Afribank Nigeria Ltd V. Moslad Enterprises Ltd & Anor. (2007)
LawGlobal-Hub Lead Judgment Report
KUMAI BAYANG AKAAHS, J.C.A.
The 2nd Defendant/Respondent who is the Managing Director of the 1st defendant/Respondent and sole signatory to the 1st defendant/respondent’s account at the Ilesha Branch of Afribank Nigeria Limited (formerly called International Bank for West Africa Limited) applied for overdraft and loan facilities from the Bank. The facilities which were granted at an interest rate of 9% per annum were guaranteed by the 2nd defendant in a letter dated 9th December, 1985 which was received in evidence as Exhibit “P1”. The letter reads as follows:-
“INTERNATIONAL BANK FOR
WEST AFRICA LIMITED
ILESHA BRANCH
B, 43 OKE ESA ST.
ILESHA, OYO STATE
9TH December, 1985
Our Ref: IL/TTO/OA/1349/85
The Managing Director,
Moslad Enterprises Ltd,
P.O. Box 1506
Ilesha.
Dear Sir,
RE: BANK FACILITIES
With reference to your recent request, we are pleased to inform you that the Bank is prepared to make available the undermentioned banking facilities subject to the following terms and conditions:-
AMOUNT:- Overdraft- N62,000,00
Medium Term Loan- N128,000.00 made up as follows:
N60,000.00 for building
N52,430.00 for Machinery and Equipment
N15,000,00 for Vehicle and Furniture
REPAYMENT: The overdraft is subject to the usual banking terms and conditions for repayment on demand and may be cancelled by the Bank without prior notice.
The Medium Term Loan is repayable in 48 monthly installments of N2,666.67 commencing 12 months after first drawdown of the loan.
EXPIRY: The facilities will expire in November, 1986 and must be renewed before that date
INTEREST: Interest will be charged on the facilities at the rate of 9% per annum,
SECURITIES: The facilities will be secured by:
- Legal Mortgage on Mr. E.A Oyedeji’s properties at Ife and Ilesha
- Equitable Mortgage on farmland
- Guarantee of Mr. Oyedeji
- Chattel Mortgage on Machinery/Equipment.
- An undertaking to domicile all farms (sic) proceeds to our Bank:
- ACGS guarantee.
CONDITIONS PRIOR TO UTILIZATION:- The facilities will not be made available until the following has (sic) been received:
(a) Your acceptance of this offer within 30 days of date of this letter
(b) Original title documents (certificate of Occupancy, Governor’s consent to mortgage, current Tax Clearance Certificate of both company and Mr. Oyedeji, etc) and all other documents to enable us to perfect the security mentioned above.
If the above facilities are not utilized within six months thereof, we shall consider this offer to have lapsed and will not be committed to providing the funds as aforesaid.
Please signify your agreement to the above by signing and return to us the attached copy of this letter.
Thanks for your cooperation.
Yours faithfully,
INTERNATIONAL BANK
FOR WEST AFRICA LTD,
Signed: K. Abayomi Adekoya
Branch Manager.”
The 2nd defendant endorsed “accepted” on Exhibit P1 and signed the endorsement on 11/12/85. He also executed a Guarantee in favour of the Bank in consideration of the Banking facilities and accommodation given to Moslad Enterprises Ltd. The Guarantee was put in evidence as Exhibit “P2”. The facilities were fully enjoyed and this the defendants admitted in paragraph 4 of the amended Statement of defence when they pleaded that
“4. Defendants aver that a formal offer was made to the 1st defendant vide plaintiffs letter of 9th December, 1985, which 1st defendant accepted 1st defendant made full use of the facility”.
After enjoying the facilities to the fullest the 1st defendant refused to pay back the loan and overdraft and accrued interest despite repeated demands. The 2nd defendant also failed to redeem the guarantee he executed in favour of the Bank. Consequently the Bank instituted an action in the High Court of Osun State sitting at Ilesha and in the Amended Writ of Summons as well as paragraph 15 of the Amended Statement of Claim, claimed from the defendants as follows:
“15. WHEREOF the plaintiff claims against the defendants jointly and severally is for the sum of N472,966.75 (Four hundred and seventy two thousand, nine hundred and sixty-six naira seventy five kobo) being the amount due and payable by the 1st defendant to the plaintiff as at 30th September, 1991 for money lent in form of a term loan and overdraft to the 1st defendant at the 1st defendant’s request in the normal course of the plaintiffs business as a banker together with periodic interest and the usual bank charges thereon the repayment of which sum the second defendant guaranteed to the plaintiff; and which sum the defendant (sic) have refused and or neglected to pay inspite of repeated demands.
