for levying taxes for state and county purposes, levy a tax not exceeding 1.75 percent upon the assessed value of all real and personal property within the city except as otherwise provided in the Local Government Securities Law and the Consolidated Local Improvements Law, as amended from time to time. The taxes so levied shall be collected at the same time and in the same manner and by the same officers, exercising the same functions, as prescribed in the laws of the State of Nevada for collection of state and county taxes. The revenue laws of the state shall, in every respect not inconsistent with the provisions of this charter, be applicable to the levying, assessing and collecting of the municipal taxes.

      2.  In the matter of the equalization of assessments, the rights of the city and the inhabitants thereof shall be protected in the same manner and to the same extent by the action of the county board of equalization as are the state and county.

      3.  All forms and blanks used in levying, assessing and collecting the revenues of the state and counties shall, with such alterations or additions as may be necessary, be used in levying, assessing and collecting the revenues of the city. The city council shall enact all such ordinances as it may deem necessary and not inconsistent with this charter and the laws of the state for the prompt, convenient and economical collecting of the revenue.

      Sec. 8.020  Revenue ordinances.  The city council shall have full power to pass and enact all ordinances necessary to carry into effect the revenue laws in the city and to enlarge, fix and determine the powers and duties of all officers in relation thereto.

 

ARTICLE IX

 

Civil Service

 

      Sec. 9.010  Civil service.

      1.  There is hereby created a civil service system applicable to and for the purpose of governing the selection and appointment of all employees of the city except elected officials of the city, the city manager, the assistant city manager, the director of public works, the director of public safety, the director of personnel and finance, the director of parks, recreation and public properties, the secretary of the city manager, the city engineer, the chief of police, the chief of the fire department, the chief deputy in the office of the city clerk, all persons employed in the city health department, in the office of the city attorney, in the office of the civil service commission, the superintendent of parks, the superintendent of recreation, the chief of the building and safety inspector’s office, the superintendent of the sanitation department, the city comptroller, the airport manager, the chief license inspector, employees at the Reno municipal airport, the traffic engineer and personnel employed on a part-time basis, or on a temporary basis not contemplated to exceed 6 months during any calendar year.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1983 (Chapter 662, SB 612)ê

 

public safety, the director of personnel and finance, the director of parks, recreation and public properties, the secretary of the city manager, the city engineer, the chief of police, the chief of the fire department, the chief deputy in the office of the city clerk, all persons employed in the city health department, in the office of the city attorney, in the office of the civil service commission, the superintendent of parks, the superintendent of recreation, the chief of the building and safety inspector’s office, the superintendent of the sanitation department, the city comptroller, the airport manager, the chief license inspector, employees at the Reno municipal airport, the traffic engineer and personnel employed on a part-time basis, or on a temporary basis not contemplated to exceed 6 months during any calendar year.

      2.  The civil service system shall be administered by a board composed of five persons appointed by the city council, no more than three of whom shall belong to the same political party. Such persons shall:

      (a) Be residents of the city.

      (b) Have no other connection with the city government.

      (c) Hold no elective office.

      (d) Serve for a 3-year term of office.

      (e) Receive compensation as provided by city ordinance.

      3.  The city council shall provide for such employees as are necessary for the board properly to carry out the duties prescribed herein.

      4.  The civil service board shall, after public hearing, adopt or amend rules and regulations for the civil service system. Such rules and regulations shall provide for:

      (a) Recruitment, examination, selection and promotion of city employees.

      (b) Position classification.

      (c) Appeal procedures for employee promotion, demotion, disciplinary and removal actions.

Nothing in these rules and regulations shall prevent the city manager, without appeal, from adjusting an employee’s salary within his salary range, depending upon the employee’s job performance.

      5.  From time to time, as requested and funded by the city council, the civil service board shall provide miscellaneous personnel services for the city such as, but not limited to, wage survey and position evaluation studies.

 

ARTICLE X

 

Miscellaneous Provisions

 

      Sec. 10.010  Severability of provisions.  If any portion of this charter is held to be unconstitutional or invalid for any reason by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this charter. The legislature hereby declares that it would have passed the charter and each portion thereof, irrespective of the portion which may be deemed unconstitutional or otherwise invalid.

      Sec. 10.020  Effect of enactment of charter.

      1.  All rights and property of every kind and description which were vested in the city prior to the enactment of this charter shall be vested in the same municipal corporation on the effective date of this charter.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1984 (Chapter 662, SB 612)ê

 

vested in the city prior to the enactment of this charter shall be vested in the same municipal corporation on the effective date of this charter. No right or liability, either in favor of or against such corporation existing at the time of becoming incorporated under this charter, and no action or prosecution shall be affected by such change, but it shall stand and progress as if no change had been made.

      2.  Whenever a different remedy is given by this charter, which may properly be made applicable to any right existing at the time of such city so becoming incorporated under this charter, such remedy shall be cumulative to the remedy before provided, and used accordingly.

      3.  All ordinances and resolutions in effect in the city prior to the effective date of this charter shall, unless in conflict with the provisions of this charter, continue in full force and effect until amended or repealed.

      4.  The enactment of this charter shall not effect any change in the legal identity of the city.

      5.  The enactment of this charter shall not be construed to repeal or in any way affect or modify:

      (a) Any special, local or temporary law.

      (b) Any law or ordinance making an appropriation.

      (c) Any ordinance affecting any bond issue or by which any bond issue may have been authorized.

      (d) The running of the statute of limitations in force at the time this charter becomes effective.

      (e) Any bond of any public officer.

      Sec. 2.  Chapter 102, Statutes of Nevada 1903, at page 184, entitled “An Act to incorporate the Town of Reno, in Washoe County, and defining the boundaries thereof, and to authorize the establishing of a city government therefor, and other matters relating thereto,” approved March 16, 1903, and all acts amendatory thereof, are hereby repealed.

      Sec. 3.  This act shall be effective on July 1, 1973.

 

________

 

 

CHAPTER 663, AB 533

Assembly Bill No. 533–Mr. Jacobsen

CHAPTER 663

AN ACT relating to the commission on crime, delinquency and corrections; providing that the commission may administer changes in law enforcement programs and projects; and providing other matters properly relating thereto.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  NRS 216.085 is hereby amended to read as follows:

      216.085  1.  There is hereby created as an independent agency within the executive department of this state the commission on crimes, delinquency and corrections.

      2.  The purposes of the commission are:

      (a) To develop a comprehensive statewide plan for the improvement of law enforcement throughout the state;


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1985 (Chapter 663, AB 533)ê

 

      (b) To define, develop [and] , correlate and administer programs and projects for the state and units of general local government in the state or for any combination of the state and units of general local government for improvement in law enforcement; and

      (c) To establish priorities for the improvement of law enforcement throughout the state.

      Sec. 2.  This act shall become effective upon passage and approval.

 

________

 

 

CHAPTER 664, AB 771

Assembly Bill No. 771–Mr. Valentine

CHAPTER 664

AN ACT relating to the care, treatment and hospitalization of the mentally ill; providing new procedures for administering Nevada’s mental health facilities; providing penalties; and providing other matters properly relating thereto.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  Chapter 433 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 12, inclusive, of this act.

      Sec. 2.  1.  Physicians employed by the hospital, mental health center or division shall receive a reasonable fee for evaluations, examinations or court testimony when directed by the court to perform such services.

      2.  The superintendent and chief shall establish reasonable schedules of rates upon which such fees shall be based and collect and deposit such fees in the general fund in the state treasury.

      Sec. 3.  If a committed person has a total income or potential income, from all sources, not exceeding the cost of maintenance, care and treatment, the superintendent, if such person is committed to the hospital, or the chief, if such person is committed to the mental health center, may be appointed as guardian of such person and estate for the purposes of receiving such income and applying it toward such costs.

      Sec. 4.  1.  Whenever a person legally adjudged to be mentally ill is deemed by the court or the superintendent to be a menace to public safety, and the court is satisfied that the facilities at the hospital are inadequate to keep such mentally ill person safely confined, the court may, upon application of the superintendent, commit such person to the Nevada state prison. The person shall be confined in the Nevada state prison until the further order of the committing court either transferring him to the hospital or declaring him to be no longer mentally ill.

      2.  All the provisions of law, so far as the same are applicable, relating to the confinement of mentally ill persons in the hospital shall apply to confinement of mentally ill persons in the Nevada state prison.

      Sec. 5.  1.  The superintendent or chief, as the case may be, is authorized to receive personal effects and property of committed persons for safekeeping if facilities are available for the proper storage and safeguarding of such property. If facilities are not available, the superintendent or chief may remove or cause to be removed such personal property from its location to commercial storage for the benefit of the committed person, and the expense of the removal and safekeeping shall be paid by funds of the committed person or from funds appropriated for the support of the hospital or mental health center, as the case may be.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1986 (Chapter 664, AB 771)ê

 

from its location to commercial storage for the benefit of the committed person, and the expense of the removal and safekeeping shall be paid by funds of the committed person or from funds appropriated for the support of the hospital or mental health center, as the case may be.

      2.  When it is determined that the committed person is incurably ill, or that he will be required to remain at the hospital or mental health center for an extended period of time, such property may be sold for the benefit of the patient if not recovered by his legal representative. The sale price in each case shall be not less than 10 percent below the total value of such property when the total value is estimated to be $100 or more. Where the total value is estimated to be $100 or more, a qualified appraiser shall be appointed by the superintendent or chief to determine such value. When relatives are known they shall be advised of a pending sale of the property and shall be given first opportunity to purchase the property. Moneys realized from sales of such property shall be deposited at the hospital or mental health center in the same manner as other personal credits of committed persons are made.

      Sec. 6.  Whenever any person committed to the hospital or mental health center dies and there is no demand made upon the superintendent or chief by such decedent’s legally appointed representative, all personal property of such decedent remaining in the custody or possession of the superintendent or chief thereof, pursuant to the provisions of this chapter, shall be held by him for a period of 1 year from the date of the decedent’s death for the benefit of the heirs, legatees or successors of such decedent. Upon the expiration of this period, all personal property and documents of the decedent, other than cash remaining unclaimed, in the possession of the superintendent or chief shall be disposed of as follows:

      1.  All deeds, contracts or documents shall be filed by the superintendent or chief with the public administrator of the committing county.

      2.  All other personal property shall be sold at public auction or upon a sealed bid basis, and the proceeds of the sale shall be applied to the decedent’s unpaid balance for costs incurred at the hospital or mental health center.

