Razaq A. Balogun V. African Continental Bank Ltd & Ors (1972)
LawGlobal-Hub Lead Judgment Report
SIR I. LEWIS, J.S.C.
In Suit No.LD/190/68, the plaintiffs’ Statement of Claim read:-
“The Plaintiffs are Bankers incorporated as a Limited Liability Company under the Companies Act with their registered Head Office at 148, Broad Street, Lagos and registered Branch Office at 27/29, Martins Street, Lagos.
The defendants are Fish Sellers at 228, Bamgbose Street, Lagos carrying on their business under the Name of Ore-Ofe Women Fisheries Company.
- On 26/3/63, the defendants opened a current account with the plaintiffs under the Name of Ore-Ofe Women Fisheries Company.
- At the time of opening the account the three defendants were the only signatories to all the cheques drawn on the plaintiffs on behalf of the Trading Concern.
2a. The three defendants are the Managing Director, Directress and Secretary of the Trading Concern.
- The defendants operated the account on credit basis until about 11/9/64 when the plaintiffs’ General Manager approved a loan of 2,000 pounds to the defendants.
4.The defendants continued to operate the account which left a balance of 4,100:5s.1d(pounds) inclusive of Bank Charges and Interests at the rate of 9% per annum.”
and the 1st defendant in paragraphs 2, 3 and 6 of his Statement of Defence pleaded:
“2. The Partnership known as Ore-Ofe Women Fisheries Company has wound up about 2 1/2 years ago and is no more doing any business.
3.The 1st defendant avers that he was never a partner in the Partnership business concern trading under the name and style of Ore-Ofe Women Fisheries Company. The 1st defendant further contends that he was only an agent of the said Partnership.
- The 1st defendant avers that he did not apply for or obtain any overdraft or loan from the plaintiffs for and on behalf of the partnership trading under the name and style of Ore-Ofe Women Fisheries Company.’
and the 2nd and 3rd defendants in paragraphs 1, 3 and 5 of their Statement of Defence pleaded:
“1.The 2nd and 3rd defendants were Fish Sellers and they were partners with some other persons in the partnership known as Ore-Ofe Women Fisheries Company. But the 2nd and 3rd defendants aver that the partnership has ceased functioning more than 2 1/2 years ago.
- The 2nd and 3rd defendants aver that they did not apply for or obtain any loan or overdraft from the plaintiffs; and that they are not indebted to the plaintiffs at all.
5.The 2nd and 3rd defendants aver that their partnership concern known as Ore-Ofe Women Fisheries Company is in no way indebted to the plaintiffs.”
It was not in dispute that the 1st defendant in company with the 2nd and 3rd defendants went in March, 1963, to the bank of the plaintiffs and asked to open an account in the name of Ore-Ofe Women Fisheries Company, and that the 1st defendant then described himself as the Managing Director of that partnership and that the 2nd and 3rd defendants described themselves as Director and Secretary respectively and that the three of them arranged to sign all cheques drawn on behalf of the Ore-Ofe Women Fisheries Company. It was also not in dispute that the 2nd and 3rd defendants were partners in the Ore-Ofe Women Fisheries Company. What was in dispute was the status of the 1st defendant in the matter, that is to say whether he was a partner in the Ore-Ofe Women Fisheries Company or whether he had held himself out to the plaintiffs to be such a partner, and whether the partnership in fact asked for and obtained an overdraft on their account with the plaintiffs of which they were aware from receiving statements periodically from the plaintiffs without disputing them so that by January, 1966, that overdraft amounted to the sum of 4.100:5:10d(pounds) which was the amount claimed by the plaintiffs in the present action. On the 9th of May, 1969, Sowemimo, J., found for the plaintiffs and awarded them 4,100:5:10d(pounds) together with 60 guineas costs against all the defendants jointly and severally. Against that decision all the defendants filed notice of appeal but before us only the 1st defendant continued with his appeal and we accordingly dismissed the appeals of the 2nd and 3rd defendants on the 20th of December, 1971.
Mr. Akinrele for the 1st defendant argued on his behalf his ground of appeal that read:
“The learned trial Judge erred in law in holding the 1st defendant personally liable when in law he was only an agent of the association ‘Ore-Ofe Women Fisheries Company.”
It was his submission that the 1st defendant was not a member of the partnership concerned, namely the Ore-Ofe Women Fisheries Company, and that the learned trial Judge made no finding that he was ever either a partner or held himself out as a partner despite evidence in this regard being given on behalf of both the plaintiffs and the defendants. The learned trial Judge, in his submission, rested the case on one of agency and found that the 1st defendant had gone to the plaintiffs’ bank with the 2nd and 3rd defendants and asked for an account to be opened for the Ore-Ofe Women Fisheries Company and later sought an overdraft for that partnership and that as the 1st defendant held himself out to the bank as the Managing Director of that partnership, he was estopped from denying that. In his judgment, the learned trial Judge said inter alia:-
“Even if it is established that the defendants exceeded their agency the fact remains that they would be personally held jointly and severally as having received the monies.
