First African Trust Bank Ltd V Partnership Investment Company Limited (2003)

LAWGLOBAL HUB Lead Judgment Report

A. O. EJIWUNMI, J.S.C. 

The claim that eventually led to this appeal was commenced by the plaintiff/respondent before the High Court of Lagos State in suit No. LD/1395/95. In that suit, the plaintiff/respondent’s claim was for the sum of N7,100,000.00 (Seven Million, One Hundred Thousand Naira) being the value of a bank draft issued by the appellant in favour of the respondent on the 8th of February, 1995 as per First African Trust Bank cheque No. 40622-062150011 and which cheque was returned unpaid despite repeated demands. The respondent also claimed interest at the rate of 21% per annum from 8th February, 1995 to the date of judgment and 10% per annum thereafter until judgment debt is finally paid.

The writ of summons in respect of this claim was followed by a statement of claim. Thereafter, the respondent by a motion on notice applied to the trial court for leave to enter judgment against the appellant. That move was resisted by the appellant who eventually got the leave of the trial court to file its statement of defence in order to defend the action. The case was then heard on the pleadings filed by the parties. For the respondent one witness gave evidence while appellant proffered evidence in support of its own case by calling two witnesses.

In view of the comments that will be made later in this judgment, the pleadings of the parties would be set out in this judgment. For the plaintiff/respondent, the statement of claim filed on its behalf by its learned counsel reads thus:-

“1. The plaintiff is a registered company with its office at 37 Ademola Street, S.W. Ikoyi, Lagos and carrying on the business of financial consultants and suppliers.

2. The defendant is a registered company carrying on banking services at Afribank Street, Victoria Island, Lagos.
3. On the 8th of February, 1995 the defendant issued a bank draft No. 40622-062150011 for N7,100,000.00 in favour of the plaintiff for services rendered.
4. That on presentation the cheque was first returned and marked “represent” “value not received”.
5. That when the cheque was again represented it was returned and marked “payment stopped.”
6. That payment could not be stopped because it was the bank itself that issue (sic) the cheque.
7. That the plaintiff had already given value on receipt of the bank draft.”

And for the appellant, its statement of defence reads thus:-

“SAVE AND EXCEPT as hereinafter expressly admitted the defendant denies each and every allegation contained in the statement of claim as if the same were specifically set out and traversed seriatum:

1. That the defendant admits paragraphs 1 and 2 of the statement of claim.
2. The defendant denies paragraphs 3, 4, 5, 6 and 7 of the statement of claim.
3. The defendant in particular response to paragraphs 3 and 7 of the statement of claim denies ever receiving value or consideration for the banker’s cheque; the subject-matter of this suit, and avers that it stopped payment of the same to prevent fraud on itself.
4. Further to the immediately preceding paragraph the defendant states that sometime in February, 1995, while in the course of trading, a man called Alhaji Tijani Ladan offered to sell US$500,000.00 to the defendant in the presence of one Alhaji Abubakar of Damco bureau de change and another.
5. The defendant further states that part of the conditions precedent to concluding and transferring the money was that part payment must be made in draft as evidence of the defendant’s ability to pay before the transfer can be effected.
6. The defendant states that based on the aforesaid agreement in paragraph it issued two cheques for N15 million Naira as follows:

(a) Nigeria Universal Bank – 7,900,000.00

(b) Partnership Investment – 7,100,000.00

TOTAL = N15,000,000.00

7. Contrary to the said agreement the bankers cheque – subject-matter of this suit – came in through clearing. The defendant immediately threatened to stop payment, were prevailed upon by the aforesaid persons to return the cheque marked ‘represent’ to enable the defendant receive value for the foreign exchange purchased.
8. However, the said cheque was represented without receipt of the foreign exchange and at this stage the defendant stopped payment to prevent loss of the naira sum of N7,100,000.00.
9. The defendant states that the said attempted fraud was reported to the police authorities, and some of the said persons involved were arrested.
10. The defendant avers that neither the said Alhaji Tijani Ladan nor the plaintiff has an account with it and denies receiving any value for the said banker’s cheque from them or anyone else.
11. The defendant denies that the plaintiff gave it any value for the said cheque nor has the plaintiff suffered any loss at all.