      Sec. 7.  When any person committed to the hospital or mental health center is discharged and fails to recover or make arrangements to recover personal property in the custody of the superintendent or chief, such property shall be held in safekeeping for the benefit of the patient for a period of 1 year from the date of discharge. If upon the expiration of the 1-year period no claim has been made upon the superintendent or chief by such person or his legal representative, all such property may be considered as unclaimed property and be disposed of in the same manner as unclaimed property of deceased persons under the provisions of this chapter.

      Sec. 8.  If, upon the death or release of a person committed to the hospital or mental health center, the value of unclaimed personal property in the possession of the superintendent or chief is so minimal that it cannot be sold at public auction or by sealed bid and if such property, either in its present condition or in an improved or adapted condition, cannot be used by the hospital or mental health center, the superintendent or chief may order such personal property destroyed.


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ê1971 Statutes of Nevada, Page 1987 (Chapter 664, AB 771)ê

 

      Sec. 9.  1.  Once a court has committed a person to the hospital or mental health center, the superintendent or chief shall make an investigation, pursuant to the provisions of this chapter, to determine whether or not such person or his relatives are capable of paying for all or a portion of the costs that will be incurred during such commitment.

      2.  If such investigation reveals that the committed person’s estate or his relatives are capable of paying such costs, the superintendent or chief may petition the court of commitment to modify its original order and require that such estate or relatives pay such expenses if such order did not so provide, or such petition may request increased payments as a result of such investigation.

      Sec. 10.  If at any time there is not sufficient money available in the estate of a committed person to pay the claims of the hospital or mental health center for his care, support, maintenance and other expenses therein, the court may on petition of the guardian of the estate, or if the guardian refuses or neglects to petition, on the petition of the superintendent or chief, make an order directing the guardian to sell so much of the other personal or real property, or both, in the person’s estate as is necessary to pay for such expenses incurred at the hospital or mental health center and also such other charges as are allowed by law.

      Sec. 11.  Payment for the care, support, maintenance and other expenses of a person committed at the hospital or mental health center shall not be exacted from such person’s estate if there is a likelihood of such person’s recovery or release from the hospital or mental health center and payment will reduce his estate to such an extent that he is likely to become a burden on the community in the event of his discharge from the hospital or mental health center.

      Sec. 12.  1.  If the superintendent or chief has reason to believe that a person is suffering from a chronic form of mental illness and will probably be hospitalized until death, he shall file a certificate with the county clerk of the county of commitment.

      2.  Such certificate shall be prima facie evidence that such person is not likely to recover or be released from the hospital or mental health center and the guardian shall pay the amount due for his care, support, maintenance and expenses at the hospital or mental health center and such other charges as are allowed by law out of any moneys of the estate in his possession.

      Sec. 13.  NRS 433.005 is hereby amended to read as follows:

      433.005  As used in NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act, unless the context otherwise requires, the words and terms defined in NRS 433.006 to 433.012, inclusive, have the meanings ascribed to them in such sections.

      Sec. 14.  NRS 433.015 is hereby amended to read as follows:

      433.015  The provisions of NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act, when related to the hospital, shall be administered by the superintendent or, when related to the mental health center, shall be administered by the chief, subject to administrative supervision by the administrator of the division.

      Sec. 15.  NRS 433.030 is hereby amended to read as follows:

      433.030  In determining residence for the purpose of NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act, a person who has lived continuously in this state for a period of 1 year, and who has not thereafter acquired a residence in another state, or abandoned his residence in this state or has not been absent from this state after acquiring such residence in this state for more than 1 year, shall be deemed to be a resident of this state.


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ê1971 Statutes of Nevada, Page 1988 (Chapter 664, AB 771)ê

 

to 433.640, inclusive, and sections 2 to 12, inclusive, of this act, a person who has lived continuously in this state for a period of 1 year, and who has not thereafter acquired a residence in another state, or abandoned his residence in this state or has not been absent from this state after acquiring such residence in this state for more than 1 year, shall be deemed to be a resident of this state. Time spent in a public institution or on parole therefrom, or as a parolee from an institution in another state, shall not be counted in determining the matter of residence in this state.

      Sec. 16.  NRS 433.040 is hereby amended to read as follows:

      433.040  Nothing in NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act shall limit the right of any person admitted to the hospital or the mental health center pursuant to NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act to a writ of habeas corpus upon a proper application made at any time by such person or a relative or friend on his behalf.

      Sec. 17.  NRS 433.120 is hereby amended to read as follows:

      433.120  The superintendent shall be the executive and administrative head of the hospital, and as such shall have the following powers and duties:

      1.  To exercise general supervision of, and make and revise rules and regulations for, the government of the hospital.

      2.  To be responsible for and to supervise the fiscal affairs and responsibilities of the hospital.

      3.  To make reports to the administrator of the division, and to supply the administrator with material on which to base proposed legislation.

      4.  To keep the complete and accurate record of all proceedings, record and file all bonds and contracts, and assume responsibility for the custody and preservation of all papers and documents pertaining to his office.

      5.  To inform the public in regard to the activities and operation of the hospital.

      6.  To invoke any legal, equitable or special procedures for the enforcement of his orders or the enforcement of the provisions of NRS 433.005 to 433.640, inclusive [.] , and sections 2 to 12, inclusive, of this act.

      7.  To cause to be kept a fair and full account of all medical affairs.

      8.  To perform neurological and psychiatric examinations of persons committed to the Nevada state prison, the Nevada state children’s home, the Nevada girls training center and the Nevada youth training center when requested by the superintendents or wardens of those institutions.

      9.  To keep, pursuant to the provisions of NRS 178.450 to 178.465, inclusive, all persons committed to his custody by order of court in a criminal proceeding.

      10.  To have standard medical histories currently maintained on all patients, and to administer the accepted and appropriate treatments to all patients under his care.

      11.  To undertake any diagnostic, medical or surgical procedure in the interest of the patient, and to give the required consent to a surgical operation upon any incompetent on behalf of the patient, where there is no known kindred or other person with legal authority to give such consent. The decision to perform such surgical operation shall be arrived at only after consultation and approval of at least two other physicians and surgeons licensed to practice in this state.


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ê1971 Statutes of Nevada, Page 1989 (Chapter 664, AB 771)ê

 

at only after consultation and approval of at least two other physicians and surgeons licensed to practice in this state.

      12.  To submit a biennial report to the administrator of the division on the condition, operation and functioning of the hospital, and anticipated needs of the hospital.

      13.  To cause to be surveyed all land known or presumed to belong to the State of Nevada for the use of the hospital, and to take all steps necessary to establish clear title thereto on behalf of the state.

      14.  To lease, with the consent of the administrator of the division, all or any part of any land known or presumed to belong to the State of Nevada for the use of the hospital for such consideration and upon such terms as the superintendent and the administrator may deem to be in the best interests of the hospital and the State of Nevada. Any moneys received from any such lease shall be remitted by the superintendent to the state treasurer who shall deposit the same in the state treasury to the credit of the general fund.

      Sec. 18.  NRS 433.1222 is hereby amended to read as follows:

      433.1222  The chief is the executive and administrative head of the mental health center, and shall:

      1.  Exercise general supervision of, and make and revise rules and regulations for, the government of the mental health center.

      2.  Be responsible for and supervise the fiscal affairs and responsibilities of the mental health center.

      3.  Make reports to the administrator of the division, and supply the administrator with material on which to base proposed legislation.

      4.  Keep the complete and accurate record of all proceedings, record and file all bonds and contracts, and assume responsibility for the custody and preservation of all papers and documents pertaining to his office.

      5.  Inform the public in regard to the activities and operation of the mental health center.

      6.  Invoke any legal, equitable or special procedures for the enforcement of his orders or the enforcement of the provisions of NRS 433.005 to 433.640, inclusive [.] and sections 2 to 12, inclusive, of this act.

      7.  Submit a biennial report to the administrator of the division on the condition, operation and functioning of the mental health center, and anticipated needs of the mental health center.

      Sec. 19.  NRS 433.180 is hereby amended to read as follows:

      433.180  Funds to carry out the provisions of NRS 433.005 to 433.640, inclusive, and sections 2 to 12, inclusive, of this act shall be provided by legislative appropriation from the general fund, and shall be paid out on claims as other claims against the state are paid. All claims relating to the hospital shall be approved by the superintendent and all claims relating to the mental health center shall be approved by the chief before they are paid.

      Sec. 20.  NRS 433.210 is hereby amended to read as follows:

      433.210  1.  The expenses of the entire proceedings as determined by the district judge shall be paid by the county unless otherwise required by subsection [4.] 3.

      2.  [Examining physicians shall be paid a reasonable sum for their services, the amount to be determined by the district judge and to be paid as he shall order.


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ê1971 Statutes of Nevada, Page 1990 (Chapter 664, AB 771)ê

 

      3.] The official reporter shall be compensated as ordered by the district judge, the fees to be paid as prescribed by law.

      [4.] 3.  Where the person to be committed last resided in another county of the state, the entire expenses of the proceedings shall be charged to and payable by such county of residence.

      Sec. 21.  NRS 433.230 is hereby amended to read as follows:

      433.230  1.  Committed persons receiving income aggregating $500 or more annually shall have guardians appointed either by the committing court or by the district court of the county wherein the hospital or mental health center is located, on the application of any interested person, or, in the case of indigents, on the application of the district attorney of the county wherein the hospital or mental health center is located.

      2.  In approving guardians, except as provided in section 3 of the act, preference shall be given to responsible relatives in the first and second degrees of consanguinity, provided that they are residents of the State of Nevada.

      Sec. 22.  NRS 433.250 is hereby amended to read as follows:

      433.250  1.  Upon the application of any person under oath setting forth that any person, who is a resident of this state as defined by [NRS 433.005 to 433.640, inclusive,] NRS 433.030, is an alcoholic or a drug addict, the judge of the district court in the judicial district where such person is found shall cause such person to be brought before him at such time and place as he may direct.

      2.  The district judge may direct the clerk of the court to issue subpenas for the attendance of witnesses at the examination of such person. Such witnesses shall be paid the same fees and mileage as are paid to witnesses in the courts of the State of Nevada, and such fees and mileage shall be paid out of county funds.

      3.  The district judge may assign counsel to defend such person, require an independent examination and enter such other orders as he may consider necessary to permit a proper determination of the allegations and to protect the rights of such person.

      Sec. 23.  (Deleted by amendment.)

      Sec. 24.  (Deleted by amendment.)

      Sec. 25.  NRS 433.460 is hereby amended to read as follows:

      433.460  1.  When a committed person has money due or owing to him, the total of which does not exceed $300, the superintendent, if such person is committed to the hospital, or the chief, if such person is committed to the mental health center, may collect the money from the debtor upon executing and delivering to him an affidavit containing:

      (a) The name of the hospital or the mental health center, as the case may be.

      (b) The name of the committed person.

