Huggins v. Commercial & Savings Bank , 141 S.C. 480 ( 1927 )

October 19, 1927. The opinion of the Court was delivered by This, as stated by Mr. Justice Cothran, was an action atlaw, tried, without objection on the part of either of the parties, by a jury. The defendant asked the Court to direct that jury to find a verdict for it, and the motion was refused. The jury rendered a verdict for the plaintiff. The defendant then moved for a new trial before another jury; and this motion was denied. The defendant then appealed to this Court from the judgment entered on the jury's verdict, approved by the trial Judge. Here, the defendant has asked that the verdict of the jury against it be set aside, and adirected verdict be entered in its favor; failing in that request, the defendant asks that a new trial before anotherjury be granted. The plaintiff, of course, asks that the judgment below be affirmed.

Mr. Associate Justice Cothran, in the opinion written by him, does not favor granting the request of the plaintiff, nor is he disposed favorably to either of the requests of the defendant. He proposes what is to be a new and novel course: To reverse the judgment in this legal action, based upon the verdict of the jury; to set aside everything done in the lower Court; to send this action at law back to that Court for trial as an action in equity; to bring into the action numerous new parties, who have not asked to come in, and who have not been invited in by either of the original parties; and to try a multitude of issues, which have not been heretofore suggested by any one, lawyer or litigant, connected in any way with this cause.

I am forced to disagree with the procedure suggested by the learned Justice, not because it is new and novel, but for two other more important reasons: First, because this Court will be compelled to go out of and beyond the record before it, if it takes the course proposed; and, second, because the judgment appealed from should be affirmed.

In considering this appeal, let us stay within the record made up by the appellant for hearing here, and consented to by the respondent. There are certain matters which should not be overlooked. First of all, let us see what issues were made by the pleadings. The complaint charged, briefly, that the plaintiff deposited in the Citizens' Bank of Timmonsville, on August 16, 1919, the sum of $3,000; that no part of this deposit was ever withdrawn from that bank; that the Citizens' Bank, being in imminent danger of insolvency (not insolvent), transferred all of its assets, including plaintiff's deposit of $3,000, to the defendant; and that plaintiff's demand on defendant for his money had been refused.

The defendant's answer was a general denial — that, and nothing more. That answer meant that the defendant denied that the plaintiff had deposited $3,000 in the Citizens' Bank; that it denied that the plaintiff had not withdrawn his money; it denied that the assets of the Citizens' Bank, and especially the plaintiff's alleged deposit, had been turned over to the defendant; and it denied plaintiff had made demand for his deposit, and that such demand had been refused.

Both parties and the trial Judge in the Court below, all the way through, regarded the action as one at law. The plaintiff and defendant said there, as they say in this Court, that the action was on quantum meruit or for money had and received. The plaintiff endeavored to sustain the material allegations of his complaint by testimony he offered.

The presiding Judge was exceedingly liberal with the defendant in his construction of the pleadings. He did not confine it to the simple denials set up in its answer. The plaintiff complained in the trial that the defendant was being permitted to introduce evidence to sustain pleas not alleged in the answer. We shall pass over these objections of the plaintiff and extend to the defendant the same liberality shown it by the very fair rulings of the trial Judge.

On its motion for a directed verdict, the defendant took positions in line with the evidence it offered. These positions were as follows: That there existed between the plaintiff as a depositor, and the Citizens' Bank the relation of debtor and creditor; under the contract between the two banks, the defendant did not assume the payment of the alleged deposit of the plaintiff; that the plaintiff was estopped by his conduct; that there was no proof that defendant ever came into possession of the deposits; that the plaintiff could not recover because of negligence; and that the defendant was a bona fide purchaser for value without notice of the plaintiff's claim.

In addition to the positions set out, the defendant, on the motion for a new trial, took these further position: That the presiding Judge erred in holding, on the motion for directed verdict, that it was against public policy for the defendant to take over all the assets of the Citizens' Bank without it becoming liable to all the depositors of that bank for their deposits; that the action was for money, had and received on the law side of the Court; that there was no evidence to sustain such action; that if the plaintiff was entitled to any remedy at all, it was by bill in equity against the defendant to subject the assets coming into its hands to the payment of his demand; that the holdings of the trial Judge had taken defendant by surprise; and that a new trial should be had to give the defendant an opportunity to show that the plaintiff had been paid his deposit.