ALTERNATIVELY, if the plaintiff suffered any loss at all (which is denied) the same is not attributable to the fault of the defendant

12. The defendant further states that only the outcome of police investigations can reveal what role (if any) the plaintiff played in the entire transactions; as the plaintiff’s name was given to the defendant as beneficiary of the said cheque.
13. That even with the endorsement on the cheque (i.e. ‘represent’ value not received) the plaintiff did not contact the defendant for confirmation of the cheque until after same had been stopped. 14. The defendant further states that had it not stopped payment of the said cheque; it would have suffered a complete loss of the value of the cheque.
14. Whereupon the defendant states that the plaintiff’s claim is speculative and unfounded and should be dismissed with costs to the defendant.”

At the trial, the case for the respondent as given by the only witness called appears to be that one Alhaji Abubakar brought a bank draft of N7.1 Million which was part-payment of an amount owed by him to the respondent. Following the presentation of the cheque for payment to the appellant, claimed by the respondent to be its bankers, the bank draft No. 013922 dated 8-2-1995 was returned and that it should be re-presented. The respondent duly re-represented the bank draft exhibit P1 at a future date. When it was so re-presented to the appellant, it was returned unpaid with this remark: “value not received”. As since the bank draft has remained unpaid, the respondent commenced this action. Under cross-examination, the witness said about Alhaji Abubakar who gave the bank draft to the respondent as follows, and I quote:-

“Alhaji Abubakar was interested in investing in the plaintiff’s company by purchase of share on the company. The plaintiff company made some payments to Alhaji Abubakar in terms of facilities granted to him. He was given credit facilities by the plaintiff company. He was given credit facilities up to Twenty-Six Million Naira N26,000,000.00. The credit facilities was given to Alhaji in January, 1995. The draft was given to the plaintiff by Alhaji Abubakar in part settlement of the credit facilities granted to him. When the draft was dishonoured we made contract (sic) with Alhaji Abubakar about it, he did not make any effort to repay the returned draft even after several meetings…”

For the appellant, evidence was given by its first witness inter alia, that the respondent is not a customer of the appellant. That apart from the bank draft exhibit P1, the appellant had no relationship whatsoever with the respondent. He said that around 8th February, 1995, one Alhaji Tijani Ladan came with Alhaji Abubakar of Damco bureau de change to the appellant where they had a meeting with the officials of the appellant. During that meeting the visitors offered to sell on the autonomous market a sum of $500,000.00. As the representatives of the appellant became interested in the offer, it was agreed with the off errors that the said sum would be bought by the appellant for the sum of N15,000,000.00 (Fifteen Million naira). At the request of Alhaji Tijani, the appellant also agreed that it would issue two cheques (bank drafts) for the sum of N15,000,000.00 as follows:

(1) for the sum of N7.9 Million Naira in favour of Nigeria Universal Bank; and

(2) the second cheque (bank draft) for the sum of N7.1 Million Naira in favour of the appellant.

The witness further added that it was a term of the agreement that the two bank drafts to be issued by the appellant would not be presented for payment until the sum of $500,000.00 has been transferred and received into the foreign account of the appellant bank. The appellant was however surprised that the relevant bank draft in this case for N7.1 Million Naira was presented for payment before the $500,000.00 (Dollars) was paid into the foreign account of the appellant. As this action was contrary to the agreement reached between the appellant and Alhaji Ladan, the bank draft was not paid.

It was returned and marked “represent”. The other bank draft for N7.9 Million was similarly treated. Despite that treatment of the cheques, the sum of $500,000.00 (dollars) that was promised by the off erors namely, Alhaji Abubakar and Alhaji Ladan remained unpaid into the account of the appellant. The bank draft of N7.1 million Naira relevant to this case had to be stopped by the appellant to prevent a fraud on itself. The appellant subsequently explained to the Managing Director of the respondent its reason for stopping the bank draft, exhibit P1.

The evidence of the second witness for the appellant, one Rufus Adeosun, who described himself as a banker and in the employment of the appellant, confirmed the transaction as stated by the first witness, a Mrs. Solomon Osita Mbamalu, a legal practitioner and the legal adviser of the appellant. Following addresses at the close of the oral evidence given by the parties, the learned trial Judge delivered a considered judgment. By the said judgment, the respondent was awarded judgment in terms of its claim. Accordingly, the respondent was awarded its claim for the sum of N7,100,000.00 being the value of the bank draft issued by the appellant in favour of the respondent with interest at the rate of 21% per annum from the 8th of February, 1995 until the date of the judgment, and thereafter at the rate of 10% per annum until the judgment debt is fully paid.

