(a) When the commissioner, upon investigation, finds that a domestic society:

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Terms Used In Tennessee Code 56-25-606

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Attorney: means the person designated and authorized by subscribers as the attorney-in-fact having authority to obligate them on reciprocal insurance contracts. See Tennessee Code 56-16-102
  • Certificate: means the document issued as written evidence of the benefit contract. See Tennessee Code 56-25-104
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-25-104
  • Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
  • Reporter: Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
  • Society: means fraternal benefit society, unless otherwise indicated. See Tennessee Code 56-25-104
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(1) Has exceeded its powers;
(2) Has failed to comply with any provision of this chapter;
(3) Is not fulfilling its contracts in good faith;
(4) Has a membership of less than four hundred (400) after an existence of one (1) year or more; or
(5) Is conducting business fraudulently or in a manner hazardous to its members, creditors, the public or the business;

the commissioner shall notify the society of such deficiency or deficiencies and state in writing the reasons for the dissatisfaction. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies that exist be corrected. After the notice, the society shall have a thirty-day period in which to comply with the commissioner’s request for correction, and if the society fails to comply, the commissioner shall notify the society of the findings of noncompliance 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.

(b) If on the date the society does not present good and sufficient reasons why it should not be so enjoined or why the action should not be commenced, the commissioner may present the facts relating thereto to the attorney general and reporter, who shall, if the attorney general and reporter deems the circumstances warrant, commence an action to enjoin the society from transacting business or in quo warranto.
(c) The court shall thereupon notify the officers of the society of the 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. No society so enjoined shall have the authority to do business until:

(1) The commissioner finds that the violation complained of has been corrected;
(2) The costs of the action have been paid by the society if the court finds that the society was in default as charged;
(3) The court has dissolved its injunction; and
(4) The commissioner has reinstated the certificate of authority.
(d) 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 to them.
(e) No action under this section shall be recognized in any court of this state unless brought by the attorney general and reporter upon request of the commissioner. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the commissioner as the receiver.
(f) The provisions of this section relating to hearing by the commissioner, action by the attorney general and reporter 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.
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