AND THE PLAINTIFF also claims interest on the said sum of N 472,966.75 at the rate of 15% from 30/10/91 until final judgment and thereafter at the rate of 10% per annum until liquidation of the whole debt together with cost”.
Mr. Olumide Bobade, the Credit Officer at the Ilesha Branch of the Bank testified for the plaintiff. Three Exhibits namely the letter of 9/12/85 conveying the offer of the loan and overdraft to the 1st defendant, the Guarantee on Form ADV 6B which the 2nd defendant executed in favour of the Bank and the Solicitor’s letter of demand dated 2/8/91 were admitted in evidence as Exhibits “P1”, “P2” and “P3” respectively. Two other documents were admitted under cross-examination and they were marked Exhibits “P4” and “P5”. They are letter dated 8th September, 1992 and the Statement of Account of 1st defendant in Ilesha Branch of the plaintiffs Bank from 3/4/85 – 30/4/86 respectively, In the course of giving his evidence in Chief, the plaintiffs witness sought to tender a letter dated 23/12/87 informing the 1st defendant about the deregulation of interest rate on the Agric facility and the 1st defendant’s statement of account from 31/5/91 to 30/11/92 but they were rejected and were accordingly marked Exhibit Rejected “A” and “B” respectively. No evidence was called for the defence. Learned counsel then addressed the court and the learned trial Judge in a reserved judgment delivered on 1/3/94 dismissed the plaintiffs claims with N500.00 costs in favour of the defendants. The plaintiff now appellant was dissatisfied with the judgment. Pursuant to an order obtained from the Court of Appeal dated 25/9/95 the appellant appealed against the decision in its Notice of Appeal dated 29/9/95 containing four grounds of appeal. The parties filed briefs of argument, the appellant raised three issues for determination while the defendants (hereinafter referred to as the respondents) adopted the issues framed in the appellant’s brief but argued issues 2 and 3 together since they deal with the liability of the 2nd respondent and whether the guarantee given in 1988 was in relation to the loan facility advanced in 1985. I agree that issues 2 and 3 should be taken together. The issues raised are:-
- Whether on the pleadings and evidence before the court the learned trial Judge was right in holding that the appellant had not proved its claims preponderantly thereby dismissing the appellant’s claims against the respondents in their entirety.
- Whether on the pleadings and evidence before the learned trial Judge, the said learned trial Judge was right in holding that the Guarantee of 1988 if at all is not related to the loans and facilities of 1985 granted to the 1st respondent on the ground that there is no credible evidence to connect the two together.
- Whether the 2nd respondent on the basis of Exhibit “P2” executed in favour of the appellant, the 2nd respondent is liable in respect of the debt of the 1st respondent as the guarantor.
The appellant’s brief dated 22/12/2000 and filed on 2/1/2001 was deemed filed on 14/10/2001 while the respondents’ brief dated 5/3/07 and filed on 6/3/07 was deemed filed on 27/3/07. Both counsel adopted their briefs of argument. In the course of giving oral argument, Mr. Bode Elemide, learned counsel for the respondents conceded that Judgment should have been entered in favour of the appellant for N59,107.00 since the respondents admitted enjoying the facility which was guaranteed by the Central Bank. This concession is predicated on Exhibit “P5”. I will say more about the concession later in the judgment.
On issue No. 1 learned counsel for the appellant referred to paragraphs 5, 6, 7 and 9 in the Amended Statement of Claim which were admitted in paragraphs 3 and 4 of the Amended Statement of Defence and submitted that a fact admitted by the defendant in his pleadings need not be proved by the plaintiff, but should be regarded as established at the trial. It is the contention of learned counsel that parties are bound by their pleadings, and any evidence or court’s finding not supported by the pleadings of the parties should be ignored since it has no leg on which to stand and any issue not raised in the pleadings is not properly an issue before the court and needs no consideration as the learned trial Judge is not permitted to wonder into areas not pleaded by the parties, nor even given in evidence during the trial of such suit. Counsel placed reliance on the following cases for his submissions:
CHIEF R.B. BURAIMOH v CHIEF MALIKI ADENIYI ESA & 8 ORS (1990) 2 NWLR (pt.133) 406; CHAIRMAN GWARAM LOCAL GOVERNMENT v. ALHAJI HAMZA DANTINE (1993) 2 NWLR (pt.275) 370; DR. BEN O. CHUKWUMAH v. PETROLEUM DEVELOPMENT COMPANY OF NIGERIA LIMITED (1993) 4 NWLR (pt. 289) 512. He finally submitted by citing the case of JIMOH ADEKOYA ODUBEKO v. VICTOR OLADIPO FOWLER that a court of law is precluded from speculating or making a case for either party to the proceedings by suo motu formulating the weakness in the case (if any) and resolving same in favour of any of the parties.
