3PLR – LAW UNION AND ROCK INSURANCE OF NIG. LTD V. LIVINUS ONUOHA

POLICY, PRACTICE & PUBLISHING LAW REPORTS, 3PLR

LAW UNION AND ROCK INSURANCE OF NIG. LTD

V.

LIVINUS ONUOHA

COURT OF APPEAL (JOS DIVISION)

CAJ/31/195

MONDAY, 1ITH MAY, 1998

3PLR/1998/64 (CA)

OTHER CITATIONS

(1998) NWLR (Pt. 555) P. 576

BEFORE THEIR LORDSHIPS:

GEORGE ADESOLA OGUNTADE, J.C.A. (Presided and Read the Leading Judgment)

DENNIS ONYEJIFE EDOZIE, J.C.A.

OKWUCHUKWU OPENE, J.C.A.

REPRESENTATION

MAIN ISSUES

INSURANCE AND REINSURANCE LAW:- Insurance policy – Claim thereunder – Insurable interest of claimant – How determined – Relevant considerations

INSURANCE AND REINSURANCE LAW:- Insurable interest – Meaning – What qualifies as – Whether always co- terminus with ownership.

COMMERCIAL LAW – MAXIM:- Nemo dat quod non habet – Exception thereto in Section 22 (1) of the Sale of Goods Act, 1893 – Acquisition of good title from goods bought from market overt even if the seller of the goods would be liable in conversion for the sale – Rationale.

COMMERCIAL LAW – SALE OF GOODS:- “In good faith ” as used in section 62(2) of the Sale of Goods Act, 1893 – Meaning of – Presupposition

COMMERCIAL LAW – SALE OF GOODS:- ‘Market overt’ – Meaning of in Section 22(1) Sale of Goods Act, 1893 – Incidence and doctrine of –  – Whether mechanic village qualifies as such.

PRACTICE AND PROCEDURE – EVIDENCE:- Judicial notice – Duty of court to take judicial notice of all laws, Acts and enactments – Section 74 of the Evidence Act – Legal implication

ISSUE SUMMARY, FACTS AND RATIO OF CASE

Issues:

1        Did the respondent at anytime have an insurable interest over the car insured with the appellant in view of the trial court’s finding that the said car was stolen from where D.W. I’s wife parked it?

2. Is there an evidential burden on the appellant to prove that the respondent -at the time he insured the car with it was aware that the car was stolen?

Facts:

Before the Benue State High Court sitting at Makurdi the respondent as plaintiff claimed against the Appellant as defendant, the sum of N40,000.00 being indemnity and estimated value of a Peugeot 504, saloon car with Registration No. LA 9574 AM insured with the defendant on Policy No. NP 9918 (m)

The appellant is an insurance company. The respondent insured with the appellant a Peugeot504 saloon car for N40,000.00. While the car was so insured, it was destroyed by fire. The respondent duly informed the appellant. The appellant initially showed signs it would settle the respondent’s claim. It claimed the wreck of the car and sold it for N1,000.00. Later, however, the appellant refused to settle. It had discovered that the car insured with it by the respondent was stolen from the place where D.W.1’s wife had parked it. The car belonged to D.W. 1. The respondent in the circumstances sued asking for an indemnity of N40,000.00.

The parties filed and exchanged pleadings. On conclusion of trial the trial court found in favour of the respondent and awarded N39,000.00 against the appellant.

Aggrieved with the decision, the appellant appealed to the Court of Appeal. In determining the appeal the Court of Appeal considered the provisions of Section 22(1) of the Sale of Goods Act, 1893, a statute of general application applicable to Benue State which provides:

“22(1) Where goods are sold in market overt according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith without notice of any defect or want of title on the part of the seller.”

Held (Unanimously dismissing the appeal):

Anybody who sues on an insurance policy can only sue in respect of his own interest unless by special provisions, the law allowing it, the policy is made for the sake of another, or unless some statute says the policy shall enure for the benefit of somebody else.

2. On Meaning of insurable interest

– Insurable interest may he defined as the assured’s pecuniary interest in the subject matter of the insurance.

3. On what court need consider in determining whether a claimant has insurable interest

– A court called upon to determine whether or not a particular claimant has an insurable interest in the property concerned will need to consider the issue whether the destruction or diminution in value of the property will result in a loss to the claimant.

4. On what qualifies as an insurable interest

– The definition of insurable interest is very elastic and it is not always co-terminus with the ownership, wholly or partial, of the particular goods insured. The mere possession of property is probably sufficient to give the person in possession an insurable interest in it.

