WELLS v. LLOYD ET AL

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District Court of Appeal, Second District, Division 2, California.

WELLS v. LLOYD ET AL.

Civ. 13232.

Decided: April 25, 1942

Freston & Files and James A. McLaughlin, all of Los Angeles, for appellants. Thurlow T. Taft, of Santa Monica, and Tanner, Odell & Taft and Donald A. Odell, all of Los Angeles, for respondent.

This appeal is from a judgment for the plaintiff after verdict. Plaintiff, as trustee in bankruptcy of the estate of Bay Cities Guaranty Building and Loan Association, commenced the action to recover damages alleged to have been suffered by the defunct association upon the claim that defendants had perpetrated a fraud upon Bay Cities in the purchase of its certificates. Prior to trial the action was dismissed as to all defendants except Merchants National Trust and Savings Bank of Los Angeles, hereinafter referred to as the Bank, and its successor in interest, Bank of America National Trust and Savings Association. This is the third appeal.

In the first appeal plaintiffs' judgment against the bank was reversed upon the ground that issues other than the amount of damages should have been submitted to the jury for decision. Wells v. Lloyd, 6 Cal.2d 70, 56 P.2d 517. On the second appeal, judgment of nonsuit was reversed under the doctrine of the law of the case which established in the instant case that there were debatable questions of fact which should have been submitted to the jury. Wells v. Lloyd, 35 Cal.App.2d 6, 94 P.2d 373.

The facts out of which this action arose were stated by the Supreme Court (Wells v. Lloyd, 6 Cal.2d 70, 77, 56 P.2d 517, 521) as follows:

“Lloyd Building & Loan Association was organized as a guarantee capital association, and had issued, without consideration, 1000 shares of guarantee capital stock. The issued stock was held for the benefit of the association, which had no other assets of more than nominal value and had not received a permit from the building and loan commissioner to do business. In order to obtain a permit, without which it could not lawfully engage in business, it was necessary for the Lloyd Company to have at least $100,000 in cash capital and at least $10,000 for organization and operating expense. Under the rules and regulations of the commissioner, a guarantee capital building and loan association, to be qualified to do business, was required to have $100,000 paid–in capital. An applicant for a permit was required to furnish a certificate from its bank showing it to have not less than the sum of $100,000 on deposit to its credit. Lloyd Association obtained a permit in the following manner:

“Defendant Commagere, acting in concert with Lloyd Association, gave Merchants National Bank his thirty–day promissory note for $120,000, interest on which, for said period, was guaranteed by Alvin H. Frank & Co. The bank credited the account of Commagere with the amount of the note. Commagere purchased a cashier's check payable to himself for a like amount, and, with the cashier's check purchased, in the name of Lloyd Association, and the bank issued, its certificate of deposit for $120,000, payable in thirty days. This certificate was indorsed and placed in an escrow with the escrow department of the bank, together with certificates for one thousand shares of the capital stock of Lloyd Association, being all of the outstanding stock. Nine hundred and ninety–five of the shares were in the name of Commagere, and one share in the name of each of five other persons. Escrow instructions were given the bank by Lloyd Association, which provided that the stock might be sold for $120,000 within a thirty–day period; that if this money was provided from stock sales, certificates were to be issued to the purchasers, the money received therefrom was to be used to pay the Commagere note, and the certificate of deposit was to be delivered to Lloyd Association. If the full sum of $120,000 should not be received from stock sales, such sums as had been paid in were to be returned to the persons furnishing the same, the stock was to be returned to Lloyd Association, and the certificate of deposit was to be delivered to the note department of the bank for the purpose of paying the Commagere note.

“The note was given, the certificate issued, and the escrow opened on October 23, 1928, and on the same day a vice president of the bank wrote a letter to the building and loan commissioner, stating that the bank had on that day issued a certificate of deposit to Lloyd Association in the sum of $120,000. By the use of this letter Lloyd Association procured from the building and loan commissioner, on November 9, 1928, a permit under which it became authorized to engage in the building and loan business in Los Angeles.

“On October 22, 1928, defendant Commagere had arranged with a bond house, Alvin H. Frank & Co., to purchase, for cash, bonds owned by the company at their par value of $120,000. Nothing was done toward completing this purchase, nor was anything accomplished toward selling, for cash, the stock of Lloyd Association, as was contemplated when the escrow was opened.

