#### STATE v. J. H. HIGHTOWER.

(Filed 27 February, 1924.)

1. Criminal Taw — Banks and Banking — Insolvency—Deposits—Statutes.

In order for a conviction under the provisions of section 85, chapter 4, Public Laws 1921, the State must prove beyond a reasonable doubt the actual receipt of the deposits by defendant officer of the bank at the time when the bank was insolvent to his own knowledge, or that such officer permitted an employee of the bank to receive the deposits with knowledge of these facts.

2. Evidence — Witnesses—Expert Opinion — Cross-Examination.

Where an expert witness has given his testimony upon evidence he obtained as a result of his personal investigation, it is not reversible error to admit his opinion thereon without first requiring him to state the evidence upon which it is hypothecated, under the modern doctrine, for these are matters to be brought out on cross-examination.

3. Same — Opinion Evidence Upon the Issues.

An expert witness may not invade the province of the jury by testifying to his opinion upon an issue of facts to be determined by the jury upon the evidence on the trial.

*3014. Same- — Appeal and Error.

It is reversible error to deny tbe defendant tbe right of cross-examination of an expert witness, whose testimony, in an action for the commission of a felony, has been received against him upon the trial, or to introduce evidence tending to disprove the facts upon which the expert opinions were based.

5. Same — Banks and Banking — Officers—Deposits-—Insolvency.

In an action to convict an officer of a bank for receiving or permitting an employee to receive deposits at a time he knew of the insolvency of a State bank (chapter 4, Public Laws 1921), the testimony of the State Bank Examiner is to be received as that of an expert upon the question of the bank’s insolvency.

6. Same — Knowledge.

In an action to convict under chapter 4, Public Laws 1921, an officer of a bank for receiving, etc., deposits therein at a time he knew of its insolvency, the question as to his knowledge is ordinarily to be determined with reference to a variety of facts and circumstances, and in defense it is permitted him to go into an investigation of the assets and property of the. bank at the date of the deposits, and their value at that time or thereafter, when bearing upon their worth at the time they were charged to have been unlawfully received.

7. Same.

AYhere the defendant is tried as an officer of a bank for unlawfully receiving deposits of the bank, or permitting them to be received, in violation of chapter 4, Public Laws 1921, and the State Bank Examiner and another expert have been permitted to give their testimony as to its insolvency at the time upon their investigation, without stating the basis of their opinions thereon, it may not be decided as a matter of law, upon conflicting evidence, that the defendant must have known of the insolvent condition testified to by the experts.

8. Criminal Law — Evidence — Opinions — Witnesses — Constitutional Law — Trial by Jury — Prejudicial Error.

The right of the defendant in a criminal action to cross-examine expert witnesses who have testified their opinion against him is a material one, guaranteed by our Constitution, Art. I, sec. 17, and a denial thereof may not be held as merely a technicality and harmless; nor is this error cured by the fact that he has had an opportunity to cross-examine one of these witnesses in refutation of the correctness of the facts upon which his conclusion was based, especially when the other witness is to be regarded as the most important one.

9. Criminal Law — Banks and Banking — Solvency—Deposits—Due Course of Business.

The word “insolvent,” in the statute making it a felony for an officer of the bank, etc., to receive deposits therein with knowledge of its insolvency, means when the bank cannot meet its depositary liabilities in due course, and does not require that the condition of the bank should at the time be such as to enable it at any given time to pay all of its depositors in full at the same time on demand. Chapter 4, section 31, Public Laws 1921.

Clarkson, J., dissenting; Clark, C. X, concurring in dissenting opinion.

*302Ajppeal by defendant from Granmer, J., at June Term, 1923, of Wake.

Criminal prosecution, tried upon an indictment charging the defendant and one H. H. Massey, president and cashier, respectively, of the Central Bank and Trust Company, a banking institution located in the city of Raleigh, N. C., with wilfully and feloniously receiving money, checks, drafts or other property as deposits in said Central Bank and Trust Company on 13 January, 1922, when they and each of them had knowledge of the fact that such banking institution was insolvent and unable to meet its depositary liabilities as they become due in the regular course of business, in violation of chapter 4, section 85, Public Laws 1921.

The jury acquitted the defendant H. H. Massey and convicted the defendant J. H. Hightower. From a judgment sentencing the defendant Hightower to an indeterminate imprisonment in the State’s Prison of not less than two and one-half years and not more than four years, as provided by C. S., 7738, the defendant appealed, assigning errors.-

Attorney-General Manning and Assistant Attorney-General Nash for the State.

Willis Smith and Charles U. Harris for defendant.

Stacy, J.

The pertinent provisions of the statute, under which the Xiresent indictment is laid, are as follows:

“Sec. 85. Insolvent bardas, receiving deposits in. Any person, being an officer or employee of a bank, who receives, or, being an officer thereof, permits an employee to receive money, checks, drafts or other property as a deposit therein, when he has knowledge that such bank is insolvent, shall be guilty of a felony, and upon conviction thereof shall be fined not more than five thousand dollars or imprisoned in the State’s Prison not more than five years, or both.” Chapter 4, Public Laws 1921.

In the first section of said act, so far as now applicable, the term “insolvency” is defined to mean: (a) “when a bank cannot meet its depositary liabilities as they become due in the regular course of business” ; and (b) “when the actual cash market value of its assets is insufficient to pay its liabilities to depositors and other creditors.” The remaining definition of said term, as contained in the statute, is not material for present purposes. The evidence relates only to the ones just given.