By referring to the exceptions of the defendant-appellant, it will be seen that no complaint is made as to the receipt or rejection of evidence; and no error is imputed to the instructions of the Judge to the jury. The exceptions made by the appellant relate only to the failure to grant its motion for a directed verdict and to the refusal to grant its motion for a new trial.

In passing upon the questions presented for consideration, we shall not follow the exceptions as they are laid down. The appellant's counsel in their well-prepared brief have given us much assistance by setting out the questions really involved in the appeal, and we shall adopt their statement thereabout, for the sake of brevity, however, stating them in our own language. The questions raised in the appeal are these:

(1) Was the account of the plaintiff as a depositor of the Citizens' Bank an account stated, and should the plaintiff have first proceeded in equity to open up that account stated before he could bring his action at law?

(2) Was the plaintiff estopped by his conduct?

(3) Did the evidence sufficiently show that the defendant was enriched unjustly at the plaintiff's expense to sustain an action on quantum meruit?

(4) Did the evidence show that the defendant was abona fide purchaser for value without notice?

(5) Did the contract between the Citizens' Bank and the defendant relieve the latter of liability to the plaintiff?

(6) Did the Circuit Judge abuse his discretion in refusing defendant's motion for a new trial on the ground of surprise?

The facts as recounted by Mr. Justice Cothran will be adopted in the main by us. We shall relate, however, some matters brought out in the evidence not referred to as fully by him as we think they should appear.

As to the first question. Generally, an account rendered and not objected to within a reasonable time becomes an account stated. But this rule refers only to such accounts as may become accounts stated. Formerly it was the rule that accounts stated existed only between merchants. Gradually, the doctrine was extended in many jurisdictions to all classes of business men. 1 R.C.L., 210, Par. 8. This broadening of the doctrine seems to have been recognized in the Federal Courts and in the Courts of the greater number of States in the Union. There are some exceptions to this general rule, however, as to banks and their depositors, and notably so in Virginia and West Virginia.McGraw v. Traders' Nat. Bank, 64 W. Va., 509;63 S.E., 398. Neither has the rule been made broad enough in England and Canada to include banks and their depositors. See articles on Accounts and Accounting and Notes Thereto in Ruling Case Law and Corpus Juris. A well-recognized authority says:

"But the doctrine of retention merely of an account rendered has not been applied with its full effect to accounts between bank and depositor." 27 L.R.A., 820, note.

Then:

"An account between bank and customer, although balanced monthly, which is carried on for a period of years, constitutes together a running account and is in effect but one transaction." Pickett v. Merchants' Nat. Bank,32 Ark. 346.

We have failed to find a case in our reports that holds, or even indicates, that the principle of accounts stated as between a bank and its depositor has ever been recognized in South Carolina. In the citations of authority of the appellant and respondent, no case so holding is pointed out.

In the absence of legislative enactment to direct us, with no precedent to bind us, and without decision to guide us, it seems necessary for this Court to decide at this time, if it will adopt the rule that the furnishing of a statement by a bank to its depositor, which is retained by the depositor and unobjected to, will, after a reasonable time, be regarded as an account stated. In making this decision, the striking language of Mr. Justice Cothran in a recent case, where the situation was somewhat like the present, seems appropriate:

"In this state of conflict between the decisions, it is up to the Court to ``choose ye this day whom ye will serve'; and, in the duty of this decision, this Court has the right to determine which doctrine best appeals to its sense of law, justice, and right." Antley v. New York Life Ins. Co., 139 S.C. 23;137 S.E., 199.

We are reminded, too, of what Mr. Justice Gage, then Circuit Judge, said in his dissenting opinion in State v.Rhame, 92 S.C. 455; 75 S.E., 881; Ann. Cas., 1914-B, 519:

"The banks carry the arterial blood of the business world. It ought to reach the people quickly, free from taint of suspicion."