“At about the time the permit was issued, Elwood Lloyd IV and Commagere contacted the officers of Bay Cities Building & Loan Association, a company engaged in the building and loan business in Santa Monica. [Lloyd was also a director of this association.] The Bay Cities company was desirous of acquiring a building and loan association doing business in Los Angeles, and entered into negotiations to acquire the Lloyd Association, under representations that the latter held a permit and had assets of the value of $120,000.

“Alvin H. Frank & Co. agreed to accept certificates of $120,000 par value of the Bay Cities company for the bonds Commagere had agreed to buy, and Bay Cities agreed to accept the bonds and 1000 shares of the outstanding stock of Lloyd Association in exchange for its certificates. This exchange was completed through the same escrow in the bank. Bay Cities thereupon became the owner of the bonds and stock, and Alvin H. Frank & Co. acquired the Bay Cities certificates, which it sold to its customers. The certificate of deposit was delivered to the note department of the bank, together with $700, as interest, and the note was canceled. Defendant Commagere received some $4,400 commission from Frank & Co. The bank received $700 interest and the return of its certificate of deposit and $100 as an escrow fee.”

The action was tried on the theory that as a result of conspiracy the defendants falsely represented the value of the bonds and that in reliance upon such representation, Bay Cities purchased bonds which proved to be worth less than 50 per cent of par. The liability of the bank was allegedly predicated upon the proposition that the letter written to the Building and Loan Commissioner by its vice–president contained the statement that the Lloyd Association had $120,000 on deposit; that by such statement the bank falsely represented the actual situation by failing to disclose the truth regarding the escrow and particularly the fact that the deposit of $120,000 was a pretense and not a deposit in good faith of funds actually belonging to the Lloyd Association and that as a natural and probable consequence of such misrepresentations the bank had enabled Lloyd and Commagere to defraud Bay Cities by subsequent representations as to the value of the bonds. The bonds acquired by Bay Cities as a result of the exchange with the Lloyd Association were found by the jury to be worth only $48,200. The difference between that amount and the face value of the Bay Cities certificates, to wit $71,800, was awarded plaintiff by the verdict.

The bank contends that it is entitled to a reversal of the judgment by reason of prejudicial error in the instructions. By plaintiff's instruction 19–D the jury was directed that if it should find that it has been “established by a preponderance of the evidence that artifice or deception was employed by the alleged conspirators which prevented or forestalled a complete investigation as to the truth of such representations, then plaintiff is not bound by the failure of said Bay Cities Association to obtain information or knowledge of facts relating to such representations as should have been discovered in the exercise of ordinary care except for the employment of such artifice or deception.” Instruction 19 correctly informed the jury that “if you believe from the evidence that such investigation was begun and that ample opportunity was given for such investigation, and no artifice or deception forestalled a complete investigation, no recovery can be had.”

There was no evidence whatever of any artifice or deception practiced by any defendant by which Bay Cities was prevented from making a full and complete investigation concerning the value of the bonds. This was in effect declared by the Supreme Court on the first appeal when it stated (6 Cal.2d page 87, 56 P.2d page 526): “Bay Cities was not hindered in any way in making a full and independent investigation.” From this it follows that it was error to give the quoted portion of instruction 19–D.

Also, the court erred in giving plaintiff's instruction No. 17 which in effect instructs the jury that a false representation is legally fraudulent, whether knowingly made or whether made through ignorance, carelessness or mistake. That instruction was in direct conflict with plaintiff's instruction 16 and defendant's 26–G in both of which it is declared that to constitute false statements as fraudulent it is necessary that they be made “in the knowledge that they were false or that such representations were not warranted by the information of the person or persons by whom they were made.” Also, it conflicted with the language of defendant's instruction 26–G which declared that “you must assume that all representations, whether true or false, were made in good faith unless the contrary is established by clear proof and satisfactory evidence.” The giving of a correct instruction upon a material issue does not cure the vice of a contradictory instruction which tends to confuse the minds of the jury. Zolkoske v. United States Farm & Land Co., 72 Cal.App. 63, 236 P. 344.

