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  • F.B.N. Ltd. vs. Moba Farms Ltd.
  • 255
  • 2005-04-18
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F.B.N. Ltd. vs. Moba Farms Ltd.

FIRST BANK OF NIGERIA LIMITED

MR. N. UKA V

MOBA FARMS LIMITED

PATRICK M. EYEKPIMI

THE AGRICULTURAL CREDIT GUARANTEE FUND BOARD

COURT OF APPEAL

( BENIN DIVISION )

MUHAMMAD S. MUNTAKA-COOMASSIE JCA ( Presided )

KUMAI BAYANG AKAAHS JCA (Read the Lead Judgment)

AMINA ADAMU AUGIE JCA

CA/B/46/95

MONDAY, 7 TH JUNE,  2004

ACTION - Limitation to - Recovery of loan - When time begins to run Determination of

BANKING - Accounts - State of as to whether in credit or debit - What determines

BANKING - Cheques of customers - Banker refusing to honour Consequence of

BANKING - Customer and banker - Relationship between - Nature of

BANKING - Merger or combination of accounts by bank at its discretion -  Customers who agrees to complaining - Impropriety of

BANKING - Merger or combination of accounts belonging to a customer -  Power of banks to do except there exists an agreement  to the contrary

BANKING - Overdraft by customers - Whether bankers obliged to grant CONTRACT - Breach of contract - Cases of - Award of both general and special damages therein - Inappropriateness of

CONTRACT - Illegal contracts - Unenforceability of - When a party can recover thereunder

CONTRACT - Written agreement - Terms of - Extrinsic evidence as means of altering - Inadmissibility of

COURT - Interest on judgment - Award of - Power of court in respect of under Bendel State High Court Rules (applicable to Delta State)

DAMAGES - General and special damages - Award of both in cases of breach of contract - Inappropriateness of

DOCUMENT - Interpretation of - Importation  of new or additional words while interpreting - When acceptable

EVIDENCE - Written agreement - Terms of - Extrinsic evidence as means of altering - Inadmissibility of

INTERPRETATION OF DOCUMENTS - Words of free from ambiguity How construed

JUDGMENT AND ORDERS - Interest on judgment - Award of - Power of court in respect of under Bendel State High Court Rules ( applicable to Delta State )

Issues:

1.              Whether the 1st and 2nd respondents ever consented to the debiting, merger or combination of two of its accounts by the 1 st appellant, with or without prior notice to them.

2.              What is the effect of section 13 of Decree No. 20 of 1977 on the debit by the 1st appellant?

3.              Whether the mortgage deed was terminated by frustration.

4.              Whether the trial court was right in awarding both special and general damages  in an action based on contract.

5.              Whether the award of 20% interest on the judgment debt was valid.

6.              Whether the action of the appellants in the counter-claim was statute-barred.

Facts:

The 1st plaintiff/respondent is a limited liability company, which was incorporated under the Companies Decree 1968 and is a customer of the 1 st defendant bank. The 2nd plaintiff is its Managing Director. In 1979, the 1 st plaintiff in its effort to establish a poultry farm applied for a loan facility of N930,000.00. The application was processed and N750,000.00 was approved by the bank. Later in 1981, the plaintiffs asked for an additional N100,000.00 which was granted thereby bringing the total loan approved to N850,000.00. The loan facility was secured by a mortgage debenture dated 22 nd July, 1981 which was for N400,000.00 initially but later up stamped to cover borrowing for N825,000.00. There was also a Deed of Legal Mortgage for N400,000.00. The Central Bank guaranteed the loan by issuing a Guarantee Certificate No. BD/FBN/80/34 for N750,000.00 (Exhibit B). The guarantee was later enhanced to cover borrowing of N850,000.00 and N1,000,000.00 by exhibits “C” and “DD”. The 2nd plaintiff and two other people namely Lawrence E. Oraka and Peter Okoh also executed a guarantee (Exhibit “MM”) to secure the borrowing of N850,000.00 by the 1 st plaintiff for the poultry farm project. The facility was fully utilised. The plaintiffs made the first repayment after which an epidemic swept through the farm, which led to the decimation of the pullets. This was the state of affairs when the plaintiffs approached the defendants for a working capital of N150,000.00 which was approved in 1984 after the plaintiffs had submitted an acceptable cash flow projection to the defendants and a sanction ticket was issued by the head office of the bank to the branch office in Warri. On or about 16th April, 1984 the 2nd plaintiff issued a cheque for N20,400.00 for the purchase of maize but it was returned unpaid. Three other cheques for various amounts were issued and were returned unpaid. As a result of the defendants’ refusal to make available money by honouring the cheques, the plaintiff could not buy the maize and since there was no food for the birds, they started to die of starvation. When the 2nd plaintiff made enquiries about the non-honouring of the cheques, the 2nd defendant informed him that the loan facilities extended to them were fully utilised and were therefore exhausted. He then challenged the 2nd defendant as to the truth of the assertion. He later realised that the sum of N67,111.76 had been transferred from the current account into the new working capital loan account No. 3, hence there were not sufficient funds to meet the amount in the dishonoured cheques. This action taken by the defendants adversely affected the plaintiffs’ business to an extent that when the defendants agreed later to reverse the debit of N67,111.76k to the current account, the farm was already on its way to a total collapse. Despite the collapse of the farm, the defendants wrote the 1st plaintiff threatening to appoint a receiver/manager to sell the property comprised in the mortgage debenture. This prompted the plaintiffs to take a pre-emptive measure to forestall the defendants from carrying out their threat and also claiming damages for the losses they suffered as a result of the unauthorised transfer of the N67,111.76k from the 1st plaintiff’s current account. The 1st defendant counter-claimed for the debit balance in the plaintiffs’ loan account.

At the conclusion of the trial, the trial court entered judgment in favour of the plaintiffs/respondents.

Dissatisfied, the appellants appealed to the Court of Appeal.