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FEDERAL SUPREME COURT OF NIGERIA
30TH JUNE, 1961
BEFORE THEIR LORDSHIPS:
LIONEL BRETT, AG. C.J.F. (Presided and Read the Lead Judgment)
EDGAR IGNATIUS GODFREY UNSWORTH, F.J.
JOHN IDOWU CONRAD TAYLOR, F.J. (Dissented)
Nonyelu -for the Appellant
Sotire -for the Respondent.
Egwuatu – for the A. G. (Eastern Region).
NONPROFIT LAW: Trustees of a nonprofit –when deemed to act ultra-vires the trust created – execution of judgment obtained against trust property or un-named trustees – whether the use of ‘for and on behalf of trustees’ makes a trust property or all the trustees liable
COMPANY LAW – BODY REGISTERED AS LIMITED BY GUARANTEE:- Legal personality – Whether distinct from those of its named trustees – Proper style of bringing action against body – Effect fo failure thereto – Liability of trustees towards the satisfaction of any judgment debt ordered against the body
DEBTOR AND CREDITOR LAW:- Attachment of property as security for satisfaction of debt – relevance of indemnity owed by a third party to the judgment debtor – Liability of a trustee for the judgment of a registered trustee
REAL ESTATE/LAND LAW:- Contract for sale of land – Action for damages for breach of contract and refund of purchase price
COMMERCIAL LAW:- CONTRACT – Breach of contract – Action for refund of purchase price – Where defendant is a registered incorporated trustee – Proper party to proceed against
COMMERCIAL LAW – AGENCY:- Distinction between a person who sues or is sued as an agent “for and on behalf of his principal” and a person who sues or is sued for “himself and on behalf of others” – Common interest between agent and principal beyond the relationship of principal and agent – When deemed present
ESTATE ADMINISTRATION:- Trusteeship under the Land (Perpetual Succession) Ordinance Cap. 107 – Named trustees of a body registered as a body limited by guarantee – Whether mere representatives of a corporate body which can only be sued under the name and style provided in the Certificate of Incorporation – Proper designation for suing a body registered by guarantee – Where plaintiff fails to sue in prescribed name – Whether liability cannot therefore attach to the trust property or the Trustee as such – Whether the personal property of the trustees cannot be made liable for the judgment debt of a registered trust
PRACTICE AND PROCEDURE – ACTION – REPRESENTATIVE ACTION:- Order IV. r. 1 and Order IV. r. 3 of the Eastern Region High Court Rules, 1955 – Endorsement of writ for action in a representative capacity – Where more persons than one have the same interest in one suit – Need to obtain leave of court before one or more of such persons could act in a representative capacity for the other persons interested to sue or defend in such suit, for the benefit of or on behalf of all parties so interested
PRACTICE AND PROCEDURE – ACTION:- Parties to an action – Distinction between an action by an agent acting on behalf of the principal and a representative action where a party acts for himself and others – Whether similar principles apply to an action on contract against named Defendants “for and on behalf of Trustees” – Trust incorporated under Land (Perpetual Succession) Ordinance, Section 2 – Effect
PRACTICE AND PROCEDURE – JUDGMENT AND ORDER: Execution –Whether judgment for damages ineffectual against Trust property or un-named Trustees
INTERPRETATION OF STATUTE:- Order IV. r. 1 of the Eastern Region High Court Rules, 1955 – Provision for a plaintiff suing or a defendant counterclaiming in a representative capacity to see that his writ is so endorsed – Effect
WORDS AND PHRASES:- “on behalf of a Named Principal” – “As agent for Named Principal” – “On account of Named Principal” – Whether of same meaning
BRETT, AG. C.J.F. (Delivering the Lead Judgment):
The appellant is one of the six Registered Trustees of the Enitonna High School, Port Harcourt, who have received a certificate of incorporation under the Land (Perpetual Succession) Ordinance and may thus be sued in their corporate name. In 1957 the respondent brought an action in the Eastern Region High Court against the appellant and one of the other trustees, heading his claim-
Karimu Sanusi . . . . . . . . . . . . . . . PLAINTIFF and
The claim was for damages for breach of contract and the refund of the sum of £5,500 paid as the purchase price of a piece of property at 12 Bonny Street, Port Harcourt, which the defendants had agreed to sell to the plaintiff. No issue was raised as to the capacity in which the defendants were sued, and the judgment given in the plaintiffs favour contains no reference to it. The judgment was unsatisfied, or at least not satisfied in full, and the respondent, as judgment creditor, secured the attachment of the landed property of the appellant situate at No. 98/100 Bende Street, Port Harcourt. The appellant’s claim that he is not personally liable on the judgment, and that his property cannot be attached and sold in satisfaction of the judgment, was rejected by the High Court of the Region and the present appeal is against the decision rejecting that claim.