Being dissatisfied with the judgment of the trial court, the appellant appealed to the Court of Appeal (Lagos Division). In that court, the appellant was also unsuccessful and has therefore appealed further to this court. Pursuant to its appeal to this court, the appellant was granted leave to appeal to this court. The appellant in compliance with the rules of this court filed a brief for the appellant. Upon being served, the respondent also filed a respondent’s brief.

For the appellant, the following issues were identified in the appellant’s brief for the determination of the appeal:-

“(a) Whether in the circumstances of this case the appellant is obliged to pay the respondent on exhibit P1 when the Court of Appeal had found that the pleadings and evidence of the appellant on want of value had not been controverted nor seriously challenged by the respondent (Ground 1).

(b) Whether the learned Justices of the Court of Appeal were right in holding that the appellant had not sufficiently pleaded nor proved the fraud which the appellant alleged in this case. (Grounds 2 & 3).

(c) Whether in the absence of a written endorsement of the condition precedent on the draft, the appellant is not permitted by law to prove that the delivery of the draft was subject to a condition precedent and whether the condition ought not to bind the respondent who is a nominee of Alhaji Ladan with whom the appellant entered into an agreement for the supply of forex. (Ground 4)”.

In the respondent’s brief, the following are the two issues set down for the determination of the appeal:-

“(1) Whether the respondent was required by law to show that it had given consideration for the draft before it could be paid.

(2) Whether the alleged fraud had been particularised as required by law and proved”.

As I have carefully considered the issues raised by the parties for the determination of the appeal, and although my judgment would be guided by the issues raised in the appellant’s brief, I would also advert to the two issues proffered for the respondent, as they are also germane to the determination of the appeal.

Now, a careful reading of the facts of this case, the pleadings of the parties, and the judgments of the courts below, would reveal that the core question raised in this appeal is, whether the court below was right to have upheld the conclusion reached by the trial court that the draft exhibit “P1” was payable at sight to the respondent.

It is however argued for the appellant in the appellant’s brief and in the oral argument before this court that the court below was wholly wrong to have upheld the judgment of the trial court. In support of that submission, learned counsel for the appellant has argued that the court below properly adverted to the pleadings of the parties and rightly observed that having regard to the state of the pleadings, the respondent ought to have filed a reply to the statement of defence of the appellant. The court below, it is argued, without considering this aspect of the appeal before it, wrongly in the view of learned counsel for the appellant, went on to hold that if the appellant had not received value, it would not have issued the draft, as it is the practice of banks to receive value before drafts are issued. He went on further to submit that the court below wrongly placed reliance on the decisions in U.B.A. Ltd. v. Ibhafidon (1994) 1 NWLR (Pt.318) 90 and Lagricom Co. Ltd. v. U.B.N. Ltd. (1996) 4 NWLR (Pt.441) 185. It is also argued in support of the above submission that the court below misconceived the evidence of the appellant or did not sufficiently relate the evidence of the appellant in support of its pleadings before reaching the conclusion that the respondent was entitled to be paid the sum claimed in ex. P1. In the view of learned counsel for the appellant, had the court below considered such evidence as was on record, it would have reached the conclusion that the decision in U.B.A. Ltd. v. Ibhafidon (supra) is not applicable to the case under consideration. He then referred to the case of U.B.N. v. Nwoye (1996) 3 NWLR (Pt.435) 135, as more apposite to the determination of the question raised in respect of this issue. He also invited the attention of the court to Halsbury’s Laws of England, Vol. 4, 4th Edition, paragraph 379 at page 164, and to the following cases:- Re Whitaker (1889) 42 Ch.D. 119 at 124; and R. E. Jones Ltd. v. Waring & Gilow Ltd. (1926) AC 670 at 680, 687 and 699. On this main question, the contention made for the respondent in the respondent’s brief and in the oral argument at the hearing of the appeal, is that the court below was right to have upheld the respondent’s claim. Learned counsel for the appellant urged the court to apply the decision in UBA Ltd. v. Ibhafidon (supra) for the appellant before issuing the draft exhibit “1A” must have satisfied itself that the transactions leading to its issuance were in order. In the view of learned counsel for the respondent, the bank cannot rely on a mistake of the bank and another third party to repudiate the payment of the draft. It is the further submission of learned counsel that the appellant once it has issued the draft, is estopped under S. 150, Evidence Act from denying that it was not issued for valuable consideration.