We find nothing in the entire charge to the jury to overcome the explicit direction contained in plaintiff's instruction 17. Where a clear conflict in the instructions given by the court occurs and it is impossible to determine which instruction the jury followed in arriving at its verdict, prejudicial error has resulted. Pierce v. United States Gas & Electric Co., 161 Cal. 176, 185, 118 P. 700.

By reason of the prejudice resulting from the instructions a reversal of the judgment could not be avoided.

However, we are not satisfied that a reversal of the judgment is an adequate disposition of this cause. Three trials have already been held. To send it back for a fourth were an imposition upon the judicial process in view of a record whereby we may pronounce a final decision. In making bold to do so, however, we are confronted with the doctrine of the law of the case. In the first trial the jury was instructed to return a verdict for plaintiff in an amount to be fixed by the jury. The judgment based upon such verdict was reversed by the Supreme Court in a decision which holds that there was sufficient evidence on behalf of defendant to justify submission to the jury. In the second trial a nonsuit was granted. That order was reversed by this court (Division One) under the impulsion of the law of the case, indicating that there was sufficient evidence in favor of plaintiff to justify submission to the jury. On the other hand it appears obvious that notwithstanding anything that had occurred before, on the third trial the facts were fully and completely presented to the jury. Upon those facts we are constrained to hold that the evidence is insufficient to sustain any verdict for plaintiff but that, on the contrary, judgment should be ordered for defendant. In deriving this conclusion, we confess that our adherence to the substantive law of frauds transcends our obligation to respect former decisions in this action, before the pronouncement of which the vice of plaintiff's proof does not appear to have been sufficiently emphasized. Under such exceptional circumstances it is our duty to look “to a just determination of the rights of the parties to the litigation and not merely to rules of practice,” to “decide the case without regard to what has gone before,” even though we should reconsider “questions decided upon a former appeal.” England v. Hospital of Good Samaritan, 14 Cal.2d 791, 795, 97 P.2d 813, 815.

Briefly stated, the original plan of the parties, in which defendant bank cooperated, contemplated, in effect, a preorganization scheme. Instead of having a subscription agreement among a number of organizers, with an escrow arrangement pending the obtaining of sufficient subscriptions to meet the statutory requirement of $100,000 capital and $10,000 for organization expenses, before applying for a permit to operate, it was apparently thought that subscriptions could be more readily obtained if the stock to be sold had already been issued. Consequently the plan was devised whereby the Lloyd Association might promptly obtain a permit from the building and loan commissioner to do business. This could be done by placing the money to the credit of Lloyd's. The certificate of deposit, together with the issued shares of Lloyd's capital stock were to be placed in the escrow, from which nothing was to be delivered until sufficient stock sales had been negotiated to provide the required capital. Whereupon the stock was to be issued to the purchasers, the money placed in the association treasury, and the certificate of deposit returned to the bank to cancel the Commagere note. If sufficient funds were not obtained, the money was to be returned from the escrow to the persons who had agreed to buy, and the certificate of deposit returned to the bank to cancel the note. What was to become of the permit to operate, in this event, does not appear––perhaps Commagere and Lloyd, in their optimism, never contemplated such failure. Certainly in the absence of testimony, it cannot be presumed that the plan contemplated any dishonest action such as a fraudulent sale of securities to Bay Cities. This is the plan, and the only plan, that has been shown to exist at the time the bank wrote the letter to the commissioner.

While this scheme does not commend itself as one to be approved, yet it does not appear to have contemplated any fraud upon Bay Cities or upon any investor. In fact, the escrow arrangement carefully guarded against the possibility of paying out any money or of delivering any shares until the full amount had been paid in and the statute satisfied. It did, of course, involve an improper and unauthorized short cut to obtain a permit to operate and the action of the bank in writing the letter which did not give the commissioner the whole truth cannot be too strongly condemned.

If, however, the original plan, pursuant to which the bank wrote the letter, involved no fraudulent intent and contemplated no acts concerning future investors, the bank cannot be held responsible for subsequently conceived and executed action by others, which were no part of this plan, unless evidence is presented to connect the bank with such acts. The record discloses an entire absence of such testimony. As the Supreme Court stated: “Nothing was done toward completing this purchase, nor was anything accomplished toward selling, for cash, the stock of Lloyd Association, as was contemplated when the escrow was opened.” 6 Cal.2d page 78, 56 P.2d page 521.