In order to obtain a conviction under the provisions of this statute, it may be observed in limine, the State must prove beyond a reasonable doubt: (1) that the deposits described in the bill of indictment were actually received; (2) that the bank in question was insolvent at the *303time tbe alleged deposits were received therein, and (3) that the defendant, officer or employee of the bank, received, or such officer thereof permitted an employee to receive, said deposits, with knowledge, at the time, of the insolvency of such bank. These are the essential elements of the offense condemned by the statute, and which is denominated a felony therein.

The principal evidence offered by the State, of which the defendant first complains, is that of Clarence Latham, State Bank Examiner, and W. S. Ooursey, an expert accountant, or “auditor employed by the banking department to make an audit of the bank” (defendant’s brief), to the effect that, in the opinion of said witnesses, the Central Bank and Trust Company was insolvent on 13 January, 1922, the day on which it is alleged the defendant, as president of said banking institution, received certain deposits therein, with knowledge at the time that such banking institution was then insolvent. These opinions were based upon an examination and investigation of the affairs of the bank, made by the two witnesses in the discharge of their official duties. The competency of this evidence is assailed upon two grounds:

First. It is challenged because, it is alleged, the witnesses were allowed to express their opinions upon one of the essential facts necessary to constitute the offense charged, and which the jury alone was impaneled to decide. “Whatever liberality may be allowed in calling for the opinions of experts or other witnesses, they must not usurp the province of the court and jury by drawing those conclusions of law or fact upon which the decision of the case depends,” says Fuller, J., in S. v. Stevens, 16 S. D., p. 317, a case dealing with the insolvency of a bank. And, speaking to a similar question, in People v. Paisley, 288 Ill., 310, Duncan, J., says: “No witness can thus invade the province of the jury, expert or otherwise.” See, also, S. v. Myers, 54 Kan., 206; Ellis v. State, 138 Wis., 513.

Second. It is questioned because, as a prerequisite to the expression of such opinions, the witnesses were not required to state the facts upon which they based their conclusions. In White v. Bailey, 10 Mich., 155, Campbell, J., says that no witness, expert or other, should be allowed to give in evidence an opinion on one of the essential facts to be shown, unless he first state the foundation or basis of his opinion. “This is necessary for two reasons: First, it is necessary, in order to enable other experts to determine whether the opinions expressed by the witness are correct, and to enable the parties to contradict them, if wrong. Second, it is necessary, in order that, if an opinion is given on a mistaken or perverted statement of facts, the truth may be elicited from others to destroy the foundation of the conclusions. And a third reason might be mentioned, which is, that the court and jury may know, from his oppor*304tunities, wbat means tbe witness bad of forming any opinion at all. These are rudimentary principles, wbicb cannot safely be departed from.”

We have cited some of tbe authorities, probably tbe strongest ones, wbicb tend to support tbe defendant in bis position on tbe two grounds stated above. But tbe decisions elsewhere are not all one way. They are in sharp conflict. Tbe precise question now raised apparently is presented for tbe first time in this jurisdiction — certainly for tbe first time under tbe present statute. In tbe light of tbe instant record, we think tbe defendant’s initial class of objections to tbe admission of tbe opinion evidence of tbe witnesses, Latham and Ooursey, must be overruled on both grounds. These witnesses, tbe one a State bank examiner and tbe other an auditor employed by tbe State Banking Department, it is conceded, possess special skill for interpreting or drawing inferences from observed data of their own, or from observed data furnished by others, and their conclusions or opinions purport to be based upon an examination or investigation of tbe subject-matter about wbicb they undertake to speak. “To warrant its introduction” (expert opinion evidence), says Earl, J., in Ferguson v. Hubbell, 97 N. Y., p. 513, “tbe subject of tbe inquiry must be one relating to some trade, profession, science or art in wbicb persons instructed therein, by study or experience, may be supposed to bave more skill and knowledge than jurors of average intelligence may be presumed generally to bave.” And to like effect is tbe language of Beck, C. J., in Hamilton v. R. R. Co., 36 Iowa, p. 36: “Every employment requires a degree of skill, and there is none in wbicb a degree of proficiency may not be obtained by practice. This fact is no ground for tbe admission in evidence of tbe opinions of men engaged in every pursuit in regard to matters pertaining thereto. Tbe pursuit in which tbe witness claims to be an expert must be one of science, skill, trade, or tbe like; these things pertain to tbe pursuit, and opinions of those proficient therein may be beard. But one skillful in pursuits not of this character may not give an opinion. Tbe pursuit itself must be considered in determining who may be examined as experts.”

Tbe business of examining banks undoubtedly falls within tbe classification of trades or pursuits, requiring special skill or knowledge, and hence one versed in its intricacies, we apprehend, should be permitted to speak as an expert. It is not questioned, on tbe instant record, but that tbe two witnesses offered by tbe State are competent to speak as experts in their field or in their line of work.