Before the consideration of the arguments proffered by learned counsel for the parties in respect of this issue, I think it is desirable to advert first to the pleadings filed in this matter. In this respect, it is pertinent to note that the court below in the course of the lead judgment delivered by Chukwuma-Eneh, JCA, adverted to the state of the pleadings when he had referred to the pleadings and said at page 345 of the records, thus:-

“The foregoing represents the state of the pleadings of both parties upon which issues were joined in the lower court. No reply was filed by the respondent (i.e. the plaintiff in the court below) on the new issues of want of consideration and allegation of fraud. Perhaps it did not feel obliged in the circumstances that one was necessary. I do not intend to expatiate on the point.”

Then he went on to make the following observation with regard to the position:-

“The respondent (as plaintiff) had strenuously argued that the appellant was estopped from denying that it had received value for exhibit “P1″. Besides that as a holder in due cause he was not obliged to give value. It went on to assert that the draft was for shares taken in the respondent’s company in another breath that it was given to meet the credit facilities of N26m given to Alhaji Ladan. The trial court upheld the respondent’s case that value was given.”

After making the above observation, the court below then went on to consider what both that court and the trial court perceived to be the case for the appellant as opposed to that of the respondent.

In that regard, the court below had this to say at page 346 of the printed record:-

“The crux of the appellant’s case on the pleadings and evidence in the court below …. is that exhibit “P1” was issued and delivered to the (sic) Alhaji Ladan on condition that the draft would not be presented for payment unless and until the foreign exchange was paid into the appellant’s account. The foreign exchange was not paid before exhibit “P1″ was presented for payment hence it was dishonoured. The witnesses were called to support the averments in the pleadings. It was suggested that the respondent prevaricated as to the nature of the transaction it alleges between it and Alhaji Ladan. And also that neither could serve as consideration for the draft.”

It is pertinent to observe that the pieces of evidence attributed to the respondent concerning the purchase of shares from it by Alhaji Ladan would not have been considered by the trial court and the court below as nowhere in its pleadings did the respondent make such averments. This is because it is settled law that as parties are bound by their pleadings, evidence not pleaded cannot be allowed at the trial. And if such evidence was admitted. then an appellate court is duty bound to strike out such evidence, and must not consider it in the determination of the appeal. See National Investment and Properties Co. Ltd. v. Thompson Organisation Ltd. and Ors. (1969) NMLR 99, (1969) 1 ANLR 136; Akeredolu v. Akinremi (1989) 3 NWLR (Pt.l08) 164 at 173. Therefore, the court below should not have alluded to the unpleaded evidence led by the respondent. Be that as it may, it is in my view clear that the pleadings of the respondent show quite clearly that their claim was based solely on the fact that exhibit “P1” was issued by the appellant. Now with that as the position of the respondent, the court below then accepted the formulation made by the trial court as to what the appellant need to prove in order to avoid the payment of exhibit “P1” to the respondent.

The court below in accepting that formulation then opined as follows:

“I am therefore compelled to hold the opinion that on the particular facts of this matter that for the appellant to succeed in this appeal it was obliged to prove want of consideration together with fraud on the part of Alhaji Ladan so as to establish that there was no contract at all, i.e. ab initio. If I may further observe, as the issues of want of consideration and fraud appear founded on the same substratum it is beyond conjecture that failing to establish either would completely collapse appellant’s case. The question that naturally follows is: whether the appellant succeeded in this exercise.”

The court below, per Chukwumah-Eneh, JCA, then proceeded to consider United Bank of Africa Ltd. v. Ibhafidon (1994) 1 NWLR (Pt.318) 90 and Lagricom Co. Ltd. v. Union Bank of Nigeria Ltd. (1996) 4 NWLR (Pt.441) I85, to answer the question. And at the end of the consideration of these cases, the court below upheld the conclusion reached by the trial court that the draft exhibit “P1” was otherwise payable at sight since as found by the trial court, the alleged fraud had not negatived the presumption of value as per S.30(1) of the Act.