Turning to the issue of the guarantee executed by the 2nd respondent in favour of the appellant, learned counsel submitted that in law, Exhibit ‘P2’ as an admitted exhibit in the case speaks for itself, citing the case of EMETUMA v. NGWUMOHAIKE (1993) 3 NWLR (pt. 283) 612 in support of the submission. He argued that there was no issue joined by the parties as to whether the Guarantee of 1988 if at all was related to the loan and facilities of 1985 or not and submitted that it was an issue taken suo motu to which the parties were not given opportunity of fair hearing. He pointed out that the 2nd respondent did not offer evidence on his averment that it was the Central Bank of Nigeria that guaranteed the loan as pleaded in paragraph 3(a) of the Amended Statement of Defence. It was therefore wrong for the learned trial Judge to have held “the Guarantee of 1988 if at all is not related to the loan and facilities of 1985” when there was no pleadings and/or evidence before the court to that effect in the case of the parties. Learned counsel submitted that there was sufficient and reasonable relevant satisfactory, uncontradicted, uncontroverted, unchallenged and credible evidence before the court to connect Exhibit “P2” duly stamped in 1988 to the contract made in 1985 in Exhibit P1, Exhibit “P2” is a continuing guarantee and makes 2nd respondent liable for the whole debt that the 1st respondent as the principal debtor is liable to the appellant at the time the debt is being demanded and realized. Learned counsel also argued that although Exhibit “P2” was not dated, this did not render the Exhibit illegal or invalid as the said Exhibit had been properly stamped in compliance with the Stamp Duty Law of the State. It was submitted that if the learned trial Judge had given proper consideration to the usage of Exhibit P2 in commercial banking of banker/customer relationship between the appellant as a commercial bank and the respondents as customer and guarantor respectively and clauses 1, 2, 3 and 4 of Exhibit “P2” he would have held 2nd respondent liable for the debt incurred by the 1st Respondent. He therefore urged the court to allow the appeal.
Learned counsel for the respondents agreed with the legal proposition put forward by the appellant’s counsel on the parties being bound by their pleadings and that admitted facts by the defendant must be accepted by the court as established without any further proof but contended that the essence of paragraphs 3 and 4 was only to admit that 1st respondent was a customer of the Bank and in that capacity applied for an overdraft which was granted and utilized but went on to aver that the loan was guaranteed by the Central Bank of Nigeria. Since the defendants denied paragraphs 5-15 the Statement of Claim by their paragraph 2 of the Amended Statement of Defence the admission made in paragraphs 3 and 4 of the said Amended Statement of Defence does not tantamount to an admission of the facts pleaded in paragraphs 5,6,7 and 9 in the Amended Statement of Claim. In view of this there was need for appellant’s witness to prove that Exhibit “P2” was a proper guarantee given by the 2nd respondent for the facility and that no sum at all was repaid by the 1st respondent from the entire loan and overdraft of N190,000.00 granted and the balance remaining after working out the proper interest rate at 9% per annum as agreed. If judgment had been entered in favour of the appellant for N190,000.00 plus interest this would have negated the evidence of PW1 under cross-examination wherein he stated that the amount was in debit to the tune of N59,107,00 as at 31/12/85. Since the appellant first claimed N342,685.80 as at 30/9/91 but later changed it to N472,966.75 during the same period, the onus was on the appellant to prove its claim by preponderance of evidence before the respondents could be called to answer to the claim. Learned counsel cited the following cases to support his argument: ONWUCHEKA v. EZEOGU (2002) 9-10 SC 114; MISS FELICIA OSAGIEDE OJO v. DR. GHARORO 25 NSCQR 712.
