UNION BANK OF NIGERIA LTD. V. SIMON OSEZUAH AND OSEZUAH & CO.NIG .LTD.
COURT OF APPEAL(BENIN DIVISION)
The nature and character of letters of credit -The buyer who, pursuant to his sales contract instructs his banker to issue a credit, undertakes impliedly or expressly to put the banker in funds to meet a payment under it if the documents against which the banker pays are what the buyer calls for: and where he does so provide funds the banker is bound to apply them to the purpose to which they are appropriated. Normally, and in the absence of any express agreement to the contrary, the banker on paying under the credit, debits the buyer‘s account. The Banker must comply rigidly with his instructions and where he does, he is entitled to the indemnity of an agent.
The nature and implication of irrevocable letter of credit – The banker’s undertaking under an irrevocable or confirmed credit is absolute. An irrevocable or confirmed credit which had been advised to the beneficiary cannot be cancelled at the instance of the buyer.The opening of confirmed letters of credit constitutes a bargain between the bank and the vendor of the goods,which imposes upon the banker an absolute obligation to pay once a credit has been communicated to the beneficiary, the buyer cannot amend without the beneficiary’s consent nor can the issuing banker at the instigation of the buyer,force an amendment on the intermediary buyer.
The nature of confirmed letter of credit –Under the confirmed letter of credit,the buyer requests his banker to open a credit in favour of the seller and in pursuance of that request the banker, via his foreign agent issues a confirmed credit in favour of the seller.This credit is a promise by the banker to pay money to the seller in return of the shipping documents. On presentation of the documents by the seller he gets paid the contract price.The conditions of the credit must be strictly fulfilledotherwise the seller would not be entitled to draw on it.
The nature of confirmed letters of credit –A confirmed credit is an irrevocable credit.
The Law governing letters of credit –The law governing commercial letters of credit is largely the law of contract and agency.
NSOFOR J.C.A, (Delivering the Leading Judgment): This appeal is of some particular interest in my respectful opinion.For one thing it does raise for consideration an aspect of the Law of International Trade of general interest.
Osezuah & Co.Nig .Ltd (hereinafter to be referred to simply as the company for short) the 2nd respondent in the case giving rise to the present appeal was or is a customer of the Union Bank of Nigeria Plc.The company is in a major dry-cleaning business in Benin City. Now in modern day international trade men of business or rather businessmen seek to engage bankers or banks as intermediaries to transact their business internationally.
So,the company –plaintiff desirous of dealing with MOE &Stoll International Inc.a United States of American Company(hereinafter to be referred to as the Overseas Suppliers)to import some dry-cleaning equipment enlisted for theservices of Union Bank of Nigeria Plc. (the issuing Bank) in the business transaction to provide it (the company)with the necessary commercial credits- a common feature in such international business transaction or contracts. The Issuing bank never however handles the goods the subject matter of the contract or business for the buyer (herein the company plaintiff).It (the issuing Bank) handles and deals in “documents”as between the seller and the buyer. Simon Osezuah (the1st plaintiff) is however a shareholder and a Managing Director to the Company.
But where does the above lead me to? It does lead me and enables me to say straightway that the relationship arising or being created between the company –plaintiff and the Overseas Suppliers arises ex-contractu between the two of them only.It is in International Trade relationship of a “Principal “ and an “Agent” between the company-plaintiff being the principal and the issuing bank the Agent and this is apart from the Banker /Customer relationship existing between the parties as the bank and the customer. In merely furnishing a by way of a collateral security for the opening of Irrevocable Letters of Credit and /or for a loan or overdraft facility ,as a security to the Issuing bank,the guarantor is ,in my view ,no party in the contract or in the International Trade business between the company –plaintiff (with its the Issuing Bank –Agent)and the Overseas Suppliers MOE Stoll International Inc. ofAmerica.
Simon Osezuah executed as a “guarantor”to the company/plaintiff a Deed of Legal Mortgage on behalf of the Issuing Bank i.e. the appellant herein.
The present appeal, therefore,arises from this international trade relationship between the plaintiff company and the overseas supplier in which the Union Bank of Nigeria Plc. acted for the company plaintiff.It is an appeal from the Judgment of A. A. Agun, J. in suit No.B/86/87. The Judgment was given on the 10/12/93.The suit giving rise to the action was through summons filed on 13/10/87.Consequent upon the order by court, the parties filed and exchanged their respective original pleadings. They later amended their pleadings. The pleading were finally settled at the “Second Further Amended Statement of Claim” and the “Further Amended Statement of Defence.
Now,since a statement of claim supercedes the writ,the endorsement on the writ of summons, I avert to paragraph 49 of the Second further Amended Statement (hereinafter to be referred to simply as the claim for short)for what reliefs the plaintiffs claimed against the defendant. See Lahan & Ors.v. Lajoyetan &Ors. (1972)6 S.C.190 Paragraph 49 of the claim is in the following terms.
Whereof the 1st and 2nd plaintiffs claim as follows:
Further or other reliefs
Dated at Benin City this 7th day of November, 1989.
I confess,I am totally ignorant of what the fourth head of the claim, (i.e. “paragraph 49(4) of the claim”)connotes or is intended to mean.
The case came on before the learned trial Judge on the 27/6/89 for hearing. The plaintiffs testified in line with their joint pleadings. Thereafter, they summoned the evidence of some other witnesses and then closed their side of the case. The Union Bank of Nigeria Plc. was represented during the trial by its officer, one Sunday Umakaye Romun. The defendant –Bank had testified through Sunday Umakaye Romun with whose testimony it closed its case.
The learned trial Judge,having received all the available evidence- oral and documentary – legally receivable and legally received, reserved his judgment till the 26/11/93. The Judgment was eventually delivered on the 10/12/93
In a reserved and well considered judgment, the learned trial Judge found for the plaintiffs. He wrote in page 96 of the record of appeal, inter alia:-
“In the final analysis the plaintiff’s claim substantially succeeds and all the declaration sought in paragraph 49(1)(2)(3)(a)(b) of the plaintiffs’amended statement of claim are hereby allowed to as follows:
By way of special damages
By way of General Damages
Dissatisfied and aggrieved with the judgment,the defendant has,naturally and logically appealed from it to the Court of Appealoriginally on these three grounds of appeal.The “Notice of Appeal” together with the “Grounds of Appeal” was filed on the 25/2/94.It is copied in pages 117 to 119 of the record. The three original grounds of appeal,shorn of their respective “Particulars of Error” respectively are:-
“Grounds of Appeal
“In the instant case in view of the recklessness and non-challant manner the defendant operated the 2nd plaintiff’s account,I am of the firm and considered view that a claim of N60,000 (Sixty thousand naira)per annum is not unreasonable and staggering in all its circumstances.”