There may be some reasons why the rule of accounts stated should apply to banks and depositors, we admit. There are others, however, more cogent to cause this Court to declare to the contrary. The Courts holding the former view base their determination on the prime reason that the ordinary relationship of debtor and creditor exists between a bank and its depositor. They have overlooked one or two important things in their consideration. In calling attention to these we can do no better than quote from Corpus Juris:

"The contract between a bank and a depositor is not materially different from any other contract by which one person becomes bound to take charge of and repay another's funds. * * * The relation between a bank and a depositormay be dual in character, the bank, being the depositor'sdebtor with respect to one thing and his agent with respectto another: and while the relation between the bank and a depositor in respect to a general deposit is generally regarded as that of debtor and creditor, yet in another sense, the depositoris the owner of the deposit, in that he can demandrepayment at any time." 7 C.J., 641.

It will be seen by looking at the words italicized by us in the excerpt, the exact ideas we have in mind: The bank'sagency of the depositor; and the right, generally, of the depositorto demand repayment at any time. In most instances, the relation of principal and agent does not exist between a creditor and his debtor. And, likewise, in many cases, the creditor may not demand immediate payment of the debt.

It is the primary duty of a bank to carefully guard the money of its depositors, and to be ever ready to return the amounts intrusted on proper demand. If the money of a depositor in a bank is lost through either the fraud or negligence of any agent thereof, the bank is liable for the loss sustained. And even without fraud or negligence the bank is usually liable for such losses.

It has been well and generally known for many years that banking institutions advertise in every nook and corner that the money placed with them will be handled with safety and security. And many banks have appealed, publicly, for deposits, with inviting promises, such as, "Let us do your bookkeeping for you." All this has been, and is even to-day, so well known to bankers, depositors, and the people generally that this Court can and should take judicial notice thereof.

The tendency of legislation in this State, too, has been towards the protection of depositors. As illustrations of this, the office of state bank examiner has been created; a statute was enacted making it a felony for an employee of a bank to accept a deposit when aware of the insolvency of the institution; and a provision in our Constitution subjects stockholders of banks to an assessment of 100 per cent. on the stock held by them for the benefit of depositors.

Under all the circumstances, the rule that the statement of a depositor's account with his bank should become an account stated for failure of the depositor to interpose objection thereto within a reasonable time is not consistent with justice and the relations existing between those classes of business people. The rule we prefer to adopt is, in effect, this:

Evidence of the retention by a depositor of statements orpassbook of his bank, after a reasonable time for examination,without notice to the bank of objection thereto, may begiven to show an implied admission of an acquiescence inthe correctness of the account.

The rule announced is almost in the words used in Corpus Juris in stating the principle adhered to in several jurisdictions in the United States. 1 C.J., 696, and note 61. It is in accord also with this declaration in Ruling Case Law:

"The presumption of acquiescence in an account rendered, arising from its retention without objection after the lapse of a reasonable time, is not conclusive, but only evidence of an admission and is therefore subject to disproof." 1 R.C.L., 214, Par. 12.

Even if we agreed with the appellant that the transaction between the plaintiff and the Citizens' Bank had the effect of an account stated, still we could not follow appellant in its other contention that the plaintiff should have first instituted an equitable action. Let it be kept in mind that the defendant, and not the plaintiff, raised the question of an account stated.

Under our liberal practice, as laid down in the Code of Procedure, it was unnecessary for the plaintiff to have gone first into a Court of equity to "surcharge" or "falsify" (using the strictly legal terms) the alleged account stated of the defendant, as was required under the old practice. Two authorities, we think, are entirely sufficient to sustain our position:

"A stated account may be impeached for fraud, mistake, or error, by an original proceeding in equity brought for that purpose. It may also be impeached when interposed asa defense to an action, either at law or in equity, for a preliminaryproceeding to set it aside is never necessary toenable a plaintiff to make his principal cause of actionavailable. Wherever it is thrust forward, in whatever formof action it is pleaded, it may be impeached. Thus the correctnessof an account stated may be overcome by proof,either when the debtor is sued upon the account, if there isan error to his prejudice, or by the plaintiff by suing for theproper amount." (Italics added.) 1 R.C.L., 218, Par. 17.

"While a suit to open, surcharge or falsify an account is one proper for equitable jurisdiction, yet the rule seems to beestablished that a stated account need not necessarily beimpeached by a direct suit brought for that purpose. It may be impeached for fraud or mistake either at law or inequity whenever it is brought forward as a defense or causeof action. Accordingly, when items are omitted, the statedor settled account may be impeached by plaintiff suing forthe correct balance; and where the balance of a stated accountis settled or paid, or where, upon account between parties, anitem is omitted by mistake, the account may be impeachedin a suit to recover the omitted item, or items paid by mistakeor fraud." (Italics added.) 1 C.J., 715.

