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Yesufu v. A.C.B. Limited

CHIEF FESTUS S. YESUFU

( Trading under the name and style of Sarah and Yesufu Trading Company)

V

AFRICAN CONTINENTAL BANK LIMITED

SUPREME COURT OF NIGERIA

GEORGE SODEINDE SOWEMIMO, JSC ( Presided )

MOHAMMED BELLO, JSC ( Read the Lead Judgment )

C. IDIGBE, JSC

KAYODE ESO, JSC

AUGUSTINE NNAMANI, JSC

SC. 29/1980

23 RD JANUARY,  1981

BANKING - Banker/customer relationship - Nature of

BANKING - Banker’s statement of customer’s account - Financial liability of Bank to customer - Whether statement of account sufficient to prove

BANKING - Collecting Banker - Duties of - Customer’s bill drawn against revocable credit - Notice of dishonour of - Whether Bank entitled to give customer before instituting action in court

BANKING - Discounting Banker - Duties of - Notice of non-payment of customer’s bill - Whether Bank entitled to give customer before debiting account

BANKING - Discounting banker - Liability of

BANKING - Discounting of bill - Banker discounting customer’s bill and crediting customer’s account with discounted value thereof - When

Bank can subsequently debit customer’s account - When Bank cannot BANKING - Discounting of bill - Banker discounting customer’s bill and crediting customer’s account with discounted value thereof - Bank subsequently debiting customer’s account in respect thereof - Bank not returning bill to customer before debiting account - Effect

BANKING - Discounting of bills - Duty of Banker to give account to customer - Rationale for

BANKING - Discounting of bills - Reversal of credit entry in account on ground of non-payment of bill - Onus of proving dishonour or nonpayment of bill - On whom lies

BANKING - Reversal of credit entry in customer’s account and debiting account in the same sum - Implication of reversal

COMMERCIAL LAW - ‘Discounting’ - Meaning of - Duties and liabilities of discounter of a bill

EVIDENCE - Burden of proof - Facts specially within knowledge of a party  Burden on such party to prove - Failure to discharge the burden Effect - Section 141, Evidence Act (now section 142)

MARITIME LAW - Bill of lading - Question whether it is taken from customer for collection or as security or discounted for him - Whether one of fact or law

Issues:

  1. Whether the learned Justices of the Court of Appeal were right in quashing the finding of liability on the portion of the appellant’s claim based on Exhibit 3 on the ground of section 37  of the Evidence Act and the burden of proof required of the appellant.
  2. Whether the learned Justices of the Court of Appeal were right in setting aside the finding of the trial Judge in respect of the claims on Exhibits 7 to 27A.

Facts:

The plaintiff (now appellant) commenced an action against the defendant (now respondent) at the High Court of Bendel State, Benin City claiming, inter alia, the sum of N610,942.52, being the value of bills of exchange or sight drafts for exported commodity negotiated and/or discounted by the plaintiff with the defendant but which the respondent failed or neglected to pay to the plaintiff or to credit to plaintiff’s account with the defendant bank and/or claimed to have short-collected but without plaintiff’s knowledge.

The appellant’s case at the lower court was that he had been a customer of the respondents since 1965 and had been operating a current account which he maintained with the respondents at their Benin City branch and that he also operated the account for negotiating and discounting his bills of lading and other shipping documents which were drawn on reasonable letters of credit opened in his favour by his overseas customers to whom he exported rubber.  He gave evidence that whenever the respondents discounted his bills, which was at less one percent of the value of the goods shipped, they would credit his account with the discounted value of the bills in Nigerian currency.  However, payments to the respondents by his customers for goods shipped were made in the United States Dollars.

He testified that on going through his statement of account, Exhibit 3 , he discovered that bills which had been discounted and had been credited to his account since between 1967 and 1969 were in 1971 reversed and debited to the account.  That the account was also debited with several sums known as differentials in respect of some bills of lading and that he was not informed by the respondents of short pay of dishonour by nonpayment of the bills and that the respondent did not return to him any of the bills reversed in Exhibit 3.  The appellant also gave evidence of a debit entry in Exhibit 3, purporting to be devaluation of pound sterling when there was no devaluation of Naira or Dollar, which were the currency of their transactions at the material time.

The respondent did not adduce evidence to explain any of the entries in Exhibit 3, what differential means and why the appellant’s account was debited for devaluation.

After a review of the evidence, the trial Judge found that the respondents discounted the bills and shipping documents of the appellants and did not accept them for collection; that the entries in Exhibit 3 correctly stated what the respondents did in operating the appellant’s account but that some of the entries did not correctly reflect the real transaction between the appellant and the respondents.  He then found the respondents liable in the sum of N314,568.23 in respect of the claim founded on Exhibit 3 and N261,815.30, being the full value of the bills-Exhibits 7 - 27A.  He then entered judgment for the appellant in the sum of N576,383.53.

Being dissatisfied, the defendant appealed to the Court of Appeal. The Court of Appeal quashed the finding of liability on the portion of the appellant’s claim based on Exhibit 3 on the grounds of section 37 of the Evidence Act and the burden of proof required of the appellant.  In respect of the claim based on Exhibits 7-27A, the Court of Appeal set the finding of the lower court aside on the ground that the appellant failed to prove the bills to have been drawn against irrevocable letters of credit.

Being dissatisfied, the plaintiff appealed to the Supreme Court.