Subsequently,the defendants sought for and obtained leave of court to file further or additional grounds of appeal; in terms of Exhibit A exhibited in the application for leave dated the 9th of March, 1995. The additional grounds of appeal filed were numbered serially and consecutively as “(1) and (2)’’.
I shall set them down, again, shorn of their respective ‘’particulars of Error’’ to avoid prolixity. They are:
‘’Additional grounds of appeal’’
So, there were altogether three original grounds of appeal plus two additional grounds filed in challenge to the judgment, a total, therefore, of five grounds of appeal raised. But apparently, the numbering of both the original and the additional grounds of appeal filed is bound to be confusing. Clearly, most certainly there has occurred a duplication in the numbering. That ought not to be so. The proper method of numbering any further or additional grounds of appeal raised is to number them consecutively with the original grounds of appeal filed. Thus, the confusion and the duplication of numbers are avoided.
The defendant at the trial is herein the appellant. The plaintiffs in the court below are the respondents herein. In compliance with the rules of the Court of Appeal, 1981, the parties had filed and exchange their briefs of arguments. Therein each party had formulated for determination the issues. The appellants formulated in page 2 of their brief the following five (5) issues:
Issues which arise for determination:
3.1. Whether the trial court was right in awarding damages on a contract for which such penalty was not provided, nor was negligence, recklessness and non challant manner of operating the account pleaded and having regard to the evidence before court.
3.2 Whether the court properly evaluated the evidence so to make this award both special and general damages in a contractual relationship between the parties, the one being a mortgage involving bankers/customer relationship.
3.3 Whether the trial court was right to have relied on the evidence connecting the feasibility report, the same being inadmissible as contrary to section 91 (3) of the Evidence Act Cap. 112 laws of the federation 1990 even though there was no objection to its admissibility, the feasibility report having been produced when litigation was contemplated by the 1st and 2nd plaintiffs.
3.4 Whether the trial judge considered at all section 149(c) of the Evidence Act that the common course of business has been followed in the account presented by the appellant.
3.5 Whether the trial court adequately considered the law as to opening of the irrevocable letter of credit and other matters relating to entries into any banking account especially the one relating to the 2nd plaintiff.
The respondent on their part had, in page 5, ‘’paragraph 3.1.’’ formulated for determination the following two (2) issues immediately set down.
Issues for determination:
(i) Whether the learned trial judge was right in holding that the defendant was Estopped from denying the fact that funds covered by irrevocable letters of credit were released to the beneficiaries in 1983 based on defendant’s representations in Exhibit F and M.
(ii) Whether the learned trial judge was right in the award of special and general damages to the plaintiffs.
This appeal came on for the hearing before us on the 22/5/96. At the hearing, Mr. L.O. Akhidenor for the Appellant had adopted the Appellants brief of argument deemed properly filed and served on the 26/6/95. He relied on the brief. Similarly, Mr.M. Imadegbelo of the counsel for the respondents adopted the respondents brief of argument deemed properly filed and served on the 16/1/96. He also relied on the brief.
In a laudable short speech, Mr. Akhidenor, in amplification of his brief had urged us to dismiss the judgment of the court below and, inter alia, allow the appeal. Mr. Imadegbelo urged us contra-wise. He press us to affirm the court below and, on that account, to dismiss the appeal. Not much speech made, at all.
Now, it becomes desirable, indeed, necessary to give the back ground facts, the antecedents of the case giving rise to the plaintiff’s appeal. They would not only serve to facilitate and enable a better appreciation, but also an understanding of what issues were involved, canvassed and agitated at the trial and now on appeal.
The pleadings filed, are rather prolix. They are copious-the ‘’second further amended statement of claim’’ running up to a total of 49 paragraphs copied from pages 31 to 43 inclusive of the record, running to a total of24 paragraph. So, rather than extract the fact from the very pleadings themselves, I would, instead, summaries each party’s case, as pleaded, albeit briefly, to avoid an undue length and bulk of the judgment.
The second named plaintiff, Osezuah & Co. (Nig.) Ltd. (hereinafter to be referred to simply, as the ‘’company’’ for short) was or is a customer to or of the Union Bank of Nigeria Ltd, the defendant, (hereinafter to be referred to simply, as the ‘’Bank’’ for short). The company kept an account with the Bank. Desirous of buying and importing some dry- cleaning equipment from MOE & Stoll international Inc. a United States of America based company, (hereinafter to be referred to simply, as the ‘’Overseas suppliers’’ for short) had approached the bank to help assist it (the company) handle the international trade transaction with the ‘’Overseas Suppliers’’. It (the company) applied to the bank for an overdraft facility to the tune of N60,000.00 (Sixty Thousand Naira). It was approved or granted. For a collateral security, Simon Osezuah, the company’s shareholder and Managing Director executed a deed of legal mortgage of his property for or with the bank. The deed was or is registered as “8/8/617” in the Land Registry.
The overseas Suppliers opened and sent to the company their proforma invoices –(three of them) Nos. 81-006A,82,008 and 82,009-9A(Exhibits A-A3). The values of the equipment as per the proforma Invoices were in the United States of America dollars, what in International Trade,was the “money of Account”.The total value was U.S 64,590 dollars (sixty-four thousand,five hundred United States of America dollars).
Consequently,the back opened Irrevocable Letters of Credit,(L.C) Nos.37/82,40/82 for or on behalf of the Overseas Suppliers (Exhibits “B to B5”).
On the reverse side of each “L.C” are the undertakings executed and acknowledged by the company,including for the purposes of what I might be disposed to say, ut infra,the following expressions inter alia:-
“In consideration of the opening by you of this credit on my/our behalf I/we hereby undertake and agree that three days before the due date of each draft drawn thereunder in case of acceptance or on receipt of document in Nigeria … I/we will provide you with funds necessary to meet the payment thereof ….It is understood ….I/we agree that my/our liability to you in respect of each draft drawn under this credit shall not be discharged until the Central Bank of Nigeria provide you with the requisite foreign currency to meet payment by you or your correspondent and such ……
I/we hereby authorize you to debit my /our account with all sums which may become due to you in respect of this credit including your commission of ….I/we enclose a cheque for …. to provide you with your margin security you are authorised to debit my /our account with….”.
(The italics is supplied by me for emphasis of the indemnity undertaking by the company).I had rather set them out sooner than later. This I have done.