Mr. Justice Woods said in Smith v. Allmon, 74 S.C. 502;54 S.E., 1014:

"But even if the parties had agreed that it [the account] should have the effect of an account stated, it could not be binding on either of them if clearly shown to be founded on erroneous calculation."

The most favorable thing to be said of the conduct of some one employed by the Citizens' Bank is that there was error in failing to enter plaintiff's deposit on the books of the bank. We cannot see any distinction between an "erroneous calculation" and an erroneous entry, or failure to make an entry through error.

This Court has shown in the past its strong belief in honest dealings between a bank and one of its customers. In the case of Bank of Williston v. Alderman, 106 S.C. 386;91 S.E., 296, where a bank, through its own error, paid out over $500 on a check for only $15, the bank was allowed to recover the money overpaid, and that decision was absolutely right. When the tables are turned, and the customer has lost his money through a mistake of the bank, why should not he be entitled to recover?

We next take up the second question, that relating to the estoppel of the plaintiff. The defendant relies upon two cases to sustain its position that the plaintiff was precluded as a matter of law because of his negligent conduct in failing to discover earlier the error in his account and giving notice thereof. The case cited are EnglandNational Bank v. United States (C.C.A.), 282 F., 121, and Leather Mfgr's Bank v. Morgan, 117 U.S. 96;6 S.Ct., 657; 29 L.Ed., 811.

We concede, frankly, that the England case does sustain the proposition of the appellant. With due respect to the Court which decided that case, we do not think the law announced by it is correct, nor that the authorities cited sustain the proposition. It was held, succinctly stated, that the failure of the depositor to make the examination within a reasonable time, or to speedily notify the bank of the fraud committed, "is in law a conclusive admission of the correctness of the account." It must be manifest that the declaration goes too far. If that principle is correct, it would seem impossible to reopen an account stated, even as suggested by appellant's counsel, for mistake or fraud in an equitable action. The case of Leather Mfgr's Bank v. Morgan, supra, discussed later, is referred to as authority for the position taken. We shall demonstrate later, we hope, that that case does not go as far as was held in the England case. The other cases, given as authority, namely, U.S. Bank v. Bankof Georgia, 10 Wheat., 333; 6 L.Ed., 334; Robb v. Vos,155 U.S. 13; 15 S.Ct., 4; 39 L.Ed., 52; First Nat. Bank v.Farrell (C.C.A.), 272 F., 371; 16 A.L.R., 651; andCitizens' Bank v. Hinkle, 126 Ark. 266; 189 S.W. 679, do not support the holding made. It would take too long to discuss these cases fully. In U.S. Bank v. Bank ofGeorgia and Robb v. Vos there was no issue between a bank and its depositor. While in Bank v. Farrell the amount of the judgment in favor of the depositor was reduced, the depositor's rights were sustained generally. In Bank v.Hinkle the verdicts in favor of the depositors were affirmed. In this case, the Supreme Court of Arkansas made a ruling, which we think is applicable here, and with which we agree:

"A bank depositor has the right to suppose that his account is being correctly kept, and, while bound to examine his passbook and to make complaint if it furnishes notice that improper charges have been made against the account, is under no duty to act until such notice." (Syllabus.)

From the Morgan case, the appellant cites this language, which seems favorable to its contention:

"In their relations with depositors, banks are held, as they ought to be, to rigid responsibility. But the principles governing those relations ought not to be so extended as to invite or encourage such negligence by depositors in the examination of their bank accounts, as is inconsistent with the relations of the parties or with those established rules and usages, sanctioned by business men of ordinary prudence and sagacity, which are or ought to be known to depositors."

We think the appellant has misapprehended, however, the full effect of the decision in the Morgan case, and has overlooked some expressions in the opinion very much applicable to the case at bar. We quote further from the same authority:

"While it is true that the relation of a bank and its depositor is one simply of debtor and creditor (Phoenix Bankv. Risley, 111 U.S. 125, 127 [4 S.Ct., 322]; Bk.,28 L.Ed., 374, 375), and that the depositor is not chargeable with any payments except such as are made in conformity with his orders, it is within common knowledge that the object of apassbook is to inform the depositor from time to time ofthe condition of his account as it appears upon the books ofthe bank. It not only enables him to discover errors to hisprejudice, but supplies evidence in his favor in the eventof litigation or dispute with the bank. In this way it operatesto protect him against the carelessness of fraud of the bank. The sending of his passbook to be written up and returned with the vouchers is, therefore, in effect, a demand to know what the bank claims to be the state of his account. And the return of the book, with the vouchers, is the answer to that demand, and in effect imports a request by the bank that the depositor will, in proper time, examine the account so rendered, and either sanction or repudiate it." (Italics ours.)

