Augustine Chigozie Uba V. Union Bank of Nigeria Plc (1994)
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RABIU DANLAMI MUHAMMAD, J.C.A.
Augustine Chigozie Uba the appellant herein was the plaintiff at the lower court. He was a customer of Union Bank of Nigeria PLC, the respondent herein. He operated two accounts with the respondent at its Gindiri Branch. One account was a Current Account while the other was a Loan Account. On 9th day of July, 1991, the appellant bought various motor spare parts from one C.G. Lot for N372, 500.00. On the same day he issued the said C.G. Lot with a cheque for N50, 000.00 drawn on the respondent’s Gindiri Branch, as deposit for the supply of the spare parts. When C.G. Lot presented the cheque for encashment, it was not honoured and was returned marked “Drawer’s Confirmation required.” C.G. Lot was annoyed. He went to the appellant and told the appellant off in the presence of so many people. C.G. Lot also sold the spare parts to another person. The appellant was surprised that his cheque was dishonoured because he had made a total deposit of N 167, 346.00 and had only withdrawn N 113, 100.00 leaving a balance of N54, 346.00. The appellant then went and saw the Branch Manager, who asked for time to sort out the account. When nothing was done by the Branch Manager, the appellant instructed his Solicitors to write to the Bank which was done. When the respondent still refused to pay the cheque, he sued the Bank at the Plateau State High Court, Pankshin Judicial Division Claiming:-
“Whereof plaintiff claims the sum of N500, 000.00 (Five Hundred Thousand Naira Only) as special and general damages for all the loss incurred by the plaintiff as a result of the dishonour of his cheque aforesaid by the defendant.”
Pleadings were ordered, filed and exchanged. In its statement of defence, the Bank denied liability and counter-claimed. The bank averred that as at 9/7/91 when the appellant’s cheque was presented his current account was in debit. The Bank then counter-claimed for N907.42.
At the hearing of the suit, the appellant testified and also called one other witness. Only one witness testified on behalf of the respondent. In a reserved judgment the trial Judge in dismissing the claim said:-
“I find that the defendant has successfully proved that the plaintiff had no enough fund at the time of the presentation of the cheque to the Bank on 9/7/91. He cannot therefore blame the defendant for dishonouring his cheque moreso when the dishonour was no outright … The plaintiff was in deficit to the tune of N755.68 Kobo at the time of presenting his cheque on 9/7/91.”
With regards to the contention that the Bank did not plead that it used the sum of N50, 000.00 to liquidate the loan, the trial judge held:-
“In my opinion, I find that this is implied in paragraph 9 of the pleadings of the defendant. The loan account is also pleaded in paragraph 2 and 3 of the counter-claim which was not challenged by plaintiff’s pleadings.”
On the issue of a Banker combining two accounts without the express permission of the customer, the trial judge stated:-
“…It is the law and indeed Banking practice that unless precluded by agreement express or implied from the course of business, the banker is entitled to combine two different accounts kept by the customer in his own right, even though at different branches of the same Bank, and to treat the balance, if any, as the only amount really standing to his credit… In the case in hand, I see nothing wrong in the defendant opening a Loan Account separate from plaintiff’91s ordinary Current Account unless there was an express agreement that the two accounts should be operated distinct and separate.”
The learned trial Judge then concluded:-
“On the whole I find that the defendant did not wrongfully and negligently dishonour the plaintiff’s cheque since he had no sufficient fund covering the sum of N50, 000.00 in his account. I therefore find that he is not entitled to the damages claimed.”
The trial Judge also found the respondent’s counter-claim as proved and entered judgment against the appellant in the sum of N907.42 at 26.5% interest from 17/7/92.
The appellant was dissatisfied with this decision he therefore appealed to this court. He filed nine grounds of appeal. Without their particulars, the grounds of appeal read:-
“(1) The learned trial Judge misdirected himself when he held that fact of using the sum of N50, 000.00 paid into his ordinary current account by the appellant was used by the respondent to offset the “indebtedness” of the appellant was implied in paragraph 9 of the Statement of Defence and paragraphs 2 and 3 of the counter-claim.
(2) The learned trial Judge erred when he refused to uphold the submission of the appellant that the fact of using the sum of N50, 000.00 paid in by the appellant to offset his loan was not pleaded by the respondent.
(3) The learned trial Judge also erred in law and on the facts when he held as follows:-
“Taking it for granted that the plaintiff had such a balance in his account and the defendant dishonoured the cheque what is the liability of the Bank to the plaintiff? Is the bank liable on negligence? I do not think so.”
(4) The learned trial Judge also misdirected or not properly directed himself when he held as follows:-
“The mere fact that the defendant did not reflect the payment of the loan by plaintiff in Exhibit 2 does not amount to negligence since it was not served on plaintiff before he issued his cheque Exhibit “A”
(5) The learned trial Judge erred when he held that the sum of N50, 000.00 paid into his normal current account by the plaintiff was used by the defendant/respondent to offset the loan of N50, 000.00.