He submitted that once indebtedness of 1st respondent in the sum of N472,966.75 or in any amount is not proved, the liability of the 2nd respondent is not proved and so the learned trial Judge was correct in his finding that Exhibit P1, an unsigned guarantee of 1988 is not related to the loan of 1985. Furthermore, it is the learned counsel’s contention that the fact of denial in the pleadings that the loan was secured by the Central Bank of Nigeria cast on the plaintiff a burden to prove that 2nd respondent guaranteed the loan. He argued that if this court finds that Exhibit P2 proves a guarantee of 1st respondent’s loan by 2nd respondent, the issues that would need to be resolved would be in what sum and for how long and under what terms? He submitted that parties would not, as a rule, be allowed to re-shape their cases on appeal after a decision on the merit, based on evidence before the court, by attempting to make the facts adduced fit the case as it ought not to be. The case of OKULATE v. AWOSANYA (1990) 5 NWLR (pt. 150) 345 was Cited In support. He therefore urged this court to dismiss the appeal.
The questions to answer in this appeal are:
- Did the plaintiff/appellant establish liability in any amount against the 1st defendant/respondent?, and
- 1s there any valid guarantee executed by the 2nd defendant/respondent for which he can be held liable for the debt incurred by the 1st respondent?
The starting point in resolving the first question is the concession made by Mr. Elemide in oral argument that judgment should have been entered in favour of the plaintiff for N59,107.00. Apart from this concession, the defendants admitted paragraphs 7 and 9 of the Amended Statement of claim when they averred in paragraph 4 of the Amended Statement of defence as follows:-
“4. Defendants aver that a formal offer was made to the 1st defendant vide plaintiffs letter of 9th December, 1985, which 1st defendant accepted. 1st defendant made full use of the facility”.
The facilities were an overdraft of N62,000.00 and a Medium Term Loan of N128,000.00 totaling N190,000.00 with an interest of 9% per annum. The Solicitor to the plaintiff, one R. Olaitan Awobeku Esq., from the Chambers of Olu, Olaitan & Co. wrote a demand letter to the Managing Director of the 1st Defendant Company on 2nd August, 1991 which was admitted in evidence as Exhibit P3 and it reads:-
“OLU, OLAITAN & CO.
Oyo State Office
N6B/756A God First House
Sango
P.O, Box 16717
Ibadan, Oyo State
2nd August, 1991.
The Managing Director,
Moslad Enterprises Limited,
Lejoka Abiola Street
Ilesha, Oyo State.
Dear Sir,
RE: DEBT OF N318,166.61 & N130,213.33 OWED TO AFRIBANK LIMITED: DEMAND HEREOF
We are Solicitors acting for AFRIBANK NIGERIA LIMITED (hereinafter referred to as “our client”) and we have been retained and have their instruction to act on this matter.
We have been informed by our client that your outstanding indebtedness to our client is N318,166.61 & N130,213.33 (Three hundred and eighteen thousand, one hundred and sixty-six naira, sixty-one kobo) & (One hundred and thirty thousand, two hundred and thirteen naira, thirty-three kobo) as reflected in your Account No. 36-000-193P.
We have equally been informed that despite repeated and or several demands you have failed, refused and neglected to pay up this debt.
We hereby demand from you the repayment of this debt that is N318,166.61 & N130,213.33 to our client within 7 days of the receipt of this letter.
TAKE NOTICE that our standing instruction is to issue a Writ of Summons against you if the said indebtedness is not defrayed within 7 days.
TAKE FURTHER NOTICE that you are requested to pay the said sum of N318,166.61 & N130,213.33 within the said date in your own interest of course to avert the unpleasantness of the court action which might IN FACT be of great embarrassment.
A stitch in time saves nine. Be warned and pay up promptly.
Yours faithfully,
For: OLU, OLAITAN & CO.,
Signed: R. Olaitan Awobeku Esq.
(Solicitor)
CC: Branch Manager,
Afribank Nig. Ltd.
Ilesha”.
The statement of account of the 1st defendant for the period 3/4/85 to 30/4/86 was produced and admitted in evidence as Exhibit P5 while another letter dated 8th September 1992 was written by the plaintiff to the Accountant of the 1st Defendant Company asking the latter to confirm the
NAME
SIGNATURE
DESIGNATION
DATE
OFFICIAL STAMP (if applicable)”.
