Inuwa Mohammed Mai V. Standard Trust Bank Ltd (2007)
LawGlobal-Hub Lead Judgment Report
OLUKAYODE ARIWOOLA, J.C.A.
This appeal is against the judgment of Kaduna State High Court sitting in Kaduna delivered by J. S. Abiriyi, J. in Suit No. KDH/KAD/121/2001 on 3rd day of May, 2002 wherein the Plaintiff s claims were dismissed.
In an amended statement of claim dated 12th day of October, 2001 but filed on 26th day of October, 2001 the Plaintiff (hereinafter referred to as the Appellant) had claimed against the Defendant (herein after referred to as the Respondent) in paragraph 17 as follows:
“WHEREOF the Plaintiff claims against the Defendant as follows –
(a) AN ORDER directing the Defendant to allow the Plaintiff have access to the funds in its account with the defendant.
(b) AN ORDER that the said denial of the Plaintiff to the funds in its account as (sic) wrongful and a breach of contract.
(c) AN ORDER directing the Defendant to indemnify the Plaintiff for all the loss occasioned to third parties by the plaintiff as a result of the conduct of the Defendant.
(d) AN ORDER directing the Defendant to pay to the Plaintiff for all lost profits and incidental expenses incurred by the Plaintiff as a result of the Defendant’s actions and/or omissions.
(e) AN ORDER directing the Defendant to pay the Plaintiff the sum of N50,000,000.00 (Fifty million naira) as damages for breach of contract.
IN THE ALTERNATIVE TO (e)
(f) AN ORDER directing the Defendant to pay the Plaintiff the current banking interest on the said amount till the date of release”
The facts in brief that led to this appeal are that, the Appellant was a customer to the Respondent, operating current Account No. 0915188017 with the Kaduna branch of the Respondent. Sometime on 9th January, 2001 the Appellant had opened the said account with a cheque of six million, four hundred and eighty-seven thousand, eight hundred and sixty-five naira, fifty kobo (N6,487,865.50). The said cheque No.00006932 dated 9th January, 2001 was that of the Respondent’s Kano branch. On the 16th day of January 2001, the said cheque was alleged to have been cleared and the Appellant’s account in Kaduna was duly credited with the said sum of over six million naira. Thereafter, the Appellant issued various cheques between 18th and 22nd January, 2001 on the said account infavour of different persons and these cheques were honoured by the Respondent. But on 20th and 24th January, 2001 the Appellant issued two cheques in particular infavour of his daughter and one T.Y. Ikpome respectively (see Exhibits 3 and 6) but the said cheques were returned unpaid by the Respondent. As at that time, the Appellant had to his credit in the said account, the sum of N5,886,031.00 (See Exhibits 2E, 2F and 20). On enquiry through his Solicitor, why the said cheques were not paid, the Respondent wrote to say that one Standard Construction Ltd., another customer to the Respondent had given the Bank a payment order” hence the refusal to honour the said two cheques. When the Respondent was not taking any’ further step to honour the Appellant’s demand, the latter proceeded to Court. The case went to trial and in a considered judgment, the trial court dismissed the Appellant’s claim in its entirety.
Dissatisfied with the judgment, the Appellant filed a Notice of Appeal dated 11th day of July, 2002 on 12th July, 2002 on the following eight (8) grounds of appeal, herein reproduced without their particulars –
GOUNDS OF APPEAL
“MISDIRECTION
- The trial court misdirected itself on point of fact when it found as follows –
“The Plaintiff has not led evidence to rebut the fact that the cheque was stopped by Standard Construction Limited.”
When the fact that the cheque was “Stopped” by the Respondent was not in dispute.
- ERROR IN LAW
The trial court erred in law when it held as it did that:
“The plaintiff has not led evidence to rebut the fact that the cheque was stopped by Standard Construction Limited.”
When there was no evidence to rebut.
- ERROR IN LAW
The trial court erred in law when it opined:
“From the statement of defence and evidence of the only witness for the defence and documents tendered especially exhibit II and the document attached thereto the defendant has justified its action. As there was a stop payment order from Standard Construction Limited, it would have been reckless of the defendant to continue payment without first of all investigating as it set out to do.”