And to show that there are instances, under the law, where a bank is liable to a depositor for its negligence to his detriment, even if the depositor is also negligent as to examination of his accounts, we point to this excerpt:

"Of course, if the defendant's officers [referring to the bank], before paying the altered checks, could by proper care and skill have detected the forgeries, then it cannot receive a credit for the amount of those checks, even if the depositor omitted all examination of his account."

Again it was stated:

``We must not be understood as holding that the examinationby the depositor, of his account, must be so close andthorough as to exclude the possibility of any error whateverbeing overlooked by him. * * * While no rule can belaid down that will cover every transaction between a bankand its depositor, it is sufficient to say that the latter's dutyis discharged when he exercises such diligence as is requiredby the circumstances of the particular case, including therelations of the parties, and the established or known usagesof banking business." (Italics added.)

While there may have been some evidence in this case to show negligence on the part of the plaintiff in the matter of examination of the statements furnished to him by the Citizens' Bank, or by the defendant, it cannot be held that all the evidence indicated without dispute that the plaintiff was negligent.

The statements furnished monthly may not have shown the deposit of $3,000. The modern bank statement, made on a machine, with its stars, dots, dashes. "O. D's," perforations, and its red, blue, and black ink, and with figures often running over each other, are difficult papers for many people to comprehend. But the old-time passbook is easy for those with but limited education to understand. The plaintiff had a book of that kind in his possession, given to him by the Citizens' Bank, and therein was proper entry of the deposit in question. It stands out boldly as evidence to show that the bank received plaintiff's money. Why should plaintiff, ordinarily, except when he found that his former trust had been misplaced, go into an examination of the monthly statements to see if his deposit had been entered thereon, when the passbook gave "conclusive" evidence ofthe entry?

The third question seems to be easily disposed of. If the plaintiff lost his $3,000 deposit, as alleged, some one, somewhere, and some time must have received the benefit thereof. If all the assets of the Citizens' Bank were delivered to the defendant — and that is conceded by defendant — the plaintiff's money, or whatever stood for his money, went into the defendant hands. If the plaintiff cannot recover of the defendant, it seems plain that he has lost his $3,000, and the defendant is enriched to that extent. In any event, it was a matter for the jury to determine on the evidence before it if the defendant was enriched at the expense of the plaintiff.

As to question four. In the recent case of Kirton v.Howard, 137 S.C. 11; 134 S.E., 859, this Court approved the three things stated to be necessary to entitle one to take advantage of the plea of purchaser for value without notice, as laid down in Black v. Childs, 14 S.C. 312, and other cases which approve the statement there made. In the Kirton case, the Court approved this language:

"One cannot successfully interpose this defense [plea ofbona fide purchaser] where the circumstances are sufficient to put one upon inquiry, or where one might by due diligence have ascertained the facts. One is charged with notice of every fact which such inquiry and such diligence will certainly disclose."

As we see it, the defendant, without requiring aid of the plaintiff, furnished sufficient evidence to demand that the jury settle the question. Mr. Winn, a witness for the defendant, who was formerly cashier of the Citizens' Bank, and after the transfer to the defendant became manager of its branch at Timmonsville, very frankly testified to the following facts: That he made up a schedule of the assets and liabilities of the selling bank when the transfer was made; this showed that the plaintiff was a depositor, and that his balance at the time of transfer was $5,667.45; that several months before the transfer, he found a shortage in the funds of the bank of $132,000; that several audits of the institution were made, and there was no reduction in the shortage; that soon after he went to work in the bank he found that the books were not dependable, and there were a great many irregularities; that the individual ledger did not correspond with the general ledger; that the loans and discounts were out of balance. When asked if he "fully acquainted Mr. Brand (president of defendant bank) with the condition of things you found there?" he replied, "No, I didn't; I think the president (the president of the selling bank) manipulated things there." He also testified that he told Mr. Brand that he had found "these books all mussed up," and that he had been trying to get them straightened out. Further, he stated, when asked if Mr. Brand knew of the errors in the old bank, "we knew that errors had been found, but we were under the impression that they had sifted down to $132,000."