(6) The learned trial Judge erred and totally misunderstood the case of Bank of the North v. Abdulsalami Dabare (1976) Nig. Commercial Law Reports 448 at 453 when he wrongly placed reliance on it in dismissing the plaintiff’s case when the facts of the case are different from the facts of the present case and therefore distinguishable.
(7) The decision of the court is against the weight of evidence before the court.
(8) The learned trial Judge erred in law when he gave judgment for the respondent on its counter-claim when there was no evidence of any demand made for the repayment of the overdrawn balance.
(9) The Judge also erred when he gave judgment for the respondent on the ‘overdrawn’ balance when there was no evidence of how the current account came to be overdrawn.”
In compliance with Order 6 of the Court of Appeal Rules, 1981, both parties filed their respective briefs. The appellant identified four issues for determination in this appeal. These are:-
“(1) Was the fact that the respondent used the sum of N50.000.00 paid into his current account by the appellant to offset a loan granted to the appellant by the respondent.
(2) Can a Bank combine two separate accounts of a customer without permission and the four knowledge of the owner of the account?
(3) Was the Bank negligent or not?
(4) Was the Judge right in giving judgment for the respondent in their counter-claim?”
The respondent on the other hand formulated three issues for determination in the appeal viz:-
“(i) Whether the defendant bank was right in applying the sum of N50, 000.00 lodged by the plaintiff in his current account towards the liquidation of the debit balance on his loan account;
(ii) Whether the trial Judge was right in his finding that the defendant was not liable in damages for dishonouring the plaintiff’s cheque;
(iii) Whether the respondent proved its case regarding the counterclaim and was entitled to judgment for same.”
I have carefully considered the issues formulated by the two parties. Taking into account the grounds of appeal filed, it is my opinion that the issues formulated by the respondent are more apt to the determination of this appeal. In any case, I tried but could not make head or tail of the first issue formulated by the appellant.
At the hearing of the appeal Mr. Maduabuchi learned counsel for the appellant adopted the appellant’s brief and also proferred oral evidence in elucidation of some points. It was submitted that it was wrong of the lower court to have held that the Bank in its Statement of Defence had pleaded that it used the N50, 000.00 which the appellant paid into his current account to offset his indebtedness to the Bank. After considering paragraph 9 of the Statement of Defence and paragraphs 2 and 3 of the counter-claim, it was submitted that what all these paragraphs said was that the appellant took a loan of N50, 000.00 from the Bank. It was contended that the act of granting a loan was a fact which must be pleaded and that using the N50, 000.00 from the current account to offset a loan in the loan account must also be pleaded. It was submitted that since these facts were not pleaded any evidence in proof of these facts went to no issue and should be disregarded. Okagbue v. Romane (1982) 5 S.C. 133 at 155 and Odogwu v. Odogwu (1990) 4 NWLR (Pt.143) 224 at 232.
It was also submitted that the trial Judge totally misunderstood the decision in the case of Bank of the North v. Abdulsalami Dabare (1976) Nig. Commercial Law Reports 448. Counsel extensively reviewed this case and submitted that in the Bank of the North case there was authorisation for the combination and that in our present case there was no such authorisation. It was further submitted that the Bank had no power to combine the accounts unless it was authorised by the owner. It was therefore submitted that the trial Judge was wrong to have held that the respondent could combine the two accounts.
It was further submitted that once money is paid into customer’s account by a customer the duty on the Bank is to have same credited into the account of the customer. Failure to do so is prima facie evidence of negligence and the Bank would be liable in damages as held in Balogun v. National Bank of Nigeria (1978) NCLR 102 at 108 and Yesufu v. A.C.B. (1981)1 S.C. 74.
With regards to the counter-claim, it was submitted that the Judge was wrong to enter judgment in favour of the respondent because there was no evidence of demand. Johnson v. Sobaki (1968) All NLR 282. The counter-claim was therefore premature and should have been struck out. It was also contended that there was no evidence before the court as to how the current account came to be overdrawn.
Counsel then urged us to allow the appeal, set aside the judgment of the lower court and enter judgment for the appellant in terms of his claim.
Mr. Orpin learned counsel for the respondent adopted the respondent’s brief. It was submitted that the appellant’s cheque was dishonoured because he did not have sufficient funds to his credit to meet the cheque and in the circumstances the respondent had no duty to honour same. It was contended that the two lodgements of N25, 000.00 made by the appellant were used by the respondent with the full knowledge of the appellant to offset a loan of N50, 000.00 granted to the appellant. In fact the appellant had admitted that he took the loan.
It was further submitted that the respondent was justified in law in applying the appellant’s funds from his current account towards offsetting his debit balance on his loan account. It was submitted that the law is that unless precluded by agreement or course of business a banker is entitled to combine all accounts kept in the same right by the customer. It was contended that in our present case, there was no evidence of any agreement to the contrary and the accounts are in the same right being personal accounts of the appellant. It was also submitted that the appellant did not contend that the loan was not yet due.