The equipment arrived Nigeria. Some of them were defective,others not the type originally ordered for. The company wrote to the bank to stop any payment to the overseas suppliers/beneficiaries. The bank replied that that was not possible. Funds covered by the L.Cs,had already been released to the Overseas Suppliers.
According to the company, it had liquidated its indebtedness to or with the bank, but notwithstanding the bank was wrongly debiting and crediting its account with the bank. The company aggrieved that it completed payment to the bank in 1983. It demanded the return to it the Title Deeds registered as “8/8/617”.But the bank wrongfully refused to do so. Because of the bank’s wrongful detention of deeds,the company asserted further, that it hereby lost the chance of obtaining a credit facility from Allied Bank Ltd for the expansion of its business. It accordingly lost an estimated profit of N30,000.00 per annum.
The above apart, the bank in 1987 unilaterally increased its (company‘s) overdraft holding. Hence the action brought.
The bank, on its part had set up a parallel case. Not only did it deny falsely or wrongly crediting and /or debiting the company’s account, or sending irreconcilable accounts but also denied detaining the “Deed of Legal mortgage” wrongfully. According to the bank, the company was or as at the 23/4/87 indebted to the bank to the tune of N14, 517.93 (Fourteen Thousand, Five Hundred and Seventeen Naira, Ninety-three kobo)inclusive of accruing interest charges.Of this,the company was duly informed or warned in writing dated the 23/4/87.By banking practice the bank is or was entitled to retain the “legal mortgage title deeds”until the company’s indebtedness was fully ,liquidated.
The bank denied the allegations contained in paragraphs 19,20,21,22,23,24,29,31,32,33,38,39,40,41,47,48 and 49 of the second further amended statement of claim”.
It was part of the bank’s case, as pleaded that the Central Bank of Nigeria did not release the relevant foreign currency until 1988.This is the company that was duly informedin writing (Exhibit 2)dated the23/2/88.
The bank set up a plea of estoppel.It pleaded the indemnity as per the irrevocable letters of credit.It was part of the bank’s case that it was its letter of the 6/10/87 to the companywarning it of its (company‘s documentary financial liability and the outstanding interest charges that stirred the company quickly to institute the present action.
In my respectful view, based on the state of their pleadings, the issue that went for trial was not very complex. It fellwithin a narrow compass. It seems to me to be this; but before I do set down what the issue was, as it appears to me I shall, firstly avert to the principles to guide me in its formulation.
Now, as appearing in page 643 of Paget‘s Law of Banking,8th Edition.
“The buyer who, pursuant to his sales contract instructs his banker to issue a credit undertakes impliedly or expressly to put the banker in funds to meet a payment under it if the documents against which the banker is bound to apply them to the purpose to which they are appropriated. Normally,and in the absence of any express agreement to the contrary, the banker on paying under the credit debits the buyer’s account. The banker must comply rigidly with his instructions and where he does,he is entitled to the indemnity of an agent.”
And at page 644 occurs also the following expression:
“The banker‘s undertaking under an irrevocable or confirmed credit is, of course,absolute. An irrevocable or confirmed credit which had been advised to the beneficiary cannot be cancelled at the instance of the buyers (Hamzeh Malas & Sons v.British Imex Industries Ltd). In the words of Jenkins L. J “……….the opening of confirmed letters of credit constitutes a bargain between the bank and the vendor of the goods,which imposes upon the banker an absolute obligation to pay.” Once a credit has been communicated to the beneficiary the buyer cannot amend without the beneficiary’s consent, nor can the issuing bank,at the instigation of the buyer,force an amendment on the intermediary buyer.”
Perhaps, at the risk of a repetition; (and I apologise for it) but rather necessary for the purpose of clarity and better appreciation,I did reproduce certain of the undertakings(indemnity clauses)by the company, as the buyer, to the effect that:-
“I/we agree that each draft drawn under this credit shall not be discharged until Central Bank of Nigeria provide you with requisite foreign currency to meet payment by you …………… and if no account is maintained in my/our name in your books,I/we undertake to reimburse you for any claim of the above nature made.”
I shall not stop here.No, I shall further avert to the memorable apt and instructive dicta, per Denning,L.J (as he then was)in Pavia &Co.S.P.A v Thurmann Neilsen (1952)2 Q.B.84 at page 88 to this effect:
“The sale of goods across the world is now usually arranged by means of confirmed credits.The buyer requests his banker to open a credit in favour of the seller and in pursuance of that request the banker,or his foreign agents,issues a confirmed credit in favour of the seller.This credit is a promise by the banker to pay money to the seller in return of the shipping documents.Then the seller,when he presents the documents,gets paid the contract price.The conditions of the credit must be strictly fulfilled otherwise the seller would not be entitled to draw on it.
Strictly speaking a confirmed credit is an irrevocable credit. Thelaw, therefore governing commercial letters of credit is largely the law of contract and agency.
Armed with and guided by the above discussed principles the issue firstly arising from the state of the parties pleadings, therefore, becomes this: Has or had the company, buyer of those America type –dry cleaning equipment from MOE& Stoll International Inc.(the overseas suppliers)transacting through its (company –buyer’s) agents (Union Bank of Nigeria Plc.,(the Issuing Bank) liquidated fully, in terms of the undertakings,as per the irrevocable letters of credit opened, its indebtedness or documentary financial liability to the Bank herein the appellants before the action brought, giving rise to the present appeal?
And hereagainthe dichotomy between the “money of account”and the “money of payment”which implies that the debtor must use as much “currency of payment”that would be enough to pay the debt in the currency of account, it must be ever borne in mind in considering this appeal.
Secondly,the gist of liability in tort of detinue is the wrongful detention of the plaintiff’s chattel (herein the Title Deeds registered as “8/8/617” in the Lands Registry).The action was available against the defendant who received the chattel from the plaintiff or otherwise against the defendant who withholds or withheld the plaintiff’s chattel after the plaintiff had demanded its return.
Hence,in General& Finance Facilities Ltd v. Cooks Cars (Ramford)Ltd.(1963) 1 WLR 644, Lord Diplock,L.J.(as he then was)at page 648 differentiated action in conversion from action in Detinue as follows:
“There are important distinctions between a cause of action in conversion and a cause of action in Detinue, the former is a single wrongful act and the cause of action accrues at the date of conversion,the latter is a continuing cause of action which accrues at the date of the wrongful refusal to deliver up the goods and continues until delivery up of the goods or judgment in the action in detinue.”