“* * * the original plan of the promoters, Lloyd and Commagere, was to qualify the Lloyd Association, and, thereafter, to sell 1000 shares of the stock for cash; the exchange with Bay Cities was agreed upon later. The thing which was ultimately accomplished was not shown to have been within the contemplation of the parties in the beginning. [6 Cal.2d page 81, 56 P.2d page 523].

“* * * The bank had no part in the negotiations between Lloyd Association and Bay Cities. It did not know, until a day or two before the exchange of property was made, that Bay Cities was an intending purchaser. It acted only as escrow holder of Bay Cities certificates and the property that was exchanged therefor. It knew nothing of the representations made by Lloyd Association as to the value of the bonds, or of the investigation thereof made by Bay Cities, or the knowledge it acquired. The terms of the exchange it knew by reason of the escrow. The position of purchasers of stock, under the original plan, would have been very different from that of Bay Cities, after its purchase was concluded.” 6 Cal.2d page 82, 56 P.2d page 523. (Emphasis added.)

It is not shown that the bank had anything to do with the side arrangement (which was no part of the original plan) by which Commagere was to purchase certain bonds from Frank & Co., nor with the later substituted arrangement by which the Bay Cities issued its own certificates of par value of $120,000 directly to Frank & Co. in exchange for the bonds owned by the latter company plus all of the capital stock of the Lloyd Association. It is true that the bank as escrow holder permitted the stock of the Lloyd Association to be delivered out of escrow on the faith of these bonds received by the Bay Cities for the Lloyd Association, which latter association was then the property of Bay Cities. How can it be said that the Bank as escrowee owed any duty to anyone to forbid the closing of the escrow in the face of the fact that Bay Cities, which was receiving the bonds and the Lloyd Association stock, had made its own independent investigation of the bonds and satisfied itself of their value? It should be observed that in the year following their acquisition not only did Bay Cities cause the Lloyd Association to seek its permit by virtue of the bonds valued at par but the commissioner granted such permit upon the basis of the bonds as an asset of the Lloyd Association. “It does not appear that the bank was under any duty to investigate the value of the bonds or to make inquiry as to any representations that may have been made concerning the same.” 6 Cal.2d page 85, 56 P.2d page 524.

The real gist of the Supreme Court's decision is stated in the last paragraph, 6 Cal.2d page 90, 56 P.2d page 527: “The liability of appellants was not established by evidence of that conclusive nature necessary to warrant an instructed verdict, and appellants therefore were deprived of the right of jury trial.” In the numerous instances in which the decision analyzes the points involved and holds that there should have been a submission to the jury, the court was primarily concerned with the question of whether or not the evidence so strongly supported the plaintiff as to justify an instructed verdict for plaintiff. The court was not examining the voluminous record for the purpose of determining whether or not there would have been substantial evidence to support a finding upon each fact vital to plaintiff's cause of action in case of a verdict for plaintiff. It was not necessary for the Supreme Court to do so and it would be pressing the doctrine of the law of the case too far now to preclude such examination upon the basis of that doctrine.

We now direct our attention to an element of the situation, which, disregarding all others, is fatal to plaintiff's case. Neither of the prior holdings passed upon this point. In order more clearly to understand the factual situation involved, we deem it important to set forth here the substance of the representations made by Lloyd and Commagere to the officers of Bay Cities. Sometimes one of them is credited with the representations and sometimes the other, but it may be fairly said that both of them pledged their faith to the following statements:

That all the Lloyd Building and Loan Association had was a charter which had cost $50; that it had an authorized capital of $100,000; that Commagere would underwrite the stock with his deposit of $120,000 in the bank; that the Lloyd Association had a license to do business in the city of Los Angeles; that the Lloyd Association had no assets except the $120,000 on deposit with the bank; that with such money Commagere was buying the entire capital stock of 100,000 shares; that the bonds offered by Commagere and Lloyd in exchange for the certificates of the Bay Cities Building and Loan Association were “legal for savings banks and the bonds would be worth $120,000 and that an escrow could be opened and the bonds placed in escrow * * *”; that while the escrow was open the value of the bonds could be determined by an investigation by the Bay Cites Association before completing the exchange; that Commagere was a very wealthy man; that he had bought all the stock of the Lloyd Association; that he would prefer that Bay Cities take the Alvin Frank bonds instead of cash and that these bonds would be worth $120,000.