When the appeal first came up for consideration it appeared that the interests of the Registered Trustees might be affected and since the trust seemed prima facie to be a charitable one we invited the Attorney-General of the Eastern Region to arrange for the Registered Trustees to be represented. At the hearing, Mr.s Egwuatu, Crown Counsel, appeared on their behalf, but it is now clear, and is common ground between the parties, that whatever rights of indemnity the appellant may have against the Registered Trustees the corporate body is not liable under the judgment obtained against the appellant and Mr. Wilson.
In the High Court it was held that the conditions attached to the Certificate of Incorporation empowered the Trustees to accept and acquire land and hold it in trust, but not to sell it, and that the appellant must be held personally liable on the judgment because he acted ultra vires in agreeing to sell the land. This point had not been argued and I am unable to agree with the view which the learned judge formed. Section 2 (3) of the Land (Perpetual Succession) Ordinance provides that on the grant of a Certificate of Incorporation the trustees “shall have … power … subject to the conditions and directions contained in the said certificate to hold and acquire and by instruments under such common seal to convey, assign and demise any land or any interest therein …” In my view only an express prohibition in the conditions could take away the statutory power of conveying land and I think it was a mistake to hold that the agreement to sell was ultra vires.
Even if I shared the view of the learned Judge as to the powers of the Trustees, I should feel obliged to hold that he was wrong in basing his decision on that view, not only because the issue had not been argued before him but because the issue was irrelevant to the question which he had to determine, which was the effect of the judgment which it was sought to enforce, and nothing more. In the proceedings leading up to that judgment, questions of law relating to the personal liability of trustees, or of members of corporate bodies, would have been highly relevant, but the sole question in the present proceedings is whether the judgment as recorded does in fact hold the appellant personally liable, not whether it ought to have done so. In my opinion it does. No appeal having been brought against it, it is unquestionably a valid and subsisting judgment in which the appellant is named as one of the persons against whom it is given, and whatever effect the inclusion of the words “For and on behalf of Trustees of Enitonna High School” may have it is agreed that they do not make the trust property or the other trustees liable. No authority has been cited to us for the proposition that the use of such words relieves the named defendant of liability, while not imposing liability on any other person, and I would treat the words used as mere surplusage.
What the appellant says is that there has been an unsuccessful attempt to make him and Mr. Wilson liable in a representative capacity, and that the omission of the words “for themselves” from the description of the defendants prevents the judgment from being enforceable against them personally, and makes it, in the result, enforceable against no-one. It is for the appellant to establish that the judgment is not enforceable against him personally, and once again I think the argument comes too late. If the point had been raised during the trial of the substantive issue it could have been ascertained whether the reference to the Trustees was intended to mean the Registered Trustees as a corporate body or the six individual trustees, who may, for all that now appears to the contrary, have incurred a personal liability, and an appropriate amendment could have been applied for if necessary, or the action against the defendants could have been withdrawn. As it is, the appellant is himself one of the trustees and since the words used are just as capable of referring to the individual trustees as to the corporate body he is one of the persons “for and on behalf of” whom judgment was given against him. For this reason, even if I am wrong in regarding the qualifying words as mere surplusage, I would hold that the judgment is enforceable against the appellant personally. On these grounds I would dismiss the appeal, with costs to the respondent assessed at 21 guineas.
UNSWORTH: F.J.: I concur.
TAYLOR, F.J. (Dissenting):-
I have had the benefit of reading the majority judgment of my Lords Brett, F.J. and Unsworth, F.J., and regret that after full consideration of the issues involved in this appeal, I find myself unable to agree with the views expressed in the majority judgment on what I consider the two main issues, for the reasons contained in this judgment.
This is an appeal from the judgment of Egbuna Ag. J., in an interpleader suit, which arose as a result of an attachment of the property of the present appellant, consequent upon a judgment obtained against the defendants in suit P/22/1957. The defendants in that suit were described as “I. A. Williams, G. C. Wilson (For and on behalf of Trustees of the Enitonna High School, Port Harcourt)”.
The judgment in that suit was exhibited as exhibit “2„ and was delivered on the 12th December, 1957. It opens with the following words:
The facts of this case are not really in dispute. The plaintiff agreed with the defendants to purchase from them a property used as a school of which they were Trustees.
and in the penultimate paragraph the learned Judge held that:
In the result therefore I assess damages at £40 per month with effect from 1st June, 1956 until the date on which the sum of £5,500 is repaid. If part payment is made, then damages will be pro rata from the date of part payment. From the damages thus assessed must be deducted the sum of £300 already paid by the defendants as advance rent, but the sum of £55 stamp duty paid on the agreement will be added.
