Auto Import Export V. J.A.A. Adebayo & Ors (2005)

LAWGLOBAL HUB Lead Judgment Report

OGUNTADE, J.S.C. 

The appellant, a Romanian company was the plaintiff at the Lagos High Court. It had on 14/11/79 issued its writ of summons against three defendants claiming for the following:-

“The plaintiff’s claim against the defendants jointly and/or severally is for the sum of N1, 089,743.50 (US.$1,700,000.00) being the balance (plus interest) of the price of motor vehicles, spare parts and machinery (hereinafter called ‘The goods’) sold and delivered by the plaintiff in Lagos to Continental Motors and Engineering Company Limited now under the Management and Receivership of Mr. Basil Adenrele Adu liquidator (hereinafter called ‘the 1st defendant’) which said goods were by an agreement between the 1st defendant and the 2nd defendant transferred to the 2nd defendant for reward, the payment of which said sum of N1,089,743.50 (U.S$1,700,000) having been guaranteed by the 3rd defendant by virtue of a memorandum in writing dated the 20th May, 1975 been to balance price of motor vehicles, spare parts and machinery – N990,448.00 (U.S.$1,153,500) To interest at 5% per annum up to and including 20/5/75 as agreed – N99,295.50(U.S.$153,500) = N 1,089,743.50 (U.S.$1, 700.000)

The defendants have refused to pay despite repeated demands, and the plaintiff also claims interests on the said sum of N1,089,743.50 (U.S$1,700,000) at the rate of 12% per annum from 3/12/77 until the date of judgment and thereafter at the rate of 6% per annum until the judgment debt and costs have been fully paid.”

In the course of the trial before the High Court, the plaintiff amended its statement of claim; and another defendant, Mr. J. A. A. Adebayo (now the 1st respondent) was joined to the suit as the 2nd defendant. The plaintiff later withdrew its suit against Mr. Basil Adenrele Adu, who had at the inception of the suit been sued as 1st defendant.

Pleadings having been filed and exchanged, the suit was heard by Candide Johnson C.J. (of blessed memory). The plaintiff called one witness. The present 3rd respondent who was identified at the trial as the 4th defendant also called one ‘witness. On 16/7/86, the learned Chief Judge in his judgment concluded thus:-

“On the views above held, it is my judgment that the 3rd defendant remains liable to the plaintiff for the payment of the agreed sum of $1.7million dollars otherwise N1, 089,743.50k as claimed in the writ.

I find no case made out against the 2nd and 4th defendants on the claim and the case is dismissed against both the 2nd and 4th defendants. I hereby enter judgment in favour of the plaintiff against the 3rd defendant in the sum of N1, 089,743.50k with interest at 12% per annum from 2/12/77 until today and thereafter interest at 6% per annum until the judgment debt and interest are fully paid.”

It is necessary that I observe here that the 2nd defendant before the High Court is now described in this appeal as 1st respondent, the 3rd defendant as 2nd respondent and the 4th defendant as 3rd respondent. This observation becomes necessary in order to align the description of parties in the High Court with their description in the court below and this Court.

The 2nd respondent was dissatisfied with the judgment of the trial court. It brought an appeal against it. The plaintiff was also I dissatisfied. It brought a cross-appeal of its own. The Court of Appeal (Lagos Division) heard the appeal. In its judgment on 1/7/96, the court below struck out the appeal by the 2nd respondent and dismissed the cross-appeal by the plaintiff. The result was that the judgment of the trial court remained undisturbed. The plaintiff, dissatisfied with the judgment of the court below, has come on a last appeal before this court. In its appellant’s brief, the issues identified as arising for determination in the appeal are these:-

“(1) Whether the appellant had waived its right of recovering the balance of the debt of $1.7million and interest from the 3rd respondent and whether the 3rd respondent can validly rely on the defence of waiver where such was not pleaded.

(2) Whether upon a proper construction of exhibit 5, the endorsement of the three (3) drafts, exhibits 8, 8A, 8B by the 3rd respondent was a mere formality or a recognition of the 3rd respondent’s continued indebtedness to the appellant and a duty under the Bills of Exchange Act to pay the said sum of $1.7million plus interest to the appellant.

(3) Whether upon a proper construction of exhibit 5, the appellant’s right to payment against the 3rd respondent should be determined on the basis of the three (3) irregularly drawn drafts, exhibits 8, 8A and 8B or its further amended statement of claim.

4. Given the circumstances of this case and upon a proper construction of exhibit 5, whether the words ‘without recourse’ indorsed on the three drafts, exhibits 8, 8A and 8B operate to exclude the 3rd respondent from liability of paying the sum of $1.7million plus interest given the circumstances of the transaction.”

The 1st and 3rd respondents through their counsel filed a joint brief wherein they identified the under-mentioned issues as arising for determination.