The president of the defendant bank, Mr. Brand, was equally frank in his testimony. He testified that several audits disclosed that there was a shortage in the Citizens' Bank of around $132,000, and that he was aware of this shortage when his bank entered into the contract with the selling bank; that the negotiations as to the sale covered a month or more; that he knew probably six months before the transfer that the selling bank "was in deep water"; that he had auditors of the Federal Reserve Bank to make an audit of the Citizens' Bank; that the shortage had wiped out the capital and surplus of that bank; that he demanded a schedule because he had heard of so many errors; that in addition to taking over all the assets of the Citizens' Bank, he required "a protective fund" of $75,000, and the Citizens' Bank was left nothing with which to pay any debts.

When the cashier of the selling bank, who thereafter became manager of the purchasing bank, and also the president of the latter had knowledge that somebody had abstracted from the funds of the old bank a sum around $132,000, when the capital stock of the bank was only $75,000, they must have been aware that at least $57,000 had been taken from money belonging to the depositors. As experienced bankers, they must have known, also, that in all likelihood the person who was responsible for the abstractions had probably made false entries, or omitted to make proper entries of deposits made by the depositors. They must have known, too, when the individual ledger of the depositors did not correspond with the general ledger of the bank, that there were likely errors in the accounts of the depositors. The information received by these gentlemen, acting for the corporation they represented, was imputable to the corporation itself. Through them, the defendant was "charged with notice of every fact which (such) inquiry or due diligence" would have certainly disclosed.

We next turn to the fifth question. The record shows that when the stockholders of the Citizens' Bank agreed, in proper meeting, to sell and transfer all of its assets, real and personal, to the defendant, and when they agreed to turn over to the defendant, in addition thereto, the sum of $75,000, in cash or in notes acceptable to the defendant, these things were to be done "in consideration of the assumption by second party (the defendant) of the liability of first party (the Citizens' Bank) to its depositors and the holders of its bills payable." (See contract.) It must be clear, as is held by Mr. Justice Cothran, that the words inserted in the contract by the officers of the two banks, attempting to limit the liability of the defendant to only certain obligations of the Citizens' Bank set out on a schedule attached to the contract, were void, as they were in absolute conflict with the directions given by the stockholders of the selling bank to its officers.

In connection with the question under consideration, the appellant has cited us to the case of Brown v. AmericanRailway Express Co., 128 S.C. 428; 123 S.E., 97, and we presume that it was that case to which Judge Rice referred in his remarks on appellant's motion for a directed verdict. The appellant seems to depend mainly upon the decision mentioned for reversal of the judgment below, and it calls our special attention to this language in the opinion there:

"In the absence of statute, in order to render a purchasing company liable for the debts of the selling corporation, it must appear: (a) That there was an agreement to assume such debts; (b) the circumstances surrounding the transaction must warrant a finding that there was a consolidation of the two corporations; (c) or that the purchasing corporation was a mere continuation of the selling corporation; or (d) that the transfer was pretensive of the transaction fraudulent in fact."

There was involved in the Brown case the liability of a purchasing corporation for the debts of a selling corporation, when the purchaser had bought all the assets of the seller, and where there was no express agreement that the purchaser would be responsible for the payment of such debts. In the case, it was sought to hold the American Railway Express Company, purchaser of the assets of Southern Express Company, for a demand against the last-named corporation. The plaintiff had a directed verdict against the American Railway Express Company, the defendant. It appears that the Circuit Judge "held substantially that because the defendant has acquired and taken over the business of the Southern Express Company, it should be held liable as a matter of law for the delicts and debts of its predecessor on grounds of public policy." The defendant offered evidence tending to establish "that it did not acquire all of the property of the Southern Express Company and did not assume the payment of the outstanding debts and liabilities of that company; that the Southern Express Company thereafter continued its corporate existence, with a president, treasurer, claim, department, board of directors, etc.; and that at the time of the trial of this cause owned real estate, stocks, and bonds, not included in the property transferred to the American Railway Express Company."