All the defendants have held themselves out by signature on Exhibit “A”, on the cheques Exhibits “B”, “C”, “D”, and “E” to have acted on behalf of the association. The fact that 1st defendant acted because a Mr. McEwen requested him to do so is immaterial. As a matter of fact Mr. McEwen was not called to give evidence. Nothing has been said as to his connection with either the Bank or the association.’
It was not disputed that the 1st defendant was one of the signatories of the cheques (Exhibit “B”, “C” , ‘D” and ‘E”) drawn by the Ore-Ofe Women Fisheries Company, not in favour of himself, but in favour of others designated in those cheques, but, in Mr. Akinrele’s submission, as the 1st defendant was an agent for a disclosed principal, he could not be held personally liable and for that submission he relied on Bowstead on Agency, 12th Edition, page 258, where it was stated:-
“But no agent is personally liable on any contract made by him merely in his capacity of an agent, even if he made it fraudulently, knowing that he has not authority to do so.”
However, that sentence must be read in the con of the whole of Article 113 and not in isolated fashion; and Article 113 reads:-
“Article 113
AGENT LIABLE IF HE CONTRACTS PERSONALLY, BUT NOT IF HE CONTRACTS MERELY AS AN AGENT.
Every agent who contracts personally, though also on behalf of his principal, is personally liable, and may be sued in his own name on the contract, whether the principal be named therein, or be known to the other contracting party, or not, and either the principal or agent may be sued, unless the other contracting party elect to give exclusive credit to the principal. But no agent is personally liable on any contract made by him merely in his capacity of an agent, even if he makes it fraudulently, knowing that he has no authority to do so.
The question whether an agent who has made a contract on behalf of his principal is to be deemed to have contracted personally, and if so, the extent of his liability on the contract, depends on the intention of the parties to be deducted from the nature and terms of the particular contract and the surrounding circumstances including any binding custom.”
In the latest edition of Bowstead on Agency, namely the 13th Edition, these principles are stated in Articles 117 and 118 at pages 373 and 374 in the following terms:-
“Article 117
GENERAL RULE
Where an agent makes a contract, solely in his capacity as agent, between his principal and a third party, he is not liable to the third party thereon.”
Article 118
AGENT LIABLE IF HE CONTRACTS PERSONALLY
An agent who undertakes personal liability to the third party in the course of making a contract on behalf of his principal is liable in accordance with the terms of any undertaking into which he has entered.”
Mr. Akinrele then argued that accepting that if the 1st defendant held himself out as being personally liable, apart from the partnership, he could be successfully sued, nonetheless, in his submission, he did not so hold himself out here and the learned trial Judge did not specifically so find. He further argued that the fact that the 1st defendant signed as Managing Director did not make him personally liable, apart from the partnership, as was shown by Chapman v. Smethurst (1909) 1 KB 927. As, in his submission, the learned trial Judge wrongly dealt with the issues as being one of agency and failed to deal with the really material issue as to whether the 1st defendant was a partner or held himself out to the plaintiffs as a partner of the Ore-Ofe Women Fisheries Company, learned counsel applied for the plaintiffs’ claim against the 1st defendant to be sent back for rehearing de novo.
Mr. Sotubo for the respondents conceded that the learned trial Judge made no finding as to whether or not the 1st defendant was a member of the partnership or had held himself out as a partner, but nevertheless contended that such findings should be implied from the passage in the judgment that we have already quoted (supra). He further argued in the alternative that, from the same passage in the Judgment that we have quoted, it could be inferred that the 1st defendant held himself out as an agent who was personally liable. But when it was put to him by this court, he had to concede that the question of the 1st defendant being personally liable, though an agent, was never how the plaintiffs’ case was pleaded or put in the High Court, for having regard to the Statement of Claim which we have quoted (supra), the plaintiffs’ case clearly turned on whether the 1st defendant either was a partner or held himself out to the plaintiffs as a partner; and Mr. Sotubo agreed that the learned trial Judge did not deal with the issue in his judgment.
In our view, the learned trial Judge should not have gone into the issue of the 1st defendant’s being liable as an agent as this was not pleaded nor was it ever the plaintiffs’ case. Moreover, we do not think anyway that the learned trial Judge was finding, in the passage of his judgment which we have quoted and which was relied upon by Mr. Sotubo, that the 1st defendant held himself out as being personally liable.
The learned trial Judge seems to have thought that, as the 1st defendant was one of the signatories of the cheques, he must be liable for having received the proceeds, yet the 1st defendant did not sign as a partner but as Managing Director, and there was no evidence that he ever himself received the money paid on the cheques or that it went otherwise than to the persons designated in the cheques. As there was conflicting evidence on the issue as to whether the 1st defendant held himself out to the plaintiffs as a partner and as the learned trial Judge came to no finding of fact on this vital issue, we see no alternative but to conclude that the matter was never properly determined.
We accordingly allow the appeal and set aside as against the 1st defendant only the judgment together with the award of costs, and we do order that the plaintiffs’ claim against the 1st defendant be heard de novo before another judge of the Lagos High Court. The question of costs in the High Court shall abide the outcome of the rehearing, but the 1st defendant is entitled to his costs of this appeal which we assess at 56 guineas.
SC.325/1969
