GLOBAL SOAP AND DETERGENT IND. LTD. & ORS. V. GEN. S.T. BELLO & ANOR.
(2011)LCN/4958(CA)
In The Court of Appeal of Nigeria
On Monday, the 5th day of December, 2011
CA/IL/3/2010
LIABILITY OF AN AGENT : WHETHER AN AGENT OF A DISCLOSED PRINCIPAL WILL INCUR LIABILITY FOR CONTRACTS ENTERED IN THE SCOPE OF HIS AUTHORITY
In the case of Alhaji Isa Bayero vs. Mainasara & Sons. Ltd. (supra) this Court Per Ariwoola, JCA (as he then was) @ p.431 – 432, particularly at paragraphs G – G held that: “I am therefore satisfied, that the respondent was aware that the appellant was merely acting as an agent for his disclosed principal, who was their party, U.N.C.P. The general law is that a contract entered by an agent acting in the scope of his authority for a disclosed principal is in law the contract of the principal, and the principal but not the agent, is the proper person to sue or to be sued, upon such contract. In the instant case as the chairman of the party when the contract was entered by the appellant, he was merely acting as agent of the principal Agency has been described as a fiduciary relationship created by express or implied contract or by law, in which one party (the agent) may act on behalf of another party (the principal and bind that other party by words or action. An agent therefore is one who is authorized to act for or in place of another, a representative. Generally speaking, anyone can be an agent who is in fact capable of performing the function involved. The agent normally binds not himself but his principal by the contracts he makes. See Black’s Law Dictionary, 8th Edition pages 67 & 68. In Ogbonnaya N. Godwin vs. Christ Apostolic Church (1998) 14 NWLR (Pt.584) 168 the Supreme Court held that the term “agent” includes any person who acts for another in a capacity of deputy, steward, rent collector or any other agent or trustees I am satisfied that there was enough evidence before the Lower Court, from the affidavits and various exhibits, to convince the trial judge that indeed the proper party to be sued was not before the court Any agent acting on behalf of a disclosed and known principal, as in the instant case, is not liable for his acts of agency. Only the principal should be liable.”) A cursory look at the decision reproduced supra will leave no one in any doubt that the 2nd to the 4th’ appellants fall within the definition and the circumstance of the above case in which the court had rightly decided. See Iwuchukwu vs. Nwizu (1994) 7 NWLR (Pt.357) 379 @ 396. Per Uwais JSC (as he then was). In the case of Yesufu vs. Kupper International N.V. (1996) 5 NWLR (Pt.446) 17 @ 28 – 29 Para. H – B, the apex Court Per Kutigi JSC, (as he then was) held pointedly thus: “I have no doubt in my mind at all that as Chairman/Director of the 2nd appellant, the 1st appellant was in the eyes of the law an agent of the company for which he acted and the general principle of law of principal and agent would generally have applied. Thus where a director enters into contract in the name of or purporting to bind the company. It is the company the principal which is liable on it, not the director. The director is not personally liable unless it appears that he took personal liability. Even where a director contracts in his own name but really on behalf of the company, the other party to the contract can generally on discovering the company is the real principal, sue the company as undisclosed principal on the contract”. Again, the apex Court in the case of Osigwe vs. P.M.C.L. 1 – 2 S.C. (Pt.1) p.79. The Supreme Court Per Ogbuagu JSC held that; “this is why it is now firmly established that a defendant acting on behalf of a known and disclosed principal, incurs no liability, even where the disclosed principal is a foreigner. See the case of Khonan vs. John (1939) 15 NWLR 12; Niger Progress Limited vs. NEL Corpa (supra) and Calen (Nig.) Ltd. vs. University of Jos (1994) 1 NWLR (Pt.323) 631 @ 636 C.A where it was held that as a general rule, a contract made by an agent acting within the scope of his authority for a disclosed principal, is in law, the contract of the principal and as such, the principal and not eth agent, is the proper person to sue or be sued upon the contract. PER TIJJANI ABDULLAHI, J.C.A
NON-JOINDER OF PARTIES: EFFECT OF NOT JOINING PERSONS WHO WERE NEITHER NECESSARY NOR DESIRABLE PARTIES TO THE CLAIM BEFORE THE LOWER COURT
It can be seen that failure of the 2nd to 4th Defendants (Appellants) to be parties in the Respondents’ case at the lower court, cannot defeat effective and final determination of the issues in the case between the claimants and the 1st Defendant, (Respondents and 1st Appellant) in this Appeal. To that extent, the 2nd to 4th Appellants were not necessary and desirable parties to the claim before the lower court (GREEN VS GREEN (1987) 7 SCNJ 212; Gbadamosi vs Dairo (2001) 11 WRN 129; Fawehinmi vs NBA (No.1)(2001) 50 WRN 133). PER ITA GEORGE MBABA J.C.A
JUSTICES
TIJJANI ABDULLAHI Justice of The Court of Appeal of Nigeria
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
ITA GEORGE MBABA Justice of The Court of Appeal of Nigeria
Between
GLOBAL SOAP AND DETERGENT IND. LTD. & ORS. Appellant(s)
AND
GEN. S.T. BELLO & ANOR. Respondent(s)
TIJJANI ABDULLAHI, J.C.A, (Delivering the Leading Judgment): On the 12th January, 2009, at the Kwara State High Court of Justice, Ilorin, the Plaintiff/Respondent filed a writ of summons on the undefended list procedure for and on behalf of himself and Fossil Petroleum Nigeria claiming the under listed reliefs against the defendants/appellants. The writ of summons reads thus:
“The claimant’s claim against the defendant(s) jointly and or severally is for:
1. The sum of N1,320,000.00 (One Million, Three Hundred And Twenty Thousand Naira) only.
2. The cost of this suit.
3. 10% interest per annum on the judgment sum from the date of judgment till judgment is finally liquidated.”