Mere opinion evidence was wholly rejected by tbe early English courts as being insufficient to support an absolute judgment or to bold a witness for perjury. Hence it was not received as evidence at all. *305“It is no satisfaction for a witness to say that he ‘thinketh’ or ‘per-suadeth himself,’ ” was the reason assigned for its exclusion by Coke. And in S. v. Allen, 8 N. C., p. 9, Henderson, J., said: “The law requires that he who deposes to a fact should have the means of knowing it. Grounds of conjecture and opinions are not sufficient.” But the law in this respect has been the subject of considerable growth and development, both in England and in this country. The history of this development, beginning with its original exclusion and leading up to the admission of such evidence, with illustrations from the decisions of the courts, is given by Wigmore in his valuable work on the subject of Evidence. In this connection he refers to the practice of admitting opinion evidence by experts based upon observation or investigation, and concludes that such evidence by experts of conceded skill and experience may be received without in the first instance necessarily requiring the facts observed or discovered to be stated to the court and jury, such disclosures being more properly a matter for cross-examination. We quote from section 1922:

> “It has already been seen, in reviewing the history of the doctrine, that in the beginning the disparagement of opinion rested on grounds totally different from those now received. It was objected to because, as a mere guess', the belief of one having no good grounds, it lacked the testimonial qualification of observation; hence, a mere opinion, as soon as it appeared to be such, must be rejected. In a few jurisdictions the modern doctrine has been confused with the earlier one, and it is laid down as a general rule that opinions must be accompanied with the facts on which they are based — usually with the exception that expert witnesses are exempted from this rule.

> “Now, in no respect is this rule sound. In the first place, then, there is no principle and no orthodox practice which requires a witness having personal observation to state in advance his observed data before he states his inferences from them; all that needs to appear in advance is that he had an opportunity to observe and did observe, whereupon it is proper for him to state his conclusions, leaving the detailed grounds to be drawn out on cross-examination. Any other rule cumbers seriously the examination, and amounts in effect to changing substantially the whole examination into a voir dire — an innovation on established methods which is unwarranted by policy.”

He further says (section 675) : “All opinions or conclusions are in a sense hypothetical. But does it follow that, when the opinion comes from the same witness who has learned the premises by actual observation, those premises must be stated beforehand, hypothetically or otherwise, by him or to him ? For example, the physician is asked, ‘Did you examine the body?’ ‘Tes.’ ‘State your opinion of the cause of death.’ *306Is it here necessary that be should first state in detail the facts of his persona!observation, as premises, before he can give his opinion? In academic nicety, yes; practically, no; and for the simple reason that on cross-examination each and every detail of the appearances he observed will be brought out, and thus associated with his general conclusion as the grounds for it, and the tribunal will understand that the rejection of these data will destroy the validity of his opinion. In the opposite case, where the witness has not had personal observation- of the premises, they are not to be got from him on cross-examination, because he had no data of personal observation; and that is precisely the reason why they must be indicated, and set out in the question to him, for thus only can the premises be clearly associated with the conclusion based upon them.

> “Through failure to perceive this limitation, courts have sometimes sanctioned the requirement of an advance hypothetical statement even where the expert witness speaks from personal observation.”

We are disposed to adopt the conclusions reached by Mr. Wigmore in his work on Evidence, though the numerical weight of authority may be otherwise, and a very satisfactory statement of what we conceive the law to be will be found in People v. Youngs, 151 N. Y., p. 218. There, opinion evidence of experts was received without first requiring the observations upon which such opinions were based to be given in evidence. This was affirmed on appeal, it being the subject of exception, and the reviewing Court, speaking to the question, said :

> “It appears by the record that certain medical experts were called as witnesses by the prosecution, who testified that they had made a personal examination of the defendant with reference to his sanity, and were then asked whether in their opinion he was sane at the time of such examination. These questions were objected to by the defense as incompetent, but the objection was overruled, and there was an exception. It is now urged that these experts should not have been permitted to express an opinion without first stating the facts upon which such opinion was based. The testimony of experts is an exception to the general rule, which requires that the witness must state facts and not express opinions. In such cases the opinion of the witness may be based upon facts so exclusively within the domain of scientific or professional knowledge that their significance or force cannot be perceived by the jury, and it is because the facts are of such a character that they cannot be weighed or understood by the jury that the witness is permitted to give an opinion as to what they do or do not indicate. In such cases it is the opinion of the witness that is supposed to possess peculiar value for the information of the jury. Of course, all the facts or symptoms'upon which the opinion is based may be drawn out also, *307either upon tbe direct or cross-examinations. It is undoubtedly tbe better practice to require tbe witness to state tbe circumstances of bis examination, and tbe facts, symptoms or indications upon wbicb bis conclusion is based, before giving tbe opinion to tbe jury. But we tbink that it is not legal error to permit a medical expert, who has made a personal examination of a patient for tbe purpose of determining bis mental condition, to give bis opinion as to that condition at tbe time of tbe examination, without in tbe first instance disclosing tbe particular facts upon wbicb tbe opinion is based. Tbe party calling tbe witness may undoubtedly prove tbe facts upon wbicb tbe opinion is based, and, as we have already observed, that is doubtless tbe safer practice. It may also be true that tbe court, in tbe exercise of a sound discretion, may require tbe witness to state tbe facts before expressing tbe opinion, and in all cases tbe opposite party has tbe right to elicit tbe facts upon cross-examination. But tbe precise question here is whether tbe court committed an error in permitting tbe witness to give tbe opinion before tbe facts upon wbicb it was founded were all disclosed, and we tbink that when' it is shown that a medical expert has made tbe proper professional examination of tbe patient in order to ascertain the existence of some physical or mental disease, be is then qualified to express an opinion on the subject, though be may not yet have stated tbe scientific facts or external symptoms upon wbicb it is based.”

Applying these principles to tbe instant case, we tbink tbe better practice would have been for Latham and Coursey to have stated tbe facts or to have detailed tbe data observed or discovered by them, before drawing their conclusions or giving their opinions in evidence, but we shall not bold it for legal or reversible error that such was not required as a condition precedent to tbe admission of their opinions in evidence before tbe jury. S. v. Felter, 25 Ia., 75; S. v. Foote, 58 S. C., 218. Speaking to a similar question, in Commission v. Johnson, 188 Mass., p. 385, Bradley, J., said: “By this form of examination no injustice is done, for whatever reasons, even to tbe smallest details, that an expert may have for bis opinion can be brought out fully by cross-examination.”

