Julius Berger Nigeria Plc & Anor V. Toki Rainbow Community Bank Ltd (2009)
LawGlobal-Hub Lead Judgment Report
MOHAMMED LAWAL GARBA, J.C.A.
This appeal is from the decision of the High Court of Rivers State delivered on the 21/12/05 in suit NO. PHC/1070/99. The decision was that judgment was entered for the Respondent (as Plaintiff) against the Appellant (as 3rd and 4th Defendants) as per Plaintiffs’ claim against them as stated in paragraph 19 (1) – (7) of the Plaintiff’s amended statement of claim of 17th March, 2000″. The claims on the paragraph which appear at pages 52 – 53 of the printed record of appeal are as follows:-
“19. Wherefore the plaintiff claims from the defendants jointly and severally as follows:
- The sum of N1, 900, 800.00 due and payable to the plaintiff by the 4th defendant on 9th April 1997 following the assignment by the 2nd defendant of the benefit of the contract between the 2nd defendant and the 4th defendant to the plaintiff.
- Interest at the rate of 21% per annum for month, that is to say, 26th March to 26th May 19 on the sum of N960, 000.00 drawn by the 2nd defendant from the said loan, and at the rate of 10% per month from 27th May 2997 until judgment.
- Interest on the judgment debt at the rate of 10% per annum from judgment until payment.
- N2, 335, 000.00 due to the plaintiff by reason of the assignment by the 2nd defendant to the plaintiff of the benefit of its contract with the 4th defendant a per Local Purchase Order No. 48303 dated 2nd May 1997.
- Interest on the said sum at the rate of 10% per month from 30th June 1997 until judgment.
- Interest on the judgment debt at the rate of 10% per annum form the date of judgment until payment.
- In the alternative, against the 1st and 3rd defendant the said sum of N2, 335, 000.00 with interest thereon as above being damage suffered by the plaintiff as a result of the fraudulent misrepresentation by the 1st and 3rd defendants to the plaintiff which was intended to be acted upon by the plaintiff and was infact acted upon by the plaintiff to its detriment.”
My reading of the facts as contained in the record of appeal from which the above claims were made can be summarized thus: That the 1st Appellant had issued two separate Local Purchase Orders (LPOs) to Pit -a-pat International Nigeria Ltd (the 2nd Defendant in the High court) for the supply of plastic jute bags and Haulage land off loading of 5/15m Aggregate from Isioqu Quarry to PHC respectively. To enable it meet and satisfy the LPO’s Pit-a-Pat International Nigeria Limited (to be called the company hereinafter) sought for and obtained money or loan from the Respondent to which the payments for the LPOs due to the company from the 1st Appellant were said to have been assigned. On the ground that the money taken on loan by the company was not paid back or repaid through the payment by the 1st Appellant, the Respondent took out the writ of summons against the Appellants as well as the company and its managing Director one Peter Morkah with the above claims as amended endorsement thereto. It is worthy of mention that the company and its managing Director did not file a statement of defence to the Respondents’ claim and so did not defend the action against them. The claims were made jointly and severally against all the four (4) Defendants set out in the writ of summons and the amended statement of claim by the Respondent. On their part, the Appellants had in paragraph 13 of the statement of defence dated 24/9/99 raised a preliminary Objection to the claims against them on the following two (2) grounds:
“(a) No privity of contract between the plaintiff and them, and
(b) That the 3rd defendant being an employee of the 4th Defendant to the knowledge of the Plaintiff is an agent of a disclosed principal.”
The objection was taken after the hearing of evidence in the case and dismissed in the judgment appealed against.
Being dissatisfied with the decision of the High Court, a Notice of Appeal against same was filed on the 16/1/06 by the learned counsel for the Appellants. The Notice of Appeal was with the leave of the court amended by way of additional grounds to increase the grounds of appeal to thirteen (13).
Briefs of argument were filed by learned counsel for the parties to the appeal as follows; the Appellant brief was dated and filed in the 28/11/07. The Respondents’ brief filed on 23/9/08 was deemed properly filed on the 9/2/09 while the Appellants Reply brief was filed on the 19/2/09. The briefs were adopted and relied on by the learned counsel as their respective submissions in support of their position at the hearing of the appeal on the 4/5/09.
From the thirteen (13) grounds of appeal, the following issues were formulated by the learned counsel for Appellants at page 2-3 of the Appellants’ brief:
- Whether the trial court was right to refuse to grant the preliminary objection raised by the 3rd and 4th defendants now appellants in paragraph 29 of the further amended statement of defence No. 2 dated the 19th April 2005.
- Whether the respondent proved before the trial court that is customer Pit-a-Pat International Nig. Ltd, the 2nd defendant was indebted to it.
- Having regard to the evidence before the lower court whether the respondent established that there was an assignment of the proceeds of the contract to it and whether the condition for domiciliation was not a mere security for the loans and the instructions of the 2nd defendant a mere mandate or authority to pay.
- Whether the trial court was right to hold the appellants liable to pay the costs of the two loans to the respondent.
- Whether the lower court was right to hold that there was a domiciliation of the contracts proceeds which amounted to a legal assignment.
- Whether the lower court was right to hold that the appellants failed to plead facts relating to exhibit “L”
- Whether the lower court was right to grant both the main claims/reliefs and the alternative claim in respect of the 2nd contract/loan at the same time.
- Whether the trial court was right to hold that the 3rd defendant/2nd appellant made fraudulent misrepresentation that influenced the respondent to grant the 2nd loan to Pit-a-Pat International Limited.
- Whether the trial court was right to hold that the cheque exhibit F5 was paid by the 2nd defendant in fulfillment of a condition for the grant of the 2nd loan.