      (c) A statement that the total amount known to be due to the committed person does not exceed $300.

      2.  Moneys paid to the superintendent or chief shall be deposited by him in the patients’ personal deposit fund to be credited to the committed person [.] except as provided in section 3 of this act.

      3.  A receipt delivered by the superintendent or chief to the debtor shall constitute a good and sufficient release for the payment of the money


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ê1971 Statutes of Nevada, Page 1991 (Chapter 664, AB 771)ê

 

made by a debtor pursuant to the provisions of this section and shall fully discharge the debtor from any further liability in reference to the amount so paid.

      4.  Payments due to a committed person from retirement programs, annuity plans, government benefits, insurance benefits or any other form of monetary benefits due and owing to such committed person may be collected by the superintendent or chief, upon notice to the agency or person responsible for such payments. Such moneys shall be deposited in the patients’ personal deposit fund pursuant to NRS 433.440.

      Sec. 26.  NRS 433.550 is hereby amended to read as follows:

      433.550  1.  When a patient [committed under NRS 433.695] , hospitalized by court order, is discharged, written notice of such discharge shall be given to the county clerk of the county from which such patient was committed.

      2.  An indigent resident of this state discharged as having recovered from his mental illness, but having a residual medical or surgical disability which prevents him from obtaining or holding remunerative employment, shall be returned to the county of his last residence. A nonresident indigent with such disabilities shall be returned to the county from which he was committed. The superintendent, if such person was committed to the hospital, or the director, if such person was committed to the mental health center, shall first give notice in writing, not less than 10 days prior to discharge, to the board of county commissioners of the county to which such person will be returned.

      3.  Delivery of the indigent resident defined in subsection 2 shall be made to an individual or agency authorized to provide further care.

      4.  Nothing contained in this section shall authorize the release of any person held upon an order of a court or judge having criminal jurisdiction arising out of a criminal offense.

      5.  The superintendent or the director, as the case may be, shall not discharge a patient known to have exhibited physical violence toward persons or property immediately prior to commitment and who was committed subject to further order of the court, without first giving notice in writing, not less than 10 days prior to discharge, to the court or judge who ordered such patient committed. The superintendent or the director, as the case may be, may release the patient without obtaining further court orders.

      Sec. 27.  NRS 433.667 is hereby amended to read as follows:

      433.667  1.  Any voluntary patient admitted to any hospital pursuant to NRS 433.665 who is 18 years of age or over is entitled at any time to obtain his release from such hospital by filing a written request with the chief of service. The chief of service shall, within a period of 48 hours after the receipt of any such request, release the voluntary patient making such request [.] , unless proceedings for hospitalization under court order, pursuant to NRS 433.685 to 433.697, inclusive, have been initiated. In the case of any voluntary patient under the age of 18 years, the chief of service shall release such patient, according to the provisions of this section, upon the written request of his spouse, parent or legal guardian.

      2.  The chief of service may release any voluntary patient hospitalized pursuant to NRS 433.665 whenever he determines that such patient has recovered or that his continued hospitalization is no longer beneficial to him or advisable.


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ê1971 Statutes of Nevada, Page 1992 (Chapter 664, AB 771)ê

 

him or advisable. Release pursuant to this subsection is subject to the prior approval of the superintendent, if such person is hospitalized at the Nevada state hospital, or the director if such person is hospitalized at the Southern Nevada comprehensive mental health center.

      Sec. 28.  NRS 433.675 is hereby amended to read as follows:

      433.675  Not later than 24 hours after the admission, pursuant to NRS 433.673, of any individual to a hospital, the administrator of such hospital shall give notice of such admission, by certified mail, to the spouse, parent or legal guardian of such person. [and to the clerk of the district court of the county in which such hospital is located.]

      Sec. 29.  NRS 433.679 is hereby amended to read as follows:

      433.679  1.  The district court shall, within a period of 48 hours after the receipt by the clerk of the petition filed pursuant to NRS 433.677, either order the hospitalization of such person for emergency observation and diagnosis for a period not to exceed 7 days from the time such order is entered, or order his immediate release. In making its determination, the court shall consider the written reports of the agent, officer or physician who made the application under NRS 433.671, 433.672 and 433.673, the certificate of the examining psychiatrist or physician which accompanied it, and any other relevant information.

      2.  Any person whose continued hospitalization is ordered under subsection 1 is entitled, upon his own request or upon the request of his parent, guardian, adult children or spouse, to a hearing before the court entering such order. Any such hearing so requested shall be held within a period of 5 days after receipt of such request.

      3.  The district court may, upon request of the patient or responsible relative and receipt of evidence of adequate financial arrangements, order hospitalization pursuant to subsection 1 in a private or a county hospital.

      Sec. 30.  NRS 433.681 is hereby amended to read as follows:

      433.681  The chief of service of any hospital in which a person is hospitalized under a court order entered pursuant to NRS 433.679 shall, within 48 hours after such order is entered, have such person examined by a physician. If the physician, after his examination, certifies that in his opinion the person is not mentally ill to the extent that he is likely to injure himself or others if not presently detained, the person shall be immediately released. The chief of service shall, within 48 hours after such examination has been completed, upon request, send a copy of the results thereof by certified mail to the spouse, parents, attorney, legal guardian, or nearest known adult relative of the person examined.

      Sec. 31.  NRS 433.685 is hereby amended to read as follows:

      433.685  Proceedings for the judicial hospitalization of any person in the State of Nevada may be commenced by the filing of a petition with the clerk of the district court of any county where the person who is to be hospitalized resides by his spouse, parent, adult children or legal guardian, by any physician, duly accredited officer or agent of the department of health, welfare and rehabilitation, or by an officer authorized to make arrests in the State of Nevada. Such petitions shall be accompanied:

      1.  By a certificate of a physician stating that he has examined the person and is of the opinion that such person is mentally ill, and because of such illness is likely to injure himself or others if allowed to remain at liberty; or


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ê1971 Statutes of Nevada, Page 1993 (Chapter 664, AB 771)ê

 

      2.  By a sworn written statement by the petitioner that:

      (a) The petitioner has good reason to believe that such person is mentally ill and, because of such illness, is likely to injure himself or others if allowed to remain at liberty; and

      (b) That such person has refused to submit to examination by a physician.

      Sec. 32.  NRS 433.699 is hereby amended to read as follows:

      433.699  1.  When a person is committed to a hospital under one of the various forms of commitment prescribed by law, the parent or parents of a mentally ill person who is a minor or the husband or wife or adult child of a mentally ill person, if of sufficient ability, and the estate of such mentally ill person, if such estate is sufficient for the purpose, shall pay the cost of such mentally ill person’s maintenance, including treatment and surgical operations, in any hospital in which such person is hospitalized under [NRS 433.645 to 433.739, inclusive:] the provisions of this chapter:

      [1.] (a) To the superintendent, if such person is committed to the Nevada state hospital;

      [2.] (b) To the chief, if such person is committed to the Southern Nevada comprehensive mental health center; or

      [3.] (c) In all other cases, to the hospital rendering the service.

      2.  If such persons and estates liable for the care, maintenance and support of a committed person neglect or refuse to pay the superintendent, chief or the hospital rendering service, the state is entitled to recover, by appropriate legal action, all sums due plus interest at the rate of 7 percent per annum.

      Sec. 33.  NRS 433.717 is hereby amended to read as follows:

      433.717  1.  The chief of service of a public or private hospital shall as often as practicable, but not less often than every 6 months, examine or cause to be examined each patient admitted to any such hospital pursuant to NRS 433.695, and if he determines on the basis of such examination that the conditions which justified the involuntary hospitalization of such patient no longer exist, the chief of service shall immediately release such patient.

      2.  Release pursuant to subsection 1 shall be subject to the approval of the superintendent if such patient is committed to the Nevada state hospital, or of the director if such patient is committed to the Southern Nevada comprehensive mental health center.

      3.  Nothing in subsections 1 and 2 shall be construed to prohibit any person from exercising any right presently available to him for obtaining release from confinement, including the right to petition for a writ of habeas corpus.

      4.  If a patient has been committed, until further order of the court, the superintendent or the director, as the case may be, shall give written notice to such court 10 days prior to the release of such patient, and the superintendent or director, as the case may be, may authorize such release without requiring further orders of the court.

      Sec. 34.  NRS 433.719 is hereby amended to read as follows:

      433.719  1.  Any person hospitalized in a public or private hospital pursuant to [NRS 433.645 to 433.739, inclusive,] this chapter is entitled to communicate by sealed mail or otherwise with any person or official agency inside or outside the hospital, and to receive uncensored mail from his attorney or personal physician.


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ê1971 Statutes of Nevada, Page 1994 (Chapter 664, AB 771)ê

 

agency inside or outside the hospital, and to receive uncensored mail from his attorney or personal physician. All other incoming mail or communications may be read before being delivered to the patient, if the chief of service believes such action is necessary for the medical welfare of the patient who is the intended recipient. However, any mail or other communication which is not delivered to the patient for whom it is intended shall be immediately returned to the sender. Nothing in this section shall prevent the administrator from making reasonable rules regarding visitation hours and the use of telephone and telegraph facilities.

      2.  The provisions of subsection 1 do not apply to any person hospitalized pursuant to NRS 178.425 or 433.320.

      Sec. 35.  NRS 433.725 is hereby amended to read as follows:

      433.725  No patient hospitalized pursuant to [NRS 433.645 to 433.739, inclusive,] this chapter shall, by reason of such hospitalization, be denied the right to dispose of property, marry, execute instruments, make purchases, enter into contractual relationships, vote and hold a driver’s license, unless such patient has been adjudicated incompetent by a court of competent jurisdiction and has not been restored to legal capacity. If the chief of service of the public or private hospital in which any such patient is hospitalized is of the opinion that such patient is unable to exercise any of the aforementioned rights, the chief of service shall immediately notify the patient and the patient’s attorney, legal guardian, spouse, parents or other nearest known adult relative, and the district court of that fact.

      Sec. 36.  NRS 433.729 is hereby amended to read as follows:

      433.729  Any patient, and the patient’s spouse, parents or other nearest known adult relative, shall receive, upon admission of the patient to the hospital, a written statement outlining in simple, nontechnical language all release procedures provided by [NRS 433.645 to 433.739, inclusive,] this chapter setting out all rights accorded to patients by [NRS 433.645 to 433.739, inclusive,] this chapter and describing procedures provided by law for adjudication of incompetency and appointment of trustees or committees for the hospitalized individual.

      Sec. 37.  (Deleted by amendment.)

      Sec. 38.  NRS 433.733 is hereby amended to read as follows:

      433.733  Witnesses subpenaed under the provisions of [NRS 433.645 to 433.739, inclusive,] this chapter shall be paid the same fees and mileage from the same fund as are paid to witnesses in the courts of the State of Nevada.

