Union Bank of Nigeria Limited V. Ifeatu Augustine Nwoye (1989)
LawGlobal-Hub Lead Judgment Report
SALAMI, J.C.A.
The respondent, as plaintiff in the court below, took out a writ of summons which was endorsed as follows against the appellant:
“1. The plaintiff who is a trader, residing at No.12, Niger Bridge Road, Asaba maintains a current account with the defendants Bank at Asaba.
- The defendant is a limited liability company with its Head Office at No.40 Marina Lagos and carries on Banking business at their branch at Asaba, Bendel State, among other places in Nigeria.
- On or about the 2nd day of July, 1984 the plaintiff issued a cheque No.360008/044465 for N15,000.00 (fifteen thousand naira) to plaintiffs Trading Associates, Ifeatu Onuorah & Co. which cheque was on 11/7/84 wrongfully and/or negligently dishonoured by the defendant despite the fact that the plaintiff at the material time had enough money in his account to meet up the payment of his said cheque.
The plaintiff in consequence has been greatly injured in his credit and in his said trade or business, and he has suffered loss and damage.
WHEREFORE the plaintiff claims against the defendant the sum of N100,000.00 (One hundred thousand naira) being special and general damages for wrongful dishonour of the plaintiffs said cheque No.360008/044466 or In the Alternative, N100,000.00 (One hundred thousand naira) special and general damages for negligence.”
Pleadings were ordered and exchanged and further amended statement of claim and further amended statement of defence. Both parties called evidence in support of his or her position. The trial Judge in a reserved judgment found the appellant liable and made a total award of N40,000.00 being special and general damages of N28,266.00 and N11,734.00 respectively. The appellant was thereby aggrieved and has appealed to this court on six grounds of appeal. It is note-worthy that none of the grounds of appeal questioned the principles for awarding damages.
The respondent filed a notice of preliminary objection to the grounds of appeal which notice the learned counsel for the respondent withdrew at the hearing of the appeal and was accordingly struck out.
At the hearing of this appeal, the learned counsel for the parties relied upon their respective briefs and made oral submissions in amplification. The issue calling for determination, on the evidence produced before the learned trial Judge, is the point in time when the respondent’s draft for N80,000.00, exhibit 51, was cleared. The issue for determination is, therefore, very narrow and turns mainly on the facts.
In the circumstance, it will be necessary to relate the facts at the case briefly. The respondent had been maintaining a current account with the Asaba Branch of the appellant since 1982.The respondent on 2nd July, 1984 drew a cross-cheque for N15,000.00 in favour of a firm, Ifeatu Onuorah & Co. on his account with the appellant’s branch at Asaba.
The cheque No.360808/044465 dated 2nd July, 1984 was presented thrice, on 2nd July, 1984, the very day the draft was paid in, 6th July, 1984 and 11th July, 1984. On each occasion the cheque, which is exhibit 35 in this appeal, was presented it was endorsed either “effect uncleared” or “represent”. It is the respondent’s case that his account was in sufficient fund to meet the value which the cheque was drawn for. The respondent came to this conclusion on the strength of certain payments he made to his account on or about the day the cheque was made and first presented. In this regard his evidence runs thus:
“As at 28/6/84 I had in my current account with the defendant bank the sum of N9,038.24. Between 2/7/84 and 10/7/84 I made many lodgments. I can recognise the bank teller with which I made the lodgments. I made 8 lodgments. On 2/7/84 I made lodgments of N191: marked Exhibit 14, N1,700 Bank draft marked exhibit 15, N8,000 Bank draft A.C.B. Asaba marked exhibit 16.
On 5/7/84 I made lodgment of N500 cheque ACB Asaba exhibit 17, N2,000 bank draft; Tendered; Exhibit 18. On 6/7/84 I made lodgment, N3,003 in cash; tendered and marked exhibit 19 N5,650 Union Bank Draft and marked exhibit 20. On 10/7/84 I paid in N620 Union Bank Asaba cheque. It is exhibit 21.
