STANDARD BANK OF NIGERIA LTD. (AS AMENDED) v THE ATTORNEY-GENERAL OF THE FEDERATION (SUIT NO. LD22A/1970) [1971] NGHC 6 (15 February 1971)

**STANDARD** **BAN****K** **O****F** **NI****GERIA** **LT****D.** **(AS** **AMEN****DED)** **(DE****FENDANT/APPELLANT)** **_v._** **THE** **ATTORNEY-GENERAL** **OF** **THE** **FEDERATION** **(PLAINTIFF/RESPONDENT)** **(1971)** **All** **N.L.R.** **388** **Div****i****si****o****n:** High Court of Lagos **D****at****e** **o****f** **Judgment:** 15th February, 1971 **C****as****e** **Num****b****er:** SUIT NO. LD22A/1970 **Before:** Taylor C.J. Appeal from Magistrate's Court. **_HELD_**** _:_** (1) When an agent has received money paid to him by a third person under a mistake of fact, if he still has the money in his hands it can be recovered. If, on the other hand, he has paid it away to his principal, then it cannot be recovered from the agent, and the only remedy is to go against the Principal. (2) What the trial Chief Magistrate had done was nothing short of giving judgment, in an action against an agent of a disclosed principal, against the principal without the latter being made a party to the proceedings. (3) The fact that the bank had in fact made a refund of £162-18 _s_ -O _d_ to the plaintiff/respondent did not in any way affect the liability on the claim before the court. **_OB_**** _I_**** _T_**** _E_**** _R_**** _:_** Different considerations would have applied if the agent in the circumstances of this case still had in his possession the money mistakenly paid in by the plaintiff/respondent on behalf of the Bank's principal. _App_ _e_ _a_ _l_ _a_ _ll_ _o_ _we_ _d_ _:_ _J_ _u_ _dgm_ _e_ _n_ _t_ _o_ _f_ _l_ _o_ _we_ _r_ _Co_ _u_ _r_ _t_ _s_ _e_ _t_ _a_ _s_ _id_ _e_ _:_ _J_ _u_ _dg_ _m_ _en_ _t_ _o_ _f_ _d_ _i_ _sm_ _i_ _ss_ _a_ _l_ _e_ _n_ _te_ _r_ _ed_ _._ _Cas_ _e_ _referre_ _d_ _to_ _:_ _Gowe_ _r_ _s_ _v_ _._ _Ll_ _o_ _yd_ _s_ _&_ _N.__P_ _.F_ _._ _B_ _a_ _n_ _k_ (1938) 1 A.E.R. 766. APPEAL from the Magistrate's Court SUIT NO. LD22A/1970 _Bentley_ for the Defendant/Appellant. _Inyang_ for the Plaintiff/Respondent. Taylor, C.J.:-The plaintiff, now respondent, sued the defendant for the sum of £409-2 _s_ -6 _d_ as monies paid to the account of one Mr Nnawuchi with the defendant bank as salary for the months of November, 1966 to March 1967, and a small sum in respect of salary for October, 1966. The fact of payment in of the sum claimed was not in dispute nor was the fact that the aforesaid Mr Nnawuchi was not entitled to these sums disputed in view of his no longer being in the service of the Government of the Federation at the relevant period. The evidence of the appellant went also to show, and this was also conceded on appeal by Mrs Omotosho for the respondent, that when the appellant bank received Exhibit B asking them in effect not to pay out any amount standing to the account of Mr Nnawuchi i.e. on 8/6/67 the said account stood at a debit. Exhibit "H" in this respect shows that on 8th April, 1967 the account of Mr Nnawuchi was "in the red" to the tune of £7-1 _s_ -9 _d_. It is an obvious conclusion then that all the sums paid in by the respondent to the credit of Mr Nnawuchi for the months in respect of which the claim is made, had, by the 8th April, 1967 been not just withdrawn but overdrawn. The sole issue for me to decide here is really a very simple one, and is whether the appellant bank can be sued in respect of the payment made in the circumstances above stated where it is also shown that other monies are paid into the account from sources other than the present respondent? To put it in problematic form-A under a mistake of fact pays money into B's account with C Bank. B withdraws that money leaving his account in debit. Subsequently D pays money into B's account with the same bank or B pays money into his account from other sources. A now realising his error wishes to reclaim the sum or sums so mistakenly paid. Is his remedy against the bank who no longer hold any of the money paid in by A, or is his action against B and if necessary joining the bank C or against C by way of garnishee proceedings? Mr Bentley for the appellant made reference to the statement of the law contained in the 5th Edition of Paget's Law of Banking at page 254 where it is said that:- "The other position barring the recovery of money paid under mistake of fact is where it has been innocently received by an agent, and that agent, before notice of the mistake, has paid it over to his principal, or otherwise materially and irrevocably altered his position." The same principle of law is stated in different words in the Third Edition of Volume 1 Halsbury's _Laws_ _of_ _England_ at page 233 para 522 as follows:- "But if a third person pays money to an agent under a mistake of fact, or in consequence of some wrongful act, the agent is personally liable to repay it, unless, before the claim for repayment was made upon him, he has paid it to the principal or done something equivalent to payment to his principal." So clear is the law on this subject that in the case of _Gowers_ _v._ _Lloyds_ _&_ _N.P.F._ _Bank_ 1938 1 _A.E.R_. 