      Sec. 39.  NRS 433.735 is hereby amended to read as follows:

      433.735  No person apprehended, detained or hospitalized under any provision of [NRS 433.645 to 433.739, inclusive,] this chapter shall be confined in jail or in any penal or correctional institution unless such confinement is ordered by a court of competent jurisdiction.

      Sec. 40.  NRS 433.737 is hereby amended to read as follows:

      433.737  The provisions of [NRS 433.645 to 433.739, inclusive,] this chapter shall be applicable to any person who, on or after July 1, 1967, is a patient in a hospital in the State of Nevada by reason of having been declared insane or of unsound mind pursuant to a court order entered in a noncriminal proceeding prior to such date; except that any request for an examination authorized under NRS 433.713 to 433.717, inclusive, may be made by such person, or his attorney, legal guardian, spouse, parent or other nearest adult relative, after the expiration of the 30-day period following July 1, 1967, and not more frequently than every 6 months thereafter.


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ê1971 Statutes of Nevada, Page 1995 (Chapter 664, AB 771)ê

 

inclusive, may be made by such person, or his attorney, legal guardian, spouse, parent or other nearest adult relative, after the expiration of the 30-day period following July 1, 1967, and not more frequently than every 6 months thereafter.

      Sec. 41.  NRS 433.739 is hereby amended to read as follows:

      433.739  1.  Any person who:

      (a) Without probable cause for believing a person to be mentally ill, causes or conspires with or assists another to cause the hospitalization of any such person under [NRS 433.645 to 433.739, inclusive;] this chapter; or

      (b) Causes or conspires with or assists another to cause the denial to any person of any right accorded to him under [NRS 433.645 to 433.739, inclusive,] this chapter,

shall be punished by a fine not exceeding $5,000 or by imprisonment in the state prison for not less than 1 year nor more than 6 years, or by both fine and imprisonment.

      2.  Any person who, without probable cause for believing another person to be mentally ill, executes a petition, application or certificate pursuant to [NRS 433.645 to 433.739, inclusive,] this chapter, by which such person secures or attempts to secure the apprehension, hospitalization, detention or restraint of any such person alleged to be mentally ill, or any physician or psychiatrist who knowingly makes any false certificate or application pursuant to [NRS 433.645 to 433.739, inclusive,] this chapter, as to the mental condition of any person, shall be punished by a fine not exceeding $5,000 or by imprisonment in the state prison for not less than 1 year nor more than 6 years, or by both fine and imprisonment.

      Sec. 42.  NRS 436.013 is hereby amended to read as follows:

      436.013  The administrator shall have the following powers and duties:

      1.  To serve as the executive officer of the division.

      2.  To make a biennial report to the director of the department on the condition and operation of the division, and such other reports as the director may prescribe.

      3.  [To appoint a superintendent of the Nevada state hospital, who shall possess the qualifications prescribed in NRS 433.090.

      4.]  To appoint a [director and] chief of the Southern Nevada comprehensive mental health center, who shall be selected pursuant to NRS [433.121 and 433.1223, respectively.

      5.] 433.1223.

      4.  To employ, within the limits of available funds in accordance with the provisions of chapter 284 of NRS, such assistants and employees as may be necessary to the efficient operation of the division.

      Sec. 43.  NRS 433.145 and 433.450 are hereby repealed.

      Sec. 44.  1.  Section 17 of this act shall become effective at 12:01 a.m. on July 1, 1971.

      2.  Sections 1 to 16, inclusive, and sections 18 to 44, inclusive, of this act shall become effective on July 1, 1971.

 

________


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ê1971 Statutes of Nevada, Page 1996ê

 

CHAPTER 665, SB 121

Senate Bill No. 121–Senators Young, Brown, Swobe, Walker, Wilson, Foley and Close

CHAPTER 665

AN ACT relating to courts of justice; establishing the office of court administrator; providing his powers and duties; making an appropriation; and providing other matters properly relating thereto.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  Chapter 1 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 7, inclusive, of this act.

      Sec. 2.  There is hereby created the office of court administrator.

      Sec. 3.  The court administrator shall:

      1.  Be appointed by the supreme court and shall serve at the pleasure of the court.

      2.  Receive an annual salary set by the supreme court not to exceed $22,500.

      Sec. 4.  The court administrator, with the approval of the supreme court, may appoint and fix the compensation of such assistants as are necessary to enable him to perform the duties required of him by sections 2 to 7, inclusive, of this act.

      Sec. 5.  During his term of office neither the court administrator nor any of his assistants may engage directly or indirectly in the private practice of law.

      Sec. 6.  Under the supervision and direction of the supreme court, the court administrator shall:

      1.  Examine the administrative methods and systems employed in the offices of the judges, clerks, court reporters and employees of all courts of this state and make recommendations, through the chief justice, for the improvement of such methods and systems;

      2.  Examine the condition of the dockets of the district courts and determine the need for assistance by any district court;

      3.  Make recommendations to the chief justice relating to the assignment of district judges where district courts are in need of assistance and carry out the direction of the chief justice as to the assignments of judges to judicial districts where the courts are in need of assistance;

      4.  Collect and compile statistical and other data and make reports of the business transacted by all courts and transmit such information to the supreme court to the end that proper action may be taken in respect thereto;

      5.  Prepare and submit budget estimates of state appropriations necessary for the maintenance and operation of the judicial system and make recommendations in respect thereto;

      6.  Collect statistical and other data and make reports relating to the expenditure of public moneys, state and local, for the maintenance and operation of the judicial system and the offices connected therewith;

      7.  Formulate and submit to the supreme court of this state recommendations of policies or proposed legislation for the improvement of the judicial system;


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ê1971 Statutes of Nevada, Page 1997 (Chapter 665, SB 121)ê

 

      8.  Submit annually, on February 1, to the supreme court a report of the activities of the administrator’s office for the preceding calendar year; and

      9.  Attend to such other matters as may be assigned by the supreme court or prescribed by law.

      Sec. 7.  1.  All judges, clerks and employees of the district courts, justices’ courts and municipal courts shall provide the court administrator with any records, papers or other information that he may require and shall cooperate with him in every possible manner in order to effectuate the purposes of sections 2 to 7, inclusive, of this act.

      2.  Subsection 1 does not authorize disclosure by the court administrator of records and papers not otherwise open to public inspection.

      Sec. 8.  NRS 4.230 is hereby amended to read as follows:

      4.230  1.  Every justice must keep a [book, denominated a “docket,”] docket, in which he must enter:

      [1.] (a) The title of every action or proceeding.

      [2.] (b) The object of the action or proceeding; and if a sum of money be claimed, the amount thereof.

      [3.] (c) The date of the summons, and the time of its return; and if an order to arrest the defendant be made, or a writ of attachment be issued, a statement of the fact.

      [4.] (d) The time when the parties, or either of them, appear, or their nonappearance, if default be made; a minute of the pleadings and motions; if in writing, referring to them; if not in writing, a concise statement of the material parts of the pleading.

      [5.] (e) Every adjournment, stating on whose application and to what time.

      [6.] (f) The demand for a trial by jury, when the same is made, and by whom made, the order for the jury, and the time appointed for the return of the jury and for the trial.

      [7.] (g) The names of the jurors who appear and are sworn, and the names of all witnesses sworn, and at whose request.

      [8.] (h) The verdict of the jury, and when received; if the jury disagree and are discharged, the fact of such disagreement and discharge.

      [9.] (i) The judgment of the court, specifying the cost included, and the time when rendered.

      [10.] (j) The issuing of the execution, when issued and to whom; the renewals thereof, if any, and when made, and a statement of any money paid to the justice, when and by whom.

      [11.] (k) The receipt of a notice of appeal, if any be given, and of the appeal bond, if any be filed.

      2.  The court administrator shall prescribe the form of the docket and of any other appropriate records to be kept by the justice, which form may vary from court to court according to the number and kind of cases customarily heard.

      Sec. 9.  Chapter 5 of NRS is hereby amended by adding thereto a new section which shall read as follows:

      The court administrator shall prescribe the form of the docket and of any other appropriate records to be kept by the municipal court, which form may vary from court to court according to the number and kind of cases customarily heard.


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ê1971 Statutes of Nevada, Page 1998 (Chapter 665, SB 121)ê

 

      Sec. 10.  1.  There are hereby appropriated from the general fund in the state treasury for the office of court administrator the following sums:

 

For the fiscal year ending June 30, 1972...................................    $10,000

For the fiscal year ending June 30, 1973...................................       10,000

 

      2.  After June 30, 1973, any unexpended balance of the appropriation herein made shall not be encumbered or committed for expenditure and shall revert to the general fund on September 1, 1973.

      3.  The supreme court is authorized to make application for, receive and expend federal funds in support of the office of court administrator. Any such funds so received shall be expended in accordance with the allotment, transfer, work program and budget provisions of NRS 353.150 to 353.245, inclusive, and transfers to and from salary allotments, travel allotments, operating expense allotments, equipment allotments, and other allotments shall be allowed and made in accordance with the provisions of NRS 353.215 to 353.225, inclusive, and after separate consideration of the merits of each request. The portion provided by appropriation from the general fund by subsection 1 shall be decreased to the extent that the receipt of the funds from the Federal Government are exceeded, but such decrease shall not jeopardize the receipt of such funds to be received from the Federal Government.

 

________

 

 

CHAPTER 666, AB 179

Assembly Bill No. 179–Committee on Judiciary

CHAPTER 666

AN ACT deleting an erroneous internal reference relating to trustees’ accountings.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  NRS 164.030 is hereby amended to read as follows:

      164.030  1.  Any trustee whose appointment has been confirmed, as provided in NRS 164.010, at any time thereafter may petition the court for instructions in the administration of the trust or for a construction of the trust instrument, or upon or after the filing of a final account, for the settlement and allowance thereof.

      2.  Upon the filing of the petition the court shall make an order fixing a time and place for hearing thereof, unless hearing has been waived in writing by the beneficiaries of the trust.

      3.  Unless otherwise ordered by the court, notice of the hearing shall be given as follows:

      (a) The clerk shall cause a copy of the order to be posted at the courthouse of the county where the proceedings are pending, at least 10 days before the date of the hearing; and

      (b) The trustee filing such petition shall cause a copy of the order to be delivered to the beneficiaries of the trust as follows:


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ê1971 Statutes of Nevada, Page 1999 (Chapter 666, AB 179)ê

 

             (1) By handling the notice or copy to the beneficiary personally or to his guardian, or attorney of record; or

             (2) By sending it by registered or certified mail with return receipt requested to such beneficiary, or his guardian or attorney of record, at the last-known address of the addressee.

