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SUIT NO. K/131/1974


3PLR/1976/34  (HC)






Majiyagbe – for plaintiff

L.O. Sanyaolu – for defendant



Banking-Overdraft-Oral agreement to issue bankers drafts only upon money paid in—Signed request by defendant for drafts in excess of money paid in—Whether defendant liable for overdraft.




The plaintiffs claim from the defendant N25,123. 87 plus interest “being money paid by the plaintiffs as bankers for the defendant at his request.”

The main facts of the case are not in dispute. The defendant was a pilgrims agent for the year 1972/73. He was one of an unregistered firm calling themselves Nujumul Hajjaji. He went to the Manager of Barclays Bank, Bank Road, Kano in 1972 and asked to open an account in the name of Nujumul Hajjaji Company. He says he went with three other directors of the “company” but it is significant that one of the signatories of Exhibit 1, Alhaji Inuwa, introducing defendant to the bank was not a member of the “company.” The Bank Manager, who has not been called to give evidence refused to allow the “company” to open a current account because it was not a registered firm but he agreed to allow the defendant to open an account in his own name.

It was made clear to the Manager that the only purpose of the account was to obtain foreign exchange for pilgrims. First defendant says that “the bank agreed not to issue any draft beyond the amount of money in the account at any time, and on any day to work on only the amount paid that day by our agents. So after collecting the passports, the agents were to take them and the money and the daily list to the bank and leave them until the next day when the bank would make the required drafts.” There is no evidence in rebuttal of this and I see no reason to doubt it, though I note that there is nothing in writing to this effect.

This suit has arisen because the practice seems to have been somewhat different from the theory. The first money was paid out on the 14th of December, 1972. This was an amount of £22,843.10s; this was followed the same day by another debit of drafts to pilgrims totalling £15,500. On December the 15th drafts totalling £29,500 were issued and smaller sums of money were debited to the defendant’s account for payments of drafts on the 21st and 22nd of December, 1972 and again on the 27th of December, 1972. On the 28th of December a small amount was issued in bankers drafts. On the 2nd of January, 1973 a large amount of money was deposited, and over N200,000 value of travellers cheques to pilgrims. was debited. This was the next to the last day for these foreign exchange transactions. The evidence is that the last of the pilgrims in defendant’s care were to leave on the 3rd of January, 1973. It is significant that up to this date the defendant’s account remained in credit. All the debits were based on lists of pilgrims made in the defendants office containing their passport numbers and the value of the draft to be issued to each. These were long lists; for example, the fist for the 15th of December, 1972, one of the documents in Exhibit 3, contains 123 names and is for foreign exchange drafts to the value of N15,880. For this and for all the other transactions for foreign exchange on the account in question, defendant has signed a Barclays Bank document “E.56” requesting the issue of the drafts shown. For each such transaction he was issued with a voucher. These vouchers are also contained in Exhibit 3. He claims that he did not receive the vouchers but I have no doubt that they were sent by the bank to the address given to the bank by the defendant and shown on the back of his current account card, Exhibit 1.

On January 3rd, 1973, seven fists were issued to the plaintiffs by the defendant or his agents requesting 165 foreign exchange drafts for a total of N43,450. The bank issued these drafts against the signature of the defendant and issued him with a branch voucher. All these can be seen in Exhibit 3A. Apart from two very minor transactions totalling 1450 on 9th and 25th January, this was the last issue of bankers drafts to pilgrims on this account. The trouble has arisen because there was not, as there should have been, any money paid in to cover a usual amount against the usual signature of defendant referring to the usual attached list.

There is evidence that the first witness who issued the drafts was disciplined by the bank for doing so. This supports the defendant’s evidence that it was not intended by either party to allow the account to go into debit. It seems that the fact that it was in debit was not discovered for some days.

It seems quite clear that this was a deliberate fraud on the part of someone, but there is nothing to suggest that the malefactor was a member of the plaintiffs’ bank nor that it was the defendant. It could equally have been the sub-agents who it appears the defendant left unsupervised to pay in these monies and obtain the bankers drafts for the pilgrims.

The defendant admits that he did not check the account. He was receiving commission as a pilgrims agent but he has told the Court frankly that there being no commission payable to him on this specific transaction, he had no interest in it.

He considered it the duty of the bank to see that no draft was issued except against cash paid in and he considers the account in his name to be merely a matter of banking account procedure.

Against this, the plaintiffs submit that it is significant that the bank insisted upon the account being opened unconditionally in the name of the defendant. If it were a matter of mere accounting and if the bank were to be entirely responsible to the exclusion of the defendant, there would be no point in such insistence. Secondly, it is plaintiffs’ case, which I find proved, that no draft was issued except against the signed request of the defendant upon what is called “Exchange Form E.56” which is the middle form in each set of forms in Exhibit 3.

Mr. Sanyaolu for the defendant submits that there is no dispute that the defendant did not authorize these overdrafts. He says that there is evidence that Form E.56 must be completed whether the foreign exchange draft is being issued against cash or against an account. I cannot agree that it is not disputed that this overdraft was never authorized by the defendant. The plaintiffs claim that his signature on Form E.56 in Exhibit 3 is such authorization. Secondly, if the drafts can be issued against cash then the fact that the bank insisted on their being issued against an account in the name of the defendant weighs in favours of the plaintiffs’ position that the defendant was to be responsible for all drafts issued against his signature.

Mr. Sanyaolu for the defendant relies in particular upon the case of London Chartered Bank ofAustralia v. McMillan [1892] A.C. 292. In that case, an account was opened by the Registrar-General to be called “the general banking account.”