The foregoing is the most we have been able to abstract from the record of all the statements made that could fairly be construed as representations by the two men to the officers of Bay Cities.

Assuming, without here deciding, that the above statements constitute actionable fraud, and that they amounted to statements of fact and not mere expressions of opinion, and assuming (although as we have seen, this is not supported by the evidence) that the bank and all the other parties at first accused by plaintiff had made all of the representations accredited to Lloyd and Commagere, yet the plaintiff is not entitled to recover for the reason that there was an utter failure on the part of plaintiff to establish that any reliance was placed by Bay Cities upon the statements made concerning bonds of the house of Alvin Frank. Without contradiction, the evidence shows that Lloyd and Commagere suggested to Bay Cities that an investigation be made of the value of the bonds before consummating an exchange of its certificates for them. The story of the investigation made by Bay Cities of the bonds has already been told in the following language of the Supreme Court (6 Cal.2d page 84, 56 P.2d page 524): “The Bay Cities Association was furnished with a list of the bonds belonging to Alvin H. Frank & Co., which Commagere had agreed to buy and it was willing to take over the Lloyd Association if the bonds were worth par. Bay Cities made some inquiry as to the value of the bonds. Mr. Rishell, president of the company, and one or two others of its directors were appointed by the board [on November 20, 1928] to investigate the value of the bonds. Mr. Rishell inquired of Alvin H. Frank & Co., by whom he was told that the bonds were quoted at par, but that Alvin H. Frank & Co. would not guarantee to sell them at par. On November 26 he went to San Francisco where he interviewed the building and loan commissioner, confirmed the fact that Lloyd's held a permit and learned that the commissioner was not interested in the value of the bonds so long as they were a legal investment for the funds of a building and loan association. [The Commissioner stated that the bonds were a legal investment.] While in San Francisco he [Rishell] interviewed a banker and obtained some information concerning some of the bonds. On the morning he left Los Angeles for San Francisco he delivered the Bay Cities certificates to Mr. Stintin, vice president of Bay Cities, to be placed in escrow. Stintin took the certificates to the bank where he entered into an escrow agreement to exchange them for the stock and bonds. This escrow was closed the second day following. There was testimony to the effect that this exchange was completed before Mr. Rishell intended it should be done.”

In view of the fact that Bay Cities commenced its investigation it cannot be said that it placed reliance upon any representations. For the same reason it cannot recover damages because of such representations. When one party to a transaction commences to investigate the property offered to him for purchase or exchange, or begins to investigate the truth of representations made concerning such property and proceeds without let or hindrance, he must be held to have gone far enough to be satisfied that he has all the information available upon the subject of his search. If he makes the purchase he is then deemed to have acted upon his own judgment and not to have relied upon the representation of another. Hayward v. Widmann, 133 Cal.App. 184, 189, 23 P.2d 762; Hackleman v. Lyman, 50 Cal.App. 323, 326, 195 P. 263; Gratz v. Schuler, 25 Cal.App. 117, 121, 142 P. 899; Carpenter v. Hamilton, 18 Cal.App.2d 69, 71, 62 P.2d 1397. Referring to one who has initiated an inquiry concerning property offered him for purchase or exchange, Mr. Pomeroy says: “The plainest motives of expediency and of justice require that he should be charged with all the knowledge which he might have obtained had he pursued the inquiry to the end with diligence * * * He cannot claim that he did not learn the truth and that he was misled.” Pomeroy's Equity Jurisprudence, 3rd Ed., § 893 (5th Ed., vol. 3, p. 513, § 893).