      4.  Upon the hearing the court shall make such order as it deems appropriate, which order shall be final and conclusive as to all matters thereby determined and binding in rem upon the trust estate and upon the interests of all beneficiaries, vested or contingent, except that appeal to the supreme court may be taken from the order within 30 days from the entry thereof by filing notice of appeal with the clerk of the district court, who shall mail a copy of the notice to each adverse party who has appeared of record.

      [5.  A trustee whose appointment has been confirmed, as provided in NRS 164.010, shall furnish to each beneficiary of the trust periodic accounts in the manner provided by NRS 165.135.]

      Sec. 2.  This act shall become effective upon passage and approval.

 

________

 

 

CHAPTER 667, AB 107

Assembly Bill No. 107–Messrs. Kean, Lowman, Poggione, Lauri, Smith, Frank Young, Swallow, Wilson, Howard, Getto, Lingenfelter, Homer, Ronzone, Mrs. Frazzini, Messrs. McKissick, Jacobsen, Hafen, Torvinen and Fry

CHAPTER 667

AN ACT relating to narcotic, dangerous and hallucinogenic drugs; providing that all such drugs be denominated controlled substances; establishing categories of such substances; authorizing and requiring the board of pharmacy and the investigation and narcotics division of the department of law enforcement assistance to perform certain administrative and enforcement acts; providing for the revocation and denial of certain licenses to conduct a business, occupation or profession; providing penalties; and providing other matters properly relating thereto.

 

[Approved May 6, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  Chapter 453 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 87, inclusive, of this act.

      Sec. 2.  1.  Sections 2 to 70, inclusive, of this act, may be cited as the Uniform Controlled Substances Act.

      2.  The Uniform Controlled Substances Act is designed to supplant the Uniform Narcotic Act as enacted by chapter 23, Statutes of Nevada 1937.

      Sec. 3.  When used in sections 2 to 87, inclusive, of this act, the words and terms in sections 4 to 28, inclusive, of this act, shall, for the purposes of sections 2 to 87, inclusive, of this act, have the meanings ascribed to them in sections 4 to 28, inclusive, of this act, except in those instances where the context clearly indicates a different meaning.

      Sec. 4.  “Administer” means the direct application of a controlled substance, whether by injection, inhalation, ingestion or any other means, to the body of a patient or research subject by:

 


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ê1971 Statutes of Nevada, Page 2000 (Chapter 667, AB 107)ê

 

substance, whether by injection, inhalation, ingestion or any other means, to the body of a patient or research subject by:

      1.  A practitioner or, in his presence, by his authorized agent; or

      2.  The patient or research subject at the direction and in the presence of the practitioner.

      Sec. 5.  “Agent” means an authorized person who acts on behalf of or at the direction of a manufacturer, distributor or dispenser. It does not include a common or contract carrier, public warehouseman or employee of the carrier or warehouseman.

      Sec. 6.  “Board” means:

      1.  For the purposes of the regulation of any pharmacy, as defined in section 71 of the act, under the provisions of this act, the state board of pharmacy.

      2.  For all other purposes provided for in this act, the state board of pharmacy and one chemist. Such chemist shall be:

      (a) A person who has had experience in the field of controlled substances.

      (b) Appointed by the governor and serve at the pleasure of the governor.

      Sec. 7.  “Bureau” means the Bureau of Narcotics and Dangerous Drugs, United States Department of Justice, or its successor agency.

      Sec. 8.  “Controlled substance” means a drug, substance or immediate precursor in sections 31 to 40, inclusive, of this act.

      Sec. 9.  “Counterfeit substance” means a controlled substance which, or the container or labeling of which, without authorization, bears the trade-mark, trade name or other identifying mark, imprint, number or device, or any likeness thereof, of a manufacturer, distributor or dispenser other than the person who in fact manufactured, distributed or dispensed the substance.

      Sec. 10.  “Deliver” or “delivery” means the actual, constructive or attempted transfer from one person to another of a controlled substance, whether or not there is an agency relationship.

      Sec. 11.  “Dispense” means to deliver a controlled substance to an ultimate user or research subject by or pursuant to the lawful order of a practitioner, including the prescribing, administering, packaging, labeling or compounding necessary to prepare the substance for that delivery.

      Sec. 12.  “Dispenser” means a practitioner who dispenses.

      Sec. 13.  “Distribute” means to deliver other than by administering or dispensing a controlled substance.

      Sec. 14.  “Distributor” means a person who distributes.

      Sec. 15.  “Division” means the investigation and narcotics division of the department of law enforcement assistance.

      Sec. 16.  1.  “Drug” means substances:

      (a) Recognized as drugs in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them;

      (b) Intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in man or animals;

      (c) Other than food, intended to affect the structure or any function of the body of man or animals; and


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ê1971 Statutes of Nevada, Page 2001 (Chapter 667, AB 107)ê

 

      (d) Intended for use as a component of any article specified in paragraphs (a), (b) or (c).

      2.  “Drug” does not include devices or their components, parts or accessories.

      Sec. 17.  “Immediate precursor” means a substance which the board has found to be and by rule designates as being the principal compound commonly used or produced primarily for use, and which is an immediate chemical intermediary used or likely to be used in the manufacture of a controlled substance the control of which is necessary to prevent, curtail or limit manufacture.

      Sec. 18.  1.  “Manufacture” means the production, preparation, propagation, compounding, conversion or processing of a controlled substance, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, and includes any packaging or repackaging of the substance or labeling or relabeling of its container.

      2.  “Manufacture” does not include the preparation or compounding of a controlled substance by an individual for his own use or the preparation, compounding, packaging or labeling of a controlled substance by a practitioner:

      (a) As an incident to his administering or dispensing of a controlled substance in the course of his professional practice; or

      (b) By his authorized agent under his supervision, for the purpose of, or as an incident to, research, teaching or chemical analysis and not for sale.

      Sec. 19.  1.  “Marihuana” means:

      (a) All parts of the plant Cannabis sativa L., whether growing or not;

      (b) The seeds thereof;

      (c) The resin extracted from any part of the plant; and

      (d) Every compound, manufacture, salt, derivative, mixture or preparation of the plant, its seeds or resin.

      2.  “Marihuana” does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture or preparation of the mature stalks (except the resin extacted therefrom), fiber, oil or cake, or the sterilized seed of the plant which is incapable of germination.

      Sec. 20.  “Narcotic drug” means any of the following, whether produced directly or indirectly by extraction from substances of vegetable origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis:

      1.  Opium and opiate, and any salt, compound, derivative or preparation of opium or opiate.

      2.  Any salt, compound, isomer, derivative or preparation thereof which is chemically equivalent or identical with any of the substances referred to in subsection 1, but not including the isoquinoline alkaloids of opium.

      3.  Opium poppy and poppy straw.

      4.  Coca leaves and any salt, compound, derivative or preparation of coca leaves, and any salt, compound, isomer, derivative or preparation thereof which is chemically equivalent or identical with any of these substances, but not including decocainized coca leaves or extractions of coca leaves which do not contain cocaine or ecgonine.


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ê1971 Statutes of Nevada, Page 2002 (Chapter 667, AB 107)ê

 

thereof which is chemically equivalent or identical with any of these substances, but not including decocainized coca leaves or extractions of coca leaves which do not contain cocaine or ecgonine.

      Sec. 21.  1.  “Opiate” means any substance having an addiction-forming or addiction-sustaining liability similar to morphine or being capable of conversion into a drug having addiction-forming or addiction-sustaining liability, including racemic and levorotatory forms.

      2.  “Opiate” does not include, unless specifically designated as controlled under section 29 of this act, the dextrorotatory isomer of 3-methoxy-n-methylmorphinan and its salts (dextromethorphan).

      Sec. 22.  “Opium poppy” means the plant of the species Papaver somniferum L., except its seeds.

      Sec. 23.  “Person” means individual, corporation, partnership or association, or any other legal entity.

      Sec. 24.  “Poppy straw” means all parts, except the seeds, of the opium poppy, after mowing.

      Sec. 25.  “Practitioner” means:

      1.  A physician, dentist, veterinarian, scientific investigator, podiatrist or other person licensed, registered or otherwise permitted to distribute, dispense, conduct research with respect to or to administer a controlled substance in the course of professional practice or research in this state.

      2.  A pharmacy, hospital or other institution licensed, registered or otherwise permitted to distribute, dispense, conduct research with respect to or to administer a controlled substance in the course of professional practice or research in this state.

      Sec. 26.  “Production” includes the manufacture, planting, cultivation, growing or harvesting of a controlled substance.

      Sec. 27.  “State,” when applied to a part of the United States, includes any state, district, commonwealth, territory, insular possession thereof, and any area subject to the legal authority of the United States of America.

      Sec. 28.  “Ultimate user” means a person who lawfully possesses a controlled substance for his own use or for the use of a member of his household or for administering to any animal owned by him or by a member of his household.

      Sec. 29.  1.  The board shall administer this chapter and may add substances to or delete or reschedule all substances enumerated in the schedules in sections 31, 33, 35, 37 and 39 of this act pursuant to the procedures of chapter 233B of NRS.

      2.  In making a determination regarding a substance, the board shall consider the following:

      (a) The actual or relative potential for abuse;

      (b) The scientific evidence of its pharmacological effect, if known;

      (c) The state of current scientific knowledge regarding the substance;

      (d) The history and current pattern of abuse;

      (e) The scope, duration and significance of abuse;

      (f) The risk to the public health;

      (g) The potential of the substance to produce psychic or physiological dependence liability; and

      (h) Whether the substance is an immediate precursor of a substance already controlled under this chapter.


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ê1971 Statutes of Nevada, Page 2003 (Chapter 667, AB 107)ê

 

      3.  After considering the factors enumerated in subsection 2 the board shall make findings with respect thereto and issue a rule controlling the substance if it finds the substance has a potential for abuse.

      4.  If the board designates a substance as an immediate precursor, substances which are precursors of the controlled precursor shall not be subject to control solely because they are precursors of the controlled precursor.

      5.  If any substance is designated, rescheduled or deleted as a controlled substance under federal law and notice thereof is given to the board, the board shall similarly control the substance under this chapter after the expiration of 30 days from publication in the Federal Register of a final order designating a substance as a controlled substance or rescheduling or deleting a substance, unless within that 30-day period the board objects to inclusion, rescheduling or deletion. In that case, the board shall publish the reasons for objection and afford all interested parties an opportunity to be heard. At the conclusion of the hearing, the board shall publish its decision, which shall be final unless altered by statute. Upon publication of objection to inclusion, rescheduling, or deletion under this chapter by the board, control under this chapter is stayed until the board publishes its decision.