In his arguments of the above issues learned counsel had indicated that issue NO.1was distilled from grounds 3 and 6, issues 2 and 9 from grounds 5, 8, 9 and 12, issues 3 and 5 from grounds 1, 2, 4, 5 and 6 issue 4 from grounds 1, 4 and 7, issue 6 from ground 8, issue 7 from ground 11 and issue 8 from ground 10. This shows that more than one issue were raised from each of grounds 1, 4 and 6 against established and permitted practice in law. Formulation of more than one (1) issue from a single ground of appeal is proliferating the issues which leads to repetition of arguments on simple points that in turn very often obsucate the real issues that require determination in an appeal Proliferation of issues only leads to round about submissions on otherwise straight forward issues and tend to make the reading and appreciation of the points canvassed therein cumbersome. It adds no value whatsoever to the viability and efficiency of the issues so proliferated and that is one good reason Why the court have always deprecated the practice. See CLAY IND. (NIG.) LTD V AINA (1997) 8 NWLR (516) 208; ONYEM AIZU V. OJIAKO (2000) 6 NWLR (659) 25.
For the Respondent two (2) issues were submitted for determination in the appeal at page 2 of the Respondents’ brief of argument. They are:-
(1) Was the court below right in holding that Pit-a-Pat International (Nigeria) Limited assigned the benefit of its two contract with the 1st appellant to the respondent? 1, 2, 6, 7 & 8
(2) Was the court below right in finding that tie 2nd appellant made fraudulent representation to the respondent which induced it to give the second loan to Pit-a-Pat International (Nigeria) Limited to its detriment? 3 & 4.
At the hearing of the appeal learned counsel for the Respondent had indicated that issue (1) above was distilled from Appellants grounds of appeal 1, 2, 6, 7 & 8 while issue (2) was from grounds 3 and 4. A claim reading of the grounds of appeal would reveal that the crucial issues that require decision in the appeal are issues 1, 3, 4, 7 and 8 formulated by the learned counsel for the Appellant. The Respondent two (2) issues are in substance the same with Appellants issued 3 and 8 but I intend to consider and determine the appeal on the aforenamed crucial issues.
“ISSUE 1.
Whether the trial court was right to refuse to grant the preliminary objection raised by the 3rd and 4th defendants now appellants in paragraph 29 of the further amended statement of defence No. 2 dated the 19th April 2005.”
This issue deals with the preliminary objection raised by the Appellants the grounds of which have earlier stated.
The Submissions of learned counsel for the Appellant on the issue are to the effect that from the statement of claim (statement of claim) and the evidence at the trial, it is clear that the contracts which led to the action were between the Appellant and company. That the Respondent was not a party to the contracts and that the Appellants were not parties to the loan agreements or financial arrangements between the Respondent and the company. Relying on the cases of IKPEAZU V. ACB (1965) NMLR374 at 379, A.G. FEDERATION V. A.I.C. LTD. (2000)10 NWLR (675) 295, CAP. PLC V. VITAL INVES. LTD. (2006) 6 NWLR (976) 220, he argued that person who is a stranger to a contract cannot enforce it even if it was made for his benefit based on the principle of privity of contract. That not being a party to the agreement between the company and the Respondent, the 1st Appellant was not obliged to pay the proceeds of the contract between it and the company to the Respondent. For that reason, learned counsel urged us to hold that there is no privity of contract between the Appellant and Respondent and strike out their names from the action. In addition, it was contended that since the Respondent had averred in paragraph 3 of the amended statement of claim that 2nd Appellant was/is the contract manager in the employment of the 1st Appellant and PW1 Mr. Kolapo had confirmed that in evidence, the 2nd Appellant incurs no liability as an agent of a disclosed principle. That it is the 1st-Appellant for whom the 2nd Appellant acted that is liable for the action and who should be sued alone without the 2nd Appellant. The cases of URN LTD V. EDIT (1993) 4 NWLR (part 287) 288 and NIGER PROGRESS LTD V. NORTH EAST LINE CORP. (1989) 3 NWLR (part 107) 68 were relied on for the submission and we are urged to strike out the name of 2nd Appellant from the suit.
It was also the submission of the learned counsel on the objection that the case did not disclose reasonable cause of action because there was no evidence of a demand for the payment of the loans which was a precondition for the action to the recover loans. Where no demand was made followed by refusal to pay, then there is no cause of action, according to him relying on ISHOLA V. SGB NIG. LTD. (1997) 2 NWLR (part 488) 405, ANGYU V. MALAM (1992) 9 (part 264) 242, UBA V. OKI. (1999) 8 (part 614) 244 and KOLO V. FBN PLC (2003) 3 NWLR (PART806) 216.
The learned senior counsel who settled the Respondent’s brief of argument had stated at paragraph 3 on page 1 of the brief that the issue or defence of absence of privity of contract between the 1st Appellant and the Respondent was not called in the suit. He also said the High court disbelieved the bare denial by the 2nd Appellant that he was an agent of a disclosed principal.
The above arguments are the same or substantially so with the submissions made by the learned counsel for the parties before the High Court on the objection. Because the objection was a challenge on the competence of the Respondent’s claim against the Appellants and therefore questioned the judicial authority or powers of the High Court to entertain same, established principles of law required that the claim made by the Respondent be closely scrutinized by that court in line with the relevant laws in order to determine it. The now well known position of the law is that the Respondent (as plaintiffs) claim as contained in the writ of summons taken out and statement of claims filed in support thereof are the exclusive determinants of the competence of the claims or parties against whom they were made. The competence of the claims or parties there by the operation of the law, as a matter of course affects and involves the competence of the High Court before which they were taken to determine the dispute therein. This is because it is only when proper parties and competent claims were brought by the due process of the law before a court would that court have the requisite vires or judicial authority to entertain and determine same. CO-OPERATIVE DEV. BANK PLC V. JOE GOL DAY CO. LTD. (2000) 14 NWLR (Part 688) 506, MULTI-PURPOSE VENTURES LTD. V. AG. RIVERS STATE (1997) 9 NWLR (part 522) 642, EGBUONU V. B.R. T.C 12 NWLR (531) 29.