- ERROR IN LAW
The trial court erred in law when it observed as follows:-
“On the other hand if the Plaintiff thought the stop payment order had no basis it was beholden on him(sic) to produce a rebuttal by the writer of the letter stopping payment or a letter withdrawing it.”
Thereby placing on the Appellant onus of proof, which does not lie on him.
- MISDIRECTION.
The trial court misdirected itself on point of fact When it observed as follows:
“On the other hand if the plaintiff thought the stop payment order had no basis it was beholden on him(sic) to produce a rebuttal by the writer of the letter stopping payment or a letter withdrawing it.”
When the evidence before the trial court shows that the stop payment order has no basis.
- ERROR IN LAW.
The trial court erred in law in holding:
“It appears to me that unless the issue of the letter stopping payment is resolved it is not possible to make an order directing the Defendant to allow the Plaintiff have access to the funds in the account with the Defendant…As I have said elsewhere in the judgment as the Defendant acted on the letter sent by Standard Construction Limited stopping payment, there is no basis for holding that the denial of funds to the plaintiff in the account is wrongful and a breach of contract.”
Thereby imposing a duty on the Appellant which the law as the contract between the party(sic) does not impose.
- ERROR IN LAW
The trial court erred in law when it held as follows:-
“I am of the view that the Defendant acted prudently and sagaciously in the circumstances by stopping payments. It was for the Plaintiff to cooperate with the Defendant with a view to finding out who and what actually was behind the stop payment and to sort out the problem that led to it if there was any problem. It was not for the Plaintiff without doing that to rush to the Court.
It appears to me that unless the issue of the letter stopping payment is resolved it is not possible to make an. order directing the Defendant to allow the Plaintiff access to the funds in the account with the Defendant….As the Defendant acted on the letter sent by Standard Construction Limited stopping payment, there is no basis for holding that the denial of funds to the Plaintiff in the account is wrongful and a breach of contract.”
When the findings totally negate the contract between the Appellant and the Respondent.
- The judgment is against the weight of evidence. ”
The Appellant on 28th October, 2005 filed his brief of argument dated 27th October, 2005. From the eight (8) grounds of appeal contained in the Notice of Appeal, the Appellant formulated a sole issue for determination as follows:-
“Whether the refusal of the Respondent to allow the Appellant access to his account when the account was in credit did not amount to a breach of contract.”
In arguing the appeal, learned counsel to the Appellant contended that the relationship that existed between the Appellant and the respondent was that of Customer/Banker relationship. He submitted that the relationship is one of debtor/creditor, in that when a bank credits the current account of its customer with certain sum, the bank becomes a debtor to the customer in the sum. In the same way, debit in the account of a customer makes the customer a debtor to the bank in the sum debited on the said account. He cited, F.B.N. Plc vs. Nagarfi (1998)6 NWLR (pt 555) 692 at 696; Yusufu vs. ACB (1981) All NLR 292 at 297. Learned counsel referred to page 43 of the record of proceedings to show in evidence that it was not controverted that as at the time cheques were presented for payment, the Appellant had in his account with the respondent, a balance of over five million naira, yet the cheques were not honoured by the Respondent. He referred to the reason advanced by the Respondent for not honouring the cheques, as the “stop payment order” said to be issued by the Standard Construction Limited, who was not a party to the relationship between the Appellant and Respondent. He submitted that the Respondent was bound to honour Appellant’s cheques once there was sufficient balance in the account. He cited, Allied Bank (Nig.) Ltd. vs. Akubueze (1997) 6 NWLR (pt 509) 374 at 379.
On the production of rebuttal to or withdrawal of the stop payment order given by Standard Construction Ltd., Learned counsel submitted that it was not the duty of the
Appellant to obtain rebuttal or get the maker of stop payment order to withdraw it. He submitted and rightly too, that he who asserts must prove. He referred to Section 135 of the Evidence Act.
