United Bank for Africa Plc V. Ekene Dili Chukwu (Nigeria) Limited & Ors (1999)

LawGlobal-Hub Lead Judgment Report

GALADIMA J.C.A. 

This is an appeal by the Defendant/Appellant against the decision of Uyanna, C.J., sitting in the Awka Judicial Division of Anambra State High Court contained in his judgment of the 6th day of October, 1994. The Plaintiff/Respondent’s claim against the Defendant/Appellant is for the sum of N360,000 being the amount which the plaintiff paid per Orient Bank of Nigeria Limited, Onitsha Branch Draft No.003512 of 24/4/89 in favour of the 3rd- Third Party (Panel on Recovery of Public Funds and Property, Anambra State Government) which the Defendant/Appellant paid to 1st- Third Party (Manuel Bradley Limited) and the 3rd – Third Party. The Plaintiff/Respondent claimed that this money was negligently paid and he therefore claimed this sum as damages and interest therefore at the rate of 30% until the said amount was paid.

It was by leave of the Court below that Manuel Bradley Ltd., Emmanuel Chigbo Nwogbo and Panel on Recovery or Public Funds and Property Anambra State Government were joined as 1st, 2nd and 3rd Parties respectively.

The Plaintiff/Respondent, the Defendant/Appellant and the 3rd – Third Party/Respondent exchanged pleadings. Although all the Third parties were served only the 3rd- Third Party/Respondent entered appearance and defended the claim of the Defendant/Appellant against them for indemnity and other claims.

During the trial the Court below reviewed the pleadings of parties, evidence of the witnesses and the submissions of counsel. At the conclusion of all the available evidence and the submissions of counsel the learned trial judge in a considered judgment held that the 3rd – Third Party never authorized the 2nd – Third Party to act for them as auctioneer to dispose of the vehicles in question nor had the 3rd – Third party any such vehicles to sell. He then found that the Defendant/Appellant were negligent as averred by the Plaintiff/Respondent and the 3rd – Third Party/Respondent in their respective pleadings as well as proved in evidence. Judgment was therefore given for the Plaintiff/Respondent for the sum of N360,000 as claimed, and interest of 5% per annum on the judgment sum.

The 3rd – Third Party was also found not liable to indemnify the Defendant/Appellant.

Dissatisfied with this judgment, the Defendant/Appellant (who will hereinafter be simply referred to as the “Appellant”) now appealed to this Court and has filed seven grounds of Appeal. The grounds without their particulars are as follows:-

1. Error of Law

The learned trial judge erred in law in holding that the respondent had a cause of action in negligence at p.8 of the judgment as follows”…I am satisfied in coming to the conclusion without difficulty that the defendants did not make the necessary enquiries or take the anticipated precautions as a prudent Banker in opening the account in the joint names. The case against the defendants is strengthened by their paying the proceeds of the draft contrary to the expressed endorsement on the draft in conformity with the accepted Banking practices. In this, they were negligent…”

2. Error of Law

The learned trial judge erred in law in failing to uphold the contention of the Appellant bank that negligence on its part in opening account for its customer or in collecting a cheque for a customer could not by virtue of Section 77 or 82 of the Bills of Exchange Act (Cap. 35), Laws of the Federation of Nigeria, 1990, give rise to an action in negligence against the bank but would merely disentitle it to the protection of the said section.

3. Error of Law

The learned trial judge erred in law in failing to consider the appellant’s contention that even if the respondent had any legal claim against the appellant, it should equally not succeed, in view of the defence or ex turpi causa non oritur actio available to the appellant.

4. Error of Law

The learned trial judge erred in law in failing to find that Orient Bank Draft, the subject matter of the action, was a bill made in favour of a fictitious payee and that by virtue of the provisions of Section 7(3) of the Bills of Exchange Act (Cap. 35) Laws of the Federation of Nigeria, 1990 was in the circumstances of this case properly treated by the Appellant as payable to the bearer.

5. Error of Law

The learned trial judge erred in law in failing to hold that the appellant is entitled to protection of Section 77(2) (e) of the Bills of Exchange Act.

6. The judgment of the learned trial judge was given in a hurry and was not a considered decision, in view of his dictum at page 7 of the judgment as follows:-

I have taken pains within the short compass of time at my disposal to review the pleadings of the parties, the evidence of the witnesses and the submissions of counsel.”

