Michael Foluwaso Oduwobi & Ors V. Barclays Bank, D.C.O (1962)

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UNSWORTH, F.J

We dismissed this appeal on the 5th February, 1962, and said that we would give our reasons later. We now give our reasons.

The facts of the case are that in June, 1956, Barclays Bank, who are the respondents in this case, held letters of credit in favour of the Colony and Overseas Trading Company (hereinafter referred to as the Colony Company). These letters of credit had been opened by a German Bank in favour of a customer in Germany. The opening bankers’ instructions were issued to Barclays Bank in Lagos through a London Bank, and authorized the purchase of shipping documents presented by the Colony Company. By letters dated 29th June, 1956 and 6th September, 1956, the Colony Company instructed Barclays Bank to pay £3,800 to the order of Messrs F’Olu & Sons, who are the present appellants, on presentation of documents for the first shipment. At the end of September the first defendant (who is a partner in the defendant firm) presented shipping documents purporting to show a shipment of goods to the value of £3,837-10s-0d. The account of the appellant firm was accordingly credited, though the money did not remain in the account as a substantial sum was withdrawn at the beginning of October. The documents were then remitted to the intermediary London Bank, who then paid the face value of the documents to the London Office of Barclays Bank. It was subsequently discovered that the shipping documents presented to Barclays Bank by the first defendant in fact contained false representations, as no goods of the value stated in those documents had been shipped from Lagos.

The main ground of appeal was that no action for money had and received lay against the appellants at the instance of Barclays Bank. It was said that Barclays Bank might have some claim against their principals in London, or against the Colony Company, but not against the appellants who had received the money. In support of this argument counsel submitted that no contract existed between the parties, and said that in these circumstances the money was not recoverable. He referred to the cases of Kelly v. Solari (1952) T.R., 26; Sinclair v. Brougham (1914) A. C., 398; Holt v. Markham (1923) 1 K.B; 504,513; London Joint Stock Bank v. Macmillan & Arthur (1918) A.C. 777. The case of Brook’s Wharf & Bull Wharf Ltd., v. Goodman Brothers (1937) 1 K.B., 534, was also referred to in the course of argument.

The facts of the cases referred to above were different from those in the present case, but the cases are of assistance in considering the general principles relating to an action for money had and received. The action is based on what is generally described as quasi contract and which was explained by Lord Haldane, in Sinclair v. Brougham, (supra), at p. 415, in this way:-

“Consideration of the authorities has led me to the conclusion that the action was in principle one which rested on a promise to pay, either actual or imputed by law. Moses v. Macferlan is the leading case on this point. It was an action on the case for money had and received under circumstances where any notion of an actual contract was excluded. But Lord Mansfield explained how in such circumstances the law treated the defendant as being in the same position as if he had incurred a debt: “If the defendant be under an obligation, from the ties of natural justice, to refund; the law implies a debt, and gives this action, founded on the equity of the plaintiff’s case, as it were upon a contract.”

Lord Mansfield, in the case of Moses v. Macferlan referred to above, said that the action lies “for money paid by mistake; or upon a consideration which happens to fail, or for money got through imposition, express or im-plied; or extortion, or oppression; or an undue advantage taken of the plain-tiff’s situation, contrary to laws made for the protection of persons under those circumstances.”

In considering the relationship that must exist between the parties in order to sustain an action for money had and received, Lord Wright M. R. in Brooks Wharf & Bull Wharf, Ltd., v. Goodman Brothers (supra) said this:–

“The obligation (to repay) is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law, apart from any consent or intention of the parties or privity of contract.”

Now, do these principles apply to the present case? There can be no doubt that Barclays Bank paid the money under a mistake, which was induced by the fraudulent conduct of the first appellant. In my view a claim for money had and received lies in the circumstances of this case.

The next point argued by Counsel under grounds two and three of the grounds of appeal was that the instructions to the Bank were genuine, and money received by persons who did not know of the fraud could not be recovered from them. There was no substance in this ground of appeal. The instructions to the Bank by the Colony Company were to pay the money “on presentation of documents for the first shipment”, and this must clearly be construed as meaning genuine and not fraudulent documents. The documents in this case were fraudulent, and the trial Judge held that the first appellant was aware of the fraud at the time of presentation of the documents.

The next point argued was under ground five of the grounds of appeal. It was said that the payment was made on a bill of exchange which had been accepted. In these circumstances it was submitted that the action should have been against the Colony Company and not against the present appellants. I think that this point has already been disposed of under the first ground, where I have said that action lay against the appellants in the circumstances of this case. It was further argued that there was no evidence of fraud, and in respect of this ground of appeal I would merely say that I accept the finding of fact as made by the trial Judge.

Another argument was that evidence should have been called from Germany to show that the goods had never been delivered. There is no substance in this point, as payment under the letters of credit depended upon shipment and not upon delivery.

We also dismissed the appeal against the counterclaim, as it related to the £401-19s-0d which had already been credited to the appellants.

For the reasons stated in this judgment we dismissed the appeal. The respondents are entitled to costs which I would assess at 23 guineas.

Other Citation: (1962) LCN/0971(SC)