As at 10/7/84 I have in my account N19,671.24. I obtained the statement of my account to the above effect.”
The statement of account was eventually admitted as exhibit 22. The respondent also testified that he had an overdraft facility of N3,500 in addition to the above benefits. The appellant did not seriously contest the lodgments claimed by the respondent. Its main grouse was that the cheques and drafts concerned in this appeal had to be forwarded for clearance and had not been cleared. In this on text, D.W.2, Mrs. Juliet Adeabi Madubueze, who was the branch manager at the material time testified thus:
“I say exhibit 35 on two occasions. I saw it first on 2nd and 6th July, 1984. The cheque was returned unpaid with reasons “represent on 30/7/84”. This is because the drawer had not got enough money on his account. The drawer was the plaintiff. As at 6/7/84 the draft which I sent to Benin City had not been cleared. I saw Exhibit 35 again on 11/7/84 the cheque was returned unpaid with the reason “effect uncleared”. It means that although the customer had made some lodgments into his account, not all the lodgments had been cleared to cover the amount on exhibit 35. The ACB draft for N8,000.00 had not been cleared. The draft was sent to Benin City for clearing on 9/7/84. There was also another cheque for N350.00 – Benin cheque, which had not been cleared too. There were two other cheques which had not also been cleared. Exhibit 10 is the ledger of the plaintiff. There was a cheque for N1,700 paid in on 2/7/84 had not been cleared as at 11/7/84.
There was another draft for N2,000 from Co-operative Bank Awka paid in on 5/7/84. It had not been cleared on 11/7/84. As at 11/7/84 the plaintiff account as per exhibit 10 was in black to the tune of N19,671.24.
This is so as all the lodgments had been credited to his account even though same had not been cleared. The true balance of the plaintiff account was N7,621.24 after deducting the uncleared effect.”
On the issues of uncleared effects, it appears both the respondent and PW.4 shed a flood “flight on them. The appellant alleged that on receipt of exhibit 35 together with the slip with which it was returned and the debit advice, exhibits 36 and 37 respectively the appellant went up to the African Continental Bank on which the draft of N8,000.00 was drawn to investigate why it had not been cleared. The appellant was informed that the draft was cleared on 6/7/84. With this information at his disposal, he went over to the defendant to query why the cheque was dishonoured.
On his own part, PW.4, Nwafor Uloaniche was the branch manager of ACB, Asaba. He tendered a draft from ACB Ekwuolobia drawn on the Asaba branch of the same bank. The draft, exhibit 51, is No.58/4012946 of 28/6/84. The beneficiary, the respondent in this case, paid the draft into his account at the Union Bank, Asaba.
The Union Bank sent the draft exhibit 51 to ACB Asaba as per a covering document, dated 2nd July, 1984, exhibit 51A. Exhibit 51A covered other negotiable instruments which were for clearing. The ACB cleared all the effects contained in exhibit 51A including the N8,000.00 on exhibit 35 on 6/7/84. The appellant in exhibit 51A indicated the manner it wanted the effects scheduled therein settled. It requested that the proceeds in exhibit 51A be settled by a draft drawn on the A.C.B. Ring Road, Benin Branch. Exhibit 52 is the draft issued to the appellant on 6th July, 1984 in settlement of all the items listed in exhibit 51A. The practical effect of this transaction is that ACB would be debited with the proceeds of exhibit 52 while the Union bank would be credited with the same at the Central Bank, Benin City, the clearing centre. P.W.4 admitted that until the proceeds of exhibit 52 are settled by their area office, Ring Road, Benin City the appellant would not be in physical possession of the proceeds of the exhibit.