Into this account, the receipts of all government departments under the Registrar-General were to be deposited daily and the total was then paid over weekly to the Treasury by means of a single cheque issued by the Registrar-General. Over a considerable period, from August 1888 to July 1889, the cashier responsible for paying in the money failed to do so but managed to conceal his fraud, with the result that the Registrar-General’s cheque each day exceeded the deposits. This resulted in a total overdraft of just over £6,000 of which the Registrar-General was ignorant, and the bank omitted to bring it to his notice. The Privy Council upheld an appeal from the Supreme Court of New South Wales and found against the bank, saying:

“The bank knew that the account opened with them by Ward was simply an account for the purpose of the daily lodgment of the collections of his department, and the transferring by his cheque of such lodgments to the Treasury account weekly. Ward’s cheque was the mode of transfer to the Treasury account of the money lodged by him. The Government in no way gave authority to Ward, or led the bank to suppose that Ward had any authority to overdraw by his cheques; and the bank knew, or should have known, that any overdraft was entirely outside the scope and object of the lodgments, and of the drawing against such lodgments. Yet the bank allowed an overdraft on the lodgments to grow on steadily for a year, until it reached the large amount sued for, when, for the first time, they gave notice.”

This case appears to be strongly in favour of the defence in the present case. There are, however, some distinguishing features. One is the name of the account. A second is the long period during which the overdraft was built up as opposed to the single day in the present case. This case is similar in some respect to Brooks & Co. v. The Blackburn & District Benefit Society (1883-4) 9 App. Cas. 857 in both of which cases an important consideration was the lack of authority in the customer to ask for an overdraft.

Mr. Sanvaolu has mentioned African Continental Bank Ltd. v. Eke (1969) 3 African Law Reports (Commercial) 174 in which Ighodaro J., followed Cuthbert v. Robarts, Lubbock & Co. [1909] 2 Ch. 226 in holding that when a client paid a cheque to his banker which resulted in an overdraft, he was in effect asking for a loan. Mr. Sanyaolu distinguishes these cases by stressing the specific agreement in the present instance that the bank would issue drafts only on credit received into the account. There is some support for this in British& French Bank Ltd. v. Opaleye [1962] 1 All N.L.R. 26, in which the Supreme Court referring to a banker’s appropriation of account said: “it turns out to be a question of the agreement between a customer and the bank.”

Mr. Majiyagbe for plaintiffs submits that the signature of the defendant on the Form E.56 is equivalent to the drawing of a cheque and he cites Cuthbert (above) and African Continental Bank v. Eke (above) in support.

I have been able to find no authority precisely in point. I have no doubt that it was part of the defendant’s duty as a pilgrims agent to see that these pilgrims obtained bankers drafts to spend on the hajj. I have no doubt that the plaintiff bank insisted on the defendant operating through an account in his own name in order that he should be responsible for any deficit. I cannot doubt the evidence that the defendant obtained the agreement of the bank that there should be no deficit. On the other hand, this must have been a limited and conditional agreement as witness the debits for cheques returned unpaid mentioned in the evidence and shown in Exhibit 1. In coming to my decision, I have considered carefully the course of business between the plaintiffs and the defendant. This was a large operation taking place in a hurry. It appears to have become more hurried as it neared its end. Right up to the last minute, pilgrims were asking for foreign drafts. If they did not get them, they could not go or if they went they could not survive on the hajj. The supreme importance of the hajj to a Moslem is a matter of common knowledge. If the bank had not issued the 165 drafts requested by the defendant on 3rd January, 1973, 165 pilgrims who had paid the defendant’s sub-agents (this is the implication of the list attached to Exhibit 3A) could not have gone on the hajj. It seems to me that the bank had a right to assume that the defendant knew the state of his account, (Garnett v. McKewan, (1872) L.R. 8 Ex. 10 at 13). It seems to me that in claiming that he was not responsible for ensuring the issuing of bankers drafts to pilgrims to the value of the money the pilgrims had paid his sub-agents, the defendant was wrongly attempting to avoid one of his responsibilities as a pilgrims agent. This would not affect his agreement with the bank were it not for the fact that on his own evidence, it is clear that the bank knew that it was dealing with him as a pilgrims agent. In his own evidence, the defendant says that “the season ended in January, 1973. It began on the 12th of December, 1972, I think, and finished on the 2nd-3rd January, 1973.” The Form E.56 which caused this deficit, and which is in Exhibit 3A was signed by the defendant on the 3rd January. There has been no evidence casting doubt upon the correctness of this date. In this circumstance, it is difficult to see how the defendant could hold the plaintiffs to an agreement not to issue until the following day. In all the circumstances, and not without considerable heart-searching, I have come to the conclusion that both law and equity place upon the defendant the burden of recovering the missing money, that is to say, make him responsible for the overdraft in his account with plaintiffs bank.

As to the 10% interests claimed this is a matter of common banking practice provided there is notification of the overdraft to the customer: Barclays Bank, D.C.O. v. Hassan, [1961] All N. L. R. 836. In the present case, the defendant denied receiving statements of account but I am satisfied on the evidence that they were sent to the address he gave. If he did not then receive them, I find that it was due to his own negligence, at the very least, but more probably due to a deliberate policy to ignore that part of his duties.

I therefore give judgment for the plaintiffs for the amount claimed plus 10% interest from 11th July, 1974 which I calculate at N3,977.00 making a total of 1429,100.87. This will further attract 5% per annum interest until the whole debt and costs are paid.


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