The major submissions of and the authorities cited by the appellants counsel were neither mentioned nor considered in the judgment.

7. The judgment is unreasonable, unjust and against the weight of evidence.”

The Appellant formulated four issues for determination as follows:-

“i. Whether in the circumstances of this case the learned trial Chief Judge was correct in holding that the plaintiff was entitled to succeed against the defendant in an action for negligence;

ii. Whether the plaintiff’s claim against the defendant should not be defeated by the defence or ex turpi causa non oritur actio;

iii. Whether the learned trial Chief Judge was correct in holding that the defendant was negligent in collecting the proceeds of the Orient Bank draft, which by virtue of the provisions of Section 7(3) of the Bills of Exchange Act, was payable to bearer, and in paying the same into the joint account or in favour of the 1st third party; and

iv. Whether the learned trial Chief Judge was right in failing to consider and uphold that the defendant is entitled to the protection of Section 77(2) of the Bills of Exchange Act against the claim of the plaintiff in the absence of proof that the documents relied upon by the defendant in opening the joint account of the 1st and 3rd – third parties were forged.”

The 1st Respondent formulated two issues for determination as follows:-

“(i) Whether in the circumstances of this case the learned trial Chief Judge was correct in holding that the Defendant was negligent as the Plaintiff averred in its pleadings and proved in evidence by not making the necessary enquiries or take the anticipated precaution as a prudent banker in opening the account in the joint names of Manuel Bradley Limited/Panel on Recovery or Public ‘funds and Property, Anambra State Government and paying the proceeds of the draft (Exhibit A) contrary to the expressed endorsement on the draft in conformity with the accepted banking practices.

(ii) Whether the Learned trial Chief Judge was correct in holding that the endorsement on the draft (Exhibit A) crossed: “Not Negotiable, Account Payee only” was a warning to the collecting Banker that if he collects the cheque for someone other than the payee and that person is not entitled to it, the Banker maybe liable in damages to the person who was entitled to it and hence found the defendant liable in damages to the plaintiff for the value of the draft.”

The 3rd -Third Party/Respondent adopts four issues raised for determination by the Appellant’s Brief of Argument, and the four issues were argued together.

During the hearing of this Appeal learned counsel for the appellant Dr. A. J. C. Mogbana adopted the Appellant’s Brief of Argument dated 18/11/97 and filed 21/11/97. So also did S. Izu Nwankwo, 1st Respondent’s counsel and A.U. Nwadi 3rd – Third Party’s counsel.

Before I proceed to deal with the issues raised for determination, it is necessary to deal with observations made by the 1st Respondent regarding Grounds 6 and 7 of Appeal. It is observed that since the Appellant neither raised any issue nor advanced any argument in respect of grounds 6 that ground must be taken to have been abandoned and should be struck out. This ground complains that the judgment or the learned trial judge having been given in a hurry, was therefore not a considered decision since the major submissions or the authorities cited by the appellant’s counsel were neither mentioned nor considered in the judgment. It is well settled by a long line of cases that where a ground of Appeal is not covered by any issue formulated in a party’s brief of argument, particularly the appellant’s, that ground must be taken as abandoned. It is the issues that are argued and not the ground of Appeal. No issue is raised and no argument is advanced in respect of this ground. It is therefore taken as abandoned and accordingly struck out. See Abba Tukur v. Government of Taraba State & 2 Ors. (1997) 6 NWLR (Pt.510), 549 – 570.

Similarly ground 7 beside being incompetent for being generally and wrongly framed was abandoned by the Appellant. It ought to be struck out as well.

As things stand, having stuck out grounds Six and Seven there are now only five ground of appeal upon which the four issues formulated by the Appellant for determination are predicated. In other words these five grounds of Appeal are adequately covered by the four issues for resolution. It is my further considered opinion that issues Nos.1 and 2 can be conveniently argued together while issues No. 3 and 4 can also be argued together. Hence, I appreciate why the 1st Respondent has decided to formulate only two issues for determination while the 3rd – Third Party having adopted Appellant’s four issues for determination then canvassed and argued the four issues together. As I have pointed out earlier, neither the 1st Third Party nor the 2nd – Third Party entered appearance or in any manner contested the claim by the Appellant.