The High court was therefore on the firm terrain of the law when it stated inter alia at page 136 of the record of appeal, in its determination of the objection that :-
The law is settled that in any matter where the issue of competence of a court to entertain a suit before it based on the existence or otherwise of a cause of action, lack of jurisdiction as regard subject matter of the suit lack of territorial jurisdiction or improper parties, lack of service of process and the like, raised the only reference point, to which a court is enjoined to have recourse to for guidance, in it’s attempt to reach a decision on these issues, is Plaintiffs pleading that is the statement of claim of the Plaintiff.
For the purposes of the Appellants’ objection here the relevant portions of the Respondents amended statement of claim are paragraph 19 (1), (4) and (7) being the principal and alternative claims made against the Appellants. I have before now set out the whole of paragraph 19. As can clearly be deciphered from subparagraphs (1), (4) and (7) the claims are based on the facts of assignment of the benefits of the contracts between the 1st Appellant and the company to the Respondent and alternatively, allegation of fraudulent misrepresentation by the Peter Morkah and the 2nd Appellant to the Respondent. There is no pleading or claim in the Respondent’s writ of summons or the statement of claim based on the breach of any contract between the Respondent and the Appellants or any one of them. The issue of privity of contract between the two parties did not therefore arise in the claim against the Appellants. As far as the Respondent’s claims are concerned there is no dispute about the absence or nor existence of a contractual relationship between it and the Appellants. In the circumstances, the ground of the objection by the Appellants based on the issue of privity of contract between them and the Respondent is misplaced and therefore internable in this appeal. Since the issue of privity of contract between the parties is of no moment so is the second ground of the objection as set out in paragraph 29(ii) of the Appellants’ further amended statement of defence NO.2. The ground is that 2nd Appellant was an agent of 1st Appellant, a disclosed principal. In the absence of a contractual relationship, the issue of agency in respect of 2nd Appellant would not arise. The last ground of the objection is that the claims do not disclose a reasonable cause of action. The only reason offered by the learned counsel for the Appellants on the ground of objection is that there was no evidence of a demand for repayment of the loans by the Respondent before the action was filed. As it appears the argument is impotent and weak on the ground it was made. Perhaps I should remind learned counsel that in law a cause of action is a fact or a construction of facts which when proved would entitle a plaintiff to a remedy against a defendant. See BELLO V. A-G. OYO STATE (1986) 5 NWLR (part 45) 828, EGBU V. ARAKA (1988) 3 NWLR (part 84) 598 AKILU V. FAWEHINMI (NO.2) (1989) 2 NWLR (part 102) 122. In addition in the case of OSHOBOJA V. AMUDA (1992) 6 NWLR (part 250) 690 it was held by the Supreme Court that a reasonable cause of action is a cause of action which, when the assertions in the statement of claim are considered, has some chance of success. See also OGBIMI V. OLULO (1993) 7 SCNJ 447. In the determination of whether the facts presented in pleadings disclose a reasonable cause of action the Court is only required to examine them and see if prima facie, there are facts which if proved or established would entitle the Plaintiff to a remedy and not to, find out if the Pleadings disclosed any ground of law to support the claims. In these premises I have no difficulty in finding that the aggregate of the facts contained in paragraphs 5, 6, 7, 11, 12, 13, 14, 15, 16, 17 and 18 of the Respondents amended statement of claim are such that if proved would entitle it to a remedy against the Appellants. These facts indisputably disclose a reasonable cause of action as recognized by the authorities cited above.
In the result, all the grounds of the preliminary objection by the Appellants are completely devoid of merit that would sustain it. The objection fails and is dismissed. Issue no 1 is consequently resolved against the Appellant.
Issue 3 is the next crucial issue to be determined. As a reminder, the issue is thus:-
- Having regard to the evidence before the lower court whether the respondent established that there was an assignment of the proceeds of the contract to it and whether the condition for domiciliation was not a mere security for the loans and I the instructions of the 2nd defendant a mere mandate or authority to pay.
The learned counsel for the Appellants argued issue 3 together with his issue 5 which in essence is a sub issue to it. The submissions are that the 1st Appellant’s contracts with the company did not state that the company would obtain a loan to finance the supplies and that the 1st Appellant was not a party to the loan agreements between the Respondent and, the company. That the Appellants in pleading and evidence denied that there were assignments of the proceeds of the contract to the Respondent as claimed. According to learned counsel, in the contract agreements for the loan which were Exhibits ‘C’ and ‘F’, the security for the loan was stated to be domiciliation of the contract proceeds from the 1st Appellant. That the company had written a letter to 1st Appellant Exhibit ‘D’ in which it stated as follows:- “We hereby give an irrevocable mandate that payment cheque for the supply of the above should not be released to the company without the prior knowledge of Mr. W.A kolapo of Toki Community Bank Ltd”. It was contention of counsel that Exhibit ‘D’ did not assign the proceeds of the contract to the Respondent as claimed neither did it create any domiciliation relationship arrangement because the 1st Appellant had written to the company Exhibit ‘N’ wherein it stated that payment for the contract would only be made to the person named in the LPO. Furthermore, that though the company wrote a letter Exhibit ‘G’ to the 1st Appellant that payment should be made to the Respondent that did not amount to an assignment but merely authorized the 1st Appellant to pay the Respondent. That the 1st Appellant in reaction had written Exhibit ‘O’ to inform the company that it will not pay to the Respondent and advised that the Respondent be informed accordingly. Learned counsel argued that a creditor does not necessarily assign a debt by asking the debtor to pay to a third (3rd) party, but may be intended only as a mandate or instruction to the debtor. Such mandate does not give the third (3rd) party any right against the debtor and can be revoked by the creditor. Reliance was placed on the English case of TIMPSON’S EXECUTORS V. YERBURY (36) 1 KB 365. In addition that the Respondent had stated in evidence that it did not write to inform the 1st Appellant of the loans to the company and did not deliver any mandate to it or even confirm if it had agreed to domicile payment of the contracts proceed between it and the company. In the circumstances, argued learned counsel, it can not be said that there was an agreement to domicile payment by the 1st Appellant to the Respondent to which the 1st Appellant was a party. It was argument of counsel that domiciliation of payment arrangement is not meant to create an assignment of a chose in action relying on the statement of my senior learned brother Oguntade JCA (now JSC) in the case of PETER TIWELL (NIG.) LTD. V. INLAND BANK (NIG.) LTD (1997) 3 NWLR (part 494) 408 at 419 on the difference between domiciliation of payment arrangement and contract of guarantee. Furthermore, that the law is that for a legal or statutory assignment to be complete and effective, the assignee must give written notice of the assignment to the debtor or fund holder and so the notice is an essential part of the statutory transfer of title to the debt. The case of DEALE V. HALL (1823) 3 RUSS and Cheshire, Fifoot and Furmston’s Law of contract, 14th Edition, page 571 were relied on for that submission.