The facts of the case briefly stated are that: During the course of hearing, the claimant/Respondent sought the leave of the trial Court to join Fossil Petroleum Nigeria Ltd. as co-claimant in the suit which the defendant did not oppose (see page 49 of the record).
The defendants /appellants filed a notice of preliminary objection on 25th February, 2009, asking for an order of the trial Court striking out the names of 2nd, 3rd and 4th defendants alleging that they are mere agents of the 1st defendant. In a ruling delivered on the 14th of May 2009, the learned trial Judge, I.B. Garuba (J) refused to strike out the names of 2nd to 4th defendants/appellants herein he held that:
“In fact, the 2nd, 3rd and 4th defendants in my humble view are like fingers with which the 1st defendant used to feed and lift objects of its interest and therefore cannot be severed from this case. Having found them effectually desirable for a successful resolution of this case, and I accordingly decline to strike out their name from this suit.”
Aggrieved by the ruling of the learned trial judge, the appellants approached this Court and expressed their dissatisfaction by filing a notice of appeal which carries two grounds of appeal and sought for the followings:
1. “An order of the Court allowing the appeal and setting aside the ruling of the lower Court delivered on 14/5/2009, and to strike out the 2nd, 3rd and 4th appellants from the suit”.
On 11th October, 2011, counsel for the parties adopted their briefs of argument. Learned counsel for the appellants adopted their brief dated 8th day of June, 2010 and filed on the 10th of June, 2010. He also filed a Reply Brief dated and filed on 28th/07/2011. Learned counsel adopted the two briefs and urged us to allow the appeal and set aside the Judgment of the lower Court.
Learned Counsel for the respondents also adopted their ‘brief dated and filed on 12th July, 2010. He urged us to dismiss and affirm the decision of the lower Court
In a brief settled by Tosin Alawode, appellants distilled two issues for determination from the two grounds of appeal as follows:
1. Whether by the originating process and other processes before the lower court, the 2nd 3rd and 4th appellants are not mere agents of the 1st appellant whose names where liable to be struck out.
2. Whether there existed conflicts in the Affidavits of the appellants which could make the lower Court jettison same.
The first issue is said to arise from the first ground of appeal while the second arises from the 2nd ground.
For his part, Learned Counsel for the respondents formulated two issues for determination to wit:
1. “Whether 2nd, 3rd and 4th defendants/appellants are not necessary parties to the just determination of the Claimants/Respondents’ case having regard to the entire circumstances surrounding this case.
2. Whether the trial Court was right, proper (sic) and justified when it dismissed the defendants/appellants’ preliminary objection in its considered ruling delivered on 14th May, 2009.
Learned Counsel did not relate the issues with the two grounds of appeal but the appeal can be determined by giving consideration to the first issue as distilled by the appellants. It is in the light of this issue that the appeal will be considered and determined.
ARGUMENT OF THE ISSUE
The first issue distilled by the appellants as earlier set out is:
WHETHER BY THE ORIGINATING PROCESS AND OTHER PROCESSES BEFORE THE LOWER COURT, THE 2ND, 3RD AND 4TH APPELLANTS ARE NOT MERE AGENTS OF THE 1ST APPELI.AMT WHOSE NAMES WHERE LIABLE TO BE STRUCK OUT,
Learned Counsel for the appellants, after quoting extensively from the judgment of the Lower Court, contended that, the said Judgment was made in capacity total and grave error, disregarding the capacity of the parties before him and making a case for a future financial commitments and expenses of the respondents even when it appeared to him that the 2nd, 3rd and 4th appellants are not necessary parties to the suit.
Learned counsel further contended that in determining the case of’ this nature, recourse had to be made to the writ of summons and the statement of claim. Learned counsel copiously referred to paragraphs 4 – 7 (particularly 7-(a-h) of the Affidavit in support of the originating summons and the Exhibits attached thereto and submitted that it is clear from the contents of those paragraphs that 4th appellant, Timothy Ihimoya acted for the 1st appellant and while doing this, other respondents were not in doubt of who was actually in need of the product. He relied on the case of Alh. Isa Bayero vs. Mainasa and Sons Ltd. (2006) 8 NWLR (Pt.982) 391 to support his submission.