Question that arose in issue No.1 is whether in the circumstances of this case the learned trial Chief Judge was correct in holding that the plaintiff/Respondent was entitled to succeed against the defendant/Appellant in action for negligence, whereas the Appellant’s contention in issue No.2 is that the defence of ex turpi causa non oritur actio is available to the appellant against the 1st Respondent, Chief Dr. A. J. C. Mogbana submitted that having regard to the facts of the case the plaintiff/Respondent cannot successfully found its action in negligence. It is contended that the action is totally misconceived and must fail for non co-existence of three elements in action for the tort of negligence. Learned counsel enumerated these three elements firstly, the existence of duty to take care, which is owed by the defendant to the plaintiff; secondly, the failure to attain that standard of care prescribed by the law, thereby committing a breach of such duty; and thirdly, damage, which is both casually connected with such breach and recognized by the law has been occasioned to the plaintiff. Learned counsel for the Appellant focused his submission on the following cases; Donoghue v. Stevenson (1931) A. C. 562; Lochgelly Iron and Cool Company Limited v. M’ Mulian (1934) A. C. 1 HL at. P.25; Anns & Ors. v. Metron London Borough Council (1978) A. C. 728 at 751 – 752.

It is contended that the Plaintiff/Respondent failed to prove at the trial that the Appellant either owed a duty of care to the plaintiff in respect of Orient Bank draft, Exhibit A or committed a breach of duty. It is further contended by the learned counsel that since the evidence before the trial Court is that the plaintiff is not the payee, the drawer or drawee of Exhibit A, and the joint account with the appellant bank into which Exhibit A was paid was not opened by or in the name of the plaintiff, then in the circumstances, the plaintiff action framed in negligence, should fail. He cited African Continental Bank Ltd. v. Attorney – General of Northern Nigeria (1967) ANLR 76 at 1; wherein the Supreme Court drew a clear distinction between negligence as a cause of action and negligence in respect of the defence under Section 82 of the Bills of Exchange Act (Cap. 35) Laws of the Federation of Nigeria, 1990. It is submitted that the view of the learned trial Chief Judge that failure by the Appellant to make necessary enquiries before opening the joint account was enough to found an action in negligence is totally erroneous since such negligence is relevant only for the purposes of sections 77 and 82 of the Bills of exchange Act. The following were cited: Lloyds Bank Ltd. v. E. B. Sanory & Co. (1933) A.C. 201; United Nigeria Insurance Co. Ltd. v. Muslim Bank (West Africa) Ltd (1972) 4 ANLR. (Pt.1) 314; Marfani & Co. Ltd. v. Midland Ltd. (1968) 2 All E.R. 573. Learned Counsel concluded his submission that the action is not in negligence. In respect of issue No.2 which is argued together with issue No.1 it is contended by Appellant’s learned counsel that the defence of ex-turpi causa non oritur actio is available to the appellant against the plaintiff, especially in the circumstances of the present case, since P.W.2 testified under cross-examination that no auction sale was conducted by the 2nd – third party but the plaintiff negotiated with the 2nd -the third party to purchase the vehicles by private treaty. It is submitted that the natural inference from the plaintiff’s conduct in entering into private treaty with 2nd – third party is that the plaintiff intended to corner the business and to make a deal under the table for its own advantage; the result of which is that the transaction between the plaintiff and the 2nd – third party was tainted with illegality and immorality. It is therefore contended that the plaintiff has no right to recover any money paid by it as a result of that transaction. The following authorities are relied upon: Thackwell v. Barclays Bank Plc. (1986) 1 All E/.R/.676; The Law and Practice of Banking Vol. 1 (4th Edition) pp. 222-3 by J. Milnes. Also referred is Section 738 of the Contract Law (Cap. 30) Laws of Anambra State 1986 which provides that all auctioneer has no implied authority to sale by private treaty.