Now, as the lower court depended so much on the decision reached in the cases referred to above, namely. U.B.A. v. Ibhafidon (supra) and Lagricom v. U.B.N. Ltd. (supra), it is necessary to examine the cases though they happen to have been judgments of the court below. The close examination of the decisions in the cases should help to decide whether the court below was right to have placed reliance on them in the determination of the question raised before it in the instant appeal. For this purpose, I will begin with the case of U.B.A. v. Ibhafidon (1994) 1 NWLR (Pt. 318) 90 where I delivered the lead judgment. The pertinent facts of this case are that

“One Mr. Ehinola who was introduced to the respondent in this appeal claimed to have a large sum of money in dollars in his domiciliary accounts with the appellant herein. He offered to sell to the respondent at the rate of N4 to one US dollar. The respondent was not willing to take advantage of the offer unless he was able to confirm the claim of Mr. Ehinola to ascertain the liquidity position of the account. Mr. Ehinola and the respondent together went to the appellant’s central branch office in Lagos where the said Mr. Ehinola applied to withdraw the sum of $33,643.00 from his account. The bank official told them to come back the following day. On getting there the following day the respondent was informed by the bank official that he could proceed with the foreign exchange transaction as Mr. Ehinola has sufficient funds to accommodate the amount applied for by Mr. Ehinola. The respondent claimed he handed over N134,572.00. the Naira equivalent of US $33,643.00 to Mr. Ehinola in the presence of the bank official concerned and that thereafter the appellant, through one of its official drew up a bank draft No. 031069 for US $33,643.00 in his (respondent’s) favour and handed it over to him (respondent). The respondent went with the draft to the appellant’s branch in Benin and was informed that he will be able to encash the sum on the draft. He was advised to open an account with the draft which advise the respondent complied with on 18/11/86 and he was allocated with an Account No. FCA/0003 with a teller with which he paid the draft into his account with the bank. The respondent was asked to call back at the bank after 21 days to collect the proceeds of the draft. At the expiration of the 21 days, the respondent was not given any money but was informed that nothing had been heard from the appellant’s head office in Lagos.

The appellant bank later wrote a letter to the respondent repudiating the payment on the draft. The respondent as plaintiff therefore commenced this action and claimed in his writ of summon the sum of US $33,613.00 (sic) interest at 15% on the said sum.

The case for the appellant was that the domiciliary account of Mr. Ehinola was funded from a forged cheque. It is also contended that the respondent is not entitled to recover the proceeds the draft as the transaction or arrangement he made with Mr. Ehinola is illegal being in contravention of the Foreign Currency (Domiciliary Accounts) Decrees No. 18 of 1986 which forbids transaction in foreign exchange other than with an authorised dealer which the appellant claimed Mr. Ehinola was not. The defendant, not satisfied with the judgment of the trial court appealed to the Court of Appeal.”

And upon the facts revealed in that case after referring to pertinent cases on the question raised, namely, Yesufu v. A.C.B. (1981) 1 SC 74 at 92 and Balogun v. National Bank of Nigeria Ltd. (1978) 3 SC 155. I said at pages 120-121:

“It follows, having regard to the principles enunciated above that where as in the instant case that a customer who had deposited a cheque with the appellant banker and upon the authority of the customer who had deposited money standing in his name with the banker is instructed to pay a certain sum from that account to another person and acting on that authority the banker issued a draft accordingly the payee of the draft or the person to whose favour it was issued is entitled to the proceeds of that draft. In such circumstances as it is clear that when the appellant/bank issued the draft to the respondent as authorised by the depositor its customer, the appellant did so because it was satisfied that the account of the depositor is sufficiently in funds to meet the amount for which the draft was issued. In my view the time when the draft was issued could well be described as the moment of truth for the appellant. It seems to me that the officials of the appellant who issued the draft ought to have been familiar with the effect of issuing a draft in respect of money standing to the credit of its customer. Secondly, it is not in evidence that the procedure for dealing with funds of this kind as laid down in the Enabling Acts was followed before the draft was issued. The appellant cannot be heard to refuse the payment of the draft that was issued to the respondent because of a further development that had nothing to do with him. The appellant is obliged to pay the proceeds of the draft to the respondent and should seek relief against its depositor, Mr. Ehinola. It follows therefore that the appellant was wrong to have refused to pay the proceeds of the draft to the respondent and I therefore would uphold the expressed views of the lower court that the appellant is obliged to pay the respondent the value of exhibit 1A.”