Learned counsel said there was no notice from the Respondent to the 1st Appellant of the assignment of the proceeds of the contract and so there was no valid transfer of the title thereto to it. Halbury’s Laws of England 4th Edition I volume 6, paragraph 42 at page 27 were referred to on the point. It was his contention that by the averment in paragraph 18 of the Respondents amended statement of claim and evidence of PW1 at page 20 of Volume 2 of the record of appeal, the Respondent knew that the 1st Appellant had paid for the contract with the company before the action was filed and so there was no longer any debt owed by the 1st Appellant to the company which the Respondent could claim. Finally learned counsel urged us to hold that there was no assignment legal or equitable for the repayment of the contract proceeds to the Respondent.
For the Respondent the only relevant portions of the Respondent’s brief which directly addressed the issue whether there was proof of assignment to the Respondent are to be found in paragraphs 13 and 14 at page 4 thereof. But for prudence and economy of space I would have set out the two paragraphs in their own terms in order to fully show the case put forward for the respondent on the issue. Suffice it to say that the import of the submissions is that the Appellants cannot be heard to say that the endorsement by the 2nd Appellant on the LPG did not amount to assignment when the Appellants’ letters to the company had stated that the 1st Appellant could only pay to the person named in the LPG. Further that if a statement made previously is shown to be inaccurate later, the fact that the maker repudiated it will not lead to depriving of him of his right. Finally that the Appellants have not explained what law prevented a contractee from directing his debtor to pay the benefit of his contract to a third (3) party.
In his reaction to these submissions the learned counsel for the Appellants in the Appellants’ Reply brief said that where a witness has given a testimony inconsistent with a previous statement he had made, a trial court is entitled to treat both the testimony and the statement as of little or no probative value rather than choose to believe either of them. The law and practice relating to Evidence in Nigeria 2nd Edition by T.A Aguda, pages 507 and 516 was cited by learned counsel. Similarly, that to expect the Appellants to explain the law which prevents a contractee from directing his debtor to pay the benefits of his contract to a 3rd party, is to shift the burden of proof which lies on the Respondent to the Appellants.
Now, by the pleadings and evidence adduced before the High Court was assignment; legal or equitable of the proceeds of the contract between the 1st Appellant and the company effectively made by the later to the Respondent such that title therein was in law transferred to the Respondent? I would deal with the essentials of a valid assignment in law after a consideration of the pleadings and evidence of the Respondent who asserted and therefore owes or bears the burden of proving same. The relevant pleadings of the Respondent are to be found in paragraphs 7, 13 and 19 (1) of the Respondents’ amended statement of claim dated 17/3/2000. I have earlier on set out paragraph 19(1) in this judgment so I would here reproduce only paragraphs 7 and 13. They are as follows:-
- The 2nd defendant accepted the said condition and by letter dated 26th March 1997 instructed the 4th defendant to pay the proceeds of the said contract the plaintiff’s bank and the 4th defendant acknowledged this instruction in an endorsement made on the said local purchase order and the aforesaid letter both of which the plaintiff hereby pleads.
- The 1st defendant deposited cheque for a N1, 165,100.50 and also undertook that the 2nd defendant will assign the benefit of the said contract which was for a total sum of N2, 335, 000.00 to the plaintiff. By a letter of the same date the 2nd defendant gave to the 4th defendant an irrevocable mandate to pay the sum due to it on the said local purchase order to the plaintiff. The plaintiff pleads the said letter.
The assertion in paragraph 7 is that the company instructed the 1st Appellant to pay proceeds of the contract on LPO No B0004747 to the Respondent which instruction was acknowledged by the 1st Appellant. The averment in paragraph 13 is that the company gave the 1st Appellant an irrevocable mandate to pay the sum due on the LPO NO.48303 of 2/5/97 to the Respondent. In paragraph 14 it was averred that the 1st Appellant acknowledged the instructions on the irrevocable mandate.
The evidence of the single witness who testified for the Respondent at the trial on the issue was in line with these averments and the letters written by the company to the company to the 1st Appellant on the payment of the proceeds of the contracts in respect of the above mentioned LPO’s pleaded therein, were tendered in evidence as Exhibits ‘B’ and ‘G’. It was the evidence of the witness that the instruction for the 1st Appellant to pay to the Respondent was condition in each of the agreements between Respondent and the company for the loans granted it. The agreements were also put in evidence as Exhibit ‘C’ and ‘F’. Specifically talking about the 2nd loan, the witness said at page 20 of the notes of the High Court’s proceedings of the trial conducted on the 12/5/2003, that.
“Also, that benefit of this contract should be assigned to the plaintiff.” He maintained under cross examination at page 28 of the proceedings of 11/7/03 that the company “abinitio assigned the benefits of these two contracts to the plaintiff while the 4th Defendant endorsed the irrevocable mandate issued by the 2nd Defendant to the 4th Defendant”. It may be recalled that the 2nd Defendant was the company while the 4h Defendant was the 1st Appellant at the trial.