In the opinion in the Brown case, that case was distinguished from the case of Brabham v. Southern ExpressCo. et al., 124 S.C. 157; 117 S.E., 368. In the Brabhamcase, the American Railway Express Company, one of the defendants, was held liable for a claim against Southern Express Company. The distinction made by Mr. Justice Marion, who wrote the opinion in the Brown case, was due to the fact that the evidence in the Brabham case "was susceptible of no other reasonable inference than that the Southern Express Company had gone out of existence, leaving no one to be sued by its creditors and no property to satisfy its debts; that it had become consolidated with or merged in the American Railway Express Company; and that liability for the payment of claims outstanding against it had been expressly or impliedly assumed by the American Railway Express Company."

In the Brown case, there was a reversal because the evidence was susceptible of at least one other inference in addition to the inference the presiding Judge drew from that evidence.

While the Brown case has not been distinctly overruled, the decision in Terry Packing Company v. Southern ExpressCo. et al., 140 S.E., — , filed on June 21, 1927, may have modified, to some extent, the holdings in the Browncase. It does not seem necessary to go into all these matters in order to decided the case at bar. It is our opinion, however, that the Brown case is not controlling of the issue made by the appellant.

There was in the Brown case no evidence to show that the purchasing corporation had expressly agreed to assume payment of the debts of the selling corporation. In the case at bar, construing the contract between the selling bank and the purchasing bank without the limitation placed therein at the instance of the Federal Reserve Bank, there was an express agreement that the purchasing bank would pay off the depositors of the selling bank.

But if it should be considered that there was no express agreement on the part of the defendant to pay all the deposit accounts of the Citizens' Bank, and that in order to hold the defendant for the claim of the plaintiff it would have to be upon the theory of an implied agreement on the part of the defendant to pay those deposits, we think the evidence was sufficient to require that that particular issue be submitted to the jury.

Some facts adduced in the evidence from plaintiff's standpoint were these: The Citizens' Bank ceased to function on October 3, 1922, when the sale was made; it did no business thereafter; the defendant took over all the assets of the old bank, leaving it nothing whatever; defendant occupied as a banking house the building so used by the selling bank; it was paying the depositors and creditors; the old bank "surrendered its charter," as testified to by plaintiff (this seemed disputed, though); the defendant paid nothing on account of its purchase. One of defendant's witnesses (Manager Winn) swore that the defendant "took over the affairs of the Citizens' Bank." Mr. Brand, president of defendant, testified that the bank "took over all the assets, real and personal, of the Citizens' Bank," and that the latter institution "had nothing else out of which to pay any debts whatever." The stockholders of the old bank put up $75,000, evidently for the protection of their depositors.

The situation is entirely different to that appearing in theBrown case. The facts here are stronger against the purchasing corporation than they were in the Brown case. Even in that case, this Court held that the Circuit Judge was right in not directing a verdict for the Express Company, and sent the case back for jury trial. The concluding words of the opinion of Mr. Justice Marion are singularly applicable here:

"The exceptions directed to the contention that the trial Court erred in refusing to direct a verdict for the defendant are overruled. It cannot be held that the evidence adduced by plaintiff was not susceptible of inferences of fact which would support a conclusion, under the foregoing views of the principles governing liability, that the defendant was legally liable for the payment of the plaintiff's claim in the case at bar."

It is interesting to note that in the recent case of AmericanRailway Express Company v. Commonwealth of Kentucky, decided by the Supreme Court of the United States on February 21, 1927, 47 S.Ct., 353, what that Court had to say and did regarding the liability of American Railway Express Company for debts of Adams Express Company, the assets of which had been taken over by the former named company. In that case, the Kentucky Supreme Court held the American Company for the debts of the Adams Company. The Supreme Court of the United States refused to interfere with that decision and held, in substance, that the State of Kentucky had the right to enact through its legislative department a statute requiring a purchasing corporation to take care of the debts of the selling corporation. and, in the absence of legislative enactment, that the Courts of Kentucky could put in force a rule to the same effect, which would be just as valid as a statute would have been.

Even if the Brown case is to stand — and we are not called upon here to affirm, overrule, or modify it — we cannot see how it is to avail the appellant.

