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HUMPHREYS v. SMITH. (Supreme Court of Georgia. June 15, 1907.)

1. WRIT OF ERROR-RECORD-PROCEEDINGS ON MOTION FOR NEW TRIAL.

The record contained an original motion for new trial, based upon the general grounds only, and also two amendments to the motion for new trial, containing various special grounds. It does not appear that an order was taken at or before the hearing approving the special grounds, but it does appear that a number of the special grounds are set forth in detail in the bill of exceptions, which contain an aver ment that "the recitals of fact contained in the motion for new trial are true and correct." Held, that such of the grounds as are set forth in the bill of exceptions are sufficiently verified to be considered by this court. Starling v. Thorne, 13 S. E. 552, 87 Ga. 513.

2. TRIAL-INSTRUCTIONS SUBMISSION OF MATTER NOT WITHIN ISSUES.

The case involves simply the question as to whether the claimant was entitled to the specific performance of an alleged parol agreement for the sale of land between himself and the plaintiff's intestate; the plaintiff being an administrator who was seeking to sell the land in dispute. The pleadings and evidence were not of such character as to raise an issue of fraud. The instructions of the judge with reference to fraud, being wholly foreign to the issue, were calculated to mislead the jury, and a new trial should have been granted on account of the error committed in giving such instructions.

[Ed. Note. For cases in point, see Cent. Dig. vol. 46, Trial, §§ 587-589, 591.]

(Syllabus by the Court.)

Error from Superior Court, Lowndes County; R. G. Mitchell, Judge.

Action between F. M. Humphreys and 0. M. Smith, administrator. From the judgment, Humphreys brings error. Reversed.

F. M. Humphreys and C. S. Morgan, for plaintiff in error. O. M. Smith, for defendant in error.

ATKINSON, J. Judgment reversed. All the Justices concur.

GLENN v. ZENOVITCH. (Supreme Court of Georgia. July 10, 1907.) 1. BILLS AND NOTES-ACTION ON NOTE-EVIDENCE-SUFFICIENCY.

The verdict was without evidence to support it, and the court erred in overruling a motion for new trial based upon the general grounds.

2. DEPOSITIONS INTERROGATORIES - AGREEMENT OF COUNSEL-COMPLIANCE.

Where counsel for both parties agreed, in regard to the execution and return of certain interrogatories, that "any disinterested party may act as sole commissioner in the execution and return of the above interrogatories, but the answers must be written by the witness personally," compliance with this stipulation was sufficiently shown when it was made to appear that the witness to whom the interrogatories were to be propounded dictated his answer to another person who wrote them out on a typewriter, and that the answers were read over to the witness, who then, having previously been duly sworn, signed the same.

3. BILLS AND NOTES-VALIDITY-CONSIDERATION-SETTLEMENT OF SUIT.

Where a note is given in settlement of a suit pending in court against the maker of the note, said party is bound thereby; and this is true whether the suit itself was instituted upon a just and valid claim or not.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 7, Bills and Notes, § 203.]

4. SAME-ACTION ON NOTE-EVIDENCE-SUF

FICIENCY.

No error appears to have been committed by the trial judge, except as indicated in the first headnote.

(Syllabus by the Court.)

Error from Superior Court, Cobb County; Geo. F. Gober, Judge.

Action by L. G. Zenovitch against N. A. Glenn. Judgment for plaintiff, and defendant brings error. Reversed.

Zenovitch brought suit against Mrs. Glenn on a promissory note, dated October 21, 1902, for the principal sum of $300. The defendant filed a plea and several amendments, in which she alleged that said note had been obtained by fraud of plaintiff, and, "if signed by her, is totally without consideration." She further alleged, and set up in her testimony, that plaintiff is indebted to her upon two promissory notes, dated February 20, 1903, and February 21, 1903, for the principal sum of $259 and $150, respectively; and she prayed judgment on said notes against the plaintiff. The plaintiff testified that he had had dealings with the defendant prior to October 21, 1902, and that she had become indebted to him up to that time in the sum of $1,673 on a note and $200 for money loaned; that he commenced legal proceedings upon said indebtedness against her, and on October 21, 1902, they agreed upon a settlement whereby she paid him $500 in cash and gave her note for $300, which note is the subject of this suit. The only portion of plaintiff's testimony which can be construed as a denial of the notes set up by the defendant in her cross-petition is the following: "The only cash I received besides the $500 was the sum of $15 paid by her, for which I gave a note for $15. I have never received since October 21, 1902, any money or other thing of value from Mrs. Glenn in settlement of this note [the note here sued on] or for any other purpose—that is, in satisfaction of any existing debt, as a gift or as a loan-except the $15 hereinbefore mentioned, that she paid me in Tacoma in 1903." The evidence upon the other material issues was conflicting. The jury returned a verdict in favor of the plaintiff for the sum of $300, with interest. The defendant's motion for new trial was overruled, and she excepted.