Learned counsel referred to Exhibits 2(a) – (2(e) on the balance in the Appellant’s account as at February, 2001, which was N5,886,031.00 and submitted that it was incumbent on the respondent to honour the cheques he issued when they were presented. He further submitted that the refusal of the Respondent to allow the Appellant access to his account amounted to a breach of contract. The Appellant is therefore entitled to damages as claimed before the trial court. He cited; Balogun vs. National Bank of Nigeria Ltd. (supra) and Union Bank of Nigeria Plc vs. Okubama (2000) 14 NWLR (pt 688) 570 at 589, Allied Bank Nig. Ltd. Vs. Akubueze (1997) 6 NWLR (pt 509) 374 at 379.
He finally urged the court to allow the appeal and set aside the judgment of the lower court.
Upon being served with the appellant’s brief of argument, the Respondent’s brief of argument dated 31st October, 2005 was filed on 18t November, 2005. In the rather short brief of argument, the learned senior counsel to the Respondent contended on the statement of facts of the case that, the cheque that the Appellant paid into his account at the Kaduna Branch office of the Respondent was drawn on the drawer’s account with the Kano branch office of the Respondent. He further contended that it required to be cleared through the normal banking process. Ordinarily, the cheque required to be cleared before the Respondent could credit the Appellant’s account. But the Respondent, by the custom in the banking business, had the discretion to grant an anticipatory credit after a cheque has been paid into the customer’s account. Learned counsel further contended that by that it means that the respondent was entitled to pay all or part of the value of the cheque to its customer before the cheque was cleared. He however, submitted that while the banker has a discretion in deciding whether or not to effect any payment against an uncleared cheque the customer has no right to demand such payment until the cheque has been cleared.
Learned Senior Advocate,. Aluko-Olokun, Esq. referred to the sole issue formulated by the Appellant for determination as incompetent. He submitted that the trial Judge correctly found that the cheque had not been cleared on the evidence before him.
Learned SAN submitted that a bank is bound by the instruction of the drawer of a cheque to stop payment if the cheque has not been cleared. In. refusing to allow the Appellant to make further withdrawals on the uncleared cheque after receipt of the stop payment order that it received before the cheque was cleared, the bank was doing its duty correctly. Indeed, the bank was entitled to debit the account of the customer for all the payments it made to the customer in anticipation of the clearance of the cheque as the customer had thereby become a debtor to the bank if it did not have any other money in its account.
Learned counsel further submitted that in the absence of a challenge to or a valid basis for challenging the finding of the trial Judge that the cheque had not been cleared when the stop order was received by the bank, any further complaint by the Appellant is otiose.
He concluded that the issue formulated for determination by the Appellant is not worthy of consideration as it is based on false factual premises that a true and valid credit was available to the Appellant in his account with the Respondent and that the cheque in issue had been cleared. He urged the court to dismiss the appeal for being incompetent.
As I stated earlier, the Appellant formulated a sole issue for determination of this appeal, which is “whether the refusal of the Respondent to allow the Appellant access to his account when the account was in credit did not amount to a breach of contract.” It is note worthy that the Respondent did not formulate any different issue in its brief of argument. This appeal will therefore be determined on the sole issue. It is interesting to note that the said sole issue presupposes existence of certain facts, as follows:
(i) That there was a valid and enforceable contract between the Appellant and the Respondent.
(ii) That the Appellant’s bank account with the Respondent was in credit at the point when certain cheques he issued were not honoured.
(iii) -That the Respondent refused to allow the Appellant access to his account with its Kaduna branch.
Generally, the relationship of a bank customer and a banker is contractual. In otherwords, a customer to a bank in relation to the business of banking is “any person having an account with a bank or for whom a bank has agreed to collect items and includes a bank carrying an account with another bank.” See; Nigeria Deposit Insurance Corporation (liquidator of Allied Bank of Nigeria Plc vs. Okem Enterprises Ltd. & l Or. (2004) 50 WRN 1 at 108. Similarly, the relation in law between a banker and its customer has been described as that of debtor and creditor. 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 and on the other way round, when a bank debits the current account of its customer with certain sum, the customer becomes a debtor to the bank in that sum. See; Yesufu vs. African Continental Bank Ltd. (No.3) (1976 – 1984) 3 NBLR 607, (1981) 1 SC 74, 98 – 99, Haston (Nigeria) Ltd. Vs. African Continental Bank (2002) 39 WRN 1 at 22 – 23 (2002) 11 SCM 119.