It was submitted that the counter-claim has been proved. The exhibits tendered conclusively showed that the appellant’s current account was in the debit.
The appellant also did not deny the counter-claim; he merely stated that the action was premature. Counsel for the respondent then urged us to dismiss the appeal.
From the evidence adduced at the lower court it is not in dispute that the appellant was a customer of the respondent and operated two accounts with the respondents at its Gindiri Branch. The relationship in law between a banker and its customer has been that of debtor and creditor. See Yesufu v. African Continental Bank Ltd. (1981)1 S.C. 74. See Also page 92 where Bello J.S.C. (as he then was) explained the principles of banking law and practice:-
“When a bank credits the current account of its customer with a certain sum, the bank becomes a debtor to the customer in that sum: Joachimson v. Swiss Bank Corporation (1921) 3 K.B. 110; and conversely when a bank debits the current accounts of its customer with a certain sum: the customer becomes a debtor to the bank in that sum; See Paget Law of Banking, 8th Ed. 9. 84. Whichever party is the creditor is entitled to sue, if demand for payment was not complied with, the other party for money lent: see Joachimson v. Swiss Bank Corp. (supra).
It follows from the foregoing that when a bank reverses a credit entry of a certain sum in the current account of Its customer by debiting the account with the same sum, such reversal in practical terms means that the bank has liquidated its liability as debtor to the customer.”
With regards to combining two accounts belonging to a single customer, the law is:-
“Unless precluded by agreement, express or implied from the course of business, the banker is entitled to combine different accounts kept by the customer in his own right, even though at different branches of the same bank, and to treat the balance, if any, as the only amount really standing to his credit.”
See Halsbury’s Laws of England Volume 23rd Ed. paragraph 322 at page 172.
Commenting on the above statement of law Bairamian F.J. in British & French Bank Ltd. v. Opaleye (1962) 1 All NLR 26 at 28 said:-
“The point about the customer having different accounts “in his own right” is probably this, namely, that he has both accounts in his name, and that neither account is a trust account.”
In Garnett v. M’ kewan (1872) L.R. 8 Ex. 10 the customer had accounts at two different branches. The two accounts were both in the same name. One of the accounts was in debit and the bank without giving notice, utilised the credit in the other account, and refused to honour cheques drawn on the other account. It was held that the bank was entitled to do that, because there was no special contract and no usage proved to prevent the bank from doing that or to require the bank to give him notice before doing it.
In our present case, the two accounts are in the name of the appellant. There is no evidence that either of the account is a trust account. I therefore hold that the two accounts are kept by the appellant, in his own right. There is no express agreement that the bank is precluded from combining the two accounts nor could it be implied from the evidence that such an agreement exist. The appellant has admitted receiving the loan from the bank. It was not contended that the loan was not due for payment. It is my opinion that in the circumstances of this case, the bank was right in combining the two accounts. My answer to the first issue is therefore in the affirmative.
A bank will be held negligent if it failed to observe the standard expected of a reasonable banker in respect of a cheque and the onus of proving that they were not negligent lies on the bank: United Nigeria Insurance Co. v. Muslim Bank (West Africa) Ltd. (1972) NCLR 9. A bank is also bound to honour a cheque issued by its customer if the customer has enough funds to satisfy the amount payable on the cheque. Refusal to honour the cheque amounts to a breach of contract and would render the banker liable in damages. In the instant case the bank has shown that the appellant had no sufficient funds to pay the cheque. In fact at the time the cheque was presented, it has been proved that, the account was in debit. The bank was therefore not negligent in refusing to honour the cheque.
On the issue that the trial Judge was wrong to hold that the respondent pleaded that it used the money in the current account to offset the appellant’s indebtedness, this is what the trial Judge said:-
“The learned plaintiff’s counsel contended that the fact of using the said sum of N50, 000.00 to liquidate the loan was never pleaded by the defence. In my opinion, I find that this is implied in paragraph 9 of the pleadings of the defendant where it is averred that as at 9/7/91 when the plaintiff’s “dud cheques were presented (sic) the plaintiff’s current account was actually in debit which stood at N755.68 when calculated the following day… The loan account is also pleaded in paragraphs 2 and 3 of the counter-claim which was not challenged by the plaintiff’s pleadings.”
I have read the whole of the Statement of Defence. I agree with the trial Judge that it could be implied from the pleadings that the bank used the N50, 000.00 to offset the appellant’s loan.
In the counter-claim the bank claimed the sum of N907.42 from the appellant. The appellant did not file a reply to the counter-claim. The respondent also led evidence to establish the counter-claim. This evidence was not contradicted by the appellant since the appellant did not file a defence to the counter-claim and did not rebut nor challenge the claim in his evidence, the counter-claim is deemed established.
The trial Judge was therefore right to give judgment for the respondents in respect of the counter-claim.
In the circumstance, the appeal lacks merit and is dismissed by me. Accordingly I affirm the decision of Damulak J. The respondent is entitled to costs which I assess at N750.00.
Other Citations: (1994)LCN/0173(CA)