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F. Roland Alston, for plaintiff in error. Moore & Pomeroy, for defendant in error.

BECK, J. (after stating the foregoing facts). 1. The plaintiff filed no responsive pleading to the counterclaim set up by the defendant

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At that time I loaned him $259. This note [identifying note, dated February 21, 1903, for $150] is for money that I gave him. That is his signature. The paper is in his handwriting." It is argued in the brief of counsel for plaintiff below, defendant in error here, that "plaintiff had no knowledge of them [the notes set up by the defendant] until the plea was filed on the day of the trial; and, as his interrogatories had been taken several days before and were then in court, he had no notice of this defense, and consequently did not deny these notes specifically, but his evidence leaves no doubt that said notes were never signed by him." Under these circumstances, it would have been perfectly competent for the plaintiff to move for a continuance of the case on the ground of surprise, in order to prepare to meet the issue thus raised; but this he failed to do, relying upon his other testimony to rebut the presumption in favor of the notes (the execution of which was nowhere denied) and the direct testimony of the defendant in support of the same. It is true the plaintiff testified that he had received no "money or other thing of value" from the defendant, “as a gift or as a loan," since October 21, 1902; but this entire statement is qualified by the words, "in satisfaction of any existing debt." This averment, therefore, is altogether too loose and general to support a plea of want or failure of consideration of the notes held by the defendant, the alleged consideration of which was money loaned, not "in satisfaction of any existing debt," but as an independent transaction whereby plaintiff became indebted to the defendant. It follows from what has been said that the verdict in favor of the plaintiff, for the full amount of the note sued on by him, was without evidence to support it, and the court erred in overruling defendant's motion for a new trial based on that ground.

2. The movant complains in one of the grounds of the motion for a new trial that the court erred in admitting in evidence the interrogatories of Zenovitch; the ground of the objection being that "they were not executed in accordance with the agreement between counsel as to the manner of execution, in that the answers were not written by the witness and were not in the handwriting of the witness as provided by said agreement." The agreement above referred to was as follows: "It is agreed that any disinterested party may act as sole commissioner in the execution and return of the above interrogatories. But the answers must be written by

the witness personally and certified to by a notary public." The notary public, who acted as commissioner to execute the interrogatories, certified the same as follows: "This is to certify: That L. G. Zenovitch presented to me, William Thompson, notary public in and for the state of Washington, duly commissioned and sworn, the attached interrogatories together with the exhibits thereto attached, and that, before answering said interrogatories, I propounded an oath to the said L. G. Zenovitch, which oath he took, and said that in his said answers to his said interrogatories he would tell the truth, the whole truth, and nothing but the truth. That the answers to each and every one of said interrogatories were given in my presence, and were dictated to a stenographer upon a typewriter directly, and that the same were carefully read over to him after being written and answered, and are verified by him as being the true and correct answers as [he] dictated them. That he did not write out the answers to the interrogatories in longhand himself, for the reason that he is a slow writer, and it is only with the greatest difficulty that he can write on account of poor health and a stiff wrist. That he signed his name after the same had been carefully read over by him, and that he has taken oath before me that the answers have been correctly transcribed according as he dictated them in person." And the following affidavit of said Zenovitch is attached to the answers to the interrogatories: "That he either wrote or dictated the foregoing answers to the interrogatories. That he has carefully read the same over and the interrogatories. That he knows the contents of all of said answers, and that the same constitute his answers as dictated by him, and the same are true." It has been held by this court, and we do not desire to be understood as laying down any rule in conflict therewith, that, "to render the evidence of a witness taken by written interrogatories admissible in the first instance, the statute requires that two commissioners shall act in taking the depositions of the witness; and, if for any reason the parties waive this provision of the statute and agree that such may be taken by one commissioner, it is a compliance with the terms of the agreement which makes the execution legal, and authorizes the admission of the evidence so taken. It follows that, to bring about this result, the terms of the agreement must be strictly observed." Rooney v. Southern Association, 115 Ga. 400, 41 S. E. 648. In the case just cited the court said: "The terms of the agreement

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neither strictly nor substantially observed." In the case at bar, however, the witness dictated his answers to the interrogatories just as he would have written them. The same were carefully read over to him after being written. He makes oath that they were his

answers as dictated by him, and signs the same with his signature. And we can see no reason for holding that this was not a sufficient compliance with the agreement that "the answers must be written by the witness personally."