In the instant case, the Respondent in its pleadings had admitted in clear terms that the Appellant was maintaining and/or operating a current account No. 0915188017 with its Kaduna branch. It means that the Appellant was no doubt a customer to the Respondent in the business of banking.
Furthermore, the Appellant had on 9th January, 2001 opened the said current account with the Respondent’s Kaduna branch with a cheque of its Kano branch No. 00006932. The Appellant averred that the said cheque was cleared and his account with Respondent was credited to the value of the cheque. The Appellant further averred that as at February, 2001, his bank account was in credit to the tune of N5,886,031.00. The Respondent’s reaction to the above averments goes thus:
“5. The Defendant admits the content of paragraphs 5 and 9 of the Statement of Claim and in response says that although the said account was prima facie on credit, but the said fund was in dispute and thus, the Defendant had no option than to exercise reasonable caution in the circumstances.”
It is worthy of note that paragraph 5 of the Statement of Claim which the Respondent admitted in his paragraph 5 of the Statement of defence above is very clear. It reads thus –
“5. The Plaintiff avers that the said cheque was cleared and the Plaintiff’s account with the Defendant was accordingly credited to the value of the cheque, on 16th January, 2001. On the said date the Plaintiff used counter cheques to pay for telephone bills in the sum of N11,000.00 vide the Defendant’s Bank deposit slip and Cellular bills. The said documents and other related documents are hereto pleaded and shall be relied upon at the hearing of this suit.” (Underlining mine)
It is trite that averment in pleadings which is admitted needs no further proof. See; Dr. Augustine N. Mozie & 6 Ors. Vs. Chike Mbamalu & 2 Or. (2006) 12 SCM (pt.1) 306 at 317; Olubode vs. Oyesina (1977) 5 SC 79, Balogun vs. Labiran (1988) 3 NWLR (pt 80) 66, Daily Sketch vs. Ajagbemokeferi (1989) 1 NWLR (pt 100) 678.
To further support the above clear admission, the only witness called by the Defendant under cross examination stated thus:
“The cheques was(sic) received and the customers account credited accordingly.
The Plaintiff made several withdrawals from the bank after receiving the cheque. It is true that some of the cheques were not honoured. I have seen Exhibits 3 – 7. These are all our cheques.
At the time the cheques were returned the Plaintiff’s account was in credit. I am not sure of what was left there.” (Underlining mine).
From the above, there is no doubt that the Appellant was customer to the Respondent’s Kaduna branch operating a current account No. 0915188017, in whose account there was over N5million credit balance as at February 2001 when the Respondent refused to honour some of his cheques, See; Exhibits 3, 4, 5, 6 and 7.
Generally, it is the duty of a banker to its customer to honour and pay cheques drawn on it by a customer as long as it has in its possession at the material time, sufficient and available funds for the purpose. Therefore, when there is sufficient and available fund in customer’s account and a cheque is presented but payment is refused, the holder is entitled to treat the cheque as dishonoured, even if requested to represent. See; Ide Chemists Ltd. Vs. National Bank of Nig. Ltd. (1976 – 1984) 3 NBLR 111 at 118.
As earlier stated, the relationship of a banker to customer is contractual. It is essentially that of a debtor to a creditor in the case of credit balances in account. In the case of Joachimson vs. Swiss Bank Corp (1921) 3 K.B. 110 at 127, the contractual relationship was described by Atkin, L.J. as follows:
“The bank undertakes to receive money and to collect bill for its customer’s customer. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days.. It is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such a contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept.”
The above decision has been cited and followed by the apex court of our land in Yesufu vs. African Continental Bank (supra) and Balogun vs. National Bank of Nigeria (1978) All NLR 63, (1978) 3 SC 155.
In the instant case, in the operation of the current account No. 0915188017 in the Kaduna branch of the Respondent, only the Appellant and Respondent are parties to the contract. Once a customer’s current account is duly credited with a certain amount of money, to the tune of such amount, banker becomes automatically a debtor to the creditor customer.