The cause of action in Detinue, as herein partakes of the nature of an action, “in rem”in which the plaintiff seeks specific restitution of his chattel (herein the Title Deeds registered as “8/8/617”). Armed with and thus guided by the principle of law discussed, ut supra, the issue going for trial,from the state of the pleadings becomes this; was or is Union Bank of Nigeria Plc. agents for Osezuah& Co.(Nig.) Ltd,purchasers of the dry-cleaning equipment from the American company (the Overseas Suppliers) –wrongfully detaining or retaining the “Title Deeds” given to it (the Union Bank of Nigeria Plc. the Issuing Bank of the Irrevocable letters of credit)as a collateral security? Put rather simply and more nakedly, assume “argumento”and this is, only by way of an argument, “a posteriori” before Osezuah &Co. Nig.Ltd ever liquidated fully its documentary financial liability to the Union Bank of Nigeria Plc. herein the appellant would the bank in law or at law be bound or entitled to release its security,id est ,return the title deeds to Osezuah &Co. Nig. Ltd on its demand? Unless and until either or/and the above be resolved one way or another, a discussion of “remedium” compensation or damages become idle and sterile.
And pausing here again, I wish to remind myself again from the state of the pleadings,that he who asserts has the burden to prove his assertion, See Sections 135 and 136 respectively of the Evidence Act Cap.112 Laws of the Federation,1990.And he discharges his primary onus within the principle laid down by the West African Court of Appeal (WACA)in Kodilinye v.Mbanefo Odu (1935) 2 WACA 336 at 337.Although he does discharge his onus on the balance of probability (see Mogaji v.Odofin (1978) 3 S.C .91 ), Yet if the story of the claimant i.e the plaintiff,be as good as that of the defendant,or if there is an equilibrium between them or they are on equal knell then, “a fortiori”the plaintiff must fail and his case be dismissed,Why? Because the evidence on that imaginary scale of Justice (Carrying a pair of scales and not a cornucopia)has not and does not preponderate in his (plaintiff’s)favour.Pure and simple:no more and no less!
As I indicated above,there are two sets of formulations of issues for determination.I have examined the two sets.I have compared the one set with the other set. Now,the grounds of appeal in an appellate court play a role similar to pleadings in original judgments.Issues argued in an appellate court are distilled from the ground or grounds of appeal filed.The issues or an issue formulated must of necessity flow or derive from a ground of appeal filed or more ideally from a combination of grounds of appeal filed. Any issue not arising from the grounds or a ground of appeal goes to no issue. It is a non-issue and, eo ipso,ought to be disregarded, discounted and discountenanced. “Cadit quaestio”,the matter ends there.See Modupe v .The State(1988)4 NWLR (Pt.87)130;Okpala v. Ibeme (1989) 2 NWLR (Pt.102)208.
Now,the respondents herein had not appealed from the judgment by the court below. No so,they are no cross –appellant. Yes, can they even formulate an issue or issues outside the grounds of appeal filed by the appellants herein?From my study of the respondents‘s brief, unless I understood it imperfectly,I have unsuccessfully struggled to see from which of the grounds of appeal filed, the issues formulated by the respondents were distilled. Assume, I be right in my view,then the result is obviously. See Buraioh v. Bamgbose (1989)3 NWLR (Pt.109)352.The respondents cannot be allowed to formulate an issue,as it were, “in nubibus” hanging in the air,or “ in abstracto” .No. The result is obvious. And I have said enough above,I shall not repeat myself.
Before discussing the learned submissions by the counsel on the arguments .I shall permit myself to say straight away that I have scrutinized the appellant’s brief argument.In my respectful view,It is just a piece of prose writing running from pages 2 to 5 thereof,in course, “ paragraph 4.1.” to “paragraph 4.6.” At page 6 is the “conclusion”.
There is no knowing which argument or submission related to or is related to which issue and from which grounds of appeal the issue argued relates or is distilled.
All that is left to or for the Justice preparing the judgment to sort out, in my respectful view,this irregular method helps in no small way to make the already difficult task of the Justices of the appellate court preparing the Judgments more onerous.Please help lighten their task.It is highly desirable that the briefs be carefully written.A well written brief of argument saves time. It enhances the quick disposal of the appeal.It cannot,with respect to the counsel,regarding the appellant’s brief of argument filed,be said to be a model .No
Now, to the learned submissions by the counsel on the arguments: It was contended by the counsel ,in “paragraph 4.1 .” of page 2 of the appellant’s brief, referring to paragraph 23 of the “Second Further Amended Statement of Claim (the claim) that the total of the debits “Dr.”therein came to N166,312.00 i.e (N75,348.00 plus N 90,940 (see paragraph 23(1) and 23(3) respectively while the total credit (Cr) of N 43,303.00 plus N75,348,00 plus 44,209 came to N 162,860.11.As the counsel submitted, by sheer simple arithmetic, there was a debit balance of N3,451.89.This amount was by far less than the credit facility of N 60,000.00 granted to the company. It was the further contention that the respondent did not plead how much it was over –debited .Neither did the trial court itself even inquire to find out how much the respondent was over debited with. It was part of the contention by the learned counsel that the respondent failed to establish in evidence by evidence say for an example, by the presentation of Bank Tellers, that it (the respondent)had liquidated the overdraft facility granted it together with the interest thereon accruing. On the contrary, the learned counsel had drawn attention to the evidence by the appellant through its officer in page 65 lines 16-28 and in pages 66 lines 1-5,of the record to show how the respondent’s account was operated. The operation, counsel submitted, arose from the irrevocable letters of Credit opened and the final release of foreign currency by the Central Bank of Nigeria. Exhibit M by the Central Bank of Nigeria showed the amount not in Naira but in foreign currency,id est,United States of America dollars, id est,$7,236.00.
Counsel, therefore submitted that the learned trial Judge was wrong in saying,(borrowing the diction of the brief)that “there was no single document of Central Bank involvement in these dealing”. The respondent, as the “principal of or to the appellant, its “Agent”, it was submitted that it ought to take the consequence of its Agent. The respondent was therefore, it was submitted, ought to take the consequences of its Agent. The respondent was, therefore, it was submitted in page 3 of the appellant‘s brief bound by the dictates or of the Central Bank of Nigeria.
Learned counsel had further contended that Simon Osezuah the 1st named plaintiff at the trial (and herein the 1st respondent)never was a customer to or of the appellant .And the learned trial judge ,counsel contended, failed to appreciate that the appellant owed no duty of care to the 1st respondent ,in respect of keeping any accounts and accordingly failed to appreciate what duties of care were owed to the respondents respectively in the transaction giving rise to the case and giving rise to the appeal.Counsel cited and relied on Salomon v. Salomon & Co.Ltd.(1897)A.C 22 and further on Akinsanya U.B.A Ltd (1986)4 NWLR (Pt.35)273.