Bay Cities by resolution of its board of directors authorized the exchange of its certificates for the bonds offered provided that after investigation its officers should be satisfied. Those officials made inquiry in both San Francisco and Los Angeles. No inquiry evoked a favorable report upon the bonds. Not one defendant suggested a source of information or indicated that a closing of the escrow would be advantageous to Bay Cities. In litigation arising out of a purchase of property, where both parties stand upon equal footing and have equal means of ascertaining the truth and the vendee's skepticism has not been lulled by representations made by the vendor, the examination by the purchaser will be excused only when he is induced by fraudulent means to forego examination or where he is prevented from doing so by trick, artifice or design. Palladine v. Imperial Valley F. L. Ass'n, 65 Cal.App. 727, 755, 225 P. 291; Konda v. Fay, 22 Cal.App. 722, 725, 136 P. 514. It cannot be justifiably maintained that the parties to the transaction involved in this cause did not stand upon equal footing. It was not shown that either Lloyd or Commagere had any peculiar knowledge regarding the bonds offered for the Bay Cities certificates. They made no pretense of possessing such knowledge but on the contrary suggested its own investigation by Bay Cities. Moreover, it must be presumed that a financial institution such as Bay Cities would not accept the mere ipse dixit of strangers as to the value of securities offered for sale. Its officers must have known where and how to gain reliable information and appraisals of such bonds. They had their deal in escrow and their own time within which to investigate and evaluate the paper. Not only were they not fraudulently induced to forego inquiry but on the contrary Bay Cities was actually urged to and did make such inquiry. When the escrow was placed, the bank had nothing whatever to do with it except to close it whenever Bay Cities Building and Loan Association should notify the escrowee that it was satisfied with the proposed exchange.

In view of the conclusions above announced, it is ordered that the judgment be and it is hereby reversed with instructions to the trial court to enter judgment in favor of defendant.

I dissent. In my opinion my associates in ordering judgment for defendant bank have done violence to the thoroughly established doctrine known as the law of the case. This is made apparent by the statement in the majority opinion: “In deriving this conclusion, we confess that our adherence to the substantive law of frauds transcends our obligation to respect former decisions in this action, before the pronouncement of which the vice of plaintiff's proof does not appear to have been sufficiently emphasized.” In an attempt to support their position they cite England v. Hospital of Good Samaritan, 14 Cal.2d 791, 97 P.2d 813, 815. In that case there were three trials and three appeals. The plaintiff, who had recovered judgment at the third trial, died shortly before decision was rendered on the third appeal. While an appeal was pending from the judgment at the third trial the Supreme Court rendered a decision in other litigation in which the law governing the liability of hospitals was clarified and definitely established in such manner as to make certain the liability of the appealing hospital to the plaintiff England. Under these circumstances the court held that “rigid adherence to the law of the case would compel a most unjust decision.” The facts of the case now before us do not bear even slight similarity to the facts of the England case.

There have been three trials in the present action all on substantially the same evidence. This is apparent from the statement of facts set forth in the majority opinion, which is copied from the statement of facts in the opinion on the first appeal. The question before the court for determination on the first appeal was whether the trial court had erred in directing a verdict for plaintiff and against defendant bank. In passing upon this question the court followed the rule that it “must disregard all conflicts in the evidence and accept as true the evidence which tends to show the defendant blameless, and must draw all inferences from the facts in evidence most strongly in favor of the defendant.” 6 Cal.2d 70, at page 81, 56 P.2d 517, at page 523. In concluding that there was evidence from which a verdict in favor of defendant bank would be supported by the evidence if the jury had returned such a verdict the author of the opinion called attention to points in the evidence favorable to the bank, and the majority opinion herein contains quotations taken from the opinion in which points in favor of the bank are emphasized. I find, however, that the opinion on the first appeal contains a number of additional statements which show that it was there decided that the facts would support a verdict against the bank.