3. Where a note is given in settlement of a suit pending in court against the maker of the note, said party is bound thereby; and this is true whether the suit itself was instituted upon a just and valid claim or not. City Electric Ry. Co. v. Floyd County, 115 Ga. 655, 42 S. E. 45.

4. No error appears to have been committed by the trial judge, except as indicated above, and the judgment is reversed alone for the reason stated in the first division of the opinion.

Judgment reversed. All the Justices con

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When money is placed in a bank on general deposit, the title to the money immediately passes to the bank, and the relation of debtor and creditor is created between the bank and the depositor. The moment the deposit is made the credit of the banker is substituted for the money.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Banks and Banking, § 289.]

2. SAME-PAYMENT OF CHECK BY INSOLVENT BANK-LIABILITY OF DEPOSITOR.

If a bank, though insolvent, is still conducting its business and pays a check of a depositor in the usual course of business, and the depositor has no notice of the insolvency of the bank, the payment is good, and the depositor will be protected. If, however, the depositor is paid, not in the usual course of business, but at a time when he has notice or knowledge that the bank is insolvent, and that the intent of the bank is to create a preference in his favor over other creditors, the payment is not good, and such depositor is liable to repay to the bank. or its representative, such an amount as would be the difference between the amount received by him and his pro rata share of the assets of the bank upon a final winding up of its affairs. [Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Banks and Banking, § 156.] 3. TRIAL-INSTRUCTIONS MATTER NOT WITHIN THE ISSUES.

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SUBMISSION OF

There was no evidence authorizing the judge to charge the jury on the law of special deposits; and the instruction on this subject was, under the facts of the case, an error of such a grave nature as to require a reversal of the judg

ment.

(Syllabus by the Court.)

Error from Superior Court, Warren County; B. T. Rawlings, Judge.

Action by C. E. McGregor, receiver, against B. L. Battle. Judgment for defendant, and plaintiff brings error. Reversed.

McGregor, as receiver of the Bank of Warrenton, brought suit against Battle, alleging that on February 17, 1902, and prior thereto, and especially on February 14th the

bank was insolvent or in contemplation of insolvency, and while so insolvent the bank, in collusion with the defendant, delivered to him, and he took therefrom, the sum of $7,000 in cash, which amount was received by him under the following circumstances: │On February 11th he became a stockholder in the bank, having purchased 70 shares of its capital stock of the par value of $100, and certificates of stock were duly issued and delivered to him. On February 13th, in collusion with Allen, who was his brother-in-law and president of the bank, defendant delivered to Allen the 70 shares of stock, and Allen directed the cashier to pay to defendant $7,000 of the cash of the bank, or to place the same to the credit of the defendant as a depositor, and on February 14th the defendant, with a full knowledge of the insolvency of the bank, drew said $7,000 in cash therefroin. The purpose of Allen was to give the defendant a preference over the other creditors of the bank; the liabilities of the bańk being at that time $60,000 while its assets did not exceed $10,000. At that time the bank was absolutely insolvent and known to be so by the defendant. Some of the depositors made inquiries with a view to withdrawing their deposits, when the defendant, in collusion with Allen, made a public display of the $7,000 for the purpose of deceiving them, and they, being so deceived, allowed their de posits to remain in the bank. The assets in the hands of the plaintiff, as receiver, are not sufficient to satisfy all of the liabilities of the bank, and it is therefore necessary to recover from the defendant the amount he fraudulently received. It is charged that the payment to Battle by the bank was for the purpose of giving Battle a preference over the other creditors of the bank, and was done with the intent to delay, hinder, and defraud such other creditors, and that this intent was known to Battle. The prayer was that Battle be required to receive the certificates of stock, and that plaintiff have a judgment for the sum of $7,000, with interest from February 14, 1902. The defendant filed an answer, alleging as follows: He was never a stockholder in the bank. He had no knowledge whatever, until within a few days before its failure, that it was insolvent or in an embarrassed condition. A week or 10 days before the failure, at the solicitation of the cashier, who assured him that the bank was solvent and its stock was a good investment, he agreed to make some investigation as to the bank's affairs with a view to taking stock therein, and, making a casual investigation, he ascertained that three named parties owed the bank large sums, but there was other large indebtedness to the bank that he did not know of. In ignorance of the indebtedness, other than that of the three persons above referred to, he agreed to take $15,000 of stock in the event that one of such persons paid the entire indebtedness and the others