Concluding,counsel had referred to Exhibit T. He contended that notwithstanding that the debit balance as shown above was N3,451.89 there was evidence (See Exhibit T)that the 2nd respondent was indebted to the appellant to the sum of N14,517.93k being a continuing customer of the appellant.
The counsel had referred further to paragraph 24(2) of the claim .It was the submission by the counsel in the brief that the averment therein was “misconceived” because the amount “brought or carried forward” was not N 33,900.73 as at “9/7/86”.Rather it was “ N 77,203 Dr.” after which the credit of N43,303.00 as pleaded in or by paragraph 24(1)of the claim was given thereby leaving the debit balance of N33,900.73 to continue (again borrowing the diction of the brief) “its journey in the account on 10/7/86,see Exhibit R”.
Counsel submitted in “paragraph 4.2.” in page 4 of the brief that both the trial Judge and the respondents completely did not understand or misunderstood the “continuing system”. The learned trial Judge was further criticised for failing to resolve the accounting procedure given in evidence by the appellant and so failed and fell in error in not applying Section 149© of the Evidence Act Cap.112 Laws of the Federation 1990.Again the case of Akinsanya v. U.B.A Ltd,(supra) was prayed in aid of.
It was contended in page 4 “paragraph 4.3”of the appellant ‘s brief that in making the award of N60,000.00 as the loss sustained as a result of 1st plaintiff’s title document”,the learned trial Judge had failed to distinguish between the rights or obligation to or of the appellants to plaintiffs, herein the respondents. The 1st respondent (Simon Osezuah) had been given the award for what the trial Judge considered, wrongly it was contended,the wrong accounting of the 2nd plaintiff’s account”.
The award of the damages of N60,000 to the 1st respondent (Simon Osezuah) had no foundation in principle or at law,it was contended by counsel. Counsel referred to Exhibit “1A. It (Exh 1A)is copied at page 114 of the record of appeal (parenthetically)let me say sooner than later than Exhibit 1A reads inter alia :-
I understand that the guarantee I am about to sign is in respect of banking facilities to Osezuah & company Nigeria Limited is in support of legal mortgage dated 30th November 1981 registered as 8/8617…… (Signature of guarantor 4/11/85).
Based on the foregoing, learned counsel posited ‘’How could the 1st plaintiff recover any general damages in detinue?“Counsel, on the quantum of damages recoverable in Detinue had referred to clerk & lindsell on Torts 4th Edition pages 706 Art. 1151; and further to Kalu v Mbuko (1988) 3 NWLR (Pt.80) 86, Ratio 14’’ (a term I do not like to use because it has almost always been quoted and misapplied by some counsel).
Dealing with the award of N30,000.00 per annum from 1987 till judgment, as the anticipated loss of profit, learned counsel in page 5, paragraph 4.5.’’ of the appellant brief, learned counsel had drawn attention to the date of the filing of the writ of summons initiating the suit. The writ of summons was issued on the 13th day of October, 187. (See page 1 of the record). He later drew attention the respondent warning letter through their solicitor, Exhibit W. ‘’Exhibit W’’ predated the issuance of the writ of summons. It (Exhibit W, letter ref. No. IEI/125/87) was written and dated the 17th July 19987’’ i.e. over three months before the writ of summons was issued. Therein, the sum of N30.000 p.a. was being claimed.
The feasibility Report (Exhibit IDI) wasnot copied. It was the submission by the counsel that ‘’Exhibit IDI not withstanding that it (Exhibit IDI) was admitted in evidence without objection. Concluding counsel contented that the learned trial judge was wrong to have utilized it (Exhibit IDI) the way he did.
The above apart, counsel contended in paragraph 4 .6 of the appellant’s brief that the award of N60,000.00 per annum was too remote. He cited the ancient, highly venerated and hallowed case of Hadley v Baxendale (1843-60) ALL E.R. Rep. 461 at page 465; Onwuteaka v. Davco Technical Services & Supplier ltd FCA/L/49 of 13/2/80 (Unreported); Ogwu v Leventis Motors Ltd (1963) 2 All NLR 65.
I shall pause hear for a comment for the purpose of clarity and elucidation to put the pointy aside. I did observe above, that the appellant’s brief of argument was one long piece of prose writing. The grounds of appeal filed (five of the) were rather un-ideally, split into more issues than they necessarily ought to have been. Indeed some of the issues formulated could have been very conveniently and adequately condense into one and argued together. I have, However, adopted the method I have of taking and considering the submissions on the arguments, also together. This in my judgment was deserving in the circumstance. It also made for convenience. I have said this just in passing.
The submissions by the respondents in the respondent brief were in the main centered and hinged on what counsel christened, “’Estoppel by conduct’’ It was contended by counsel in page 6 paragraph 4.1 et seqentee, that the respondents qua plaintiff’s had pleaded estoppel’’ and gave evidence in that direction. The evidence was counsel contended, ‘’unrebutted’’ by the appellants. Particular reference were made to Exhibit F, and M.
The letter by the appellants dated 23/3/83 (Exh F) was recited and quoted in extenso’’. It (Exhibit M) I did touch on earlier on dealing with the submissions by the appellant.
Based on theseExhibits (F and M) it was submitted that the appellants were estopped from denying that the funds covered in or by the irrevocable letters of credit were released to the beneficiaries in 1983. Reliance was placed on section 151 of the evidence Act, cap. 112 laws of the Federation, 1990 and the case including joelgav. Amakiri (1976) 11 S.C. 1 at pages 12/13, Ondo State University v. folayan (1994) 7 NWLR (Pt. 354) 1 25. Counsel drew attention to the testimony of the appellant at the trial, which in the counsel’s opinion was supportive of his contention. Counsel therefore justified the leaned trial judge in accepting the evidence and adjudging the appellants, qua defendants liable.
Counsel next dealt with ‘’Award of special and general damages made by the learned trial judge. As counsel contended, the respondent established those items of claimed by credible evidence. There was evidence that by the respondents that the appellant retained the ‘’Titled Deed’’ inspite of the letters (Exhibit N and R) of demand for their return and after the respondent had liquidated their indebtedness to or with the appellants.
It was the contention by the counsel in page 9 of the respondents brief that the respondents were desirous of utilizing the title deeds to secure a loan from another bank – Allied Bank Ltd – That bank refused to grant the loan facility because the respondent could not produce a collateral security.