It must be noted that the respondent in that case was successful in that when the appellant received the bank draft issued from the headquarters branch of the respondent, the respondent had previously ascertained from his enquiries that there was enough funds to pay the proceeds of the bank draft at the Benin branch of the appellant bank.

I now turn to the case of Lagricom Co. Ltd. v. U.B.N. Ltd. (supra) where the facts are as follows:-

“The appellant sued the 3rd and 4th respondents jointly and severally for the sum of N3,205,000.00 being the value of cocoa supplied to them for which they failed to pay; against the 1st respondent the sum of N2,400,000.00 and an injunction prohibiting the 1st, 5th and 6th respondents from paying the said sum of N2,400,000.00 to the 2nd respondent as well as general damages of N5,000,000.00 against the 1st, 3rd and 4th respondents for breach of their obligations. The appellant is a cocoa merchant and the 3rd and 4th respondents were his customers. It transpired that the 3rd and 4th respondents were agents of the 2nd respondent. Overtime, the 3rd and 4th respondents were buying cocoa on a regular basis from the appellant and at times on credit. According to the appellant. Sometime in December 1988, after settling their previous indebtedness, the 3rd and 4th respondents started evacuating cocoa with a promise to pay later. They evacuated cocoa amounting to N13,950,000.00 and that they paid a total sum N11,475,000.00 leaving a balance of N2,475,000.00 still owing. Thereafter the 3rd respondent issued a draft for N2,400,000.00 to the appellant made by the 1st respondent in favour of the appellant. The said draft was lodged in the appellant’s account with the 1st respondent’s branch at Ife. Following the appellant’s refusal to allow further evacuation of cocoa until he was paid the balance outstanding, the 3rd respondent took steps and prevailed the 1st respondent to stop the draft and it was stopped. According to the 3rd respondent the draft represented upfront payment for the cocoa and that it was the failure of the appellant to deliver to him what he paid for that made him to stop the draft. It was for this that the appellant sued and made various claims against the respondents. The 3rd respondent also counter-claimed. The High Court dismissed the appellant’s claims and granted the 3rd respondent’s counter-claim against the appellant with costs. The appellant appealed to the Court of Appeal.”

The court below after hearing the appeal case argument of counsel upheld and ordered that the draft issued in favour of the appellant be paid by the respondent.

Again, it must also be noted from the accepted facts in that case that there had been transactions concerning the sale and evacuation of cocoa between the 3rd respondent and the appellant and which on the facts showed that the 3rd respondent was in debt in the sum of N2,475,000.00 to the appellant. That the 3rd respondent then issued a bank draft of the 1st respondent for N2,400,000.00 in favour of the appellant. It was this bank draft which was not honoured by the 1st respondent and which the Court of Appeal ordered by its judgment to pay to the appellant. While it is clear from the judgment that that order was made in keeping with a similar order that was made in U.B.A. Ltd. v. Ibhafidon (supra), it must be emphasised that in that case, the order to pay was made because it was apparent that when the bank draft was issued to the respondent, there was evidence that the money was sufficient to cover the amount on the bank draft in the account of the respondent with the appellant bank at its headquarters office in Lagos. I have earlier quoted what I said in this connection in U.B.A. v. Ibhafidon (supra). I therefore need not repeat it here. However, it suffices to refer to a portion from the above quoted passage from the said judgment for the sake of emphasis. It reads:-

“… as it is clear that when the appellant/bank issued the draft to the respondent as authorised by the depositor its customer, the appellant did so because it was satisfied that the account of the depositor is sufficiently in funds to meet the amount for which the draft was issued”.

I think that learned counsel for the appellant was right in his argument in his brief when he contended that the facts in U.B.A. v. Ibhafidon (supra) and the Lagricom v. U.B.N. cases could properly be distinguished from the facts in the instant appeal. From what I have said above, it is a common feature between the earlier cases that the bank drafts were issued against accounts that were sufficiently funded to accommodate the drafts issued by the appellant banks. In my humble view, the orders to compel the payment of the bank drafts so issued was clearly because there was no positive evidence to show why the bank drafts should not be paid over to the recipients. But with regard to the instant appeal, the facts in my humble view did not show that the respondent had any funds in the account of the appellant or that any money was proved to have deposited in the account of the appellant bank by its procurers, namely, Alhaji Ladan and Alhaji Abubakar. It is pertinent to refer also to the case of U.B.N. v. Nwoye (1990) 3 NWLR (Pt.435) 135. The facts of this case stated briefly are as follows:

