Evarist Ugoji V. Theophilus Uzoukwu (1972)
LawGlobal-Hub Lead Judgment Report
In suit No. 0/67/63 in the Onitsha High Court, the plaintiff (now respondent) on 25th May, 1963, took out a writ of summons against the defendant (now appellant) in which he, claimed:
“(i) an account of all monies paid and received on all the books consigned to the defendant by the Oxford University Press from January, 1963, until the day of judgment.
(ii) an order of court for defendant to pay the plaintiff a half share of all profits accruing from the sale of the books.”
The facts are relatively straightforward. In reply to a letter dated 22nd March, 1961, which he wrote in his firm’s name of E.U. Ugoji and Sons to the Oxford University Press, a firm of booksellers whose offices are at Ibadan, the defendant (Ugoji) received a letter dated 29th March, 1961, (Exhibit F) from the firm. It reads
Your air letter dated 22nd March, 1961, had been received with thanks. Could you please tell us at your earliest if you are prepared to make a pre payment of 500pounds against your order. This is not a security as it would be credited to your account and you would obtain goods worth your prepayment.
We would advise you however to continue to get your supplies from your usual source until our Travelling Representative could visit your area and report on your premises.
With all good wishes.
The defendant, apparently on further enquiries from the firm (hereinafter referred to as the press), later that year received another letter from the Press. The contents of this letter dated 29th September, 1971 (Exhibit B)
are as follows:-
We thank your for your letter of 26th September received today together with Invoices showing the trade you have been doing with other publishers.
If you are willing to accept our terms for new customers we would be willing to recommend you.
- You are required to make a pre payment of 500pounds to the Sales Manager, Oxford University Press, Warehouse Road, P.M.B. 1060, Apapa. This is not a deposit as you will be supplied books to the full value of your prepayment.
- You will be required to pay cash for a probationary period of two years. After that depending on your performance you may be considered for limited credit which may be reviewed periodically.
- We usually require trade reference, but since we have seen your Invoices from Messrs. Longmans, Green & Co. Ltd., G. Bell and Sons; Book Centre Ltd., you need not send others unless you wish to.
- Our rates of discounts to customers are as follows:
Educational books 16% off U.K. published price and 25% off U.K. published price on general and reference book ex our Apapa Warehouse. Postage extra.
If you accept these terms please send your order and prepayment of 500pounds to the Sales Manager, Oxford University Press, Warehouse Road, P.M.B. 1060, Apapa.
With good wishes,
Presumably, in pursuance of the contents of the above letter, the plaintiff and the defendant (to whose firm the letter was addressed), both of whom are booksellers, after paying the Press the sum of 500pounds entered into a written agreement on 20th December, 1961. This Agreement (Exhibit “C”) provides-
“(a) That the two persons paid deposit against order of books to Oxford University Press Apapa Branch. The said deposit was 500 (Five Hundred Pounds) which the two persons paid equally with the name of E.O. Ugoji.
(b) The company has refunded the deposit by supplying books amounting to that 500pounds.
(c) the two persons E.O. Ugoji and T.U. Uzoukwu will be running the business equally until they will be able to open the same business in the name of T.U. Uzoukwu.”
The plaintiff, at the trial testified that by this Agreement they both started a “business relationship” with the Press, the defendant contributing 250pounds while he himself contributed 250pounds. He was with the defendant on the day they deposited the 500pounds with the Press. After paying the amount, they were supplied with books worth 500pounds. On their return to Onitsha, they shared the books equally, sold them and made profit. From the amounts realised from this sale they returned to the Press and bought more books. They did not have to pay cash for all the books they bought from the Press. The plaintiff then stated that he was never asked by the defendant nor did he refuse to bring another 250pounds which he ( defendant) could add to his own 250pounds in order to make up another 500pounds which the plaintiff could deposit with the Press. He described what precipitated the present proceedings as follows:
“In December, 1962, we two agreed to go to Lagos on 28/12/62, but on 26/12/62, the defendant alone went to Lagos without my knowledge and returned with books worth 1,600pounds. I went to him to ask him why he went without me and I asked him that we should share the books as usual. He said that the business was done in his own name and that he was not prepared to share the books again with me.
In this respect, we refer to paragraphs 9-11 of the plaintiff’s statement of claim which read-
“9. On or about 2/1/63 the defendant received books on credit from the Press worth 1,936pounds= 18=11d; on or about 21/1/63 defendant received books on credit from the Press worth 929pounds=15=10d; on several other dates between January until the date of filing this statement of claim, the defendant has received large quantities of books on credit from the Press.