This brings us, then, to a consideration of tbe defendant’s second class of exceptions. On tbe cross-examination of tbe State’s expert witnesses tbe defendant sought to show that certain notes of J. H. Hightower and H. H. Massey, tbe amusement company, and Mrs. C. M. High-tower, wbicb bad been listed as bad or doubtful assets, when traced back to their original entries on the books of tbe bank, disclosed tbe fact that all of these notes were substituted for notes and obligations of R. G. Allen, the former president of said bank, and that tbe consideration for tbe substitution was tbe transfer by Allen to Hightower and Massey, the *308Amusement Company and Mrs. Hightower all of his holdings and interests in the bank building, the Superba Theater and the stock which he owned in the building, and that this consideration represented value sufficient to liquidate all of said notes.

The defendant further sought to show by the cross-examination of said witnesses that this transferred interest was delivered to the receivers of the bank, and by them in turn sold and conveyed to R. Gr. Allen upon the consideration that he pay or secure the payment of all these notes and obligations, in addition to other notes and obligations owing by him to the bank at the time of its closing; that this transaction finally secured the payment of all such notes, which at first the witnesses considered as bad or doubtful, and upon which they formed their opinions as to the insolvency of the bank; and that at all times the defendant knew of these assets behind said notes, and had reasonable ground to believe the bank to be solvent. Its insolvency was not apparent from the face of the records of the bank.

The court refused to admit any evidence relating to these transactions, and ruled that only the condition of the bank on 13 January, 1922, was to be inquired into, and that the sole question to be considered was whether or not the bank was solvent on that day. We think this ruling was erroneous and entitles the defendant to a new trial. One of the chief reasons assigned for allowing expert witnesses to give in evidence their opinions, formed from observations or investigations, without a statement of the facts upon which they are based, is that the foundation of such opinions may be fully inquired into on the cross-examination. But when this is denied, the defendant is clearly disadvantageously circumstanced before the jury. If the State is to be given the benefit of such opinions as evidence, the defendant must be allowed an opportunity to attack them, or to challenge their value and probative force.

Again, the alleged insolvency of the bank on 13 January, 1922, was not the only question to be considered, but it was further essential to inquire as to whether the defendant, president of said bank, received therein deposits, or permitted an employee to receive therein deposits, with knowledge at the time of the insolvency of such bank. The receipt of the deposits is conceded, but all knowledge of insolvency is denied. The excluded evidence was not only competent as bearing upon the alleged insolvency of the bank, but it was also material upon the question of the defendant’s knowledge of such insolvency.

The word “knowledge,” as used in the statute, we apprehend, is to be taken in its ordinary sense and according to its usual significance or acceptation. It means an impression of the mind, the state of being aware; and this may be acquired in numerous ways and from many sources. It is usually obtained from a variety of facts and circum*309stances. Generally speaking, when it is said a person has knowledge of a given condition, it is meant tbat bis relation to it, bis association witb it, bis control over it, and bis direction of it are sucb as to give bim actual information concerning it. Parrish v. Commission, 136 Ky., p. 99.

For tbe purpose of ascertaining tbe solvency or insolvency of a bank, it is permissible to go into an investigation of its assets and property— and these words include every species of property owned by tbe bank— as of tbe date wben tbe deposit is made, and, of course, tbeir value after tbat, or at tbe time of tbe trial, is competent as illustrating or bearing upon tbeir worth at tbe time charged in tbe bill of indictment. Parrish v. Commission, supra.

But it is contended tbat, notwithstanding tbe above ruling, tbe defendant was subsequently allowed tbe privilege of cross-examining tbe witness Coursey in regard to tbe matters originally excluded, and tbat for all practical purposes this evidence was before tbe jury. Even if this be so, it could hardly be said tbat a cross-examination of tbe witness Ooursey would suffice for a cross-examination of Latham, as witness tbe following questions propounded to tbe State Bank Examiner and excluded on objection:

> “Q. If you bad bad tbe same information on 13 January tbat you now have, would you say tbe bank was solvent or insolvent ?

> “A. Tbat goes into another question as to tbe value of tbe assets.

> “Q. On 13 January tbe assets as they appeared on tbe books?”

> “Objection by State; sustained; exception.”

Furthermore, in tbe charge no mention is made of tbe assets back of these alleged worthless or doubtful notes, and tbe jury is apparently limited to a consideration of tbe State’s unimpeacbed or unquestioned opinion evidence. It would be stretching tbe doctrine of harmless error to an unwholesome degree to say tbat tbe jury beard and properly considered evidence which was held to be incompetent, excluded on tbe cross-examination of tbe most important witness and disregarded by tbe court.