On issue No.3 the appellant  contended that by virtue of the provisions of Section 7(3) of the Bills of Exchange Act (Cap. 35) Law of the Federation of Nigeria 1990, the Orient Bank draft, Exhibit’ A’. is a bearer cheque and that it was properly paid into the aforesaid account. Reference was made to Paget’s Laws of Banking (19th Edition) and the case of Bank of England v. Vagliano Bros. (1891) A. C. 107, where the term “fictitious or non-existing person” as provided in Section 7 (3) of the Bills of Exchange Act, was defined. It is submitted by the learned counsel for the Appellant that since the 3rd – Third party offered no consideration for the Draft Exhibit ‘A’. which fact was unknown to the plaintiff at the time of parting possession with it, the 3rd – Third party has no right to the draft; and the plaintiff did not mean that the 3rd – Third party should take the benefit of the draft. It is further submitted that since the draft was drawn in favour of the 3rd – Third party by the fraudulent act of the 2nd third party, the payee on Exhibit ‘A’ is a fictitious or imaginary person which falls squarely within Paget’s proposition 2 for determining who is a fictitious or non-existing person.

It is further contended that being a bearer cheque, Exhibit A, was lawfully negotiated by mere delivery from Orient Bank, Onitsha to the plaintiff, to the 2nd and 1st- third parties and finally to the appellant, all crossings not withstanding.

In respect of Issue No.4 it was contended that the Appellant is entitled to the protection of Section 77(2) of the Bills of Exchange Act because it acted in good faith and without negligence since it took detailed and reasonable steps in opening joint account having regard to Exhibits E – S. It is finally submitted that no evidence was led to prove that any of these document was not genuine or was forged, particularly Exhibits H and J which were ostensibly issued by the Chairman of the 3rd – third party. That being so, the learned counsel contended, the appellant does not come within the decision in UN.I. Ltd. v. Muslim Bank (supra) as being negligent in opening an account.

Two issues were formulated on behalf of the 1st Respondent by its counsel; as reproduced above. On Issue No.1 – whether the defendant acted negligently in the circumstances of this case, it was submitted by S. Izu Nwankwo of counsel for 1st Respondent, that the Defendant/Appellant acted negligently and therefore the learned trial Chief Judge was correct to have so held. Ten reasons were proffered based essentially on the failure by the Defendant/Appellant as a banker to take prudent and cautious steps, as banking practice requires, in opening an account for a Government body like the 3rd – Third Party/Respondent. Referring to sections 217, 218, 219, 223, 224 and 225 of the Torts Law (Cap. 135) Laws of Anambra Slate of Nigeria, 1986, learned counsel submitted that the Appellant having held himself out as possessing special banking skill and profession he should have maintained some degree of care which every prudent Banker is expected to do in the circumstances.

On issue No, 4, as formulated by the Appellant, learned counsel for the 1st Respondent submitted that all the essential elements of the tort of negligence pleaded were proved by the 1st Respondent. Hence the learned trial Chief Judge rightly held that the Defendant was negligent. It was contended that the draft was purchased by the 1st Respondent with endorsement that it be paid into the account of the 3rd – Third Party/Respondent only as a payee beneficiary of the value of the draft. It is submitted that since the Appellant acted in a manner which caused the 1st Respondent to lose the money by paying the proceeds to a stranger contrary to the endorsement on the draft, the Appellant had breached that duty of care which also caused damage to the 1st Respondent. Learned counsel refers to and relies on these cases: Donoghue v. Stevenson (1931) A.C. 562; Anns v. Merton London Borough Council (1978) A.C. 728; and ACB Ltd. v. Attorney -General of Northern Nigeria. (1967) 1 ANLR 76.

On the issue No.2. it is submitted that the learned trial Chief Judge was correct and justified in holding that the crossing “Not Negotiable – Account Payee Only” on the draft was addressed to the collecting Banker and in effect warns the collecting Banker that if it collects the cheque for someone other than the payee and that person is not entitled to it, the banker may be liable in damages to the person entitled to it. He-cited and relied on the statement of J. Milnes Holden; “The Law and practice of Banking Vol. 1 (4th Edition) pp. 139 – 140 on the significance of crossing on a draft. He also relied on United Nigeria Insurance Co. Ltd. v. Muslim Bank (1972)4 S.C.69 at 77- 78; Balogun v. N.B.N. (1978) 3 S.C.155 at 163- 164.

Learned counsel canvassed extensive argument on the issue Nos. 3 and 4 as formulated in the Appellant’s Brief and urge this Count to affirm the judgment of the trial Court.