In the ordinary and every day English language which the parties to this appeal used in the transactions leading to the dispute between them, assignment means to give something to some body for their use or benefit. It also may mean to transfer right, property or title from the person/s legally entitled to them to some body else for their benefit. See page 61 of the Oxford Advanced Learner’s Dictionary (of Current English) 5th Edition by A.5. Hornby. In this con, a person/party legally entitle to property has the exclusive authority and power to give or transfer them to somebody else in any manner permitted by law. That can be done either directly or by proper directives to that effect. This meaning of assignment is not far from the connotation of the word in law as defined in Black Law Dictionary 6th Edition, page 119 as:-
“The act of transferring to another all or part of one’s property, interest or rights”.
From the above definitions it is clear therefore that a person entitled to any rights, benefits, interest title to property can validly transfer them to another who will thereupon be entitled thereto. The question I now ask is what in law are the essential requirements which make an assignment of such benefits, interests or title to property effective? Speaking generally, they include:-(1) ownership of or entitlement to the benefits, interest, rights or title to property by the assignor; (2) the absolute transfer in writing of such benefits, interests, rights or title to property to person/named therein; (3) Where, as in the present appeal, the benefits, rights and interests are in possession or custody of 3rd party, there is the requirement that the assignor should notify that 3rd party in writing of the assignment. See Chitty on Contracts Vol. 1 paragraph 19 – 007 at page 1166, Halbury’s Laws of England, 4th Edition, volume 6 paragraphs 12 at page 9.
It is however to be noted that no particular form or mode is prescribed or required by law for a legal assignment as long as the assignor absolutely and unequivocally indicates the transfer of the benefit, interest or title to the assignee. Once the above requirements are met, an assignment will be effective in law and the assignee would be entitled to the subject of the transfer and a claim thereto. The subjects of the assignment in this appeal are the benefits or interest in a contract. That being the case, reference should first be made to the law of contract enacted for River State where the contract was entered into by the parties thereto in order to find out what provisions if an were made for the regulation of the assignment of the benefits of such contract.
Contract Law No. 20 of 1988 contained in CAP 32, The Law of Rivers State of Nigeria, 1999 is the law which governors contracts in Rivers State now and when the contract in the appeal was entered into in 1997. There are no provisions dealing with assignment of the benefits of a contract by a party thereto. In addition, Nigerian judicial authorities are not many and are scarce on the issue. But because the issue is one that developed in common law in England from which all our statutory legislations drew heritage, it is applicable in our legal and judicial systems. Under the common law, a debt or other legal thing in action includes the benefit of a contract or a debt arising out of contract from which payment was to be made at a future date. Such debt is capable of being assigned under section 136 of the Law of property Act 1925. See BRICE V. BANNISTER (178) 3 Q. B.D. 569, JAMES V. HUMPHREYS (1908) 1 KB. 10, CONTRAST LAW V. COBURN (1972) 1 WLR 1238. Furthermore is was held that the benefit of a contract is only assignable in cases where it can make no difference to the person on whom the obligation lies to which of two persons he is to discharge it. TOLTURST V. ASSOC PORTLAND CEMENT MANUFACTURERS LTD (1902) 2 K.B. 660 at 668, (1903) A.C. 414. A party to a contract can in equity also assign a contractual right in one of two ways (a) he can inform the assignee that he transfers the chose to him or (b) he can instruct the debtor to discharges the Obligation by payment to or performance for, the assignee. Thus an agreement by traders or merchants with a Bank that payment for goods sold by them should be remitted direct by the purchasers to the Bank has been held to, constitute a valid equitable assignment of the amount to the Bank. BRANDTS SONS & CO. V. DUNLOP RUBBERCO. (1905) A.C. 454.
Generally however, a mere direction by a creditor to his debtor to pay money to a third party is not necessarily an assignment unless the instructions can be said in their con , to amount to an irrevocable mandate to the debtor. See CURRAN V. NEWPARK UNEMAS LTD (1957) 1 ALL E.R. 295, BRITISH EAGLE INT’L AIRLINES LTD V. CIE NATIONAL AIR FRANCE (1973) 1 LIOYD’S REP.414 AT 427.
Another principle of the common law on assignment in that an assignment made by letter is complete as soon as the letter is posted to the assignee as was held in the case of ALEXANDER V. STENHARDTWAKER & CO. 0903) 2 K.B. 208 The above general positions of the common law on assignment are to guilde a determination of the issue. whether indeed, fact and law, there was an assignment of the benefits of the contracts between the company and the 1st Appellant to the Respondent.
The assertion of an assignment in respect of the benefits of the 1st contract was based on the letter from the company to the 1st Appellant which was admitted in evidence at the trial as Exhibit ‘D’. A copy of the Exhibit is at page 34 of the record of appeal and has following contents:-
“No.3 Anokwuru Street
P. O. Box 2548,
Port Harcourt.
The Commercial Manager,
Julius Berger (Nig.) PLC,
Port Harcourt Office,
Port Harcourt.
ATIENTION MR. P. NWACHUKWU (CONTRACT MANAGER)
Dear Sir,
RE: SUPPLY OF GRADE B PLASTIC JUTE BAGSAS PER QUOTATION 0015/97 –
REF YOUR ORDER NO. B. 0004747 DATE 10/3/97 FOR 1,900,800.00 (NET VALUE OF ORDER).
We hereby give an irrevocable mandate that payment cheque for the supply of the above should not be released to PIT-A-PAT INT. (NIG.) LTD without prior knowledge of the manager Mr. W.A. KOLAPO of Toki Rainbow Community Bank Ltd 68 Nkpogu Road, Trans Amadi Ind. Layout, Port Harcourt.