But it is earnestly insisted tbat tbe present conviction should be sustained because it appears from tbe facts of record tbat tbe Central Bank and Trust Company was clearly insolvent on 13 January, 1922, and tbat tbe defendant must have known it. These, it should be remembered, are mooted questions of fact for tbe jury, and not for this Court. Tbe defendant controverts them, and they are by no means admitted. To say tbat a judgment of conviction must be upheld where tbe defendant’s case has been erroneously tried, because tbe record discloses an inference of guilt, is, in effect, to say tbat tbe inference is so strong as not to entitle tbe defendant to a jury trial at all — a proposition tbe bare *310statement of wbicb refutes itself. It is tbe duty of tbe courts to keep strict watcb over fundamental rights, and to protect them in all matters presented for consideration. Those who administer tbe law must not forget that decided cases make precedents- — precedents sometimes of little moment in themselves, but wbicb, in their accumulated power, may in some emergency overturn basic principles and subvert tbe rights of those intended to be protected. S. v. Holt, 90 N. C., p. 753. A distinguished judge and law-writer, in commenting upon the excellence of trial by jury, thus points out in substance the 'danger to which we now advert:

> “So that, the liberties of the people cannot but subsist so long as this palladium remains sacred and inviolable, not only from all open attacks (which none will be so hardy as to make), but also from all secret machinations which may sap and undermine it by introducing new arbitrary methods of trial by justices .of the peace, commissioners of the revenue, and courts of conscience. And, however convenient these may appear at first (as doubtless all arbitrary powers, well executed, are the most convenient), yet let it be again remembered that delays and little inconveniences in the form of justice are the price that all free nations must pay for their liberty in more substantial matters; that these inroads upon the sacred bulwark of the nation are fundamentally opposite to the spirit of our Constitution, and that, though begun in trifles, the precedents may gradually increase and spread, to the utter disuse of justice, in questions of the most momentous concern.” 4 Bl. Com., 350.

This right of trial by jury, says Judge Story, is justly dear to the American people; it has ever been esteemed by them as a privilege of the highest and most beneficial nature. S. v. Hart, 186 N. C., p. 589.

Again, it is urged that the errors' assigned by the defendant are rather technical, minute and attenuated, but we do not so understand the record. “A fair and full cross-examination of a witness upon the subject of his examination-in-chief is the absolute right, and not the mere privilege, of the party against whom he is called, and a denial of this right is a prejudicial and fatal error.” Sanborn, J., in Mining Co. v. Mining Co., 129 Fed., 668. In all criminal prosecutions the defendant is clothed with a constitutional right of confrontation, and this may not be taken away any more by denying him the right to cross-examine the State’s witnesses than by refusing him the right to confront his accusers and witnesses with other testimony. Constitution, Art. I, sec. 11. “We take it that the word confront does not simply secure to the accused the privilege of examining witnesses in his behalf, but is an affirmance of the rule of the common law that in trials by jury the witness must be present before the jury and accused, so that he may *311be confronted; that is, put face to face.” Pearson, C. J., in S. v. Thomas, 64 N. C., 74. And this, of course, includes the right of cross-examination. It is fundamental with us, and expressly vouchsafed in the bill of rights that no man shall be “deprived of his life, liberty, or property but by the law of the land.” Constitution, Art. I,, sec. 17.

As the case goes back for another hearing, it may not be amiss to observe that the trial court charged the jury, in the language of the statute, “the term ‘insolvency’ means when a bank cannot meet its depositary liabilities as they come due in the regular course of business,” and refused to instruct them that the real test was whether the fair market value of the assets of the bank on the particular day in question was sufficient to cover its liabilities, and to pay depositors within a reasonable time,- in the ordinary course of business, as is usually expected or required of banks.

The witness Coursey testified that, in his opinion, the bank was insolvent on the day named, but he also said that he did not know what was meant by “not being able to meet its depositary liabilities as they become due in the regular course of business.” This he considered a relative phrase, the meaning of which was to be determined by the law of averages among banks of similar size. Inability to meet depositary liabilities “as they become due in the regular course of business” evidently does not mean a condition in which the bank could not pay all of its depositors on demand. If this be the meaning of “insolvency” under the statute, then probably every banking institution in the State is insolvent, for doubtless no one of them could presently pay all of its depositors in full. It is a matter of common knowledge that every well-managed bank seldom, if ever, has on hand an amount of money equal to its depositary liabilities. It is not expected to do so, nor is it required to anticipate that all of its depositors will want their money on the same day or at the same time. It is a legitimate feature of good banking to lend out so much of the deposits as may not be necessary to meet the demands of depositors in the ordinary and regular course of business. Such is expressly sanctioned by the statute. Section 31 provides: "Reserve. Every bank shall at all times have on hand or on deposit with approved reserved depositories instantly available funds in an amount equal to at least fifteen per cent of the aggregate amount of its demand deposits and five per cent of the aggregate amount of its time deposits. But no reserve shall be required on deposits secured by a deposit of United States bonds or the bonds of the State of North Carolina.”

The statute permitting, as it does, a bank to lend out such a large amount of its deposits, it would be unreasonable to say that it must be ready at all times to pay its entire depositary liabilities on demand. *312Speaking to this question in Parrish v. Commission, supra, Carroll, J., said: “Although the law undoubtedly contemplates that when a depositor places money in a bank as a general deposit, he shall have the right to withdraw it upon demand, and that the refusal or inability of the bank to. permit him so to do would be evidence of its failing condition, it is yet manifest that the mere fact that the bank does not have in its vaults sufficient cash to satisfy all its depositors, or any considerable number of them, on the same day, or in case a run was made on the bank, would not be proof of its insolvency within the meaning of the statute. A bank might not be able to pay its depositors on demand, and yet be perfectly solvent.”