Learned counsel for the 3rd – Third Party Respondent argued Appellant’s issues together. It is the contention of the 3rd – Third Party/Respondent that the Appellant as a Banker acted negligently and in bad faith in collecting from the Plaintiff/Respondent a draft of N360,000 crossed “Not Negotiable – Account Payee only”, in favour of the 3rd- Third Party/Respondent- a State Government Body. It is submitted that in view of its illegal or immoral dealing with the 1st and 2nd – Third panics without reference to the 3rd – Third party and his referees, the Appellant can neither rely on the protection of Section 77(3) of the Bills of Exchange Act nor on the defence of “ex turpi causa non Oritur actio.” He cited and relied on the cases of Ladbroke v. Todd (1914) III L.T. 143; Attribs v. UBA Ltd. (1968) 1 ALR. Comm. 56; Bola Abimbola v. Bank of American Ltd. (1977) 4 CCHCJ. 547; United Nigerian Insurance Co. v. Muslim Bank (1972) 4 S.C. 69 31 77.

It is urged that this Appeal be dismissed because it lacks merit.

On a careful perusal of the Appellant’s Brief of argument where he adumbrated 4 issues for determination, it is observed from the facts of this case that not as many as four issues are required for determination of this appeal by this Court. When issues are proliferated for determination on the basis of a few grounds of appeal, this no doubt, defeats the object of brief writing. Numerous cases are replete in our law reports that a single issue can be formulated to encompass one or more grounds. Hence in this Appeal the 1st Respondent formulated only two issues for determination, while the 3rd – Third Respondent considered it convenient to argue the Appellant’s four issues together. Hence the two issues formulated by the 1st Respondent will be adequate enough to deal with this Appeal. 1st Respondent’s Issue No. 1 which is covered by the Appellant’s 1st and 2nd issue is whether the defendant/Appellant acted negligently in the circumstances of this case. The crux of the Plaintiff/1st Respondent claim is that since the draft in question was crossed and endorsed “Not Negotiable – Account Payee only,” the Defendant/Appellant was negligent in collecting the proceeds of the said draft, opening an account in the name of the 1st – Third party, and paying the proceeds into the said account instead of into payee’s account as expressly marked on the face or the draft. The Plaintiff/Respondent also alleged that the defendant was negligent in allowing the 2nd – Third party to operate the account alone and to withdraw the entire amount in the account. The Defendant/Appellant’s defence is that the Plaintiff/Respondent could not maintain an action in negligence against the Appellant having regard to the fact of the case and that the defendant was in no way negligent either in opening the said account. Although it would appear that no evidence was led by the 3rd – Third party to prove that the documents Exhibit D – S, were not genuine. However, it was admitted in evidence by the Defendant/Appellant that the 3rd – Third party was not contacted by the Appellant before opening the joint account and that the Accountant-General did not authorise the opening of the said account, as required by the Financial Instructions where the government is an account holder. The Appellant also claimed protection of section 77(3) of the Bills of Exchange Act and relied on the defence of ex turpi causa non oritur actio against the plaintiff/respondent. The 1st and 2nd Third parties did not participate in the proceedings, even though they were duly served with necessary court processes. The 3rd – Third party on its own part filed a statement of defence, to the Appellant’s statement of claim against the third parties whereby it denied liability to indemnify the Appellant against the Plaintiff’s/Respondent’s claim. The learned trial Chief Judge held that the crossing “Not Negotiable – Account Payee only” on the draft the subject matter of the case is addressed to the collecting banker and in effect warns the collecting banker that if it collects the cheque for someone other than the payee and that person is not entitled to it the banker may be liable in damages to the person entitled to it.

The learned trial Chief Judge also found that the Defendant was negligent because it did not make necessary enquiries or take anticipated precaution as a prudent banker in opening the account in the joint names and paying the proceeds of the draft contrary to the express endorsement on the draft and in violation of accepted banking practice Accordingly, the learned trial Chief Judge gave judgment for the Plaintiff/Respondent for the sum of N360,000.00 as claimed. It was held that the 2nd -third parties are liable to indemnify the Appellant to the sum of N360,000.00 and the costs due from the Appellant to the 1st Respondent and the costs to the appellant in the application for Third parties proceedings.