      6.  Authority to control under this section does not extend to distilled spirits, wine, malt beverages or tobacco.

      7.  The board shall not include any nonnarcotic substance on any such schedule if such substance has been approved by the Food and Drug Administration for sale over the counter without a prescription.

      Sec. 30.  1.  The board and the division shall cooperate with federal and other state agencies in discharging their responsibilities concerning traffic in controlled substances and in suppressing the abuse of controlled substances. To this end, the board and division may:

      (a) Arrange for the exchange of information among governmental officials concerning the use and abuse of controlled substances;

      (b) Coordinate and cooperate in training programs concerning controlled substance law enforcement at local and state levels;

      (c) Cooperate with the bureau by establishing a centralized unit to accept, catalogue, file and collect statistics, including records of drug-dependent persons and other controlled substance law offenders within the state, and make the information available for federal, state and local law enforcement purposes. The board and the division shall not furnish the name or identity of a patient or research subject whose identity could not be obtained under section 58 of this act; and

      (d) Conduct programs of eradication aimed at destroying wild or illicit growth of plant species from which controlled substances may be extracted.

      2.  Results, information and evidence received from the bureau relating to the regulatory functions of this chapter, including results of inspections conducted by it, may be relied and acted upon by the board and division in the exercise of its regulatory functions under this chapter.

      Sec. 30.5.  The board and division shall cooperate with each other in effectuating the purposes of sections 2 to 87, inclusive, of this act.

      Sec. 31.  1.  The controlled substances listed in this section are included in schedule I.


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ê1971 Statutes of Nevada, Page 2004 (Chapter 667, AB 107)ê

 

      2.  Any of the following opiates, including their isomers, esters, ethers, salts and salts of isomers, esters and ethers, unless specifically excepted, whenever the existence of these isomers, esters, ethers and salts is possible within the specific chemical designation:

      (a) Acetylmethadol;

      (b) Allylprodine;

      (c) Alphacetylmethadol;

      (d) Alphameprodine;

      (e) Alphamethadol;

      (f) Benzethidine;

      (g) Betacetylmethadol;

      (h) Betameprodine;

      (i) Betamethadol;

      (j) Betaprodine;

      (k) Clonitazene;

      (l) Dextromoramide;

      (m) Dextrorphan;

      (n) Diampromide;

      (o) Diethylthiambutene;

      (p) Dimenoxadol;

      (q) Dimepheptanol;

      (r) Dimethylthiambutene;

      (s) Dioxaphetyl butyrate;

      (t) Dipipanone;

      (u) Ethylmethylthiambutene;

      (v) Etonitazene;

      (w) Etoxeridine;

      (x) Furethidine;

      (y) Hydroxypethidine;

      (z) Ketobemidone;

      (aa) Levomoramide;

      (bb) Levophenacylmorphan;

      (cc) Morpheridine;

      (dd) Noracymethadol;

      (ee) Norlevorphanol;

      (ff) Normethadone;

      (gg) Norpipanone;

      (hh) Phenadoxone;

      (ii) Phenampromide;

      (jj) Phenomorphan;

      (kk) Phenoperidine;

      (ll) Piritramide;

      (mm) Propheptazine;

      (nn) Properidine;

      (oo) Racemoramide; or

      (pp) Trimeperidine.

      3.  Any of the following opium derivatives, their salts, isomers and salts of isomers, unless specifically excepted, whenever the existence of these salts, isomers and salts of isomers is possible within the specific chemical designation:

      (a) Acetorphine;


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ê1971 Statutes of Nevada, Page 2005 (Chapter 667, AB 107)ê

 

      (b) Acetyldihydrocodeine;

      (c) Benzylmorphine;

      (d) Codeine methylbromide;

      (e) Codeine-N-Oxide;

      (f) Cyprenorphine;

      (g) Desomorphine;

      (h) Dihydromorphine;

      (i) Etorphine;

      (j) Heroin;

      (k) Hydromorphinol;

      (l) Methyldesorphine;

      (m) Methyldihydromorphine;

      (n) Morphine methylbromide;

      (o) Morphine methylsulfonate;

      (p) Morphine-N-Oxide;

      (q) Myrophine;

      (r) Nicocodeine;

      (s) Nicomorphine;

      (t) Normorphine;

      (u) Phoclodine; or

      (v) Thebacon.

      4.  Any material, compound, mixture or preparation which contains any quantity of the following hallucinogenic substances, their salts, isomers and salts of isomers, unless specifically excepted, whenever the existence of these salts, isomers and salts of isomers is possible within the specific chemical designation:

      (a) 3,4-methylenedioxy amphetamine;

      (b) 5-methoxy-3,4-methylenedioxy amphetamine;

      (c) 3,4,5-trimethoxy amphetamine;

      (d) Bufotenine;

      (e) Diethyltryptamine;

      (f) Dimethyltryptamine;

      (g) 4-methyl-2,5-dimethoxylamphetamine;

      (h) Ibogaine;

      (i) Lysergic acid diethylamide;

      (j) Marihuana;

      (k) Mescaline;

      (l) Peyote;

      (m) N-ethyl-3-piperidyl benzilate;

      (n) N-methyl-3-piperidyl benzilate;

      (o) Psilocybin;

      (p) Psilocyn;

      (q) Tetrahydrocannabinols.

      Sec. 32.  The board shall place a substance in schedule I if it finds that the substance:

      1.  Has high potential for abuse; and

      2.  Has no accepted medical use in treatment in the United States or lacks accepted safety for use in treatment under medical supervision.

      Sec. 33.  1.  The controlled substances listed in this section are included in schedule II.

      2.  Any of the following substances, except those narcotic drugs listed in other schedules, whether produced directly or indirectly by extraction from substances of vegetable origin, or independently by means of chemical synthesis, or by combination of extraction and chemical synthesis:

 


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ê1971 Statutes of Nevada, Page 2006 (Chapter 667, AB 107)ê

 

in other schedules, whether produced directly or indirectly by extraction from substances of vegetable origin, or independently by means of chemical synthesis, or by combination of extraction and chemical synthesis:

      (a) Opium and opiate, and any salt, compound, derivative or preparation of opium or opiate.

      (b) Any salt, compound, isomer, derivative or preparation thereof which is chemically equivalent or identical with any of the substances referred to in paragraph (a), but not including the isoquinoline alkaloids of opium.

      (c) Opium poppy and poppy straw.

      (d) Coca leaves and any salt, compound, derivative or preparation of coca leaves, and any salt, compound, derivative or preparation thereof which is chemically equivalent or identical with any of these substances, but not including decocainized coca leaves or extractions which do not contain cocaine or ecgonine.

      3.  Any of the following opiates, including their isomers, esters, ethers, salts and salts of isomers, whenever the existence of these isomers, esters, ethers and salts is possible within the specific chemical designation:

      (a) Alphaprodine;

      (b) Anileridine;

      (c) Bezitramide;

      (d) Dihydrocodeine;

      (e) Diphenoxylate;

      (f) Fentanyl;

      (g) Isomethadone;

      (h) Levomethorphan;

      (i) Levorphanol;

      (j) Metazocine;

      (k) Methadone;

      (l) Methadone-Intermediate, 4-cyano-2-dimethylamino-4, 4-diphenylbutane;

      (m) Moramide-Intermediate, 2-methyl-3-morpholino-1, 1-diphenylpropane-carboxylic acid;

      (n) Pethidine;

      (o) Pethidine-Intermediate-A, 4-cyano-1-methyl-4-phenylpiperidine;

      (p) Pethidine-Intermediate-B, ethyl-4-phenylpiperidine-4-carboxylate;

      (q) Pethidine-Intermediate-c, 1-methyl-4-phenylpiperidine-4-carboxylic acid;

      (r) Phenazocine;

      (s) Piminodine;

      (t) Racemethorphan; or

      (u) Recemorphan.

      Sec. 34.  The board shall place a substance in schedule II if it finds that:

      1.  The substance has high potential for abuse;

      2.  The substance has currently accepted medical use in treatment in the United States, or currently accepted medical use with severe restrictions; and

      3.  The abuse of the substance may lead to severe psychic or physical dependence.


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      Sec. 35.  1.  The controlled substances listed in this section are included in schedule III.

      2.  Any material, compound, mixture or preparation which contains any quantity of the following substances having a potential for abuse associated with a stimulant effect on the central nervous system:

      (a) Amphetamine, its salts, optical isomers and salts of its optical isomers;

      (b) Phenmetrazine and its salts;

      (c) Any substance which contains any quantity of methamphetamine, including its salts, isomers and salts of isomers; or

      (d) Methylphenidate.

      3.  Unless listed in another schedule, any material, compound, mixture or preparation which contains any quantity of the following substances having a potential for abuse associated with a depressant effect on the central nervous system:

      (a) Any substance which contains any quantity of a derivative of barbituric acid, or any salt of a derivative of barbituric acid, except those substances which are specifically listed in other schedules;

      (b) Chlorhexadol;

      (c) Glutethimide;

      (d) Lysergic acid;

      (e) Lysergic acid amide;

      (f) Methyprylon;

      (g) Phencyclidine;

      (h) Sulfondiethylmethane;

      (i) Sulfonethylmethane; or

      (j) Sulfonmethane.

      4.  Nalorphine.

      5.  Any material, compound, mixture or preparation containing limited quantities of any of the following narcotic drugs or any salts thereof:

      (a) Not more than 1.8 grams of codeine, or any of its salts, per 100 milliliters not more than 90 milligrams per dosage unit, with an equal or greater quantity of an isoquinoline alkaloid of opium;

      (b) Not more than 1.8 grams of codeine, or any of its salts, per 100 milliliters or not more than 90 milligrams per dosage unit, with one or more active, nonnarcotic ingredients in recognized therapeutic amounts;

      (c) Not more than 300 milligrams of dihydrocodeinone, or any of its salts, per 100 milliliters or not more than 15 milligrams per dosage unit, with a fourfold or greater quantity of an isoquinoline alkaloid of opium;

      (d) Not more than 300 milligrams of dihydrocodeinone, or any of its salts, per 100 milliliters or not more than 15 milligrams per dosage unit, with one or more active, nonnarcotic ingredients in recognized therapeutic amounts;

      (e) Not more than 1.8 grams of dihydrocodeine, or any of its salts, per 100 milliliters or not more than 90 milligrams per dosage unit, with one or more active, nonnarcotic ingredients in recognized therapeutic amounts;

      (f) Not more than 300 milligrams of ethylmorphine, or any of its salts, per 100 milliliters or not more than 15 milligrams per dosage unit, with one or more ingredients in recognized therapeutic amounts;


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ê1971 Statutes of Nevada, Page 2008 (Chapter 667, AB 107)ê

 

      (g) Not more than 500 milligrams of opium per 100 milliliters or per 100 grams, or not more than 25 milligrams per dosage unit, with one or more active, nonnarcotic ingredients in recognized therapeutic amounts; or

      (h) Not more than 50 milligrams of morphine, or any of its salts, per 100 milliliters or per 100 grams with one or more active, nonnarcotic ingredients in recognized therapeutic amounts.