It is amazing however, to hear that after a cheque had been cleared and the value duly credited to drawee’s account, the banker came up to say that the drawer or maker thereafter “requested for a stop of payment of the cheque”. It is however not in dispute that the Standard Construction Limited, who gave the “stop payment order” to the Respondent to stop honouring withdrawals from the Appellant’s account was a stranger to the relationship between the Appellant and Respondents in the running of the former’s account. It follows therefore that to dishonour the Appellant’s cheques drawn on his account despite the sufficient fund available as credit balance in the account based on a .”stop payment order” of a stranger to the contract was simply a breach of the contractual relationship between the banker and its customer.
Perhaps the respondent fell into this error or omission because, as pleaded, both the Appellant and the Standard Construction Company Ltd. were valued customers to the Respondent. But the “stop payment order” on the cheque which had been given value and credited to beneficiary’s account came rather too late in time. The damage, if any, had been done before the request was made. The cheque had been duly cleared as admitted by the Respondent. As the saying goes, “it is too late to keep the knife away after the hand has been cut”.
On clearing of bank cheques, a cheque is said to be cleared when it has been paid or given value by the branch of the bank on which it is drawn, that is to say, the branch of the bank where the account on which the cheque is drawn is domiciled. In the instant case, the Kano branch of the Respondent must have cleared the cheque before the Kaduna branch duly credited the Appellant’s account, with the same amount and honoured a few cheques drawn by the customer. See; United Bank for Africa vs. Akparabona Community Bank (Nig.) Ltd. & 1 Or. (2005) 35 WRN 98.
Therefore, I disagree with respect entirely with the learned counsel to the Respondent when in his brief of argument he stated that the trial Judge correctly found that the cheque had not been cleared on the evidence before him. This is misleading, to say the least, as there is nowhere in the trial judge’s judgment where it was found that the cheque issued in honour of the Appellant with which he opened a current account with the Respondent had not been cleared. The pleadings and oral testimony of the only witness to the Respondent support the fact that the cheque was duly cleared and Appellant’s account credited with the value. It is therefore erroneous with respect, for the respondent’s senior counsel to say that the sole issue formulated by the Appellant is incompetent.
In Allied Bank (Nig.) Limited vs. Akubueze (1997) 6 NWLR (pt 509) 374, the Supreme Court held inter alia, that a bank is bound to honour a cheque issued by its customer if the customer has enough funds to satisfy the amount payable on the cheque in respect of the relevant account and that refusal to honour the cheque will amount to a breach of contract which would render the banker liable in damages.
Similarly, in Union Bank of Nigeria Ltd. vs. Nwoye (1996) 3 NWLR (pt 435) 135, the Supreme Court held that the liability of a banker to its customer arises in contract when a banker refuses to pay a customer’s cheque when the customer holds in his account an amount equivalent to that endorsed on the cheque. It further held that the moment a bank places money to its customer’s credit, the customer is entitled to draw upon it, unless something occurs to deprive him of that right, that a cheque which has not been cleared, where clearance is necessary does not put the account in funds.
In Baker vs. Australian & New Zealand Bank (1958) NZLR 907 referred with approval in Ide
Chemists Ltd. vs. National Bank of Nig. Ltd. (supra), it was held that the answer “Present again” endorsed on a cheque by banker was libelous. It is trite that if a banker without justification dishonours his customer’s cheque, he is liable to the customer in damages for injury to the customer’s credit. However, except in the case of business customers, proof of actual injury to credit is very necessary to secure substantial damages.
In the circumstance, this appeal succeeds as it is meritorious. The sole issue for determination is therefore resolved infavour of the Appellant but against the Respondent. Accordingly, the judgment of the trial court delivered by J. S. Abiriyi, J in Suit No. KDH/KAD/121/2001 on 3rd day of May, 2002 is set aside. The Appellant is entitled to access to his current account No. 0915188017 with the Kaduna branch of the Respondent.
In the result, legs (a), (b) and (c) of the claim succeed while legs (d) and (e) of the claim fail. The Respondent is ordered to pay to the Appellant the current banking interest on the credit balance in his said account until the date of release of the fund.
I make no further order on costs.
Other Citations: (2007)LCN/2318(CA)