Reference was made to the evidence by Patrick Kwelomen (P.W.2) an Accountant who prepared the Feasibility Report. (Exhibit IDI) (alais, per respondents brief, Exhibit Y). Numerous decided cases were cited excerpts therefro quoted in support and for support of the proposition that the evidence by the P.W.2 not having been contradicted, the court was justified to accept it, rely on it and act on it in the award it (the court) did make in favour of the respondents. It was submitted that the feasibility report was prepared in 1986; ‘’not produced during the pendency of the proceeding/evidence of plaintiff, witness No. 2’’.
In page 12 of the respondents brief, counsel had submitted (and I beg leave to borrow the diction of the brief)
“The plaintiff went further to establish substantial award by proffering evidence of fictitiouscrediting and wrongful debiting of 2nd plaintiff’s account. The mode and manner the defendant fiddled with the 2nd plaintiff’s account is illustrated at page 34 and 35 of the record of appeal. (Contained in pages 34/35 are the pleadings of plaintiff’s second amended statement of claim).
Note (1) (The Italics and the square brackets with their contents are mine).
It was the contention by the counsel again in P. 12 of the respondent’s brief that the appellant did not cross examine on or contradict the evidence by the respondents on their entitlement to general damages. Learned counsel in conclusion urged his court not to interfere with the award made.
Before I go any further, I shall pause, for a comment or, to dispose of certain of the false impressions, with respect, to the respondents counsel. A good starting point to make my comments intelligible is to refer firstly to Exhibits C and CI.
These are letters headed: “Notice of Arrival of Documentary Collections”
Part of either Exhibit by the appellant to the respondents reads: “Drawer- MOE & Stoll Inc. Date of Bill – 29/11/82.
The letter (Exhibit F) to which learned counsel referred in page 6 of the respondent’s brief is a reply to the respondents’letter dated ,”10th February ,1983”,(Exh.E)
“Stop of payment on letters of credit Nos.
It just remains for me to say that the letter (Exhibit E)to which Exhibit F was a reply demonstrated the want of knowledge of the respondents and/or the counsel,withrespect ,to the duty of an issuing bank in the law of International Trade when letters of credit (Irrevocable or confirmed letter mean the same thing ). I had already dealt with the aspect above.See Paget’s Law of Banking 8th edition page 644(supra).The above disposes of the matter wholly and entirely. So, cadit question”.
The main wicket of the respondents’ counsel’s submission indeed his fire power was “Estoppel by conduct” submitted upon with much vehemence but without bitterness. Again, I endeavoured to touch on this aspect of the case earlier on, perhaps imperfectly. I dwelt in some detail on the irrevocable letters of credit opened by the appellants on behalf of the respondent,agents for the respondents, in the business of importing those dry-cleaning equipment. I did,in some detail, try to set out,in extensor, the undertaking executed by the 2nd respondent, Osezuah & Co.(Nig.) Ltd.These undertakings were endorsed on the reverse side of each of the irrevocable letters of credit.The question now is : was the 2nd respondent not bound by these undertakings?
Ans. Of course,it was.Do those undertakings not operate as an estoppel against the 2nd respondent?
Ans. Of course, the quick answer is,capital Yes.
At the risk of a repetition the 2nd respondent is estopped by his undertaking that:
“I/we agree that my/our liability to you in respect of each draft drawn under the credit shall not be discharged until the Central Bank of Nigeria provide you with the requisite foreign currency…………
I/we hereby authorize you to debit my/our account with all sums which may become due to you in respect of this credit including your commission of………….”
Could the 2nd respondent “runaway”, resile from these? Again, the answer is a capital and short,understating No.Afterwards,what is an estoppels?It is a rule of the Law of Evidence. It is no other than a bar to testimony.To use the language of naval warfare an estoppels must always be either a mine layer or a mine sweeper, it can never be a capital war head.As put by Littleton S.667-
“A man may be stopped or an estoppels may operate because a man’s act or acceptance stoppeth or closet up his mouth to allege or plead the truth.”
To complete the circle,I now refer to Exhibit M.,also referred to by the counsel for the respondent.It (Exhibit M) from the Central Bank is in U.S.dollars.
The amount therein reads –
I shall not stop here.No.Then came Exhibit 2 dated 23/2/88,it reads:
“Our letter of credit Numbers 37/82,40/82 and 41/82.”
Now,it may be accepted as pleaded and given in evidence that the 2nd respondent is “a major dry-cleaning company”.But that cannot by any extension include or mean that the 2nd respondent is an expert, “peritue” in banking or accounts.It was pleaded that the account of the 2nd respondent was “wrongfully operated”and later submitted by counsel what there was “fictitious crediting and wrongfully debiting of the 2nd plaintiff’s account”.
The question pertinent enough and asked by the counsel for the appellant becomes, but how was it established in evidence by evidence that the account of the 2nd respondent was so wrongfully debited and fiddled with? The onus in my view, lay on the 2nd respondent to prove and establish its assertion by credible evidence, section 135 and 136 of the evidence Act Cap. 112 Laws of the Federation.
They were not tendered in evidence as evidence, in proof of the assertions, “BankTellers” to prove payments in, in liquidation of the respondent’s indebtedness to the appellant’s documentary financial credit.
Issues on the pleadings were joined on the alleged wrongful debiting and/or crediting to the 2nd respondent’s account. What was evidence in this regard? It was contained in P.66. Part of the evidence, in-chief by the defendant reads;
“The various debits and credits were as a result of the re-valuation of foreign currency that connects all imports as divested (sic) by Central Bank of Nigeria,at this period,the Central Bank of Nigeria was finding a realistic value for naira. The letter of credit,there is a clause in the letters of credit authorizing the bank to credit or debit the account covering the fluctuation in exchange rate.That form of undertaking is attached to the letter of credit Exhibit identification 1 and Exhibit identification 2” ……The relevant foreign currency in respect of this transaction was ordered on 23/2/88 ,this is the approval tendered, admitted Exhibit 2.
Continuing at page 66,the witness further stated inter alia:
“and at 22/4/87 the balance on plaintiff account was the sum of N59,580.82k and the plaintiff was written by letter Exhibit T dated 23/4/87.”
Sunday Umakaye Romun was however cross –examined.In an answer to a question by the counsel,the witness replied in page 67 of the record inter alia:-
“It is true that all the alleged debts owed by the plaintiff arose out of the documentary credit transaction.I have Exhibits 1c.2 to 1c.30 ……..The amount owed by the plaintiff was not due mainly to interest charges but due to a short fall for re-valuation exercise carried out by the defendant the debit notes Exhibits J-J4 could not have answer.”