In connection with the clearance of exhibit 35, along with other effects on exhibit 51A, D.W.2 testified under cross-examination as follows:
“Exhibit 51A was prepared by my bank. In the said exhibit we indicated to A.C.B. Asaba the mode of payment of the plaintiff’s draft to Union Bank for N8,000.00 ACB Asaba on 6/7/84 issued the defendant a draft for N21,200.23 in settlement of ACB Asaba indebtedness to the defendant as per exhibit 51A. I do know what is known as bank to bank clearing in Banking practice. Bank to bank clearing is settlement of indebtedness between bank to each other.”
On the plethora of evidence adduced before the learned trial Judge, he found, on the liability of appellant for its failure to honour exhibit 35 on 11th July, 1984, after reviewing and evaluating the evidence, as follows:
“On 6/7/84 ACB Asaba acting under the instruction of the defendant bank wrote Exhibit 52 to the defendant enclosing draft for N86,268.46 drawn on ACB Ring Road Branch in settlement of Union Bank’s cheque sent to ACB Asaba for clearing. It is my view and I so hold that at this point the rest of the remaining transaction, if any relates to the banks and had nothing to do with the plaintiff. The continuing effect of the averments in the said paragraph 20 of the defendant’s further amended statement of defence is that the ACB Asaba draft drawn on ACB Ring Road Benin City is also treated as cash. I therefore hold that exhibit 51 was cleared on 6/7/84 when the defendant received exhibit 52 and sent it to Benin City.”
The current account of the respondent as agreed upon by either parties was never over-drawn. The disagreements they had were to the amount of the respondent’s credit balance before clearance of the effects and the consequence of a payment in draft; while the respondent regarded it as cash the appellant was prepared to concede that status to an “in house” or a “domestic” draft. The learned trial Judge appeared to have acceded to the construction placed on the word by the appellant. An “in house” or a “domestic” draft is a draft is sued by a branch of a bank and drawn on another branch of the same bank. Such draft are, it appears, accorded the status of cash. So pleaded in paragraph 20 at the further amended statement of defence of the appellant. The averment reads thus:
“20. In further reply to the said paragraph 14 of the plaintiffs statement of claim the defendant avers that if a draft issued by defendant’s bank and payable by another branch of defendant’s bank, the draft will be treated as cash. But drafts issued by other banks have to be cleared in the same way as cheques. This principle is also the same with other banks.”
The appellant also led evidence in support of this averment when D. W.2 testified as follows:
“Drafts are treated as cash only if they are drawn by one bank in favour of another branch of the same bank. It is the drawee bank that can say whether the draft is good for payment. A draft given by one bank to another bank requires clearing by the bank to which it is given. So that ACB Asaba draft drawn on ACB Benin, given to Union Bank Asaba can be certified good by only A.C.B. Benin on whom the account is drawn. ”
The learned trial Judge endorsed this view thus:
“The above averment is far reaching. From what has been stated above the ACB Ekwulobia branch draft – Exhibit 51 which was paid into the plaintiffs account with the defendants bank, became cash when it was at ACB Asaba for clearance.”
The necessary implication of this holding which subsists until set aside is that the credit balance of the respondent’s drawing account was either N7,621.24 as claimed by the respondent or N7,621.24 as alleged by the appellant. See Chukwunta v. Chukwu 14 W.A.C.A. 341, Grafton Isaacs v. Emery Robertson (1984) 3 W.L.R.705, Timitimi & Ors. v. Chief Amabebe & Anor. 14 W.A.C.A. 374, 377 and section 53 of the Evidence Act. Notwithstanding the finding of the learned trial Judge, it appears the stand of the appellant is supported by the authorities. Money cannot be made available soon after it is paid in. Even where notes or gold are paid in sufficient time must be permitted to elapse to enable the bank complete its book-keeping exercise: Magrette v. Williams (1830) 1B & Ad 415. But there can be withdrawal or drawing against it as soon as it is properly credited. Capital and Counties Bank v. Gordon (1903) A.C.240, 243 and Re Mills, Bawtree & Co., Ex parte Standard (1893) 10 Marr 193.