The inability to meet depositary liabilities as they become due in the regular course of lousiness, with knowledge thereof, is the point fixed by the statute beyond which the proprietors of a bank may not continue to receive deposits therein with safety to themselves. This does not mean that the officers of a bank may not persist prudently and wisely in an effort to avert a financial disaster or to tide over a temporary embarrassment, such as may arise in a time of money stringency, but it does mean that criminality will attach under the statute when any such officer or employee receives, or when any such officer permits an employee to receive, deposits therein with knowledge of the fact that, by reason of the bank’s insolvency, such deposits, then being received, are taken at the expense or certain hazard of the depositors presently making them. The officers of a bank are not only trustees for the stockholders, but they are also trustees for the patrons of the bank. It is a matter of common knowledge that liquidation of a bank in insolvency proceedings is usually attended with considerable loss and depreciation of the value of its assets. So, when a banker stands face to face with a condition of probable or apparent inability to meet depositary liabilities “as they become due in the regular course of business,” he knows that to go into liquidation, unless such be absolutely necessary, is inviting a greater disaster for both stockholder and depositor than to persist in going on.

Premature or unnecessary suspension is often the very worst thing that could happen to all concerned, and especially to those intended to be protected by the statute. It is necessary, therefore, and we understand such to be the purpose of the law, for officers of a bank to be permitted to exercise some judgment in determining when deposits are no longer to be received therein because of probable or apparent inability to meet depositary liabilities as they become due in the regular course of business. To hold otherwise' would be to establish a rule at once hazardous to the banking business and perilous to the depositing public, and we think at variance with the intent of the Legislature. *313To require a bank to close its doors because of inability to pay depositors on demand, and not “as they become due in the regular course of business” or as a matter of right, would make the fabled position of doubly unfortunate peril most real — the banker while bending all of his energies to avoid the danger of closing, on the one hand, would be quite likely to fall into a still greater danger for himself, on the other, by drifting into the shades of prison walls. Ellis v. State, 138 Wis., 513. Rut when any officer or employee of a bank receives, or, being an officer thereof, permits an employee to receive money, checks, drafts, or other property as a deposit therein, when he has knowledge that such bank is insolvent, he comes within the condemnation of the statute and. must be held answerable for such conduct in a criminal prosecution. The statute was designed to protect the depositing public against this kind of practice on the part of officers and employees of banks, and they will be held to a strict accountability under its provisions when they receive or when any such officer permits an employee to receive deposits therein with knowledge of the fact that, by reason of the bank’s insolvency, such,deposits then being received are'taken at the expense or certain peril' of the depositors presently making them.

The statute must be given a reasonable construction, and it is possible that on the next trial the evidence may be such as to call for a more extended definition of “insolvency” than that contained in the statute. But we will not anticipate what questions may arise upon a full disclosure of the evidence.

Realizing the importance of this case to the banking interests of the State, as well as to the depositing public, we have given the record a most searching and critical examination. From this we are convinced that, in the interest of a fair and impartial trial, the cause must be remanded for another hearing. It is so ordered.

New trial.

Clarkson, J.,

dissenting: The defendant, J. H. Hightower, the president of the Central Bank & Trust Go., was indicted with H. H. Massey, the cashier, on the charge that on 13 January, 1922, they “did unlawfully, wilfully and feloniously, as officers of said bank, receive, for and in behalf of said bank, money, checks, drafts and other property as deposits therein when they and each of them had knowledge that said bank was then and there insolvent.”

The verdict of the jury was: “Said jurors for their verdict say that the defendant, the said H. H. Massey, is not guilty. . . . The jurors for their verdict further say that the defendant J. H. Hightower is guilty, but recommend the defendant to the mercy of the court.”

*314Tbe jurors tempered justice with mercy, and I believe their verdict ought to stand.

The offense for which the defendant was tried is simple and easy to understand; it was that he received, for and on behalf of the bank, money, checks, drafts, etc., when he knew the bank was insolvent, or he permitted employees to receive such deposits. A bank is insolvent when it cannot pay those who have put their money in it, and it becomes due in the regular course of business. It is also insolvent when the actual cash market assets are not enough to pay what it owes its depositors and other creditors.

The case is important. It involves the conduct of banking institutions of the State. No one need enter into this line of endeavor, but when he does and is an official he becomes a trustee and guardian of the money of the stockholders and the general public, who deposit and lend their money to the bank. Into these banks are deposited and loaned the hard-earned money of merchant, farmer, manufacturer, laborer, professional men, the widow, orphans and all sorts and conditions of people. The poor who are saving for a “rainy day.” Banks encourage thrift and saving, and are necessary for business develop ment. They are important to a community. Their success depends on the confidence of the public who trust them with their money. It is important that banks have the money so it can be used in industry and not kept idle. This money often represents the toil and sacrifice of years. For this to be swept away by a bank crashing is a serious calamity and a great wrong. Is the defendant, the president of the bank, responsible under the law for this disaster? The only question involved in this case is: Did the defendant, J. H. Hightower, on 13 January, 1922, when deposits were made on that day, know the bank was insolvent? It was incumbent on the State to prove this beyond a reasonable doubt. The defendant introduced no evidence, but relied on the weakness of the State’s evidence. What is some of the evidence showing knowledge? The defendant Hightower was in the employ of the Corporation Commission as a bank examiner eight or ten months prior to 1 July, 1921, when he resigned. That as Bank Examiner he examined the Central Bank & Trust Co. (at that time it was named the City Bank). On 26 April, 1921, he made a report of this bank. The report shows a list of criticisms against the bank, and among the criticisms was an item of $70,000 carried as an investment in the bank building. At the time R. Gr. Allen was president and H. H. Massey was cashier of the bank. Hightower quit his position as Bank Examiner and went into the very bank he had criticized, within a few months after his criticism of the condition of the bank, and in a little over six months the crash came.