How did the learned trial Judge handle and treat the evidence as led?He wrote on page 94 of the record inter alia:
“In view of my preceding remarks by the wrongful act of crediting and debiting the 1st plaintiff’s account,the defendant committed a breach of various duties of care and skill owed to the plaintiffs by reason of its negligence and also by reason of the contractual relationship existing between a banker and its customer.”
Now before I record my conclusion,I ask this pertinent question:
Q1. Was there any contractual relationship between Union Bank of Nigeria Plc. defendant at the trial and Simon Osezuah,shareholder and Managing Director to the Osezuah Co.Nig.Ltd qua 2nd plaintiff at the trial?
Q2. Was the Issuing bank,id est,the appellant herein an Agent to the 1st respondent in the international trade involved in the opening of the Irrevocable letters of Credit?
Q3. Did the appellant as the Issuing Bank owe any duty of care to the 1st respondent in the transaction?And lastly,was it the 1ST respondent’s account that was being operated during the period of the international trade with MOE & Stoll International Inc.of the United State of America.
My quick and short answer to each and all the above posers by me is capital No.Besides,the irrevocable letters of credit,the undertaking therein,were executed by the 2nd respondent.From the state of the pleading, the negligence-id est, a breach of duty of care owed by one party to another was not made an issue at the trial.Neither was the crediting of the account of Simeon Osezuah, plaintiff,whether negligently or otherwise an issue on the pleadings between the parties.And a trial court has a duty to confine itself to issues raised on the pleadings by the contesting parties.
It is the duty of trial courts to limit themselves solely and strictly to issues raised by the parties on their pleadings,and no more.To do otherwise, might well result in a denial of justice to one or other of the contesting parties.And this will amount to a miscarriage of justice. National Investment &Properties Co.Ltd v Bank of West Africa Ltd.(1962).
The above apart,it is worthy of note that a word be said of and about section 149(c) of the Evidence Act Cap.112 Laws of the Federation 1990.It raises a presumption of validity in favour of those performing public duty.And unless I be wrong the appellant in the operation of the account of the 2nd respondent was operating a public function or duty in relation to the international trade and the opening of irrevocable letters of credit.Therefore in the evaluation of the evidence of the parties the legal presumption in the favour of any party must be taken into account unless and it be displaced or rebutted.But did the learned trial Judge consider the legal presumption in the favour of the appellant before arriving at his conclusions? Put the other way round did the respondents displace or rebut the presumption?However, the posers be considered in my humble opinion,the answer is in the negative. The finding by the learned trial Judge above recited in my view, is perverse.
In my view of the law as it stands,having considered the submissions by the counsel on the arguments,and applying the principle thereto,the conclusion, I have readily come to,is that Issues 3.1,3.4 and 3.5 taken together ought,each or all,to be resolved in the favour of the appellants and, eo ipso,against the respondents.The grounds of appeal from them arising therefore,succeed.
I had above said something of or about the tort of Detinue; may be imperfectly.But I shall resist repeating myself again and again.The question pertinently arising to be asked to be firstly answered, therefore becomes this:Was or is the appellant wrongfully detaining or refusing to surrender up the title deeds given it by the 2nd respondent to secure the overdraft facility involved in the international business transaction of the 2nd respondent and the opening of the irrevocable letters of credit on its behalf by the appellant as its agent?And germane to the above,assume argument,(and I have not said it) that the retention be wrongful,what is the proper quantum of damages recoverable? And unless there be an “injuria” discussions of “remedium “is worthless and idle.
However,for convenience, I shall firstly remind myself that in an action in Detinue the Judgment may take one of these three forms.It may take the form of the value of the chattel as assessed and damages for its retention or (ii)the return or recovery of its value assessed and damages for its retention of (iii)the return of the chattel and damages for its detention.In Rosenthal v. Anderson & Ors. (1946)1 K.B 374,the court of Appeal (England)expressed itself at page 377 inter alia:-
“In action for detinue the value of the goods claimed but not return ought,in our judgment to be assessed as at the date of judgment or verdict.But see also Mc Gregor on damages 13th Edition paragraph 218 et sequentes.
Now,I searched unsuccessfully the record of appeal to see any evidencethat the Title deeds were either destroyed in one form or other,or lost and could not be locatedor traced.No, there was,however,some evidence by the respondent in page 25 of the record that demands were made for the return of the deeds from the appellants.These demands were in writing by the solicitor.See Exhibit S,dated 1/7/87.The third paragraph of Exhibit S,inter alia –read:-
“Our further instruction is formally to demand our client’s title deeds in the bank’s possession…………………………. Our client require the title deeds urgently to negotiate a loan/overdraft facility.”
It (Exhibit S)was followed by Exhibit W.It (Exh .W)was dated 7/7/87.It contained the following expression
“We have been informed …….that the unlawful detention of its Title Deeds would deprive of it expected profits of over thirty thousand naira per annum”a piece of evidence confirmed by the feasibility report made by Patrick Kwelom (p.w.2).
And as Mrs. Obazee Dafe Blessing testified, “since the collateral was one of the important document. The Allied Bank does not allow the taking of title deeds as collateral on a second mortgage as it is clumsy and cumbersome.”
But the version of the evidence by the appellant in this regard is contained in page 66 of this record.Part of the evidence by Sunday Umakeyo Romun read:
“The appellant asked for the release of his documents but this could not be done as the plaintiff was still indebted to the bank.This is by the contents of Exh.O as the close of business in April 1987 in Exhibit P the bank informed the plaintiff of their inability to release the document because of their indebtedness; after the defendant had written Exh. Pthey were no longer obliged to release the documents.The plaintiff has not paid back to the defendant the amount he is owing and the defendant is not obliged to release the documents”.
Now, I had earlier on, in the judgment referred to Exh.T dated the 23/4/87 informing the 2nd respondent of its indebtedness because.
“We must emphasize that the re-valuation of your letters of credit was the result of a Central Bank of Nigeria directive on Bills they had accepted but awaiting releases of cover…….”
Then followed the letter Exhibit P read:
“We are writing further to our letter of the 30th September 1987 as the outstanding overdraft has not witnessed any reduction since we wrote aforesaid letter. There is really no reason for us to hold fast to any security if the account secured has been fully settled. It is rather unfortunate that your current account is still overdrawn. Present balance is N9.760 with interest accruing daily while the documentary credit liability is yet to be discharged……..”
Now,to Exhibit Q:
It was made on the 30thSeptember, 1987.It is headed “Banking facilities” Part of Exhibit Q read:-
“We refer to your letter dated 30th August 1987 and regret our inability to release your title deeds held by us as security for your liabilities in our books.