How the Defendant/Appellant acted negligently can be deduced from the circumstances of this case. The learned trial judge found as at page 97 – 98 of the Record of Appeal:

“I have no doubt that at one time the 2nd Third party had acted as an auctioneer for the 3rd Third Party, However, I am of the firm belief as I am convinced by the evidence that the panel, the 3rd Third Party never authorised the 2nd – Third party to act for them as an Auctioneer to dispose of the vehicles in question in this case, I was satisfied that the 3rd Third party had no such vehicles to sell and never authorised the 2nd Third Party to sell them.”

The Respondent/Appellant as collecting banker opened an account for this “unauthorised” 2nd Third party in the Appellant’s bank at Awka in the strange joint name of the 1st and 3rd – Third Parties and paid the sum of N360,000.00 into the strange account instead of into payee’s account as expressly marked on the face of the draft – Exhibit ‘A’, which clearly bore the endorsement “Crossed: Not Negotiable. Account payee only”. It is shown that no reference was made to the Orient Bank of Nigeria Limited, Onitsha Branch that issued the draft. The Appellant allowed the 2nd Third Party to personally operate the said account and he withdrew the whole amount.

The security intended of a draft on the face of which is crossed “Not Negotiable, Account Payee only”, is to ensure that the proceeds of that particular draft are lodged only in the Account endorsed on the draft and also made it non-transferable. Usually reference will be made to the Bank which issued if there is any problem missing from the draft. The draft was made in the name of the 3rd Third party to ensure that even if the transaction failed to go through the 1st Respondent could recover their draft since it was crossed: “Not Negotiable, Account Payee Only.” The fact that the 2nd – Third party collected the draft after the purported sale of vehicles which never was or delivered, no doubt, also put the Appellant on prudent path of enquiry in opening the account in the name of joint names of tile 1stand 3rd – Third Parties. The draft was specially crossed in favour of the 3rd -Thirty party – an Anambra State Government body. Failure or refusal of the appellant to obtain the necessary authority from the State Accountant General and the Commissioner for Finance before parting with the N360,000.00 the proceeds of the draft and also failure on the part of the Appellant to make diligent enquiries from the 1st Respondent and or from the 3rd – Third party as to the genuineness or the cheque before collecting the proceeds as it is the universal practice, shows that the Appellant has acted negligently and in bad faith. See Ladbroke v. Todd (1914) 111 Lt. 43. The liability here is in tort of negligence and the duty placed on the bank in the ordinary course of the discharge of its duties in conformity with its ordinary course or business and banking practice. As the banking practice basically requires, two references, at least; for each party is required. DW1 admitted in evidence that there was no reference to the 3rd – Third party in the fake joint account which, as it were, was stage-managed by the Appellant.

I do not think that the Appellant acted normally and in the ordinary course of its business and banking practice. The Appellant outlined the necessary steps and precautions to be taken in order to open an account for the Government institution like the 3rd Third party/Respondent, but the Appellant completely failed to take as a prudent bank. In lines 21 -25 of page 69 of the Record of Appeal, the Appellant held himself out as possessing special banking skill. Section 224 of the Torts Law (Cap. 135) Laws of Anambra State of Nigeria 1986, provides:

“224. Where a person possesses special skill or holds himself out as possessing such skill, it shall be his duty to exercise such care as a normal skilful member of his trade or profession is reasonably expected to exercise.”

Where such a skilful person is alleged to have been negligent in so exercising such care, his performance shall be-judged in the light of the normal standard reasonably expected of an ordinary person expected or an ordinary person with requisite skill in a similar profession or business. Hence the Latin maxim imperitia Culpas ad numeratu.

The Appellant paid the proceeds of the draft contrary to the expressed endorsement on the draft. The essentials of tort of negligence are provided in Section 217 of Anambra Torts Law. Section 218 provides for duty of care breach of which Section 219 provides liability for damages. See. Donoghue v. Stevenson (1931) supra; Anns v. Merton London Borough Council (1978) supra.

It is incontrovertible and the learned trial judge has correctly held that the crossing “Not Negotiable- Account Payee Only” on the draft was addressed to the collecting banker and in effect warns the collecting banker that if it collects the cheque for someone other than the payee and that person is not entitle to it, the banker may be liable in damages to the person entitled to it. See Gordon v. London City & Midland Bank (1902) 1 K. B. 242; Fine Art Society v. Union Bank of London (1886 – 87) 17 Q. B. 705.