*315Clarence Latham, State Bank Examiner, when the bank was closed, testified: “The total liabilities of the bank were $352,973.20 and the assets which he considered good amounted to $189,145.23, which left had assets as he called them of $163,828.97; that of the $352,973.20 of total liabilities, $50,243.16 was for capital stock and surplus, leaving total liabilities exclusive of stock of $302,730.04, that left bad assets of $113,584.81; that in the list of assets that he considered doubtful there were the following notes of B. G. Allen of $10,000, $7,500, $5,000, $5,000 and $4,638.27; that there was a liability of the Amusement Company of $10,000 and $5,000; of C. M. Hightower, $7,500; Hightower and Massey, $23,000, $10,000 and $20,000; J. H. Hightower, $10,000; Hightower and Massey, $9,000, and R. W. Warren, $5,000, making a total of $136,638.27, and that these were the assets which he considered doubtful; that all of these, exclusive of R. W. Warren’s item of $5,000, he traced back to the original entries items, making $131,638.27, and found that they were obligations of R. G. Allen or the Superba Theater; and that the notes of Hightower and Massey and the Amusement Company and C. M. Hightower, to the extent of $131,638.27, were substituted for the indebtedness of these items; that there was an B. G. Allen note for $32,128.27 and an overdraft of B. G. Allen of $3,626.40.” It will be noted from the testimony that the trust money of the depositors and others was used by the bank officials or former bank officials.

The bank, under Hightower’s own statement as a bank examiner to the Corporation Commission, showed it was to be criticized and not in good condition. He knew this, and yet he resigned as a bank examiner and went into this tottering institution and became its president, and in about six months it was a wreck. On the question of scienter or knowledge, this evidence was before the jury, and rightly so. This evidence was relevant as to the question of scienter or knowledge. “The word relevant means that any two facts to which it is implied are so related to each other that, according to the common course of events, one, either taken by itself or in connection with other facts, proves, or renders probable, the past, present, and future existence or nonexistence of the other.” Step. Dig. Law Ev., 20; S. v. Twitly, 9 N. C., 248; S. v. Walton, 114 N. C., 783; S. v. Hight, 150 N. C., 817; Ins. Co. v. Knight, 160 N. C., 592; S. v. Stancil, 178 N. C., 683. Exceptions were made to the exclusion by -the court of evidence of a settlement with R. G. Allen, former president oL.the bank, after its failure, by which settlement the value of some of the assets were enhanced. This was an attempt to get into the record evidence not relevant to the issues of the case, being res inter alios acta, and so the judge was right in ruling this evidence out. Its .only purpose was to divert the minds of the jurors from the main issue. Suppose Allen did try to *316save bimself and others, and this can be inferred from the record, and received help to make securities, insolvent or doubtful, better; this was after the crime of 13 January. It was in the nature of restoring goods after they were taken, and was only competent in mitigation of punishment — that restitution was being made for the wrong done. Although the fact that some of the doubtful and insolvent securities were enhanced in value since 13 January, 1922, by Allen was excluded, yet the record shows that this matter was gone into later in the trial and the defendant got the benefit of this evidence, and if there had been error in excluding this class of testimony in the beginning, it was cured by the jury getting the benefit of it during the progress of the trial at a subsequent time. From the entire record the fact that Allen undertook to make good that which was insolvent and doubtful on 13 January was gotten before the jury, notwithstanding the exclusion of this evidence at certain times in the trial.

Mr. W. S. Coursey testified: “That if it should be a fact that Allen did at that time own $40,000 of the capital stock of the Farmers Bank' at Louisburg and an equity of real estate in Wake County amounting to $50,000, then his opinion as to the insolvency of Allen was erroneous.”

The testimony of Clarence Latham, State Bank Examiner, also shows “That in deducting the amount of bad assets the bank lacked $163,828.97 of being solvent on the morning of the 14th, which was the condition at the close of business on the 13th. That he did not consider that at the commencement of business 13 January, 1922, that the bank’s assets were of sufficient cash value to pay its liabilities and depositors; that the liabilities of $352,973.20 included the liabilities of capital stock and a surplus account of $243.16; that the records show that the amount of deposits received on the last two days, the 12th and 13th (of January), were $28,145.50; that when he took charge of the bank there was $678.83 cash on hand and cash items amounting to $612.37, making cash on hand of $1,291.20, and that the bank had paid out on these last two days $27,634.27. That he was requested to take charge of the bank by Hightower and Massey, who said that they had been trying to secure a loan from the Clearing House Association for the purpose of getting enough money to meet their checks, but could not do so, and therefore turned it over to him.” This was strong evidence, almost a practical admission that he received deposits on the 13th knowing the bank was insolvent.

In justice to the defendant, who is to be awarded a new trial, on cross-examination Latham testified: “That at the time he formed his opinion as to the solvency of the bank and Allen’s debt of $35,000 to the bank, he did not then know that he owned two buildings on Fayette-*317ville Street and the Allen Building on the corner of Martin and Blount streets, and $45,000 of stock in the bank at Louisburg, and that he had an equity in the buildings, but did not know what it was worth; that he did not investigate Allen’s financial condition by the courthouse records, and that his opinion as to Allen’s insolvency was based on investigation that is generally made as to the worth of the party through commercial ratings and otherwise; and that he himself did not investigate anything about Allen’s financial standing and ownership of the property, except only the general knowledge that he had of Allen’s financial standing; that at the time he formed his opinion of Allen’s insolvency he had no definite information as to what property Allen owned or how much bank stock he had, and that his opinion was based on making inquiries which were the opinions of others and commercial reports, and that at the time he formed his opinion as to Allen’s insolvency he himself had no exact or definite information as to what property Allen owned at the time or its value.”