- The defendant has refused to deliver to the plaintiff his half share of the quantity of books referred to in paragraph 9 of this statement of claim or any share in accordance with the Agreement and has sold the books on handsome profits the amount of which the plaintiff does not know.
- The plaintiff has on several occasions unsuccessfully asked the defendant to come to account with him for the credit received from the Press and the amount of profit made on the books.”
The defendant’s answer to the above averments are in paragraph 9-11 of his own statement of defence. The answer reads-
“9. Save that it is admitted that on or about 2/1/63 the defendant bought books from the said Press worth 1,936pounds=18=11d, and on or about 21/1/63 bought from the said Press books worth 929pounds=15= 10d, the defendant denies that the books were supplied on credit or that on several other dates between January until the date of filing the statement of claim the defendant received large quantities of books in their joint business on credit from the said Press.
- The defendant denies that the plaintiff is entitled to a share of the books as alleged in paragraph 10 of the statement of claim or at all.
- In answer to paragraph 11 of the statement of claim the defendant says that he did not receive books under the said Agreement on credit as alleged and will at the hearing contend that he is not in any way an accounting party to the plaintiff in respect of any of the matters alleged in the statement of claim as therein alleged or at all.”
Under cross-examination, the plaintiff testified further about the transaction as follows:-
“I went with the defendant to Apapa only once and this was when we made the first payment of 500pounds. After this we were sending our boys to collect goods and sometimes the defendant went with them.”
This testimony was given on 7th May, 1964. The case was then adjourned to 11th May, 1964. At the resumed hearing the plaintiff retracted his former testimony and said that he went to Lagos with the defendant many times. He, however, agreed that the defendant had already applied to the press for trading facilities before he ( the defendant) came to him. He denied that the defendant had been trading with the Press before he approached him with his business proposals. He also denied that the defendant asked him to contribute 250pounds such time he (defendant) placed an order for books so that he (the plaintiff) could get goods worth 250pounds on each consignment.
Alan Jordan, the trade Manager of the Press and the first witness called by the plaintiff produced the statement of account of E. U. Ugoji and Sons (Exhibit “A”) with the Press. This statement, it must be pointed out at this stage, is not that of the defendant in his personal capacity. He then stated that the 500pounds was a prepayment for books and not a deposit, and that it was intended to demonstrate that a new customer was not a petty trader but one who could transact business of not less than 500pounds. He said the defendant was a cash customer of the Press, that he had not applied to the firm for credit but that he (witness) had, at his discretion, been giving him credit. He confirmed that before he accepted the defendant as their customer he wrote him the letter (Exhibit “B”) stating the conditions.
With respect to the transactions which the defendant had with the Press in January, 1963, and which formed the basis of the plaintiff’s claim, the 1st P.W testified as follows:-
“On January 2nd, 1963, the defendant made some payment against the order he made and I allowed him to take away the difference on credit. Same thing on 21/1/63. The defendant had to deposit a sum of 500pounds for continuity of his business and he has not done so since he started business. Every entry in red is payment in cash which the defendant made.”
The defendant alone testified in his defence as follows. In December, 1961, the plaintiff informed him that he had applied unsuccessfully to the Press for trading facilities and that he would like to be getting books sold by them through him (the defendant.) Pursuant to this discussion they entered into the Agreement (Exhibit “C”). Both of them then contributed 250pounds each which he took to Lagos in December, 1961, and paid to the Press in the name of his own firm (E.O. Ugoji and Sons) in respect of books which he bought from them. He gave the plaintiff books worth 250pounds out of what he had purchased. Again in March, 1962, when he was going to buy more books from the Press, the plaintiff gave him another 250pounds and he added 750pounds of his own money to this. With this sum he bought more books from the press and on his return gave the plaintiff books worth 250pounds. After this the plaintiff made no more contribution to the book buying transaction that year. As bookselling was seasonal and was limited to the months of January to March of each year when the school children bought their books for the year, they had no further transaction until December, 1962.
In December, 1962, the defendant informed the plaintiff that he was going to Lagos again to buy books. The plaintiff said that as he had just bought a piece of land at Fegge he had no money to contribute. The defendant thereupon went to Lagos on his own and with his own money.
He then testified as to his transaction in Lagos as follows:
“I made the order on 3/1/63 for 1936pounds; on 17/1/63 I went and paid 1300pounds and carried away the goods worth 1936pounds after telling the manager and he allowed me to go with them and pay the balance later.”
Later that month, the defendant finally testified, the plaintiff approached him and asked him to give him some of his books to sell. The defendant refused, hence the present proceedings by the plaintiff.