      6.  The board may except by rule any compound, mixture or preparation containing any stimulant or depressant substance listed in subsections 2 and 3 from the application of all or any part of this chapter if the compound, mixture or preparation contains one or more active medicinal ingredients not having a stimulant or depressant effect on the central nervous system, and if the admixtures are included therein in combinations, quantity, proportion or concentration that vitiate the potential for abuse of the substances which have a stimulant or depressant effect on the central nervous system.

      Sec. 36.  The board shall place a substance in schedule III if it finds that:

      1.  The substance has a potential for abuse less than the substances listed in schedules I and II;

      2.  The substance has currently accepted medical use in treatment in the United States; and

      3.  Abuse of the substance may lead to moderate or low physical dependence or high psychological dependence.

      Sec. 37.  1.  The controlled substances listed in this section are included in schedule IV.

      2.  Any material, compound, mixture or preparation which contains any quantity of the following substances having a potential for abuse associated with a depressant effect on the central nervous system:

      (a) Barbital;

      (b) Chloral betaine;

      (c) Chloral hydrate;

      (d) Ethcholorvynol;

      (e) Ethinamate;

      (f) Methohexital;

      (g) Meprobamate;

      (h) Methylphenobarbital;

      (i) Paraldehyde;

      (j) Petrichloral; or

      (k) Phenobarbital.

      3.  The board may except by rule any compound, mixture or preparation containing any depressant substance listed in subsection 2 from the application of all or any part of this chapter if the compound, mixture or preparation contains one or more active medicinal ingredients not having a depressant effect on the central nervous system, and if the admixtures are included therein in combinations, quantity, proportion or concentration that vitiate the potential for abuse of the substances which have a depressant effect on the central nervous system.

      Sec. 38.  The board shall place a substance in schedule IV if it finds that:


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ê1971 Statutes of Nevada, Page 2009 (Chapter 667, AB 107)ê

 

      1.  The substance has a low potential for abuse relative to substances in schedule III;

      2.  The substance has currently accepted medical use in treatment in the United States; and

      3.  Abuse of the substance may lead to limited physical dependence or psychological dependence relative to the substances in schedule III.

      Sec. 39.  1.  The controlled substances listed in this section are included in schedule V.

      2.  Any compound, mixture or preparation containing limited quantities of any of the following narcotic drugs which also contains one or more nonnarcotic active medicinal ingredients in sufficient proportion to confer upon the compound, mixture or preparation valuable medicinal qualities other than those possessed by the narcotic drug alone:

      (a) Not more than 200 milligrams of codeine, or any of its salts, per 100 milliliters or per 100 grams;

      (b) Not more than 100 milligrams of dihydrocodeine, or any of its salts, per 100 milliliters or per 100 grams;

      (c) Not more than 100 milligrams of ethylmorphine, or any of its salts, per 100 milliliters or per 100 grams;

      (d) Not more than 2.5 milligrams of diphenoxylate and not less than 25 micrograms of atropine sulfate per dosage unit; or

      (e) Not more than 100 milligrams of opium per 100 milliliters or per 100 grams.

      Sec. 40.  The board shall place a substance in schedule V if it finds that the substance has:

      1.  Low potential for abuse relative to the controlled substances listed in schedule IV;

      2.  Currently accepted medical use in treatment in the United States; and

      3.  Limited physical dependence or psychological dependence liability relative to the controlled substances listed in schedule IV.

      Sec. 41.  The board shall revise and republish the schedules semiannually for 2 years from the effective date of this act, and thereafter annually.

      Sec. 42.  The controlled substances listed or to be listed in the schedules in sections 31, 33, 35, 37 and 39 of this act are included by whatever official, common, usual, chemical or trade name designated.

      Sec. 43.  The board may promulgate rules and charge reasonable fees relating to the registration and control of the manufacture, distribution and dispensing of controlled substances within this state.

      Sec. 44.  1.  Every person who manufactures, distributes or dispenses any controlled substance within this state or who proposes to engage in the manufacture, distribution or dispensing of any controlled substance within this state must obtain annually a registration issued by the board in accordance with its rules.

      2.  Persons registered by the board under this chapter to manufacture, distribute, dispense or conduct research with controlled substances may possess, manufacture, distribute, dispense or conduct research with those substances to the extent authorized by their registration and in conformity with the other provisions of this chapter.


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ê1971 Statutes of Nevada, Page 2010 (Chapter 667, AB 107)ê

 

      3.  The following persons need not register and may lawfully possess controlled substances under this chapter:

      (a) An agent or employee of any registered manufacturer, distributor or dispenser of any controlled substance if he is acting in the usual course of his business or employment;

      (b) A common or contract carrier or warehouseman, or an employee thereof, whose possession of any controlled substance is in the usual course of business or employment; or

      (c) An ultimate user or a person in possession of any controlled substance pursuant to a lawful order of a practitioner or in lawful possession of a schedule V substance.

      4.  The board may waive by rule the requirement for registration of certain manufacturers, distributors or dispensers if it finds it consistent with the public health and safety.

      5.  A separate registration is required at each principal place of business or professional practice where the applicant manufactures, distributes or dispenses controlled substances.

      6.  The board may inspect the establishment of a registrant or applicant for registration in accordance with the board’s rule.

      Sec. 45.  1.  The board shall register an applicant to manufacture or distribute controlled substances included in sections 31, 33, 35, 37 and 39 of this act unless it determines that the issuance of that registration would be inconsistent with the public interest.

      2.  In determining the public interest, the board shall consider the following factors:

      (a) Maintenance of effective controls against diversion of controlled substances into other than legitimate medical, scientific or industrial channels;

      (b) Compliance with applicable state and local law;

      (c) Any convictions of the applicant under any federal and state laws relating to any controlled substance;

      (d) Past experience in the manufacture or distribution of controlled substances, and the existence in the applicant’s establishment of effective controls against diversion;

      (e) Furnishing by the applicant of false or fraudulent material in any application filed under this chapter;

      (f) Suspension or revocation of the applicant’s federal registration to manufacture, distribute or dispense controlled substances as authorized by federal law; and

      (g) Any other factors relevant to and consistent with the public health and safety.

      3.  Registration under subsections 1 and 2 does not entitle a registrant to manufacture and distribute controlled substances in schedules I or II other than those specified in the registration.

      4.  Practitioners shall be registered to dispense any controlled substances or to conduct research with controlled substances in schedules II to V, inclusive, if they are authorized to dispense or conduct research under the laws of this state.

      5.  The board need not require separate registration under this chapter for practitioners engaging in research with nonnarcotic controlled substances in schedules II to V, inclusive, where the registrant is already registered under this chapter in another capacity.


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ê1971 Statutes of Nevada, Page 2011 (Chapter 667, AB 107)ê

 

substances in schedules II to V, inclusive, where the registrant is already registered under this chapter in another capacity.

      6.  Practitioners registered under federal law to conduct research with schedule I substances may conduct research with schedule I substances within the state upon furnishing the board evidence of that federal registration.

      7.  Compliance by manufacturers and distributors with the provisions of the federal law respecting registration, excluding fees, entitles them to be registered under this chapter.

      Sec. 46.  1.  A registration under section 45 of this act to manufacture, distribute or dispense a controlled substance may be suspended or revoked by the board upon a finding that the registrant has:

      (a) Furnished false or fraudulent material information in any application filed under this chapter;

      (b) Been convicted of a felony under any state or federal law relating to any controlled substance; or

      (c) Had his federal registration suspended or revoked to manufacture, distribute or dispense controlled substances.

      2.  The board may limit revocation or suspension of a registration to the particular controlled substance with respect to which grounds for revocation or suspension exist.

      3.  If the board suspends or revokes a registration, all controlled substances owned or possessed by the registrant at the time of suspension or the effective date of the revocation order may be placed under seal. No disposition may be made of substances under seal until the time for taking an appeal has elapsed or until all appeals have been concluded unless a court, upon application therefor, orders the sale of perishable substances and the deposit of the proceeds of the sale with the court. Upon a revocation order’s becoming final, all controlled substances may be forfeited to the state.

      4.  The board shall promptly notify the bureau and division of all orders suspending or revoking registration and the division shall promptly notify the bureau and the board of all forfeitures of controlled substances.

      Sec. 47.  1.  Before denying, suspending or revoking a registration, or refusing a renewal of registration, the board shall serve upon the applicant or registrant an order to show cause why registration should not be denied, revoked or suspended, or why the renewal should not be refused.

      2.  The order to show cause shall contain a statement of the basis therefor and shall call upon the applicant or registrant to appear before the board at a time and place not less than 30 days after the date of service of the order. In the case of a denial or renewal of registration the show cause order shall be served not later than 30 days before the expiration of the registration.

      3.  These proceedings shall be conducted in accordance with chapter 233B of NRS without regard to any criminal prosecution or other proceeding.

      4.  Proceedings to refuse renewal of registration shall not abate the existing registration, which shall remain in effect pending the outcome of the administrative hearing.


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ê1971 Statutes of Nevada, Page 2012 (Chapter 667, AB 107)ê

 

      5.  The board may suspend, without an order to show cause, any registration simultaneously with the institution of proceedings under section 46 of this act, or where renewal of registration is refused, if it finds that there is an imminent danger to the public health or safety which warrants this action. The suspension shall continue in effect until the conclusion of the proceedings, including judicial review thereof, unless sooner withdrawn by the board or dissolved by a court of competent jurisdiction.

      Sec. 48.  Persons registered to manufacture, distribute or dispense controlled substances under this chapter shall keep records and maintain inventories in conformance with the record-keeping and inventory requirements of federal law and with any additional rules the board issues.

      Sec. 49.  Controlled substances in schedules I and II shall be distributed by a registrant to another registrant only pursuant to an order form. Compliance with the provisions of federal law respecting order forms shall be deemed compliance with this section.

      Sec. 50.  1.  Except when dispensed directly by a practitioner, other than a pharmacy, to an ultimate user, no controlled substance in schedule II may be dispensed without the written prescription of a practitioner.

      2.  In emergency situations, as defined by rule of the board, schedule II drugs may be dispensed upon oral prescription of a practitioner, reduced promptly to writing and filed by the pharmacy. Prescriptions shall be retained in conformity with the requirements of section 48 of this act. No prescription for a schedule II substance may be refilled.