It will be noted that the entire Court is of the opinion that the expert testimony of the State’s witnesses is competent. From my understanding of the essential facts of the record, what was excluded in my opinion was not prejudicial or reversible error.

The State’s evidence showed that on Friday, 13 January, 1922, the Raleigh Clearing House Association had a meeting called at the instance of the defendant Hightower, president of the Central Bank & Trust Co., and Massey, its cashier, to consider a loan to that bank. The first meeting was held in the morning about 11 o’clock. At this meeting Mr. Hightower stated that he wanted to get a loan and showed the association a statement of his bank. A committee was then appointed to go over the assets of the bank and to report to the association at 3 p. m. The committee checked over the assets and collateral of the bank, and refused to recommend the loan. The final decision by the association not to make the loan was made about 11 o’clock the night of the 13th. After this failure to secure the loan, Hightower called Latham, either the night of the 13th or early morning of the 14th, and turned the bank over to him, and asked him to take charge of it. It was in pursuance of this request that Latham took the bank over on the morning of the 14th, and made the examination of its affairs and the audit of its books, which showed the bank badly insolvent.

Mr. W. S. Coursey, who audited the books and accounts of the bank, testified:

> “Q. For how long a period, Mr. Coursey, had the bank been insolvent from the disclosure of the books? A. From a very short time after its organization. That he considered the bank insolvent on 11 January, 1922.”

*318Hightower allowed the agents of the bank to receive deposits, etc., on 13 January, when he was negotiating with the Raleigh Clearing House Association. Did he not know the bank was insolvent when the negotiations were going on? Yet he allowed innocent depositors to put their money in -the bank.

It was a question of fact for the jury. They have rendered their verdict of guilty. They recommended mercy. Perhaps the jurors thought others were also responsible who were not on trial, so they took a merciful view of a serious matter. One of the purposes of punishment is to deter others from committing the same or similar offense. In considering the question of mercy, let us not forget the loss to the innocent and trusting public who had their money deposited, their hard earnings swept away.

In Wilson v. Suncrest Lumber Co., 186 N. C., 57, this Court said: “Vterdiets and judgments are not to be set aside for harmless error, or for mere error and no more. To accomplish this result it must be made to appear not only that the ruling complained of is erroneous, but also That it is material and prejudicial,' amounting to a denial of some substantial right.’ ”

Clark, C. J.,

concurs in the very clearly expressed and able dissenting-opinion of ClaeKSON, J., that the verdict and judgment in this case should be affirmed. The entire banking system of this country and, indeed, largely the welfare of the entire public, depends upon the honesty and the integrity with which deposits in our banks are kept. Especially is it important to all small depositors, as many were in this case, that they, shall feel secure that the small earnings which from time to time they have placed in trust with the bank should be forthcoming when needed.

The masterly review of the evidence in this case would seem to leave no doubt that there has been a gross breach of the high trust reposed in the officials of the bank in the care of its funds, and especially that they should not receive deposits when these experienced officials, who had previously examined the bank, knew its rotten condition.

The juries to whom this matter was committed have twice found this defendant guilty, and it would really seem impossible that, upon the evidence marshaled in the opinion of Mr. Justice Glarlcson, either jury could have done other than find the defendant guilty beyond a reasonable doubt. It is always possible for counsel for guilty bank officials, by reference to more or less similar cases, ignoring the distinction in minor details among the thousands of cases which can be found in the many thousands of volumes of reports, to find some plausible defect in every proceeding whatever, civil or criminal. This *319requires only a little dexterity in argument, but in tbis case tbe jury passed upon tbe evidence and found that there was no reasonable doubt. There is no doubt upon tbis evidence that tbe deposits were made, and that by tbe fault of tbe bank tbe depositors have lost their money. No dexterity in argument will serve tbe losers or do aught to discourage other evil-doers.

Tbe witnesses were expert bank examiners and bad recently gone over tbe vouchers of tbe bank and knew its condition. In such cases they are competent to express their opinion as to what was tbe condition of tbe bank. It would be almost impossible to go over tbe vouchers, one by one, before a jury and demonstrate to them more clearly and convincingly tbe conclusion at which they bad arrived. They were experts and officials and their conclusion was competent to be submitted to a jury.

One of tbe most distinguished lawyers of tbe Union, Elihu Root, expressed tbe views of tbe American Bar Association, and indeed of tbe better element not only of tbe Bar, but of tbe entire people, when be said recently: “Every lawyer knows that tbe continued reversal of judgments, tbe sending of parties to a litigation to and fro between tbe trial courts and tbe appellate courts, has become a disgrace to tbe administration of justice in tbe United States. Everybody knows that tbe vast network of highly technical rules of evidence and procedure which prevails in tbis country serves to tangle justice in tbe name of form. It is a disgrace to our profession. It is a disgrace to our law and a discredit to our institutions.”

Nothing would do more to restore tbe confidence of tbe public in tbe banks or be a greater benefit in sustaining tbe faith due to tbe many thousands of unquestionably sound banks and honest bank officials than tbe demonstrated certainty that upon evidence as clear as tbis and as unquestioned, and especially after two convictions by two several juries, that tbe verdict of guilty would be sustained regardless of any minute and attenuated errors which can be alleged in any proceeding. It should be made clear to bank defaulters and officials, however influential, that there is certainty of real punishment for violation of their high trust, and that shadowy technicalities and alleged minute errors will not save them. They should be made to understand that, even as Frederick of Prussia said, “Criminals must be made to know that there is law in our State, and that it will be enforced impartially and with certainty against them.”