It is true that there seems to be no statute in this State which directly regulates the transfer and sale of all the assets of one banking institution to another. Even if corporations of other classes should be permitted to sell all their assets to another corporation and evade their liabilities to creditors, banks should not be permitted to do so. In the absence of legislation to direct this Court, we are clearly of the opinion that no banking corporation should be permitted to sell all its assets to another banking institution, or to any person, firm, or corporation for that matter, and discontinue its operation, without making provision for the payment of the depositors of the selling corporation, unless the depositors agree to such sale. In a transaction of that kind, the purchaser should be held, even if there is no contract to that effect, to have assumed the liability of paying depositors. We agree with Judge Rice, who tried this case, that if a bank be permitted to evade its full responsibility to its depositors, such course would be against public policy and in conflict with our sense of justice. Banks, as conducted now, are almost quasi public institutions. They are of the very heart of the business body of the communities in which they operate. The purchaser of the assets of a banking institution knows full well, and should be held to be legally bound by the knowledge, that a bank is daily receiving funds from the people generally, from all who confide and trust in it. The purchaser is and should be aware that these depositors are entitled to demand their money at almost any time; and that the money intrusted to the bank for safe keeping is, oftentimes, funds which have been likewise entrusted to trustees, guardians, and others of a fiduciary character, and that very often the money belongs to widows and orphans.

The appellant argues that the holding of Judge Rice, with which we have agreed, will prevent banks that are financially strong from taking over the assets of other banks facing failure, and the result will be against the interest of creditors and depositors of such selling banks under such circumstances. We do not agree with the appellant's apprehensions. A strong bank desirous of purchasing the assets of a weak institution looks, of course, to the advantages accruing to it by securing the business of the customers of the selling bank. There may be, and most likely are, methods by which the purchaser may properly protect itself. There is an old maxim of the law, "Caveat emptor, qui ignorare non debuitquod jus alienum emit." (Let a purchaser beware, who ought not to be ignorant that he is purchasing the rights of another.) We cannot imagine a case where this principle is more applicable than in an instance where one bank purchases the assets of another bank, for who more than a banker should know and appreciate the duties, trusts, liabilities, and responsibilities of a bank to its customers?

As to the last question — the surprise given the defendant by the rulings of the presiding Judge. Should he have granted a new trial for that reason? This, of course, was largely within the discretion of the Court. Unless there was a clear abuse of that discretion, this Court should not and will not interfere therein. The appellant was fully advised of the views of the presiding Judge when he refused the motion for a directed verdict. If the appellant was surprised, the surprise came at that time, and then was the time for the appellant to have made known its surprise and to make its request for further time to investigate the plaintiff's deposit account, if the appellant desired to do so. If the Circuit Judge considered the request proper, he could have granted it, even if it became necessary to order a withdrawal of the case from the jury. The appellant waited too long, it seems to us; it did not make its request until the adverse verdict had been rendered. This Court has not favored the practice of a litigant waiting until he has lost his case to raise questions which he could and should have raised before the unfavorable verdict was announced.

But the appellant should have been prepared to disprove the allegation of the plaintiff that he had made the deposit, if the appellant had such proof at hand, or could have obtained it. The whole theory of plaintiff's case was based on the allegation that he had made the deposit. Really, all through the trial, as the record here shows, the appellant never seemed to question the fact that the deposit had been made, and that the plaintiff had not received proper credit therefor on the books of the Citizens' Bank.

It is an elementary legal proposition now in this State that if a complaint in an action at law states a legal cause of action, and the plaintiff submits any evidence tending to establish the material allegations of his complaint, as a matter of law, it is the duty of the trial Judge to submit the case to the jury for its determination. The trial Judge in this case ruled correctly on all legal propositions submitted to him, which have been questioned by the appellant. There was sufficient evidence on every disputed issue between the parties to require that the case be submitted to the jury. The jury having found in favor of the plaintiff, the granting of a new trial on the grounds urged by the appellant was almost entirely within the discretion of the trial Judge. A close and careful examination of the record in this case discloses that the parties were given a fair and impartial trial.

This opinion was prepared as a dissent from the opinion of Mr. Justice Cothran; a majority of the Court having concurred therein, it hereby becomes the opinion of the Court, and it is, therefore, the judgment of this Court that the judgment below be and the same is hereby affirmed.

MR. CHIEF JUSTICE WATTS and MR. JUSTICE STABLER and MR. ACTING ASSOCIATE JUSTICE RAMAGE concur.