There has already been interim judgment for the sum of £5,500 and it only remains to assess Costs.
It is clear from this judgment that the final sum awarded was liquidated at a later stage, which, from the writ of attachment, would seem to have been the 20th February, 1958. Such writ reads as follows:
WHEREAS on the 20th day of February, 1958, this Court gave judgment to the plaintiff in the sum of £3,402-1s-5d being judgment debt, costs, and interest awarded to plaintiff up to 29-11-58.
AND WHEREAS default has been made in payment according to the said judgment/order and upon the application of the plaintiff it was on the 2nd day of December, 1958 ordered that execution should issue for the sum of £3,402-1s-5d being part of the sum remaining unpaid:
It then goes on to order the distress and sale of the goods and chattels of the defendants who are said to be I. A. Williams and G. C. Wilson. The writ was accordingly executed, and, after certain disbursements were made, the sum of £122-18s-Oil was paid into Court on the 4th July, 1959. It is of course clear that this sum was insufficient to cover the judgment debt. The next step appearing on the record, was the notice by the appellant that he claims the property attached, situate at 98/100 Bende Street, Port Harcourt. The writ of attachment of the property, which presumably was issued, was not made an exhibit in the Interpleader suit, nor was a copy of the judgment of the 20th February, 1958 exhibited.
At the hearing of the Interpleader summons on the 18th March, 1960, Counsel for the appellant contended that the property sought to be attached was the personal property of Mr. I. A. Williams, and that it could not be levied upon for a judgment obtained against Mr. I. A. Williams and another, defending for and on behalf of the Trustees of the Enitonna High School. The learned trial Judge held that:
The point is whether the judgment debtor, who was one of the Trustees of the Enitonna High School, is personally liable in view of the fact that he obtained this money (£5,500) in his capacity as a Trustee of this school? The principle is that being a Trustee of the school and acting in that capacity he is not personally liable if he did so within the powers of the Corporation.
He then went on to deal with the Certificate of Incorporation and s. 2 (3) of the Land (Perpetual Succession) Ordinance Cap. 107 Laws of Nigeria and came to the following conclusions:
It seems to me that the trustees have no power under this certificate of incorporation exhibit No. 1 to sell any property of the corporation.
and a little later on he said that:
It follows that these trustees in negotiating the sale of the property of Enitonna High School acted ultra vires their powers .
The principle is that where an agent acts beyond his powers he renders himself personally liable for the consequences of his act.
The trial Judge was therefore of the view that the action suit P/22/ 1957 was brought or purported to have been brought against the defendants as Trustees of the Enitonna High School, but that the present appellant was personally liable because he exceeded his powers as a trustee. With the greatest respect to the trial Judge that was not the issue before him.
Mr. Nonyelu for the appellant argued that only the trustees of the Enitonna High School as such could be made responsible, whilst Mrs. Egwuatu appearing for the Registered Trustees, contended the contrary.
The issues before the trial Judge and before us are simple and two fold namely:
To a great extent the answer to the second depends on that given to the first, in view of the fact that there is nothing on record to show that there was an amendment of the capacity appearing on the writ. On the first issue, I am of the view that by the Land (Perpetual Succession) Ordinance Cap. 107 the Trustees as a corporate body can only be sued under the name and style provided in the Certificate of Incorporation, i.e. as “The Registered Trustees of the Enitonna High School, Port Harcourt”. They were not sued in that name and liability cannot therefore attach to the trust property or the Trustee as such. Can the personal property of the appellant be made liable for the judgment debt? In this respect the trial Judge says that:
I am aware the claim against these judgment debtors is “for and on behalf of Trustees of the Enitonna High School, Port Harcourt”. In my considered opinion this simply means “for themselves and on behalf of Trustees of the Enitonna High School, Port Harcourt.
”This is my interpretation of it. As a matter of fact the defendants (meaning the judgment debtors) defended this action on that understanding as can be seen from the heading of the pleading which they filed in defence. Both of them, the two defendants, headed their statement of defence thus:-
“For themselves and on behalf of the trustees of the Enitonna High School Port Harcourt”
. . . . . . . . . . . .
The defence was for themselves as Trustees and on behalf of the other trustees of Enitonna High School. They cannot be heard to say they were not defending for themselves.