All the essential elements of the tort or negligence as pleaded have been proved by the plaintiff/1st Respondent. The learned trial judge was right to have held that the Appellant was negligent. The plaintiff is entitled to the return of the draft for purchase and refund of the money paid for initial purchase of the draft. In dealing with the draft the Appellant owes it as a duty to protect the interest of the purchaser of the draft the plaintiff/respondent because he stands to benefit when the payee receives the payment. The payee on the other hand is entitled to the value of the draft and they are expected to offer consideration in return for the value of the draft. If the consideration which the Appellant expected to proceed from the 3rd – Third Party/Respondent railed as it happened, the Plaintiff/Respondent was clearly entitled to the return of the draft for purchase and refund of the money paid for the initial purchase of the draft. The principle of law enunciated by Supreme Court in A.C.B. v. Attorney-General Northern Nigeria (1967) supra per Brett. JSC does not favour Appellant’s contention, because the plaintiff did not bring the action on the basis of negligence for the purpose of section 82 of the Bills of Exchange Act 1990. In A.C.B.’s case one striking difference is that the plaintiff brought the action for negligence as a separate ground of action but the lower Court treated the action as one in conversion and then based in Section 82 of the Bills of Exchange Act, which was in pari material the English Bills of Exchange Act of 1882. Also the Appellant did not prove negligence on the part of the defendant in A.C.B.’s case in that the cheques in issue were drawn in favour of A.C.B. for the benefit of an existing account, though in a fictitious name. In the instant case, the draft was not drawn in favour of the Appellant. He came therefore be protected by Section 82 of the Bills of Exchange Act Cap. 35, Laws of the Federation 1990 which provides for cheques specially or generally crossed to a banker.

Since issue 2 formulated by the Appellant raised the defence of ex turpi causa own oritur actio and it is being considered with issued, this point ought to be resolved together. The maxim under which the Appellant has sought defence, applies to an action in contract based or tainted with illegality. Appellant has commended that PW2’s testimony is that 2nd – Third party told the plaintiff/Respondent that he had the authority of 3rd – third party to sell a number of vehicles by auction and no such auction sale was conducted by the 2nd – third party which was negotiated on the basis of private treaty; that the transaction between plaintiff’s/Respondent and the 2nd-third party was faint with illegality and immorality. It is therefore contended that the plaintiff has no right to recover any money paid by it as a result of that transaction. Appellant made reference to page 61 lines 3 – 9 of the Records where the plaintiff’s conduct could be inferred that he intended to negotiate with 2nd third party to purchase the vehicles by private treaty. Plaintiffs cross-examination relevant to this issue begins from line 34 (bottom) of P. 60:

“I said that the 2nd Third party in my presence and that of the PW1 told us that the panel on recovery of Public Funds and property handed him some vehicles to see for it by public auction. He said he case to know if we arc interested in knowing (sic) any. No auction was conducted. What I told the Court was not something done by secret deal (Italics for emphasis).

I do not see how the Appellant has inferred that this contractual transaction from this passage between the plaintiff and the 2nd Third party is by private treaty. The Appellant cannot rely on this maxim to dodge liability.

The defence of “ex turpi causa non oritur actio” is not to be raised casually. Where it is raised and relied on, the Court has to look at the quality or the illegality relied on and the proximity of the illegal conduct to the claim maintained by the plaintiff. It is then the Court can determine whether there has been illegality of which it can take notice and whether by affording the plaintiff the relief sought, it would, in all the circumstances, be contrary to public policy: See Thackwell v. Barclays Bank PLC. (1986) 1 All E.R. 676.

It is in the light of these circumstances I resolve issues I and 2 in favour of the Plaintiff/1st Respondent. The Appellant has failed to maintain the degree of care which a prudent banker will be expected to maintain.

The Appellant has argued in support of his Issue No.3 to the effect that by the provisions of Section 7(3) of the Bills of Exchange Act, the draft in issue is a bearer cheque having been drawn in favour of a fictitious person and was therefore properly paid into the joint account. This argument to my mind has no basis. It is not in doubt that the 3rd Third party is a legal person. This is agreed by the parties. On page 53 lines 21 – 25, the Appellant admitted in no mistaken term that the 3rd – Third Party is a legal person. The Appellant cannot now turn round to argue that the 3rd – Third Party is a fictitious person so as to justify his wrongful conduct.