In addition to the quotations contained in the majority opinion, the following quotations taken from the opinion on the first appeal should be taken into consideration: “Bay Cities made its purchase in the belief that Lloyd Association had a valid permit to do business, and would not otherwise have purchased. Its loss, however, was sustained because of its belief that the assets of Lloyd Association were worth more than was their actual value. The liability of the defendants can arise only out of fraudulent representation as to the value of Lloyd assets. * * * It is also alleged that all of the same defendants falsely and fraudulently represented the assets of Lloyd Association to be worth $120,000, and that Bay Cities believed and relied upon all of the said acts and statements of the defendants and so doing, and relying especially upon the false representations of the bank concerning the certificate of deposit, exchanged its certificates for the stock of the Lloyd Association, thus acquiring the bonds. Bay Cities was entitled to receive a valid permit and it received one that was invalid. * * * It is to be conceded, that where a conspiracy exists, none of the conspirators are to be exonerated merely because the means employed to accomplish a common purpose were unknown or unanticipated in the beginning, or because they did not join in or know of the acts of their coconspirators, or because the object accomplished differs from the one originally contemplated. But we think the present case is one in which all of these facts must be given consideration in deciding whether the bank entered into any conspiracy and if it did, whether it had a common purpose with the others in the conspiracy to perpetrate the fraud with which it was charged and for which it was held liable by the judgment. * * * Whether the defendants conspired together for any purpose, and, if so, what that purpose was, were questions of fact. And if a conspiracy should be found to exist between the bank and some of the other defendants, it is a question of fact whether the object accomplished, namely, the acquisition of the Bay Cities certificates for the consideration paid, was within the common purpose of the guilty defendants. When we take into consideration the extent of the bank's interest in the transactions, its limited participation in and knowledge of entire scheme of the other defendants, and of the methods employed to put them into effect, we cannot say that the evidence establishes, to the exclusion of every other reasonable conclusion, that the bank conspired to perpetrate the fraud on Bay Cities, which was ultimately accomplished. That question, we think, should have been submitted to the jury. * * * Several other questions of fact were presented which we think should have been submitted to the jury. These related to questions of proximate cause and reliance by Bay Cities Association upon the different representations made. * * * Again, it appears that Bay Cities Association made an independent investigation of the value of the bonds, and superficial as that investigation may have been, it does not appear that the purchaser did not to some extent rely thereon. * * * ‘Where it is claimed that the defendant's act was not the proximate cause of injury because the result could not reasonably have been foreseen, it is ordinarily a question for the jury whether the result should reasonably have been foreseen.’ * * * There was sufficient evidence upon which the jury might have decided either that Bay Cities Association did, or that it did not, part with its property as the direct and proximate result of the representations made solely by and on behalf of the Lloyd Association. These were questions of fact which the jury should have been allowed to decide. * * * Whether it [the bank] should have anticipated the acts of the other defendants was a question for the jury. * * * We think the jury should have been allowed to decide whether the representations as to values were more than expressions of opinion. Upon the whole evidence we cannot say that there could not be a reasonable difference of opinion on that issue. Furthermore, the question of the fraudulent nature of the statements was in issue. * * * The evidence upon this issue of fraudulent intent called for its submission to the jury.”

If there were any doubt as to whether it was held on the first appeal that the evidence was sufficient to support a verdict against the bank, it was entirely dispelled by the decision rendered on the second appeal. At the second trial a nonsuit was granted and on appeal the question was squarely presented to the court whether the evidence was sufficient to support a verdict in favor of plaintiff and against the bank. Mr. Justice White, on behalf of the court, after referring to some of the statements made in the opinion on the first appeal, which are above set forth, held:

“The evidence upon the second trial being practically the same as that presented upon the first trial, we are impressed that the ruling of the Supreme Court upon the first appeal, that the questions of proximate cause and the existence or nonexistence of a conspiracy, so far as the liability of the bank is concerned, were debatable questions upon which reasonable minds might disagree and should have been submitted to the jury, became the law of the case and therefore binding upon the trial court and conclusive of those questions upon appeal. In Re Estate of Baird, 193 Cal. 225, at page 236, 223 P. 974 at page 978, we find the following:

“ ‘The evidence may be different, and yet unless it is substantially different in a material respect, the doctrine of the law of the case applies, and it applies notwithstanding the fact that in the previous decision evidence contained in the record is not quoted or cited in the opinion.’ * * *

“Nor is the doctrine of the law of the case confined to that portion of the opinion of the appellate court which can be said to be strictly essential to the disposition made of the case. People's Lumber Co. v. Gillard, 5 Cal.App. 435, 438, 90 P. 556.

“The Supreme Court, in its opinion upon the former appeal having established the law of the case, the trial court was without authority to reconsider these rulings, and should have denied respondents' motion for a nonsuit * * *.” [[[[35 Cal.App.2d 6, 94 P.2d 376.]

It is significant that the Supreme Court denied an application for a hearing after this construction had been placed upon its former opinion.

In my opinion the jury was fully and fairly instructed on the rules of law applicable to the issues before them. There were no inaccuracies in the instructions which were misleading to the jury or which resulted in a miscarriage of justice.

The judgment should be affirmed.

MOORE, Presiding Justice.

STEPHENS, J., concurred.