Although your New Nigerian Bank Ltd,cheque No.BB/1644372 dated 1st July 1987 for the sum of N 5,815.83 (Five Thousand eight hundred and fifteen naira, eighty –three kobo ) has since be cleared and proceeds applied as part reduction of your liability, the balance of your accounts as at close of business yesterday are:
O/D – N 9,759.82
D/C – N 49,831.00
Total N 59,590.82 (fifty nine thousand, five hundred and ninety naira,eighty –two kobo)Interest accruing…………………
Meanwhile, the issue of releasing your title deeds is being handled by our Legal Department and we shall let you know of our action in due course.”
Now, the old adage says “one must firstly be honest before he becomes charitable “. These title deeds were given as a security to secure the respondents’ indebtedness to the appellants. Before the indebtedness be fully liquidated, ought the bank return the deeds,allow the respondents’indebtedness to stand “floating “unsecured? And who suffers for it and who starts to gain?
I had earlier touched on the principle, Mogaji v Odofin (supra) and Ss.135 and 136 of the Evidence Act. I shall not go over these again .But suffice it to say immediately that it was or is the respondents who were or are asserting that they were not indebted to the appellants in any amount and,eoipso,are entitled to the return to them of the title deeds. And who asserts proves his assertion.
Now did the learned trial Judge hand the evidence of the wrongfulness or otherwise of the retention of the title deeds, if at all he did, before he wrote as he did at page 94 reproduced above by me or afterwards? Let it however be noted now and here that both Exhibit P and Q came after Exhibits S and W respectively. Did the trial Judge make any finding that the appellants were holding the title deeds because of the respondents’indebtedness unliquidated fully. Put in other words did he make any finding that the respondents were not owing the appellants any money at all?
Nowhere in the record did he make any such vital finding. And that I hold it was essentially due to the posture and stance he, withrespect, took rather wrongly and in error when he wrote as he did in page 94 of the record. I had earlier on reproduced it while considering the earlier issues. Needless repeating myself again and again on the same grounds as I held above, I do also hold that there occurred a mis-carriage of justice. The learned trial judge had already, baselesslythough, held that the appellant was wrongly debiting and crediting the 1st plaintiff and committed a breach of various duties of care and skill owed to the plaintiffs.
But could the award of N30, 000 per annum for prospective or estimated loss of profit, stand? The principle of law established in or by Hadley v. Baxendale is as good a law in 1843 as it is today in 1996 a period of over one hundred years. Was the award of N30, 000 per annum as estimated loss of profit because the title deeds were not returned (wrongfullyor otherwise is not the case now) to enable the respondents obtain a loan from another bank directly flowing from such a refusal? This is not matter of belief or disbelief.No.it is a matter of deduction of an inference. Assuming the detention of the title deed by the appellants after demands were wrongful and am not and have not said so) is the award of N30,000 per annum from 1987 till judgment not too remote? See Mc Gregor .On Remoteness of Damages. The awards, in my opinion, ran counter to the principle laid down in Hadley v. Baxendale (supra) all the facts of the case taken into consideration.
And would your Lordships’ Court, ever, allow these awards to stand? I, most certainly, think not .In my judgment they are baseless in Law or at law. Judged from the evidence placed before the trial court. Put rather nakedly but without disrespect to the learned trial Judge, the finding for in the awards are perverse.
In the final analysis, in my judgment Issue No.3.2 ought to be resolved in the favour of the appellants. And I do hereby resolve it against the respondents. The ground of appeal from which the issue is distilled therefore succeeds.
In the result, all the grounds of appeal succeed. The Judgment by A.A Agun, J.in suit No .B /386/87 on the 10/12/93 is hereby set aside accordingly. The appeal, therefore, succeeds. There shall be costs assessed and fixed at N2, 000.00 in the favour of the appellants and against the respondents.
IGE J.C.A : I have had the opportunity of reading in advance the judgment just delivered by my learned brother Nsofor J.C.A .I agree with him that this appeal succeeds .I adopt his reasoning and conclusion as mine.
I also set aside the judgment of Agun J. delivered on 10/2/93 in suit No 8/386/87 with costs assessed at N2,000.00 in favour of the appellants.
AKINTAN J.C.A: I had the advantage of reading the draft of the lead judgment prepared by my learned brother, Nsofor,J.C.A, I entirely agree with the conclusion he reached therein that the appeal should be allowed.I also allow the appeal and abide by all the consequential orders made therein,including that on costs.
Under the Uniform Customs and Practice (UCP 600 and earlier editions ) for documentary credit, Banks deal on documents and not on goods or the underlying contracts.
Article 5 (Uniform Customs and Practice 600) provides as follows:
DOCUMENTS V. GOODS ,SERVICES OR PERFORMANCE
Banks deal with documents and not with goods, services or performance to which the documents may relate.
Furthermore, under Article 8 (a) of Uniform Customs and Practice 600 states;
“Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitutea complying presentation,the confirming bank must :
incur its deferred payment undertaking or ,having incurred its deferred payment
undertaking ,does not pay at maturity;
accept a draft drawn on it or, having accepted a draft drawn on it ,does not pay at
Article 10 (a) provides:
“Except as otherwise provided by article 38, a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary.
The implication of the above articles 5 and 8 of Uniform Customs and Practice 600 is that defects in the goods supplied cannot be a bar to authority for the paying banker to make payments when documents that conform to the terms of the Letters of Credit are presented.
It follows that an applicant cannot unilaterally request for the amendment or cancellation of a Letter of Credit without the consent of other parties to the Letters of Credit.
Furthermore, the Banker can only be estopped frommaking payment under a Letter of Credit if thereis a restraining order from a court of competent jurisdiction.
In Edward Owen Engineering Ltd v Barclays Bank International Ltd & Umma Bank (1978) 1 Lloyd’s Rep.166 @170 Lord Denning MR said:
“It has been long established that when a letter of credit is issued and confirmed by a bank, the bank must pay it if the documents are in order and the terms of the credit are satisfied.
Any dispute between buyer and seller must be settled between themselves. The bank must honour the credit”.
That was also clearly stated in Hamzeh Malas & Sons v . British Imex Industries Ltd (1958) 2. Q.B.127 at P.129 .Lord Justice Jenkins ,giving the judgment of the court ,said: “It seems to be plain enough that the opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of the goods, which imposes upon the banker an absolute obligation to pay, irrespective of any dispute that may be between the parties as to whether the goods are up to contract or not”.
The judgment clearly reinforced the Uniform Custom and Practice rule that in Letter of Credit contract banks deals on documents and not with goods or the underlying contract.