The LPO in respect of the above was financed by the same bank TOKI RAINBOW COMMUNITY BANK LTD.
Please acknowledge receipt on the copy of this letter.
Thank you,
Yours faithfully,
……
PETER MORKAH
(MANAGING DIRECTOR)
CC: The manager,
Toki Rainbow Community Bank.
Above for your necessary action.
……….
PETER MORKAH
The letter in simple and clear language conveyed the instructions that the payment cheque for the supply of the above should not be released “to the company without the prior knowledge of the manager” of the Respondent. The duty of the court in the interpretation of these clear and unambiguous words of the letter is to ascribe their ordinary grammatical meaning to them. The letter has expressly stated what the mandate is and no other thing or words out side it ought to be imported in ascertaining that the intention of the company was. The undisputable intention and instruction or mandate was that the cheque for the payment of the benefit of the contract due to the company should not be paid to it by the 1st Appellant without the prior knowledge of the Respondent’s manager. It can not seriously be argued that the letter conveyed an irrevocable mandate, instruction or order to the 1st Appellant to pay the payment cheque to either the Respondent or its manager. The letter in my firm view, did not intend nor attempted to transfer the benefits of the contract in question from the company to the Respondent in such a manner as to effectively assign the title or interest in the contract to enable Respondent claim or/sue and maintain an action against the 1st Appellant for the recovery of the benefits. Put another way, the instruction in the letter did not contain or convey an absolute transfer of the benefits of the contract from the company to the Respondent. The letter has thus fallen short of meeting the 1st essential element of a valid assignment which is that the assignment must be absolute and not by way of a charge only. For that reason, the letter did not amount to valid legal assignment of the benefits of the contract to the Respondent capable of conveying any right to the title nor claim thereto against or from the 1st Appellant. Perhaps I should point out that the mere fact that the 1st Appellant had reacted to the letter by saying it was only going to pay to the company, did not alter or change the clear and expressed intention and instruction conveyed in the letter. In fact the message or mandate conveyed in the letter did not instruct or direct that the benefits of the contract be paid directly to the Respondent. The simple intention of the letter was that the payment cheque should not be given or issue to the company with out the knowledge of the Respondent’s manager. So the issue of the transfer of the interest, benefits or title to the contract from the company to the Respondent was not even contemplated and did not therefore arise from the contents of the letter in any case. In law, the reaction of an assignee i.e acceptance or otherwise to the assignment is not a prerequisite for the validity and effectiveness of such an assignment. Though learned counsel for the Appellant had submitted that consent of an assignee is required for a valid assignment and referred to page 581 of Cheshire, Fifoot and Funston’s Law of contract, 14th Edition, the consent is only required where liability of a contractual obligation was to be transferred to a debtor. That is not the case here since it is benefits of the contract between the company and 1st Appellant that were transferred and not the liabilities. The company had no liabilities under the contract in question to be transferred to 3rd parties whose consent in such a situation would have been necessary in equity and law. That submission of learned counsel is therefore misplaced and inapplicable in the present appeal. The authorities cited in support of the submission are not helpful to the Appellants in the circumstance. As seen earlier, all that the law requires is that the assignee be put on notice in writing of the assignment.
I now turn to the 2nd contract in respect of which the claim was that benefits thereof were assigned by the company to the Respondent vide the letter admitted in evidence as exhibit ‘G’. It was written by the company to the 1st Appellant and as follows:-
“Date 28/5/97
No. 3 Anokwuru Street
P. O. Box 2548,
Mile 1 Diobu,
Port Harcourt.
The Commercial Manager,
Julius Berger (Nig.) PLC,
Port Harcourt Office
Port Harcourt.
ATIENTION: MR. A. LOSSMANN
Dear Sir,
RE: HAULAGE OF 2000 TONS OF 5/15MM AGGREGATE FROM ISHIAGU QUARRY TO PORT HARCOUT WITH “SIDED” TRAILLERS.
We hereby give an irrevocable mandate that payment cheque for payment of the above should be issued to Toki Rainbow Community Bank Ltd 68 Nkpogu Road,
Trans – Amadi Ind. Layout, Port Harcourt.
Your LPO no. 48303 DATED 2ND May, 1997 in respect of the above was financed by the same Bank, Toki Rainbow Community Bank Ltd.
Please acknowledge receipt on the copy of this letter.
Thank you,
Yours faithfully,
……..
PETER MORKAH
MANAGING DIRECTOR
CC: TOKI RAINBOW COMMUNITY BANK
Above for your necessary action.”
Once again, this letter is in straight forward language which simply conveyed the intention and directive that the payment for the contract mentioned therein should be made to the Respondent. The message is that an irrevocable mandate was given to the 1st Appellant to pay the benefits due to the company from the contract to the Respondent. This letter as can clearly be seen on its face, was written on the 28/5/97 and copied to the Respondent, like Exhibit ‘D’ in respect of the 1st contract. The plain purport of the letter was to transfer to the Respondent, the money due to the company from the contract in question. In other words, the apparent intention and directive of the letter was give or transfer the benefits, interest or title due to the company from the contract with the 1st Appellant to the Respondent I am of the view that the instructions in the letter undoubtedly have the following effect:-
(a) That the company was the owner or entitled to the benefits of the contract in question;
(b) That the company had unconditionally, entirely and absolutely (by irrevocable mandate) given or transferred the benefits and title thereto to the Respondent; and
(c) That the 1st Appellant was notified in writing of the transfer of the benefit to the Respondent.
In the circumstances, the letter appears to have met all the three (3) essential requirements of a valid assignment as set out earlier in this judgment.
In this regard I agree with the learned counsel for the Respondent that exhibit “G” constitutes, in the circumstances of the appeal, a valid assignment which confers the Respondent with title to the benefits of the contract in question and the right to claim and sue the 1st Appellant to recover same. It may be recalled that no particular form is required for an assignment as long as the intention that the contractual benefits shall become the property, of the assignee is clear from the notice of the assignment. In Cheshire, Fifoot and Furnston’s Law of contract 14th edition, at page 563 it was stated that.