Section 7(3) of the Bills of Exchange Act Cap. 35 Laws of the Federation 1990 provides:

“Where the payee is a fictitious or non-existing person the bill maybe treated as payable to the bearer.”

The term “fictitious or non-existing person” has been defined in Bank of England v. Vagliano Bros. (1891) A.C. 107. It was held that “a fictitious person” means a person who has never existed. “A non-existing person” means one who did exists but no longer exist. The payee in the instant case, in Exhibit ‘A’ is a legal existing person.

That Appellant recognized and accepted this fact as such and purportedly opened a joint account in its name. The present case does not fall squarely with paget’s proposition No.2. The proposition is:

“If, by fraud of a third party a man is induced to draw a bill or cheque in which the name inserted as the payee’s is that of an imaginary person (although people if that name may exist), such payee is a non-existing person, although the drawer contemplated someone of that name receiving the money by himself or a transferee by endorsement.”

The circumstances of this case does not admit of the Appellant as a bearer or a holder in due course. The Appellant is therefore not discharged of its negligent conduct.

In Issue No. 4, the Appellant contends that it is entitled to the protection of Section 77(2) of the Bills of Exchange Act against the claim of the respondent. This section provides:

“(2) where a banker, in good faith and without negligence-

(a) receives payment for a customer of a prescribed instrument to which the customer has no title or a defective title; or

(b) …

The banker does not incur any liability to the true owner of the instrument by reason only of his having received payment of it: and a banker is not to be treated for the purpose of this sub-section as having been negligent by reason only or his failure to concern himself with the absence of, or irregularity in endorsement of a prescribed instrument of which the customer in question appears to be the payee.

It is submitted that the Appellant took detailed and reasonable steps in opening joint account having regard to exhibits E, F, H,G, J, K, L, M, N, O, P, Q, R and S. I do not think the Appellant is entitled to protection afforded by Section 77(2) of the Bills of Exchange Act 1990. The Respondent took the precaution to specially cross the draft with the words “Not negotiable” and “account payee only”, but the Appellant paid this into an account maintained and operated by a different entity. I do not find any evidence to absolve the Appellant from culpability in negligence. The Appellant had opted to deal with the draft in a manner inconsistent with the right of the Respondent. It is therefore, liable. A banker to whom a cheque or a draft is handed over to under this circumstances ought to be put upon inquiry, and he will be liable if he acts negligently and credits a customer with the proceeds of the cheque without having made such inquiry. In the case on hand, the Appellant ought to have been put on enquiry. It cannot claim protection of the statute and should not be absolved of the resulting liability; having not deserved it.

In National Bank of Nigeria Limited v. Mobil Oil Nigeria Limited (1994) 2 NWLR (Pt. 328) P. 534 at 549 this court considering a banker’s protection under Section 2 (2) of the Bills of Exchange Act, 1964 which is pari materia with Section 77(2) of the Bills of Exchange Act, 1990, Sule-Gambari J.C.A. has this to say:

“In the present circumstance of the case on hand, the bank (Defendant/Appellant) had gone beyond assisting the culprit; the bank being presented with the cheques meant for the Lion of African Insurance Co. Ltd; received the money from the bank (International Bank for West African Limited) on which the cheques were drawn and proceeded to credit the amount to the account of different entity dubiously coined “Lion of African Insurance (consultancy), Company Limited.” This is like putting a wool in the eyes of the bank. The bank fell for it, which should not have been the case, because it ought to have been put on enquiry instead of assisting in perfecting the trick to perpetrate the fraud. Cheques meant for the benefit of one entity was allowed to be collected and the proceeds of them paid into a different entity. This is an act that fell below the reasonable standard of a prudent finance house … I find no act that can best or more constitute an act of gross negligence than these.”

Appellant is neither entitled to the protection of Section 7(3) nor 77(2) of the Bills of Exchange Act 1990, as carefully probed in appellant’s issues 3 and 4 taken above together. On the whole this Appeal lacks merit and it is accordingly dismissed. I affirm the judgment or the lower Court.

1st Plaintiff/Respondent is entitled to the costs or N2,000 and N1,000 to the 2nd Respondent (3rd – Third Party Respondent).

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Other Citations: (1999)LCN/0497(CA)