Exhibit P5 is in respect of the overdraft account while Exhibit P4 is for the loan account. The 1st defendant had the opportunity to disagree with the balance stated in Exhibit P4. It is presumed in the absence of any evidence to the contrary that the 1st defendant was owing N159,415.03 on the loan account.
Concerning the overdraft account (Exhibit P5) the account was in debit to the tune of N59,107.59 as at 30/12/85 but by 30/4/86 the debit balance was N21,217.07. The implication is that the plaintiff was able to lead evidence to prove that 1st defendant was owing far less than what is stated in Exhibit P3 and the claim in paragraph 15 of the Amended Statement of Claim. The law is that the plaintiff is entitled to judgment to the extent of what it can prove out of its claims. See: OCEANIC BANK INTERNATIONAL (NIG) LTD v. G. CHITEX INDUSTRIES LTD (2000) 6 NWLR (pt. 661) 464.
Learned counsel for the respondents has raised the spectre of the amount to be awarded and for how long and under what terms should this court find that Exhibit P2 proves a guarantee of 1st respondent’s loan by 2nd respondent. The answer to this poser is that this court cannot embark upon assessment and awards of any amount to the appellant without evidence and materials before it. See: MENAKAYA v. MENAKAYA (2001) 16 NWLR (pt. 738) 203. Just like in the evaluation of evidence if the trial court fails to properly evaluate evidence before it, the appellate court will be in as good a position as the trial court to evaluate same. See: AKPAN v. OTONG (1996) 10 NWLR (pt. 476) 108 S.C. The appellate court can still evaluate evidence not consisting wholly of documentary evidence where the evaluation of such evidence does not touch on the credibility of the witnesses. See: ONWUMELU v. DURU (1997) 10 NWLR (pt. 525) 377.
In the instant case Exhibits “P5” and “P4” have established that the 1st respondent’s indebtedness on the overdraft account was N21,217.07 as at 30/4/86 while on the loan account the indebtedness was N159,413.03 as at 30/6/92. All these monies that the 1st respondent was owing carried an interest of 9% per annum. So it is a question of arithmetical calculation, rather than the calling of evidence, to determine the indebtedness of 1st respondent as at 1/3/94 when the learned trial Judge delivered his judgment dismissing the plaintiff/appellant’s claims. Hence the debt owed by 1st respondent on the overdraft on 1/3/94 was N42,276.29 while the amount due on the loan was N184,216.37. This is the judgment which should have been entered for the plaintiff against the 1st defendant on 1/3/94.
Now to the liability of the 2nd respondent. It was the 2nd respondent who accepted the terms and conditions of the facilities granted to the 1st respondent on Exhibit P1. It is a well known principle of law that a limited liability company is an entirely different and distinct entity from its Managing Director or human agents who act for it. See: SALOMON v. SALOMON (1897) A.C. 22; ROYAL PETROLEUM CO. LTD v. FIRST BANK OF NIGERIA LTD (1997) 6 NWLR (pt.510) 584. So even though the 2nd respondent was the sole signatory to the accounts of the 1st respondent and he was the moving spirit behind the activities of the 1st respondent, he cannot without more, be held liable for the debts incurred by the 1st respondent. However, as a director of an incorporated company he can be held liable for the loan granted in favour of the company if he is either a surety or guarantor of the loan. See: CO-OPERATIVE BANK LIMITED v. SAMUEL OBOKHARE (1996) 8 NWLR (pt. 468) 579.
As already shown, it was the 2nd respondent who accepted the terms and conditions which were stated in Exhibit P1 before the facilities were utilized by the 1st respondent. The facilities were to be secured by amongst others:-
- Legal Mortgage on Mr. E.A. Oyedeji’s properties at Ife and Ilesha
- Guarantee of Mr. Oyedeji.
It is in respect of the guarantee that the plaintiff tendered Exhibit “P2” which the learned trial Judge found to be a format and did not refer to any specific amount or occasion and was not dated except the stamping on 10th June, 1988. He referred to the date the loan facilities were given which was 1985. He proceeded to hold that there is no credible evidence to connect Exhibit “P2” to Exhibit “P1”. He said Mr. Oyedeji should have given his guarantee before the loans and facilities were given and not thereafter. He finally held that the Guarantee of 1988, if at all is not related to the loans and facilities of 1985. He therefore found that the 2nd defendant/respondent was not liable on the guarantee. The learned trial Judge formed the opinion that the guarantee was given in 1988 based on the date the Exhibit was stamped.