“A legal chose in action is a right that can be enforced by an action at law, as for example, a debt due under a contract.” The only condition for the enforcement of the right by an assignee is for him to join the assignor in the claim against the debtor. The Respondent in this appeal had satisfied that condition by joining the company as a Defendant along with the Appellant at the High Court.
Since my finding is that Exhibit “G” constitute a valid assignment, legal and equitable, of the benefits of the contract from the company to the Respondent to entitle it sue the 1st Appellant to recover same, the next issue to be determined is whether or not the Respondent had shown by the pleadings and evidence adduced at the trial, that the 1st Appellant had not discharged that assignment to the Respondent to be entitled to succeed in its claim.
The relevant pleadings on the 2nd contract by the Respondent are to the found in paragraph 18 of the Amended Statement Claim which provides thus:
“The Plaintiff was amazed to learn that cheques is payments due in respect of the first and the second contracts between the 2nd defendant and 4th defendant had in fact been issued by the 3rd defendant and the said Mr. Lossmann in collusion with the 1st defendant and collected by the 1st defendant, who had fraudulently coverted the said sums to other purposes in which the 3rd defendant and Mr. Lossmann had joint interest with him.”
The evidence adduced in support of the averments is to be found at page 20 – 1 of the notes of proceedings of the trial which was made part of the record of appeal after the initial record of appeal was transmitted fro the High Court. It was in the following terms.
“To my greatest surprise, on 20th July, 1998, I went for recovery drive at 4th Defendant’s office, formerly located behind Presidential Hotel, Port Harcourt. There I learnt that payments in respect of the 1st and 2nd contracts in this transaction had been made, by the 3rd Defendant and Mr. Lossman the commercial Manager of 4th Defendant, to 1st Defendant who then converted the payments to a purpose…”
The aggregate plenitude of the pleadings and evidence is that the 1st Appellant did not pay the benefits of the 2nd contract to the Respondent as directed in Exhibit “G”. On their part, the Appellant’s did not deny that the 1st Appellant did not pay the benefits of the contract as directed by the company to the Respondent. The Appellants only denial in paragraph 17 of the Amended Statement of defence was to the effect that 2nd Appellant did not have any joint interest with the 1st Defendant. The evidence adduced for the Appellants was to the effect that the 1st Appellant had no contractual relationship with the Respondent and therefore had no obligation to pay the benefits of the contract between it and the company, to the Respondent. Specifically, DW1 said at page 52 of the notes of proceedings of the High Court under cross examination that. “That was why we replied to the two requests to that effect made by PIT-A-PAT that we will not pay to the plaintiff in respect of these two orders/contracts. If the Plaintiff comes before this court to say that 4th Defendant paid money in respect of these two contracts or any of them DIRECTLY to it, Plaintiff will be telling lies.”
What the Appellants did in legal effect is to mutedly in pleadings and emphatically in evidence, admit the case of the Respondent that the 1st Appellant did not pay the benefits of the contract in question as directed by the company in Exhibit “G” to the Respondent. With such unambiguous admission, the Respondent was undoubtedly entitled to succeed in law and equity on the claims against the 1st Appellant for the recovery of the benefits assigned to it by the company in Exhibit “G”. See sections 19 and 75 of the Evidence Act, OWOSHO DADA (1984) 7 SC 149, ONWUKA V. EDIALA (1989) 1 NWLR (part 96) 182, AMERICAN CYNAMID CO. V. VITALITY PHARM LTD (1991) 2 SCN) 42 at 50-1. The reply to Exhibit “G” by the 1st Appellant to the company that it was only going to pay to the person the LPO was of no moment to the assignment of the benefits accruing f m the LPO to the Respondent or its right to claim them from the 1st Appellant because consent or agreement of the latter was not a requirement for a valid assignment. What the law and equity require as stated before now is that the 1st Appellant be notified in writing of the intention to and the transfer of the benefits to third (3rd) party, in this case, the Respondent. The notice of the assignment in this appeal to the 1st Appellant is not in dispute.
In the result, I answer and resolve the issue in two parts as follows:
(a) There was no valid legal or equitable assignment of the benefits of the 1st contract on the LPO NO. B0004747 by the company vide Exhibit “D” to the Respondent to effectively transfer interests or title therein.
(b) That there was a valid legal and equitable assignment of the benefits of the 2nd contact on LPO No. 48303 vide Exhibit “G” by the company to the Respondent which effectively transferred the interests or title therein to the Respondent
Consequently, the issue is resolved in the first part in favour of the Appellants while in the second part; it is resolved in favour of the Respondent.
The next issue as set out earlier that needs determination is issue No.4 it is:
“Whether the trial court was right to hold the appellants liable to pay the costs of the two loans to the Respondent.”
Before going into the submissions of learned counsel on the issue, I would like to point out that after a careful reading of the judgment appealed against which runs from page 131 -160 of the record of appeal, I could not find where the High Court held the Appellants liable to pay the costs of the two loans to the Respondent. In addition, there is no order in the judgment to the Appellants to pay the costs of the two loans to the Respondent.
What is contained in the judgment appealed against is the finding that Exhibit ‘D’ and Exhibit “G” have met or satisfied the essential requirements of valid legal assignments in respect of the benefits of the two contracts. See paragraph 2 of page 154 of the record of appeal. Eventually, the judgment ended thus: at page 160:-
“Accordingly, I hereby enter judgment for the Plaintiff against the 3rd and 4th defendants as per the plaintiffs’ claim against them, as stated in paragraph 19(1) – (7) of Plaintiff’s amend statement of claim of 17th March 2000.”
