Metalimpex V. A. G. Leventis & Co. (Nigeria) Ltd. (1976)

LawGlobal-Hub Lead Judgment Report

IDIGBE, J.S.C.

This action was started by a writ on 19th January, 1973, in which the appellants (a state Corporation in the Hungarian People’s Republic) claim against the respondents (a trading company incorporated in Nigeria), the sum of N102,702.73 as indorsers ofa bill of exchange dated 1st March, 1972, and payable on 30th April, 1972, and in the alternative as guarantors of a contractual undertaking made to the appellants by Messrs. West Africa Steel and Wire Company Ltd. (hereinafter referred to as “WASCO”), a trading company incorporated in Nigeria; this amount (i.e. N102,702.73) is made up of the principal sum of N97,798 due under the bill, the sum of N4,890.13 being interest thereon and the costs of noting protest on the said bill, being the sum of N14.60. The appellants also claim interest on the total sum claimed (i.e. N102,702.73) “at 10% per annum until judgement is delivered”.

Briefly, the following facts constitute the background to this action. WASCO had, prior to March, 1971, been importing various goods on a credit-basis from the appellants and as a result was, on 1st April, 1971, indebted to the appellants in the sum of ‘a3673,511 sterling (the naira equivalent of which was given, by the appellants, as “N1,347 ,022.00”). Unable to pay this debt and being also desirous of continuing its trading activities with the appellants, WASCO proposed to them alternative arrangements for settlement ofthe debt. The appellants were requested in a letter of the 18th day of February, 1972, from WASCO (exhibit A) to agree to a schedule of deferred payments, spread over a period commencing from March, 1972, to February, 1973, of equal monthly instalments of N56,126. Monthly payments of the said sum (i.e. ‘a356,126) were to be made by respondents directly into a special account to be established for that purpose in the United Bank for Africa Ltd., Lagos (U.B.A. Lagos), and it was also added that the respondents would guarantee payments under the proposed monthly instalments; copy of a written undertaking dated 8th February, 1972, guaranteeing monthly payments as proposed (exhibit A1) addressed to WASCO by the respondents was also attached to the letter, exhibit A.

It was also proposed in exhibit A by WASCO “in the interest of continuity of our hitherto pleasant and satisfactory business relationship” that they be allowed to place orders, with the appellants for rolled steel products to the tune of N25,000 per month, “which will also be secured by Messrs. A.G. Leventis (Nigeria) Ltd.” (the respondents). A letter of confirmation of this second proposal by the respondents (exhibit D) was also enclosed in exhibit A. Exhibit D (also dated 8/2/72) signed on behalf of the respondents was addressed to the appellants at their address in Hungary. The appellants, however, did not consider the undertaking in respect of “deferred payments” sufficient and in lieu of a banker’s guarantee which they asked for from WASCO, they informed WASCO that they would be disposed to accept in addition to respondents’ written undertaking to WASCO (exhibit A1), bills of exchange to cover the deferred monthly instalment payments of N56,126 each. Accordingly, twelve bills of exchange each payable to the order of the appellants, accepted by WASCO and indorsed by the respondents were delivered to the appellants and they were to mature and become payable at the end of each consecutive month (from March 1972 to February 1973) beginning from 31st March, 1972. The negotiations relating to the above matter were, in the main.

On receipt of the twelve bills of exchange issued. to guarantee the deferred monthly instalment payments proposed in exhibit A, the appellants’ Chief Legal Adviser, Dr. Hontvari, noted that the bills were indorsed, in each case, by P. Myrianthousis, as Director of the respondents. Testifying in the trial court on behalf of the appellants, Dr. Hontvari said he came to Nigeria in March, 1972 to cross-check from the Bankers of the respondents and WASCO “as to the genuineness of the signature of Mr. Myrianthousis” and “was satisfied with the genuineness of the signature”. He negotiated the first bill which matured on 31/3/72 and the bill was honoured; and all the remaining bills were left with the U.B.A. Lagos to collect on maturity. When, however, on the due date in respect of exhibit E (a bill for ‘a365,190 due to be paid on 30/4/72) the bank presented the same for payment it was dishonoured. Later it was protested (as per exhibit F) by a Notary Public. According to Hontvari, the appellants stopped business dealings with WASCO “because the second bill of exchange (exhibit E) was not met”. Consequently, the appellants filed, in court, the present claim.

The defence of the respondents was, in the main, a denial of the authority of Mr. Myrianthousis to bind them in this particular transaction. According to the respondents, Myrianthousis had no authority or approval of respondents either to sign the undertaking in exhibits A1 and D or to indorse the bills of exchange of which exhibit E is one. It was even alleged – although not the slightest evidence was adduced in support of it – that Mr. Summ, Mr Myrianthousis and one Mr. Louvaris at all times material to the transaction referred to above had conspired to defraud the respondents. The respondents did not call evidence at the trial and we, therefore, think it is desirable, at this stage, to set out some of the salient paragraphs of the statement of defence, and these are:

(6) In further answer to paragraphs 3, 5, 6, 7, 8, 9 and 12 of the amended statement of claim, the defendants (i.e. respondents) aver that the transactions referred to in the said paragraphs result from a conspiracy between the plaintiffs (i.e. appellants), one Mr. H. Summ, one Mr. C.P. Louvaris, and others connected with West African Steel and Wire (Co) Ltd., on the one hand and one Mr. P. Myrianthousis (a former director of the defendants) on the other, for the purpose of defrauding the defendants.

PARTICULARS OF THE SAID FRAUD….

(a) … … … … … ……

(b) The said Myrianthousis colluded with Messrs. H. Summ and C.P. Louvaris to help West African Steel & Wire (Co.) Ltd. and other companies in the Group (i.e. WASCO IWAMAC Group) in their financial difficulties.

(c) In furtherance of the said conspiracy and.with the knowledge of the plaintiffs it was arranged that the said Myrianthousis was to give an undertaking in the name of the defendants, and without any consideration to pay the sum of ‘a356,126 monthly for a period of twelve months into an account to be opened at the United Bank for Africa Limited, in the name of the plaintiffs when, to the knowledge of the plaintiffs, the defendants had no indebtedness whatsoever to the plaintiffs.

(d) In spite of the foregoing, the plaintiffs further requested, and obtained from Messrs. H. Summ and C.P. Louvaris and from the said Mr. Myrianthousis, signed bills of exchange in favour of the plaintiffs purporting to be signed by the said Mr. Myrianthousis as director of the defendants.

(7) ……………..

(8) The defendants further aver that by the conduct of the plaintiffs, and particularly of their Chief Legal Adviser, one Dr. Hontvari, and by the inquiries made on behalf of the plaintiffs by other persons, the plaintiffs knew that the said Mr. P. Myrianthousis was not authorised to enter into the said transactions or to sign the said bills of exchange at all or alone.