      3.  Except when dispensed directly by a practitioner, other than a pharmacy, to an ultimate user, a controlled substance included in schedules III or IV shall not be dispensed without a written or oral prescription of a practitioner. The prescription shall not be filled or refilled more than 6 months after the date thereof or be refilled more than five times, unless renewed by the practitioner.

      4.  A controlled substance included in schedule V shall not be distributed or dispensed other than for a medical purpose.

      Sec. 51.  1.  The division may make administrative inspections of controlled premises in accordance with the following provisions:

      (a) When authorized by an administrative inspection warrant issued pursuant to section 52 of this act to an officer, employee or peace officer as defined in NRS 169.125, designated by the division, upon presenting the warrant and appropriate credentials to the owner, operator or agent in charge, may enter controlled premises for the purpose of conducting an administrative inspection.

      (b) When authorized by an administrative inspection warrant, an officer, employee or peace officer as defined in NRS 169.125, designated by the division may:

             (1) Inspect and copy records required by this chapter to be kept;

             (2) Inspect, within reasonable limits and in a reasonable manner, controlled premises and all pertinent equipment, finished and unfinished material, containers and labeling found therein, and, except as provided in subsection 3, all other things therein, including records, files, papers, processes, controls and facilities bearing on violation of this chapter; and


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ê1971 Statutes of Nevada, Page 2013 (Chapter 667, AB 107)ê

 

             (3) Inventory any stock of any controlled substance therein and obtain samples thereof.

      2.  This section does not prevent the inspection without a warrant of books and records, nor does it prevent entries and administrative inspections, including seizures of property, without a warrant:

      (a) If the owner, operator or agent in charge of the controlled premises consents;

      (b) In situations presenting imminent danger to health or safety;

      (c) In situations involving inspection of conveyances if there is reasonable cause to believe that the mobility of the conveyance makes it impracticable to obtain a warrant;

      (d) In any other exceptional or emergency circumstance where time or opportunity to apply for a warrant is lacking; or

      (e) In all other situations in which a warrant is not constitutionally required.

      3.  An inspection authorized by this section shall not extend to financial data, sales data, other than shipment data or pricing data unless the owner, operator or agent in charge of the controlled premises consents in writing.

      4.  For purposes of this section, “controlled premises” means:

      (a) Places where persons registered or exempted from registration requirements under this chapter are required to keep records; and

      (b) Places, including factories, warehouses, establishments and conveyances in which persons registered or exempted from registration requirements under this chapter are permitted to hold, manufacture, compound, process, sell, deliver or otherwise dispose of any controlled substance.

      Sec. 52.  1.  Issuance and execution of administrative inspection warrants shall be as follows:

      (a) A magistrate, as defined in NRS 169.095, within his jurisdiction, and upon proper oath or affirmation showing probable cause, may issue warrants for the purpose of conducting administrative inspections authorized by this chapter or rules of the board or division, and seizures of property appropriate to the inspections. For purposes of the issuance of administrative inspection warrants, probable cause exists upon showing a valid public interest in the effective enforcement of this chapter or rules of the board or division, sufficient to justify administrative inspection of the area, premises, building or conveyance in the circumstances specified in the application for the warrant.

      (b) A warrant shall issue only upon an affidavit of an officer or employee of the board or division having knowledge of the facts alleged, sworn to before the magistrate and establishing the grounds for issuing the warrant. If the magistrate is satisfied that grounds for the application exist or that there is probable cause to believe they exist, he shall issue a warrant identifying the area, premises, building or conveyance to be inspected, the purpose of the inspection, and, if appropriate, the type of property to be inspected, if any.

      2.  The warrant shall:

      (a) State the grounds for its issuance and the name of each person whose affidavit has been taken in support thereof;


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ê1971 Statutes of Nevada, Page 2014 (Chapter 667, AB 107)ê

 

      (b) Be directed to a person authorized to execute it;

      (c) Command the person to whom it is directed to permit the inspection of the area, premises, building or conveyance identified for the purpose specified and, if appropriate, direct the seizure of the property specified;

      (d) Identify the item or types of property to be seized, if any; and

      (e) Direct that it be served during normal business hours and designate the magistrate to whom it shall be returned.

      3.  A warrant issued pursuant to this section shall be executed and returned within 10 days of its date of issuance unless, upon a showing of a need for additional time, the magistrate orders otherwise.

      4.  If property is seized pursuant to a warrant, a copy shall be given to the person from whom or from whose premises the property is taken, together with a receipt for the property taken.

      5.  The return of the warrant shall be made promptly, accompanied by a written inventory of any property taken. The inventory shall be made in the presence of the person executing the warrant and of the person from whose possession or premises the property was taken, if present, or in the presence of at least one credible person other than the person executing the warrant. A copy of the inventory shall be delivered to the person from whom or from whose premises the property was taken and to the applicant for the warrant.

      6.  The magistrate who has issued a warrant shall attach thereto a copy of the return and all papers returnable in connection therewith and file them with the clerk of the district court in the county in which the inspection was made.

      Sec. 53.  Any officer or employee of the division designated by his appointing authority may:

      1.  Carry firearms in the performance of his official duties;

      2.  Execute and serve search warrants, arrest warrants, administrative inspection warrants, subpenas and summonses issued under the authority of this state;

      3.  Make arrests without warrant for any offense under this chapter committed in his presence, or if he has probable cause to believe that the person to be arrested has committed or is committing a violation of this chapter which may constitute a felony;

      4.  Make seizures of property pursuant to this chapter; or

      5.  Perform other law enforcement duties as the division designates.

      Sec. 54.  1.  The district courts have jurisdiction to restrain or enjoin violations of this chapter.

      2.  The defendant may demand trial by jury for an alleged violation of an injunction or restraining order under this section.

      Sec. 55.  1.  It is not necessary for the state to negate any exemption or exception in this chapter in any complaint, information, indictment or other pleading or in any trial, hearing or other proceeding under this chapter. The burden of proof of any exemption or exception is upon the person claiming it.

      2.  In the absence of proof that a person is the duly authorized holder of an appropriate registration or order form issued under this chapter, he is presumed not to be the holder of the registration or form.


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ê1971 Statutes of Nevada, Page 2015 (Chapter 667, AB 107)ê

 

he is presumed not to be the holder of the registration or form. The burden of proof is upon him to rebut the presumption.

      3.  No liability is imposed by this chapter upon any authorized state, county or municipal officer engaged in the lawful performance of his duties.

      Sec. 56.  All final determinations, findings and conclusions of the board or division under this chapter are final and conclusive decisions of the matters involved. Any person aggrieved by the decision may obtain review of the decision in the district court in the county of his residence. Findings of fact by the board or division, if supported by substantial evidence, are conclusive.

      Sec. 57.  1.  The board and division shall carry out educational programs designed to prevent and deter misuse and abuse of controlled substances. In connection with these programs the board and division may:

      (a) Promote better recognition of the problems of misuse and abuse of controlled substances within the regulated industry and among interested groups and organizations;

      (b) Assist the regulated industry and interested groups and organizations in contributing to the reduction of misuse and abuse of controlled substances;

      (c) Consult with interested groups and organizations to aid them in solving administrative and organizational problems;

      (d) Evaluate procedures, projects, techniques and controls conducted or proposed as part of educational programs on misuse and abuse of controlled substances;

      (e) Disseminate the results of research on misuse and abuse of controlled substances to promote a better public understanding of what problems exist and what can be done to combat them; and

      (f) Assist in the education and training of state and local law enforcement officials in their efforts to control misuse and abuse of controlled substances.

      2.  The board and the division shall encourage research on misuse and abuse of controlled substances. In connection with the research, and in furtherance of the enforcement of this chapter, it may:

      (a) Establish methods to assess accurately the effects of controlled substances and identify and characterize those with potential for abuse;

      (b) Make studies and undertake programs of research to:

             (1) Develop new or improved approaches, techniques, systems, equipment and devices to strengthen the enforcement of this chapter;

             (2) Determine patterns of misuse and abuse of controlled substances and the social effects thereof; and

             (3) Improve methods for preventing, predicting, understanding and dealing with the misuse and abuse of controlled substances; and

      (c) Enter into contracts with public agencies, institutions of higher education, and private organizations or individuals for the purpose of conducting research, demonstrations or special projects which bear directly on misuse and abuse of controlled substances.

      3.  The board may authorize persons engaged in research on the use and effects of controlled substances to withhold the names and other identifying characteristics of individuals who are the subject of the research.


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ê1971 Statutes of Nevada, Page 2016 (Chapter 667, AB 107)ê

 

identifying characteristics of individuals who are the subject of the research. Persons who obtain this authorization are not compelled in any civil, criminal, administrative, legislative or other proceeding to identify the individuals who are the subjects of research for which the authorization was obtained.

      4.  The board may authorize the possession and distribution of controlled substances by persons engaged in research. Persons who obtain this authorization are exempt from state prosecution for possession and distribution of controlled substances to the extent of the authorization. The board shall promptly notify the division of any such authorization.

      Sec. 58.  A practitioner engaged in medical practice or research is not required or compelled to furnish the name or identity of a patient or research subject to the board, nor may he be compelled in any state or local civil, criminal, administrative, legislative or other proceeding to furnish the name or identity of an individual that the practitioner is obligated to keep confidential.

      Sec. 59.  The following are subject to forfeiture:

      1.  All controlled substances which have been manufactured, distributed, dispensed or acquired in violation of this chapter.

      2.  All raw materials, products and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing or exporting any controlled substance in violation of this chapter.

      3.  All property which is used, or intended for use, as a container for property described in subsections 1 and 2.

      4.  All books, records and research products and materials, including formulas, microfilm, tapes and data, which are used, or intended for use, in violation of this chapter.

      5.  All conveyances, including aircraft, vehicles or vessels, which are used, or intended for use, to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of property described in subsections 1 or 2, except that:

      (a) No conveyance used by any person as a common carrier in the transaction of business as a common carrier is subject to forfeiture under this section unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of this chapter;

      (b) No conveyance is subject to forfeiture under this section by reason of any act or omission established by the owner thereof to have been committed or omitted without his knowledge or consent;

      (c) A conveyance is not subject to forfeiture for a violation of section 63 of this act; and

      (d) A forfeiture of a conveyance encumbered by a bona fide security interest is subject to the interest of the secured party if he neither had knowledge of nor consented to the act or omission.

      Sec. 60.  1.  Property subject to forfeiture under this chapter may be seized by the division or other law enforcement agency upon process issued by any magistrate having jurisdiction over the property.

      2.  Seizure without process may be made if:


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ê1971 Statutes of Nevada, Page 2017 (Chapter 667, AB 107)ê