It may be recalled that the principal claims of the Respondent in paragraph 19(1) and (4) of the mentioned Statement of Claim were based on ground of assignment of the benefits of the contracts by the company to the Respondent. In the above circumstances, the issue No.4 formulated by the learned counsel for the Appellant did not clearly enure or arise from the decision appeal against the principle of law is now common knowledge that for an issue in an appeal to be live and competent for determination, it must derive or be distilled from the decision appealed against. The issue in addition did not come from any of the grounds 1, 4 and 7 of the grounds of appeal from which it was said to have been formulated. It is consequently an incompetent issue in the appeal and there is no duty in the court to consider the submissions made thereon. The said issue is struck out for being incompetent and the submissions thereon discountenanced. REG. TRUSTEES OF APOSTOLIC FAITH MISSION V. U.B JAMES (1987) 7 SCNJ 167, BAMGBOYE V. OLARENWAJU (1990) 4NWLR (part 184) 132.
Issue NO 7 is the next crucial one for answer and it is “whether the lower Court was right to grant the main claims/relief and the alternative claim in respect of the 2nd Contract at the same time.”
After making reference and setting out the alternative claim by the Respondent against the 2nd Appellant in paragraph 19 (7) of the amended Statement of claim as well as the principal claim in paragraph 19(4) -(6), learned counsel for the Appellant’s submitted that it is settled law that both the main claim and the alternative claim cannot be granted at the same time. He relied on the cases of MICIHAEL V. YUOSUO (2004) 15 NWLR (part 895) 90, SEVEN-UP BOTTLING CO. V. ADEWALE (2004) 4 NWLR (part 862) 183 and argued that it was wrong for the High Court to have granted the alternative claim in relief (7) after it had grant d the main claims in reliefs (4),(5) and (6). We were urged by him to set aside the decision of the High Court on this head of claim. The learned senior counsel for the Respondent did not address the issue in the Respondent’s brief of argument
From the portion of the judgment of the High Court set out earlier the principal claims in paragraph 19(4) and (7) of the Respondent’s amended Statement of claim were made in the alternative. Speaking on the effect of making a claim in the alternative, the Supreme Court in the case of HELP (NIG.) LTD V. SILVER ANCHOR (NIG.) LTD (2006) ALL NWLR (part 311) 1833, per Mukhtar, JSC state thus at page 1855-6:-
“When a party makes a claim in the alternative, the belief is that he wants either of the relief sought, in which case when he is granted any of the relief, it suffices for the purpose of satisfying his claim.”
Similarly, this court per Adio JCA (as he then was) in the case of UBA V. PENNY MART LTD (1992) 5 NWLR (part 240) 228 had this to say on the grant of an alternative claim:-
“Where an alternative claim is made in addition to a main claim it is only where the main claim has not been granted that the consideration and the granting of the alternative claim can arise. Both the main claim and the alternative claim cannot at the same time be granted.”
From the above authorities in addition to the ones cited by the learned counsel for the Appellants, the law is quite settled that alternative claims made in a case by a plaintiff against a defendant or defendants cannot be granted along with or in addition to the grant of the main or principal claims made by the same plaintiff against the same defendants. In fact, after the grant of the principal or main claims, it would be improper and injudicious to proceed with a consideration and grant of an alternative claim in the same case for that would constitute the award or grant of double claims in respect of the same wrong or cause. See also the case of AGIDIGBI V. AGIDIGBI (1996) 6 NWLR (part 454) 300. In the premises of these authorities, the High Court was clearly in error of law when it purported to grant the alternative claim of the Respondent in paragraph 19(7) of the amended statement of claim when and after it had granted the main or principal claim in paragraph 19(4). Put another way and to directly answer the issue, the High Court was wrong in law to have entered judgment in favour of the Respondent in terms of the claims in paragraph 19(4) and (7) at the same time against the Appellants, the claims being in the alternative. In the result, the issue is resolved in Appellants’ favour.
The last of the crucial issue that requires determination is issue NO. 8 which is as follows:
“Whether the trial court was right to hold the 3rd defendant/2nd Appellant made fraudulent misrepresentation that influenced the respondent to grant the 2nd loan to Pit-a-Pat international Limited.”
After a consideration of and finding on the last issue, i.e. issue NO.7, issue NO. 8 would appears to have lost its seemingly crucial nature in the appeal. This is because even though it was properly raised or distilled from a competent ground of appeal No. 10, it is no longer material for the determination of the appeal. Since the alternative relief/claim granted by the High Court was found to be based on error in law and the pith of the issue NO.8 is entirely founded on that alternative claim, the issue has thereby become merely academic in the appeal. This is so because its resolution one way or the other would not in any way materially affect the out come of the appeal. Whether or not the High Court was right in finding that there was fraudulent misrepresentation to the Respondent by the 2nd Appellant for the grant of the 2nd loan to the company is no longer relevant in view of the findings on issues 3 and 7 above. In the circumstances, I do not find it expedient to consider submissions by the learned counsel on the issue.
In the final result, the appeal succeeds and is allowed in part in the following terms:-
- That there was no valid legal or equitable assignment of the benefits of the 1st contract in respect of LPO No. 000B4747 by the company to the respondent.
- That the High Court was wrong in law to have entered judgment in favour of the Respondent in respect of both the main and the main and the alternative claims at the same time.
Consequently, the decisions of the High Court in respect of the above issues are hereby set aside. For the avoidance of doubt it is ordered as follows:-
- The award of by the High court of the claim in paragraph 19(1) of the Respondent’s amended statement of claim dated the 17th day of March, 2000 in favour of the Respondent is hereby set aside.
- The award by High court of the claim in paragraph 19(7) of the said statement of claim in favour of the Respondent is set aside hereby.
- The award by the High Court of the claims in paragraph 19(4) – (6) of the statement claim in favour of the Respondent is hereby affirmed.
- The parties shall bear their respective costs of prosecuting the appeal.
Other Citations: (2009)LCN/3333(CA)