The only oral evidence on the guarantee is the evidence of PW1 who stated that the 2nd defendant guaranteed the facilities. Although the witness stated under cross-examination that he joined the plaintiff in its Ilesha Branch in 1991, he was not cross-examined on when the 200 defendant gave the guarantee nor did the defendants give any evidence apart from denying paragraph 8 of the Amended Statement of Claim and stating in paragraph 3(a) of the Amended Statement of Defence that-
“3(a). with particular reference to paragraph 8, 2nd defendant denies guaranteeing the loan, and aver that the loan was guaranteed by the Central Bank of Nigeria”
Where a defendant does not produce evidence or testify or call witnesses in support of his defence, slight or minimum evidence which can discharge the onus of proof would be required to ground the plaintiff’s claim. See: M.F. KENT (W.A) LTD. v. MARTCHEM IND. LTD. (2000) 8 NWLR (pt. 669) 459. It was held in that case that when admissible evidence has been adduced which remains uncontroverted, it becomes part of what will lead to a decision in the case, and unless the evidence is palpably incredible, the court is not only entitled to, but has no reason not to accept it. In other words, when evidence is unchallenged through cross examination, not controverted by other evidence, for example, where at the trial the plaintiff calls evidence, but the defendant who, has an opportunity to call evidence, does not call evidence to contradict the evidence led by the plaintiff, and the evidence by itself is not incredible, the evidence is not only qualified to be accepted by the trial judge, the trial judge must accept and act on the evidence.
See: ODULAJA v. HADDAD (1973) 11 SC. 357; OMEREGBE v. LAWANI (1980) 3-4 SC 108 at 117; EGBUNIKE v. AFRICAN CONTINENTAL BANK LTD (1995) 2 NWLR (pt 375) 34; BROADLINE ENTERPRISE LTD v. MONTEREY MARITIME CORPORATION (1995) 9 NWLR (pt. 417) 1 at 27; YESUFU v. KUPPER INTERNATIONAL N.V. (1996) 5 NWLR (pt.446) 17. It was also held in A-G KWARA STATE & 1 ORS v. RAIMI OLAWALE (1993) 1 NWLR (pt. 272) 645 per Nnaemeke-Agu J.S.C at pages 665-666 that although a party to a suit is not obliged to testify on his behalf, where the party’s case before a court of justice is such that he is expected to swear to its truth, and be cross-examined thereon and he fails to submit to these, as in the instant case, that is a point that can go against his credit and be a good ground for rejection of his case. This is because it is the law that in civil cases, it is the balancing of evidence called by either side to the litigation that is the only acceptable method of making conclusive findings. See: MOGAJI v. ODOFIN (1978) 4 S.C 91 at 93-96.
The learned trial Judge had no legal basis whatsoever in finding that there is no credible evidence to connect Exhibits “P1” and “P2” and was clearly wrong to hold that the Guarantee of 1988 if at all, is not related to the loans and facilities of 1983 since there was no evidence to show that the guarantee was not given in 1985 but in 1988. The date of stamping the guarantee does not suggest in the least that it was given in 1988. No law stipulates that the guarantee must be in a particular format. Even though no amount is stated in the guarantee, Exhibits P1 and P2 must be read together to ascertain the amount guaranteed. The 2nd defendant was already aware of the amount he was guaranteeing when he accepted the terms and conditions for the granting of the facilities. The court’s voiding of the guarantee by relying on Article 4811 of Chitty on Contracts 24th Edition page 1020 and the holding that the guarantee made three years after the contract in Exhibit “P1” had been concluded is merely speculative. It was also misapplied. Article 4811 of Chitty on Contracts states that: “If the surety guarantees past transactions in return for an undertaking by the creditor to continue to deal with the debtor, or to grant him further credit, there will be good consideration. In practice the surety frequently guarantees both past and future transactions in return for such an undertaking, and such a guarantee is good as to both sets of transactions for consideration to be executed on the one side is at all events prima facie consideration for all that is done on t he other, and all the promises are to be referred to all the considerations”.