5. On Insurable interest in an insurance policy

– A person who would foreseeably suffer financial loss from the occurrence of an event has an insurable interest in the subject matter which it is sought to insure against the event. The event must either cast upon the assured a legally binding liability, or it must affect a right of the assured which is recognised and protected by the courts.

Per EDOZIE, J.C.A. :

“The dominant question posed by this appeal is whether the plaintiff had an insurable interest in the subject- matter, that is, the Peugeot 504 saloon car he insured with the defendant. Indemnity insurance obviously requires the assured to have an interest in the subject- matter of the insurance other than that created by the contract itself, for otherwise he will incur no loss through the happening of the event insured against and so if the assured is without a legally recognised interest, the insurer will have a good defence to any claim under such a contract if he chooses to raise it, Macaura v. Northern Assurance Co. Ltd. (1925) A.C. 619. There is no authoritative definition of insurable interest and it is probably impossible to give a general formula to cover all the recognised types of insurable interest. It is generally true that a person who would foreseeably suffer financial loss from the occurrence of an event has an insurable interest in the subject matter which it is sought to insure against the event. The event must either cast upon the assured a legally binding liability, or it must affect a right of the assured which is recognised and protected by the courts; see Chitty on Contracts Vol 11, 23rd Edition paragraph 993, 994.

By section 22(1) of the Sale of Goods Act 1893 a statute of general application applicable to Benue State, 64 where goods are sold in market overt according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of any defect or want of title on the part of the seller”. The term “market overt” applies only to an open, public and legally constituted market” and the whole transaction must he in open market. By section 62(2) of the said Act a thing is deemed to he done “in good faith” within the meaning of the Act when it is in fact done honestly whether it be done negligently or not. On complying with section 22 of the Act, the buyer acquires a good title to the goods sold but an action for conversion lies against the seller for the market overt protection does not extend to him.

The facts of the case show that the plaintiff bought the car in question from the mechanic village at Apir which in my view qualified as a market overt and having in the circumstances of the sale bought it in good faith without notice of any defect he acquired title therein and an insurable interest in the property to entitle him to an indemnity under an insurance policy.”

6. On Exception to the general rule in nemo dat quod non habet

– By virtue of Section 22(1) of the Sale of Goods Act, 1893 a pre 1900 statute of general application, where goods are sold in market overt according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith without notice of any defect or want of title on the part of the seller. The foregoing provision is an exception to the general rule in nemo dat quod non habet. It is dictated by commercial convenience and expediency. In line with the nemo dat rule, Section 21(1) of the Sale of Goods Act stipulates that the buyer of goods acquires no better title to the goods than the seller had.

OGUNTADE, J.C.A. “Generally speaking, the market system in major cities in Nigeria is not very well organised but it seems to me that spots set aside in any of the Nigerian towns for the sale of specific or particular goods and which are publicly patronised at regular hours and acknowledged as market qualify to he described as market overt. 1 think that the mechanic’s village at Apir in Benue State where the plaintiff purchased the scrap of the car, the subject matter of this dispute qualifies to he treated as a market overt. 1 shall so treat it.”

7. On Doctrine of market overt –

The doctrine of market overt is that all sales of goods made therein are binding not only on parties but also on all other persons; so that if stolen goods are sold in market a purchaser in good faith, acquires a valid title to them against the true owner by virtue of Section 22(1) Sale of Goods Act, 1893. If however, the thief is convicted, a restitution order my he made. A sale in market overt does not destroy the true owner’s title unless made openly between sunrise and sunset.

The doctrine of market overt does not apply to goods belonging to the Crown and in the case of horses, it is subject to statutory restrictions.

8. On Meaning and incidence of ‘market overt’ in Section 22(1) Sale of Goods Act –

‘Market overt ‘means ‘open market’. The term ‘market overt’ applies only to an open, public and legally constituted market. Market overt in ordinary market terms is only held on the special days provided for the particular town by charter or prescription; but in the city of London every day except Sunday is market day. The market place or spot of ground set apart for the sale of particular goods, is also in ordinary towns the only market overt, but in the City of London every shop in which goods are exposed for sale is market overt, though only for such things as the owner professes to trade in.

9. On Meaning of “in good faith ” in Section 62(2) of the Sale of Goods Act –

By virtue of Section 62(2) of the Sale of Goods Act, a thing is deemed to he done in good faith within the meaning of the Act when it is in fact done honestly whether it he done negligently or not.

10. On Judicial notice –

By virtue of Section 74 of the Evidence Act, 1990 all courts must take judicial notice of all laws, acts and enactments.

Nigerian Cases Referred to in the Judgment:

Ekwunife v. Wayne (W.A.) Ltd. (1 989) 5 NWLR (Pt. 122) 422

Onyuike v. Okeke (1976) NSCC. Vol 10 146