The respondent who was the plaintiff in the High Court maintained a current account with the Asaba branch of the Union Bank Ltd., the appellant. On 2nd July, 1984, the respondent issued a cheque for N15,000.00 to a trading partner, but it was dishonoured because as at that time, the respondent had only N7,621.24 standing as balance in his current account. The respondent who believed that at the time he had enough money in his account to meet the said cheque felt greatly injured as to his credit and trade and then instituted the present action against the appellant claiming the sum of N100,000.00 as special and general damages for wrongful dishonour of his cheque or in the alternative, he claimed the N100,000.00 as special and general damages for negligence. At the hearing, the respondent gave evidence to the effect that he had deposited over N19,000.00 in his account. The appellant through its witness, admitted this but contended that most of the lodgements made by the respondent were made through draft which had not been cleared. At the High Court, the respondent succeeded and the appellant appealed unsuccessfully to the court below. In this court, the further appeal by the appellant succeeded.

It is I think apposite to quote in part the reasons given by some of the Justices of this court for allowing the appeal. Mohammed JSC, who wrote the leading judgment said thus at p. 143:

“There is evidence from both the plaintiff and defendant’s witnesses, who were bankers, on the banking procedure in respect of clearance of draft cheques. In this case A.C.B. Asaba did not clear draft cheque of N8,000.00 which was sent to it by the appellant. As I mentioned earlier, the bank sent to the Union Bank Asaba, the appellant, a draft cheque for N86,285.46 drawn on A.C.B. Ring Road, Benin. The correct banking procedure, as has been explained by the bankers, is that the amount in the draft cheque. Even if credited to a customer’s account, is not equivalent to cash lodgements. The customer has to wait until after the cheque has been cleared in the creating house within the Central Bank before it could be regarded as cash”.

Iguh, JSC at pages 144 – 145, had this to say:-

“The main issue that has arisen for determination in this appeal is whether the plaintiff had sufficient funds in his account as at the 11th July, 1984 to cover his cheque for N 15,000.00 drawn on exhibit 35 which was returned unpaid. If the answer is in the affirmative, his action succeeds otherwise it will be liable to dismissal. The parties appeared agreed that the key to resolving this issue lies with whether the plaintiff’s A.C.B. Ltd., Asaba draft for N8,000.00, exhibit 51, was cleared as at the said 11th July, 1984. On the undisputed evidence before the trial court, the said A.C.B. Ltd., Asaba draft was forwarded to the defendant bank, namely, the Union Bank of Nigeria Ltd., Asaba in the afternoon of Friday, 6th July, 1984. On Monday, the 9th July, 1984, being the next working day, it was forwarded by the defendant to its head office. Benin City for clearance by the Central Bank of Nigeria, Benin City. There can be no doubt that the said draft, exhibit 51, as between A.C.B. Asaba and A.C.B. Benin City was, on the evidence cash but, certainly, not as between the defendant bank and A.C.B. Asaba until the draft was cleared at the Central Bank of Nigeria, Benin City. The facts of this case are not such as involves the credibility of witnesses. It is plain to me, on the uncontroverted evidence before the court, that the plaintiff failed to establish that exhibit 51 was cleared as at 11th July, 1984. In my view, the findings of both courts below to the contrary, being totally unsupported by evidence led at the trial, must be regarded as perverse. See Sebastian S. Yongo and Another v. Commissioner of Police (1992) 8 NWLR (Pt.257) 36 and Paul O. Omoregbe v. Ehigiator Edo (1971) 1 All NLR 282 at 289. A bank will ordinarily not honour a customer’s cheque if funds in his account are insufficient to meet the cheque. It seems to me that the defendant appellant on the facts of this case, was entitled to dishonour the plaintiff’s cheque, exhibit 35 as it was not established that he had sufficient funds in his account to satisfy the said cheque.”