With regard to cheques, it is trite that their proceeds are not available, apart from allowing reasonable time for the necessary book-keeping operations to be carried out, there will be need for necessary time to clear the cheque to elapse depending on “whether the cheques are town or country”. See Paget’s Law of Banking 8th Edition by Megrah & Ryder p.304.
In the circumstance, the dishonouring of the cheque, exhibit 35, on 2nd July, 1984 and 6th July, 1984 are in order. In the case of the former date that was the day the draft, exhibit 51, was paid in, the bank is entitled to reasonable time not only to make necessary entries in its book but also time to clear or collect the draft from the African Continental Bank on which it was drawn. In the latter instance, the cheque was represented on the very day the drawee informed the customer that it had cleared the draft as per exhibit 52. I think a reasonable travelling time must be allowed to enable the clearance arrive at the appellant’s branch office in addition to time required for bookkeeping. The appellant is, therefore, without blemish for failing to honour the cheque, exhibit 35, at presentations on 2/7/84 and 6/7/84.
The only issue outstanding has to do with the representation and dishonouring of exhibit 35 on 11/7/84. The respondent insisted that the appellant was liable whether or not reasonable time had been allowed for necessary book-keeping operations to be carried out. It is also not their concern to abide the clearing of the draft, exhibit 51 which, as far as they are concerned, is synonymous with cash. This view of the respondent as I observed earlier was not countenanced by the learned trial Judge. On the other hand, the appellant maintained that the cheque exhibit 35 could not be paid until exhibit 51 was cleared from Asaba branch of ACB and also exhibit 52, a draft issued by ACB Asaba on its area office in Benin City in satisfaction of exhibit 51 is cleared.
At this stage, a genesis of exhibit 52 may be pertinent or apt. When exhibit 51, a draft issued by Ekwulobia branch of ACB and payable on the Asaba branch of that bank was paid by the respondent into his account with Union Bank Asaba, the latter forwarded it for collection to ACB Asaba along with other instruments. In the accompanying document, exhibit 51A, which has provision for five modes of settlements, the appellant opted for a bankers draft drawn on ACB Ring Road branch Benin City which option the ACB Asaba promptly acceded to by forwarding under exhibit 52, a draft No.DX573480 dated 6/7/84 for N86,285.46 in settlement of all cheques Union Bank sent to A.C.B. Asaba for clearance or collection on 6/7/84. Exhibit 52 was sent to Union Bank Benin by its Asaba branch on 9/7/84 for collection at the clearing house, Central Bank, Benin City. It is the outcome of this latter clearance the appellant wanted the respondent to abide that it endorsed exhibit 35 with “effect uncleared” once more on 11/7/84. There would probably not have been necessity for a further period of waiting if the appellant had opted for the second option which says “Remit proceeds, under advice to”.
It is my respectful opinion that if the appellant for its own convenience ejected a mode of payment which entails further delay or risk it will not be fair, just and equitable to place the extra burden on its customer, the respondent. The issuance of the second draft DX573480 dated 6th July, 1984 is primarily the responsibility of the African Continental Bank for which it could be held liable in any eventuality and solely the making of the appellant. The Asaba branch of the appellant, having received draft No.DX573480 dated 6th July, 1984, which is shown by the covering letter, exhibit 52, that it included the proceeds of exhibit 51, N8,000.00, was duty bound to honour the respondent’s cheque for N15,000.00, exhibit 35 on 11th July, 1984 when it was represented. The reason being that when that N8,000.00 was added to N7,641.24 credit balance the appellant conceded the respondent had more than N15,000.00 to his credit. This amount owed it by the bank was adequate to satisfy the value of the cheque. The relation or position of a banker to its customer has been described as that of an agent and principal and as that of debtor and a creditor. In Yesufu v. ACB (1981) 1 S.C. 74 at 92, Bello, J.S.C. (as he then was) defined the relationship as follows:
“Since the celebrated case of Poley v. Hill (1849) 2 H.L. Cas 28 the relation in law between a banker and his customer has been that of debtor and creditor: See also Hairecharn v. Evans (Barclays Bank Ltd., Carnishees) (1938) 3 All E.R. 491 at p.498.