After reviewing the evidence given by both parties, the learned trial Judge made the following finding of fact with regard to the transaction of January, 1963, which formed the basis of the claim for an account
“I do not believe the defendant. I believe that he went away stealthily to Lagos because he did not want to share the books again with the plaintiff and because he knew that the business was being done in his name.”
He the gave judgment for the plaintiff “for an account” and orderd the defendant to file an account of the business from 1st January, 1963, within 14 days after finding further as follows:
“In short I have to say that the defendant is an accounting party to the plaintiff and that when he continued with the business in 1963, he was doing the joint business of the
party and therefore should render an account of it to the plaintiff.”
The defendant has now appealed against this decision. To our mind, the main point which calls for determination in this appeal is whether the defendant was liable to account to the plaintiff with respect to the books which he bought from the Press since January, 1963, and for which he had paid as shown in the Statement of Accoun (Exhibit “A’).
For the defendant/appellant, it was contended that he was not accountable to the plaintiff/respondent for these transactions. It was further contended that the only transactions between the parties were those in which books were bought with the equal contribution of 250pounds made by each party. With respect to the other transactions for which the defendant/appellant paid with his own money, it was submitted that since the plaintiff/respondent could not in equity share either in the profits or in the losses with the defendant/appellant, he (the defendant/appellant) could not be made liable to account to the plaintiff/respondent. Finally, it was submitted that the defendant/appellant would be liable only if the business was run as a partnership. As an ordinary joint purchasing venture could not amount to a partnership, the defendant/appellant could not be an accounting party and that the learned trial Judge was in error in holding that he was.
For the plaintiff respondent it was submitted that a fiduciary relationship between the parties had been established by the Agreement (Exhibit “C”). Learned counsel further submitted that Exhibit “C” created a partnership between them and that the action of the defendant/appellant constituted a breach of confidence because he was the only one enjoying the credit facilities given by the press to the total exclusion of the plaintiff/ respondent.
In our view, the transaction complained of (i.e. the purchase made from January, 1963, onwards) were not between the defendant/appellant and the Press nor were they between him and the plaintiff/respondent on
one hand and the Press on the other. The letters Exhibits. “B” and “F” which started off these transactions, and which were written long before the Agreement (Exhibit “C”) were addressed to E.U. Ugoji and Sons. The Statement of Account (Exhibit “A”) showed that the business was transacted with E. U. Ugoji and Sons.
The Agreement (Exhibit “C”) is the only document in which the names of both parties were mentioned. We are unable, however, to construe any of its provisions as creating a trading partnership between the parties. It is true that persons who agree to share the profits of a business transaction in which they engage are prima facie partners, although they may stipulate
that they will not be liable for losses beyond the sums they agree to subscribe. There is also nothing to prevent one or more partners from agreeing to indemnify the others against loss. (See Jefifey v. Bamford (1921) 2 KB 351 as per McCardie, J., at page 359).
In the instant case, however, the arrangement made and agreed in Exhibit “C”, on the fact of it, was for the parties to share books (not profits) purchased by them from the Press in the proportion of their monetary
contribution towards these purchases. It is certainly not one for buying books jointly, selling them jointly, and sharing the profits. The learned trial Judge, in view of his finding of fact, was also aware of this arrangement.
It was not the case of the plaintiff/respondent that he contributed to the purchase made by the defendant/appellant during January, 1963, and after. As a matter of fact, the Statement of Account (Exhibit “A”) showed that between January, 1963′ April, 1964, the defendant/appellant’s firm bought books costing 2,958pounds=19=9d and paid cash for all of them (although not at once) as shown by the amounts in red therein. The plaintiff/respondent made no contribution whatsoever towards these purchases and it is inconceivable, if the defendant/appellant had sustained a loss, that he (plaintiff/respondent) would have contributed to that loss if called upon to do so, there being no agreement to that effect. Moreover, we do not see how the plaintiff/respondent could have been successfully sued by the Press if the defendant/appellant had failed to honour his obligation to pay for those books supplied to him on credit during that period.
For the above reasons, we are clearly of the view that no Partnership existed between the parties to the Agreement (Exhibit “C”). To hold otherwise would be doing violence to the normal incidents of a partnership to which we had earlier adverted. As the parties were not partners, the defendant/appellant was clearly not liable to account to him. The learned trial Judge was therefore in error in holding that he was so liable.
The appeal is accordingly allowed and the judgment of the Onitsha High Court in Suit No. 0/67/63 delivered on 27th May, 1964, including the order as to costs, is hereby set aside. Instead, we order that the plaintiff’s claim be dismissed and this shall be the order of the court. Costs to the defendant/appellant in the court below are assessed at 60 guineas and in this court at 61 guineas.