From a careful study of the judgment in U.B.N. v. Nwoye (supra), it cannot be in doubt that the appeal was allowed because the court was satisfied that a bank draft cannot be allowed to be paid upon uncleared effects. This in effect means that at the time the bank draft/cheque was issued at the behest of the respondent in favour of his partner/payee, the respondent did not have that sum of money in raw cash standing to his name in the bank. The reasoning in the Nwoye’s case that resulted in the order that the respondent was not entitled to the proceeds of the bank draft/cheque that he caused to be issued to his partner/payee, is not, in my respectful view dissimilar to that which in the Ibhafidon’s case (supra) and the Lagricom case (supra), resulted in the order of the court below that the bank draft/cheque be paid in favour of those in whose favour the bank drafts were respectively issued. In other words, it can be unequivocal that the common factor that is evident in respect of these three cases, namely, U.B.A. v. Ibhafidon (supra); Lagricom v. U.B.N. & Ors (supra) and U.B.A. v. Nwoye (supra) is this: each of the accounts involved in respect of these cases had sufficient physical cash to meet the draft cheques issued by the respective banks. The orders to pay or not to pay the various drafts/cheques were therefore not made simply because they were issued by the respective banks.

Let me now return to the instant appeal. I have earlier in this judgment quoted from the printed record the pleadings of the parties to this suit. It is clearly discernible from the said pleadings that it is the defence of the appellant that it did not pay the bank draft to the respondent, because the procurer of the bank draft, Alhaji Abubakar and Alhaji Ladan, failed to honour the promise made to the appellant that it would pay to the appellant the total sum of US $500,000 (five hundred thousand US dollars) being the equivalent of the sum of N15,000,000.00 (fifteen million) Naira. This case is however concerned with the sum of N7,1000,000.00 on the bank draft, “ex. 1” which was issued in favour of the respondent as agreed with Alhaji Abubakar and Alhaji Ladan. There is no doubt that they did not fulfill their own side of the bargain by paying the agreed sum of $500,000.00 (five hundred thousand US dollars) or any part of it into the account of the appellant. It is therefore plain from the pleadings the position taken by the respondent was based on the footing that it is claiming payment from the appellant as if it was indebted to the respondent on the sum claimed. However having regard to the statement of defence of the appellant and the evidence led thereon, I do not think that that position was sustainable to uphold the claim of the respondent. The bank draft cheque is obviously without any consideration, as it was not established that the respondent or anyone else connected with the respondent had any money of any kind in any account within the system of the appellant at any time relevant to the issuance of the bank draft.

Now, it is settled law that an appellate court would not ordinarily interfere with the judgment of the court, but where the judgment of the court below was reached either upon erroneous inference drawn from finding of facts or that its application of the law to properly found facts is perverse and/or erroneous, then the appellate court has a duty to intervene to correct the injustice so caused. See Fatoyinbo v. Williams (1956) 1 F.S.C. 87; (1956) SCNLR 274; Sarakatu J. Amida v. Oshoboja (1984) 7 S.C. 68; Finnih v. Imade (1992) 1 NWLR (Pt.219) 511. Bearing this principle above in mind, it is clearly my duty having regard to what I have said above, to interfere with the judgment of the court below. “I must therefore allow this appeal for the reasons given above. To hold otherwise would be to open wide the door for swindlers and all kinds of fraudulent and other manipulative characters to obtain funds, which they are not legally entitled to receive from banks, by claiming a right to such funds merely upon the presentation of bank drafts to the bank.”

In the event, this appeal is hereby allowed the judgment and orders of the courts below are accordingly set aside. As the appellant is entitled to its costs in the courts below and in this court, the following orders are made against the respondent: a refund of the judgment sum together with accrued interest deposited by it with the Deputy Chief Registrar of the court below in fulfillment of the conditional stay of execution granted by that court. I also order that the said judgment sum of N7,100,000.00 be refunded immediately to the appellant accordingly with all the accrued interest on that sum.

Secondly, it is also manifest from the appellant’s brief that costs in the sum of N15,000.00 had been paid by the appellant to the respondent as awarded by the courts below. The cost of N4,000.00 ordered in favour of the respondent by the trial court and by the court below for the sum of N3,000.00 are hereby also awarded in favour of the appellant. As the appellant is also entitled to its cost in this court for its success in this appeal, the sum of N10,000.00 is hereby awarded in its favour. For the avoidance of doubt, the judgment sum with accrued interest and the cost paid as adumbrated above are to be paid immediately by the Deputy Chief Registrar, the Court of Appeal, Lagos and the respondent in terms of the costs awarded. In the result, the claim of the respondent is dismissed in its entirety.

---

SC. 293/2001