#### COMMISSIONER OF BANKS, on Relation of the FARMERS BANK AND TRUST COMPANY of FOREST CITY, v. FLORENCE MILLS, Incorporated.

(Filed 6 April, 1932.)

1. Banlcs and Banking H e — Exclusion of testimony in this case with respect to consideration for pledging of assets of bank held error.

Where in an action by the receiver of a bank to recover assets of the bank pledged with a depositor to secure the deposit, the receiver contends that the pledge was without consideration and void, and the depositor contends that the security was given in consideration of future or increased deposits, and the receipt therefor is ambiguous: *Held,,*the exclusion of testimony of the active president of the bank as to a conversation with the active vice-president of the depositor tending to establish that the security was given in consideration of future or increased deposits is error, there being no testimony by other witnesses supplying the excluded testimony.

2. Trial E c — Charge in this case held insufficient to meet requirements of C. S., 564, and a new trial is awarded.

Where the trial court in his charge to the jury explains the law applicable and gives the contention of the parties, but fails to instruct the jury as to the application of the law to the substantial features of the case, the charge is insufficient to meet the requirements of O. S., 564, and a new trial will be awarded.

3. Banks and Banking H e — Commissioner of banks must sue in his individual name.

An action by the Commissioner of Banks to recover assets of the insolvent bank must be brought in his individual name, but his failure to do so may be cured by amendment.

*510Appeal by defendant from *Sink, J.,*at August Term, 1931, of Ruti-i-ereoed;

New trial.

Tbe plaintiff brought suit to recover certain collateral securities alleged to be tbe assets of tbe Farmers Bank and Trust Company of Forest City, wbicb is now in tbe bands of tbe plaintiff as liquidating agent. Tbe securities consist of two notes and approximately five hundred shares of stock in certain manufacturing companies. Tbe plaintiff alleges in substance that while the bank was insolvent tbe officers of tbe bank fraudulently and without a valuable consideration deposited these securities with tbe defendant for tbe purpose of obtaining tbe defendant’s patronage and deposits. Upon tbe pleadings tbe court formulated tbe issues wbicb were answered as follows:

1. Was tbe Farmers Bank and Trust Company of Forest City, N. C., insolvent on 14 January, 1930, as alleged in tbe complaint? Answer: Yes.

2. Did tbe defendant on 14 January, 1930, obtain tbe securities described in tbe complaint without a valuable consideration, as alleged in tbe complaint? Answer: Yes.

3. Did tbe defendant on 14 January, 1930, unlawfully and fraudulently obtain tbe securities as described in tbe complaint from tbe Farmers Bank and Trust Company of Forest City, N. O., as alleged in tbe complaint? Answer: Yes.

Judgment was rendered for tbe plaintiff and tbe defendant appealed upon assigned error.

*D. Z. Newton and B. T. Jones, Jr., for plaintiff.*

*Quinn, Hamrick & Harris for defendant..*

Adams, J.

In reference to tbe second issue bis Honor stated tbe plaintiff’s chief contention to be that tbe securities in question bad been, turned over to tbe defendant, not to secure future deposits, but to secure such as were in tbe bank at tbe time of tbe transfer, that tbe alleged agreement between tbe parties was not supported by a valuable consideration, and that tbe issue should be answered in tbe affirmative. He stated one of tbe defendant’s contentions to be that a part of tbe consideration was a promise by tbe defendant to give tbe bank tbe benefit of future and additional deposits. Then follows this instruction: “If you shall find that to be a fact, the' court instructs you that it would be your' duty to answer tbe second issue No, because that would be a valuable consideration.”

Throughout tbe trial tbe defendant insisted that tbe defendant’s promise of increased deposits was really tbe controlling factor in tbe agreement and, indeed, tbe principal consideration. To establish its *511contention tbe defendant introduced as a witness tbe active president of tbe bank and offered to sbow by bim tbat be bad a conversation witb tbe active vice-president, and tbat tbe collateral was to- be turned over to tbe defendant for tbe purpose of securing whatever deposits tbe defendant might make in tbe future as well as tbe deposit then in tbe bank. This evidence was excluded.

If tbe instruction given tbe jury on this point was correct, tbe evidence was improperly excluded. Tbe appellee says tbat tbe receipt is tbe best evidence of tbe purpose for which tbe collateral was delivered; but tbe clause “any and all deposits made” is susceptible of more than one interpretation and is therefore subject to explanation. We find nothing in tbe testimony of tbe other witnesses which supplies tbe excluded evidence.

We are of opinion tbat tbe instruction on tbe third issue is not sufficiently definite. Fraud- was thus defined: “As regards fraud, it is not essential tbat false assertions be made in express words, but fraud may be accomplished by encouraging and taking advantage of a delusion known to exist in tbe minds of others. In other words, fraud may be defined as any trick or artifice, whether perpetrated by means of false statements, concealment of material facts, or deceptive conduct, which is intended to and does create in tbe mind of another an erroneous impression concerning tbe subject-matter of a transaction, whereby tbe latter is induced to take action or forbear from action witb reference to bis property or a legal right of bis which results to bis disadvantage and which be would not have consented to bad tbe impression in bis mind been correct and in accordance witb tbe real facts.”

After setting out tbe contentions as to tbe facts tbe charge proceeds: “From all this testimony and under tbe definition of fraud as given to you by tbe court, tbe plaintiff says this transaction was fraudulently entered into, tbat is, tbat it was entered into for tbe purpose of depriving tbe other creditors and stockholders in tbe Farmers Bank and Trust Company of their lawful rights and for tbe purpose of giving unlawful preference to tbe defendant corporation. All of this tbe defendant denies, and contends and insists tbat there was no such intention on their part and tbat they actually did not do anything .unlawful, but on tbe contrary tbat they were in tbe ordinary course of business trying to protect tbe interests of tbe corporation and tbe stockholders of tbe Florence Mills, Incorporated, and tbat all their transactions were bona fide and sincere, and not for tbe purpose of defrauding anybody, on tbe part of anybody, and tbat from all tbe evidence you should fail to find as tbe plaintiff contends by tbe greater weight of tbe evidence and you should answer it, No.”

*512The instruction is subject to the criticism set forth in *Watson v. Tanning Co.,*190 N. C., 840, *Williams v. Coach Co.,*and other cases. The requirements of C. S., 564 are not met by a general statement of legal principles which bear upon the issues remotely but not with absolute directness. The trial court inadvertently disregarded an application of'the law to the substantial features of the case, the instructions on the third issue consisting of a definition of fraud and the contentions of the parties.

It is suggested that the trial of the cause may be simplified by reference to the principles stated on both sides of the question in 51 A. L. R., 296.

*We*have recently held that the Commissioner of Banks must sue in his individual name and that the failure to do so may be cured by amendment.

New trial.