766 to which I was referred by Mr Bentley, the Master of the Rolls sir Wilfred Greene said at page 773 of the report that:- "It cannot be contested, and, indeed, it is not contested, that, _w_ _h_ _e_ _r_ _e_ _a_ _n_ agent has received money paid to him by a third person under a mistake of fact, if he still has the money in his hands it can be recovered. If, on the other hand, he has paid it away to his principal, then it cannot be recovered from the agent, and the only remedy is to go against the principal. In that particular case the mistake of fact was one as to the identity of the person into whose account the money was paid, as distinct here from a mistake merely as to a state of fact only within the knowledge of the respondent i.e. as to whether the payee was or was not still in the (employ) of the respondent. Sir Wilfred Greene M.R. continued the above quotation in these words:- "It is said here that the agents, the bank, are not entitled to rely on the second branch of that proposition, because they have not in fact paid that money to their principal. It is said that the principal for whom they purported to act was Mr Gibson, and they have not paid the money to Mr Gibson, but to some fraudulent person who was masquerading as Mr Gibson. With all respect to that argument, it appears to me to be based upon a fallacy. The bank was instructed by a person, whose identity has not been ascertained, who purported to be Mr Gibson, and the bank acting for that person, and as the agent of that person, received the money. They supposed that their principal was Mr Gibson. In point of fact, he was not. But that does not, in my opinion, alter the fact that that person who actually sent the instructions was their principal. The fact that they thought he was somebody else does not alter the fact that it was that person for whom they were acting. It is to that person that they have paid away the money. In those circumstances, it appears to me that the fact that they were mistaken in thinking that their principal was Mr Gibson is quite irrelevant. I have quoted _in_ _extenso_ from the judgment because the principle stated therein though really quite an obvious and a simple one is nevertheless of extreme importance, and more so in view of the number of cases that have come before my Court of similar instances of alleged mistakes of fact by government departments paying ex-employees long after they had ceased to be employed by the Government. I do not know on what principle the Learned Chief Magistrate based his decision that:- "The statement of account of Mr Nnawuchi as it is presently standing as at March 22nd, 1968 Credit-£14-11 _s_ -3 _d_. This amount is all that plaintiff could rightly claim... But as to the amount of £14-11 _s_ -3 _d_.now standing to the credit of the said Mr Nnawuchi I give judgment to plaintiff." In short what the Learned Chief Magistrate has done is nothing short of giving judgment, in an action against an agent of a disclosed principal, against the principal without the latter being made a party to the proceedings. Different considerations would have applied if the agent in the circumstances of this case still had in his possession the money mistakenly paid in by the respondent on behalf of the Bank's principal. The fact that the bank had in fact made a refund of £162-18 _s_ -0 _d_ to the respondent does not in any way affect the liability on the claim before the court. For these reasons the judgment of the court below is set aside and a judgment of dismissal is hereby entered. I shall hear the parties on costs. _M_ _r_ _B_ _e_ _nt_ _l_ _ey_ _:_ I ask for 15 guineas only. _Mr_ _I_ _nyang_ : Has nothing to say on costs. _Court_ : Costs assessed at 15 guineas to appellant. _Appeal_ _allowed:_ _Judgment_ _of_ _lower_ _Court_ _set_ _aside:_ _Judgment_ _of_ _dismissal_ _entered._