Banker’s liability to Customer on Suggested Sufficient Fund – Court Holding
Where a banker refuses payment of a cheque which the customer has not stopped, but to meet which there are not sufficient funds of the customer’s available, and by his answer on the cheque the banker suggests that there are sufficient funds but the customer has stopped the cheque, the answer does not amount to such an admission or representation that the customer’s funds are sufficient as will fix the banker with liability to the customer for refusing paymentADENIILUYI v. AFRICAN CONT. BANK LTD. (1964) NCLR (page 19, lines 22-39; page 20, lines 14-22) H.C. (West)
Facts of the case
The plaintiffs brought an action to recover from the defendants, their bankers, the amount of a cheque drawn by the plaintiffs payment of which was refused by the defendants. The first plaintiff opened an account with the defendant bank in the joint names of himself and the second plaintiff.
The defendants believed that the plaintiffs held the account in trust for certain third parties, whom they, the defendants, regarded as their customers. The third parties believed there was an account in their name with the defendants designated or known as a special account. They paid in a cheque endorsed to them, to be credited to their special account, and the defendants paid the proceeds into the plaintiffs’ account.
The plaintiffs drew a cheque on the account which would have been covered by the credit balance in the account if the third parties’ cheque had been properly credited to it, but otherwise not. The third parties directed the defendants to freeze the account. The defendants marked the plaintiffs’ cheque “payment counter-manded” without the plaintiffs’ authority, and refused payment. The plaintiffs instituted the present proceedings, as holders of the account in their own right and not as trustees, alleging a breach of contract by the defendants in not paying out on the cheque out of moneys of the plaintiffs in their hands.
Ack: Alan Milner. All Rights Reserved (LawHub NG).