In this view, I have no doubt the trial Judge erred. In the first place, to my way of thinking, there is a vast difference between a person who sues or is sued as an agent for and on behalf of his principal and a person who sues or is sued for himself and on behalf of others. In the first place there is no common interest between the agent and the principal beyond the relationship of principal and agent whereas in the latter the persons suing or being sued have a common interest in the subject matter of the action with those they represent. There is, I think no need to cite any authority in support of the latter for the words of representation are clear in their meaning. As for the former the case of Ogden v. Hall (1879) 40 L.T. 751 at page 753, though dealing with the words where they appear in a contract, may be of some assistance. Huddleston B. held at page 753 as follows:
Now what is the meaning of these words “on behalf of Mons. Beluze Pottier, etc? If they are to be considered as words of description merely, as was done with regard to the words “as agent for John Schmidt & Co.,” in the case of Paice v. Walker and another, on which case the plaintiff’s counsel has so strongly relied in the present case, then of course the plaintiff will succeed in establishing his claim against the defendant; but if, instead of being read as mere words of description, they are held to be words indicating the capacity in which the defendants made and signed the contract, namely, that he made it “on behalf of” or “as agent for” Mons. Beluze Pottier, they would then, in my opinion, be words of the same import as the words “on account of” in the case of Gadd v. Houghton in the Court of Appeal … I think that the words “on behalf of” in the body of or at the beginning of the instrument of contract here are of the same import and to the same effect as the words “on account of in Gadd v. Houghton, and show that the present defendant was contracting not on his own account and liability, but “as agent” for Mons. Beluze Pottier.
Similar views were expressed by James, L. J. delivering the judgment of the Court in Gadd v. Houghton, (1876) 35 L.T. 222, at page 223. In so far as the writ and the Statement of Claim show that the action was one brought against the two defendants for and on behalf of the Trustees of the Enitonna High School, that capacity cannot, in my view be amended, as the trial Judge would seem to think, by the defendants adding the word “themselves” to the words of representation. Order IV. r. 1 of the Eastern Region High Court Rules, 1955 makes provision for a plaintiff suing or a defendant counterclaiming in a representative capacity to see that his writ is so endorsed. Practice has required the same provision where the defendant is sued in such a capacity.
Order IV. r. 3 of the same rules provide that:
Where more persons than one have the same interest in one suit, one or more of such persons may with the approval of the Court, be authorised by the other persons interested to sue or defend in such suit, for the benefit of or on behalf of all parties so interested.
In construing this rule the Courts have held that where a suit is brought by plaintiffs, or against defendants in a representative capacity and such plaintiffs or defendants do not obtain the leave of the Court to sue or defend in such capacity, it will be taken that they are suing or defending personally and any judgment entered against them will be a personal one. The cases of Adegbite and others vs. Chief Lawal and others 12 W.A.C.A. 398, and Lawani Laribigbe vs. Motola and others 12 N.L.R. 17, are in point. In those cases however, as in the very wording of the rule itself, the plaintiff or defendant has a common interest with the others he purports to represent. That is not however the case here, for the interest of the Registered Trustees as such, are distinct from that of the appellant personally. It is important to bear in mind that the basis of the action suit No. P/22/1957 was a contract alleged by paragraph 2 of the Statement of Claim to have been entered into between the plaintiff to that suit and the defendants, who on the pleadings, must be the two defendants in the capacity appearing on the writ.
I am firmly of the view that there was misnomer on the writ and the Statement of Claim in P/22/1957 and that the plaintiff in reality desired to sue “The Registered Trustees of the Enitonna High School.” It was for him to bring the proper defendant before the Court either originally or by way of amendment. This he did not do and proceeded to obtain judgment on a writ which was faulty. He cannot be heard to say that the present appellant is personally liable for a judgment based on a contract which was not on the pleadings entered into by the appellant personally but as agent for a corporate body which was mis-named.
Having come to this view I need say no more on the second point than that in so far as there is nothing in the judgment in P/22/57 to show that such judgment was against the appellant and G. C. Wilson personally, it must be taken that such judgment was against them in the capacity in which they were sued.
I would like to close by giving the following example:- B is sued as agent of XYZ on a contract. The words of representation used are “B, for and on behalf of, XYZ” or “B on account of XYZ”. Judgment goes against B on account of XYZ. It later transpires that XYZ is a limited firm and should have been sued as XYZ Ltd. That judgment as it stands is unenforceable against XYZ Ltd. Can it be said to be enforceable against B personally because, though he was sued as agent, yet in point of fact he was one of the Directors, be it noted, not of XYZ but of XYZ ltd.? I think not.
The appeal in my view must succeed. The ruling of the trial Judge must be reversed and an order for the release of the property at 98/100 Bende Street be made. No order for costs was made in the High Court and I would here make an order only as to the costs in this Court which I would assess at 21 guineas in favour of the appellant against the respondent.