Even if the 2nd defendant gave the guarantee in 1988 for the loan facility that was enjoyed in 1985 it is still a good guarantee because it ensured that the overdraft facility was renewed by the plaintiff for the enjoyment of the 1st defendant well beyond the November 1986 deadline when the facility was due to expire. The facilities were terminated on 2nd August, 1991 when the Solicitors to the plaintiff wrote Exhibit “P3” demanding for the payment of the debts on both loans as well as overdraft accounts. The appellant sufficiently and reasonably discharged the burden of proof laid on it by law in establishing before the learned trial Judge that the 2nd respondent guaranteed the loan and/or bank facilities granted to the 1st respondent. Clauses 2,3,4 and 5 of Exhibit “P2” clearly stipulated that the Guarantee is to be a continuing security for the whole amount now due or owing or may become due or owing. The clauses stipulate:-
“2. This Guarantee is to be a continuing security for the whole amount due or owing to you or which may hereafter at any time become due or owing to you as aforesaid by the principal until the expiration of three months after the receipt by you from the undersigned or anyone or more of them or their respective executors or administrators of notice in writing to discontinue it (but notwithstanding the discontinuance as to one or more of the undersigned the Guarantee is to remain a continuing security as to the other or others) in respect of all and every sum or sums of money which are now or shall at any time be owing in addition to such further sum for interest thereon and other banking charges in respect thereof and for costs and expenses as shall accrue to you within six months before or at any time after the date of demand by you upon the undersigned or anyone or more of the undersigned for payment.
- For all purpose of the liability of the undersigned to you under this Guarantee (including in particular but without prejudice to the generality of the foregoing for all purpose the liability of the undersigned for interest)every sum of money which may now be or which hereafter may from time to time become due or owing to you as aforesaid by the Principal shall be deemed to continue due and owing to you by the principal until the same shall be actually repaid to you notwithstanding the bankruptcy or winding up of the principal or other event whatever and in case of the death of the principal all sums which would have been due or owing aforesaid to you by the principal if the principal had lived until the time at which you shall receive actual notice of his death shall for all purposes of this Guarantee be deemed included in the moneys due and owing to you by the Principal.
- This Guarantee is to be in addition to and is not to prejudice or be prejudiced by any other securities or guarantees which you may now or hereafter hold from or on account of the Principal ad is to be binding on the undersigned and estate(s) as a continuing security notwithstanding any payments from time to time made to you or any settlement of account or disability affecting the undersigned or the death of any one or more of us or any thing whatsoever
- You are to be at liberty in the event of this Guarantee ceasing from any cause whatsoever to be binding as a continuing security on the undersigned or any one or more of the undersigned or on our respective estate(s) to open a fresh account or accounts and to continue any then existing account or accounts with the principal and no moneys paid into any such account by or on behalf of the principal and subsequently drawn out shall on a settlement or any claim under this Guarantee be appropriated towards or have the effect or payment of any part of the moneys due from the principal at the time of this guarantee ceasing to be so binding as aforesaid unless the person paying in such moneys shall at the time direct you in writing specially to appropriate the sums for that purpose.
Thus it is clear beyond peradventure that the Guarantee in Exhibit “P2” which the 2nd respondent gave in favour of the appellant is a continuing guarantee which guaranteed both past and future transactions by the 1st respondent.
It would seem to appear that Exhibit “P1” contemplated a joint or separate guarantee by the 2nd respondent and ACGS but the 2nd respondent totally denied that he was a guarantor and pleaded without producing a shred of evidence to show that the loan and overdraft were guaranteed by the Central Bank of Nigeria. I say no more about the issue since no evidence was adduced to support the pleading that the Central Bank of Nigeria could have jointly guaranteed the facilities granted the 1st respondent with the 2nd respondent.
Since there is a finding that the 1st respondent was indebted to the appellant on the overdraft and loan facilities which it has not liquidated, the secondary liability attaches to the 2nd respondent to make good the guarantee he took out in favour of the appellant.
The appeal has merit and it is accordingly allowed. The judgment of Falade J. delivered on 1/3/94 in suit No. HIL/131/91 dismissing the plaintiffs claims in their entirety is hereby set aside. In its place judgment shall be entered for the plaintiff/appellant for a total sum of N226,492.66 representing 1st defendant/respondent’s indebtedness on the overdraft and loan which the company failed to liquidate. The 2nd respondent is jointly and severally liable with the 1st respondent on the said loan and overdraft totalling N226,492.66 with interest at 10% per annum from 1/3/94 until the judgment debt is liquidated. Costs are awarded in favour of the appellant against the respondents assessed at N30,000.00. in this court and N10,000.00 in the lower court.
Other Citations: (2007)LCN/2540(CA)