When a bank credits the current account of its customers with a certain sum, the bank becomes a debtor to the customer in that sum Joachimson v. Swiss Bank Corporation) (1921) 3 K.B. 110; and conversely when a bank debits the current account at its customer with a certain sum, the customer becomes a debtor to the bank in that sum: See Paget Law of Banking, 8th Edition, P.84; whichever party is the creditor is entitled to sue. If demand for payment was not complied, the other party for money lent: See Joachimson v. Swiss Bank Corporation (supra).” (italics ours)
On the same question of the relationship of a banker and its customer Idigbe, J.S.C. in Balogun v. National Bank of Nigeria Ltd. (1978) 3 S.C.155 at pages 163 and 164 stated as follows:
“The role or predominating business of banker is the business of banking which consists in the main in the receipt of monies on current or deposit account and the payment of cheques drawn by, as well as the collection of cheques paid in by, a customer – See also Atkin, L. J. Joachimson v. Swiss Bank Corporation (1921) 3 K.B. 110 at 127. Therefore, the receipt of money from or on account of his customer by a banker constitutes the latter the debtor of the former (Foisy v. Hill (1848) 2 H.L. Cas 28); and the banker undertakes to pay any part of the money thus due from him to the customer against the written orders of the customers (Joachimson v. Swiss Bank Corporation (supra). Accordingly the relation so constituted is that of principal and agent and, therefore, a cheque drawn on the banker by the customer represents the order of the principal to his agent to pay, out of the principal’s money in his hands, the amount stated on the cheque to the payee endorsed on the cheque. Therefore, it has long been established that refusal by a banker to pay a customer’s cheque when he holds in hand an amount, equivalent to that endorsed on the cheque, belonging to the customer amounts to a breach of contract for which the banker is liable in damages”. (italics mine)
On either authorities Yesufu v. A. C.B. (supra) and H. Balogun v. N.B.N. (supra) the party in credit is entitled to sue the other party if he fails to comply with the instruction or demand for repayment or refund of money lent. In the circumstance of this case, the respondent was entitled to recover in damages for the appellant’s breach of contract to pay the amount endorsed on his cheque when the appellant held in his custody money over and above the amount endorsed on the cheque belonging to the respondent.
The last point contended on behalf of the respondent was that since the ledger of the respondent’s current account reflected that the effect paid into the account had been credited the appellant was bound to honour the cheque, exhibit 35, whether or not the effects paid into the account had been cleared. This submission seems supported by Lord Lindley when he said:-
“It must never be forgotten 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”.
at page 249 of the case Capital and Counties Bank Ltd. v. Gordon (supra). But this submission is of little or no relevance in the determination of this appeal. Firstly, the appellant was not a holder for value. Secondly, the respondent admitted reading the counteracting stipulations on the tellers, exhibit 14-21 by which he paid in those instruments. The stipulation on one of the seven exhibits reads thus:-
“Customers are advised that the Bank reserves the right at its discretion to postpone payment of cheques drawn against uncleared effects which may have been credited to the account.”
It is no longer open to the respondent, on the clear and unambiguous wordings of the counteracting stipulation, to canvas the argument that the respondent’s account was in credit to the tune of N19,671.00 on 10/7/84. The respondent is estopped from pursuing this submission any further because it is common ground that some of the instruments that put the respondent’s account in credit were attributable to the uncleared effects which had been credited to the account. He also with his eyes wide open subscribed to the stipulations when he paid in the cheques. The appellant’s appeal is confined to its liability. It did not concern itself with the assessment or measure of damages. In the result the appeal is unmeritorious and it is, therefore, dismissed. The decision of the court below including the order as to costs are hereby affirmed. The appellant is to pay costs of this appeal assessed at N300.00 to the respondent.
Other Citations: (1989) LCN/0067(CA)