reduced theirs to a safe amount. These negotiations began about February 1st; and on February 10th he agreed to take the stock on the conditions referred to. He made arrangements by which he obtained the money, and on February 12th deposited in the bank $7,000 which he expected to use to pay for the stock. On February 14th he happened to be in the bank, when the cashier, who had been very officious in endeavoring to induce him to take the stock, without any request from him, handed him through the window a paper, which, to his surprise, he discovered was a certificate for $7,000 of stock. He then stated to the cashier that he was not to take any of the stock except upon certain conditions, and asked the cashier where was Mr. Allen, the president. On being informed that Mr. Allen was in his office in the rear of the bank, he immediately took the certificate to Allen, and asked him if the conditions on which he was to take the stock had been complied with. On being informed that they had not, defendant at once told Allen that he could not take the stock until these conditions had been complied with, and left the certificate of stock with Allen. It was immediately after this that the defendant drew out his money which was on deposit in the bank. It was not placed there in payment for stock, and was not passed to the stock account with the defendant's knowledge and consent. Allen agreed to release the defendant from his contract for the stock,

and, in pursuance of this agreement, paid him the money which he had deposited. The trial resulted in a verdict for the defendant; and the plaintiff made a motion for a new trial, which being overruled he excepted.

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COBB, P. J. (after stating the facts). 1. The liability of the defendant to the plaintiff depends upon the character of the deposit made by him when the $7,000 were turned over to the bank. If it was a special deposit for a particular purpose—that is, to be kept by the bank intact to be used to pay for the stock if the conditions upon which he was to purchase were complied with-he would not be liable to the plaintiff for withdrawing the deposit at the time that he did. If the money was deposited with the bank for safekeeping only, there to remain intact until called for, the defendant would have the right to call for the same at any time, and have delivered to him the parcel containing his money, without reference to the financial condition of the bank at the time that the demand for the special deposit was made upon it. In either event, no title to the money passed to the bank. Zane on Banks & Banking, § 162 et seq. If the money was placed in the bank on general deposit, the moment the deposit became complete title to the

money passed to the bank, and the relation of debtor and creditor was created between the parties. "The moment the deposit was made the credit of the banker was substituted for the money." Ricks v. Broyles, 78 Ga. 614, 3 S. E. 773, 6 Am. St. Rep. 280; Schofield Mfg. Co. v. Cochran, 119 Ga. 901. 47 S. E. 208. The defendant admits in his answer and in his evidence that he deposited the money in the bank. The question, therefore, is whether it was general deposit or a special deposit. The money was turned over to the officers of the bank. There was no request that the deposit should be kept separate from the other funds of the bank. It was entered upon the books as a general deposit. A certificate of deposit was issued to the defendant, which, so far as the evidence discloses, had none of the indicia of a special deposit. When the defendant sought to withdraw his money, he signed a check upon the bank-the usual manner in which general deposits are withdrawn. The transaction had all of the characteristics of a general deposit, and was entirely lacking in any of the essential elements of a special deposit. It is true that on the day following the making of the deposit, when the check drawn by the defendant was paid, he received in payment of his check a part of the identical money that he had deposited the day before, but he received other money from the bank also; the amount of money put in by him not being on that day sufficient to disWhat he received charge his check in full.

on the day following his deposit was the money of the bank. It was true that it was his money at one time on the preceding day, but, as a legal consequence resulting from the deposit in the manner in which it was made, title to the money vested in the bank; and, when he drew his check as a general depositor, while he received back some of the very money which he had himself deposited, he did not receive it as his own money, but as the money of the bank. Some of this money, although the identical money that he had deposited on the day before, was as much the property of the bank as the remainder of the amount paid to him which came from other funds of the bank. There are respectable authorities holding that if a bank receives a general deposit at a time when it is insolvent, and its insolvency is known to the officers of the bank, but unknown to the depositor, the depositor may reclaim his deposit; no title to the money passing on account of the fraud perpetrated upon him. In some cases this doctrine seems to have been recognized in the general terms above stated. In others it has been limited to those cases where the money of the depositor could be identified and separated from the general funds of the bank. In other cases it has been held that the doctrine does not apply if the money of the depositor has become mingled with the general funds of the bank. 5 Cyc. 565; 2 Morse on Banks

(4th Ed.) § 629; Boone on Banks, § 295; Magee on Banks, § 333; Zane on Banks, § 344; 3 Am. & Eng. Enc. Law (2d Ed.) 847. The Code declares that if an insolvent bank or banker, with knowledge of such insolvency, shall receive money on general deposit, and fail to pay the depositor within three days after demand, such banker or officer in charge of the bank receiving the deposit shall be guilty of a felony. Civ. Code 1895, § 1982; Pen. Code 1895, § 207. The primary purpose of this provision is to punish the officers of a bank who receive on deposit money of others, knowing that the bank is in a condition where it cannot repay the same. It is contended that this is a recognition, by the General Assembly, of the fact that the receiving of the deposit under such circumstances is a fraud on the depositor who is ignorant of the condition of the bank, and therefore is in effect a recognition of the principle above alluded to, which authorizes a depositor to reclaim his deposit. It is to be noted, however, that the banker or officer of an incorporated bank may prevent a prosecution by repayment of the deposit within three days after demand. In the case of a private banker he may repay the same from any assets owned by him independently of those embarked in his banking business, or assets thus embarked so long as he is in a position where he can legally control the disbursement of such assets; but in the case of an officer of an incorporated bank, in order to prevent a prosecution, he must refund to the depositor the amount of his deposit out of his own assets, for the penalty of the law is placed upon him as an individual, and he has no authority, by virtue of his office in the bank, to use the assets of the bank for the purpose, unless it is done by the authority of those in control of the bank, and under the circumstances it is lawful for the bank to make such a disposition of its assets. The Code also declares that all conveyances, assignments, transfers of stock, or other contracts made by the bank in contemplation of insolvency, or after insolvency, except for the benefit of all creditors and stockholders, shall be fraudulent and void unless made to an innocent purchaser for value, without notice or knowledge of the condition of the bank, and the officers making or consenting to such conveyance or contract shall be punished as for a felony. Civ. Code 1895, § 1979; Pen. Code 1895, § 208. The purpose of this provision is to prevent the bank from preferring one of its creditors when the fact of insolvency is known to the creditor. A depositor by general deposit is a mere creditor, and if the bank makes to the depositor a conveyance, or assignment, or transfer of stock, or other contract the legal effect of which is to give to such depositor a preference over the other creditors, the transaction is void, and the officer conducting the same a felon. It is a well-settled principle that,

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if one obtains the goods of another under a contract of sale as the result of a fraudulent misrepresentation as to his solvency, the seller, upon discovering the fraud, may rescind the sale and reclaim the goods in the event they are still in the possession of the buyer, and the rights of innocent parties are not affected by such reclamation. It may be therefore that where, by the fraudulent representation of the officer of a bank as to its solvency, one is induced to make a general deposit of his money, the depositor may, after the discovery of the fraud that has been perpetrated upon him, recover the money that he has deposited, provided the same can be identified and the actual money received by the bank returned to him; but, where one intending to become a depositor in a bank makes no inquiry as to its solvency, and is not induced to make the deposit as the result of any statement made by the officers of the bank, such depositor is in no better position than any other person who deals with an insolvent under the impres sion that he is solvent. One who sells goods to an insolvent, such sale not being brought about by any fraudulent misrepresentation, cannot. after the goods have been delivered, reclaim the same upon the ground that he has since discovered that his buyer is insolvent, even though the fact of insolvency were well known to every other person than the seller himself. Upon the same principle we think that where one deals with a bank upon the assumption that it is solvent, and intrusts his money to it as a general depositor, he has no superior claim over other creditors growing out of the fact that he was ignorant of the insolvency at the time of the deposit; there being no other fact amounting to an inducement to make the deposit other than the bank holding itself out to the world as a bank of deposit. We do not think that the mere silence of the officers of the bank as to its condition at the time of the deposit is sufficient either to authorize a depositor to reclaim his money on account of a fraud, or to give him any superior lien over other creditors in the distribution of the assets of the bank. As stated above, however, we are aware that there are respectable authorities which go to this extent.

2. If a bank is insolvent, but is still conducting its business, and pays the check of a depositor in the usual course of business, and the depositor has no notice of the insolvency, the payment is good, and the depositor is protected notwithstanding the bank is actually insolvent. In Hill v. W. & A. R. Co., 86 Ga. 284, 12 S. E. 635, it was held that a depositor who draws his check on a bank and receives effects therefrom, without notice of, or reason to suspect, its insolvency, will be treated as a bona fide purchaser under the act above referred to. See, also, Dutcher v. Importers' Bank, 59 N. Y. 5. There is no ruling in the case in 86 Ga. 284. 12 S. E. 635, as to what would be the effect

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