It is the submission of the learned counsel that the 2nd defendant though an Executive Director of the 1st defendant and by that simple reason cannot incur any liability of the 1st defendant’ He relied on the cases of Iwachukwu vs. Nunzu (1994) 7 NWLR (Pt.357) 379 @ 396; Yesufu vs. Kupper International N.V. (1996) 5 NWLR (Pt. 446) 17 @ 28 – 29 Para H – B; Maina Nominees Ltd. vs. Federal Board of Inland Revenue (1986) 2 NWLR (Pt.20) p. 48; R.O. Iyere vs. Bendel Feed and Flour Mill Limited (2008) 7 – 12 SC 151 @ 168 and Samuel Osigwe vs. PSPLS Management Consortium Construction Limited and 13 Ors. (2009) 1 – 2 S.C (Pt.1) p. 79.
Learned counsel posited that one is left to ponder on the reasoning of the trial Judge at arriving at arriving at his ruling for the only relevant deposition in the counter-affidavit of the 1st paragraph 5 of the affidavit of one Michael S.Z. Esq., on p. 36 of the record of proceedings, where he stated that:
“That the 2nd, 3rd and 4th defendants are not mere agents of the 1st defendant but participated actively in the transaction that led to this suit.”
The deponent, learned counsel posited did not say more than this and neither did he state the active participation nor how the 2nd to 4th appellants participated actively in the transaction. Learned counsel relied on Miss Adepoki Adefarasin vs. Dr. Yasser Dayakh & Anor. (2007) 11 NWLR (Pt.1044) 89 @ 120 – 121 paragraph A – C, Per Ariwoola JCA (as he then was).
Learned counsel on the other hand, submitted that the 2nd, 3rd and 4th appellants are necessary parties to the just determination considering the role they played in the transaction that led to the case. The appellants’ contention on issue of misjoinder or agents of disclosed principal does not arise in the case at hand. Learned counsel relied on the case of Okwejiminor vs. GBA Keji (2008) 5 NWLR (Pt.1079) 172 @ 224 Paras. B – C and Kennedy vs. Trafford (1897) A.C. 180 @ 188.
It is the submission of the learned counsel that the appellants want to employ the term agency in the case at hand to avoid their legal obligation ‘whereas there is no agency relationship in the case in hand. Learned counsel further submitted that it is the cardinal principle of our law of evidence that he who asserts must prove. Learned counsel further submitted that all the authorities cited by the appellants on the issue of agency are of no moment and are distinguishable from the case at hand.
Learned counsel went on to submit that in all the authorities cited, it is only the agents of disclosed principal that were sued and not the principal and agents. Their contention is not that of agency but that of parties and as long as there is nothing on record emanating from the 1st Appellant to show that 2nd -.4th Appellants are its agents, my law lords cannot infer this. He who alleges must prove. The onus is on the 1st Appellant vide documentary evidence that 2nd – 4th Appellants are her agents and not to avoid their responsibilities. Having failed to discharge this sacred duty, learned counsel went on, the 2nd – 4th Appellants arenecessary parties to this case. He relied on the case of Union Beverage Ltd vs Pepsi Cola International Ltd. (1994) 3 NWLR (Pt.330) 1 @ 17 paras E – F for his submission.
Learned counsel contended that from the pleadings of the Claimants/Respondents especially by Exhibit BEL 1 on page 7 of the record and Exhibit BEL 2 on page 45 of the record, it is clear that the 2nd to 4th Appellants are necessary parties – whose presence is mandatory for just determination of this case. The position of law is clear that anybody whom allegation has been made against shall not be guilty of the allegation unless he is given opportunity to defend himself on the allegation made against him. For Claimants to level an allegation against 2nd to 4th Appellants because of their role leading to this case and without making them parties in this case, will breach their fundamental right to fair hearing hence they are not only desirable parties but also necessary parties. In paragraphs 7(b) (d), (e) of the affidavit in support of the writ of summons on page 4 of the record, the Claimants/Respondents made serious allegation against 2nd to 4th Appellants in their personal capacity, therefore, if the Claimants/Respondents fail to make the 2nd to 4th Appellants parties to this suit will make this case incompetent to say the least. We were urged to resolve this issue in their favour.
RESOLUTION OF THE ISSUE
The bone of contention as can be gleaned from the processes filed and the reasoning of the learned trial Judge in refusing to strike out the names of the 2nd, 3rd and 4th Appellants is; whether the said appellants acted as mere agents of the 1st appellant or acted for themselves and the 1st appellant. And whether the controversy between the parties could not be effectively resolved without making them parties to the suit under consideration.
To answer these questions, recourse had to be made to the writ of summons and statement of claim and in the instant case, the affidavit in support of the writ of summons which can be likened to the statement of claim. This will settle the question of whether there was a cause of action against the 2nd to the 4th Appellants. Exhibit BEL on page 7, written by the 1st respondent, paragraph 2 thereof states that:
“The representative of your company Mr. Timotny met me and pleaded that my company Fosil Petroleum Nigeria Limited supply the product and that payment will be within 7 days. He further pleaded that the product was needed urgently for Global Soap to continue production”.
Again, on paragraph 2 of Exhibit BEL 3 on page 9 of the record of proceedings it is averred thus:
“Our client informed us that on the 16th Day of October, 2008, your company through one Mr. Timothy Ihinmoya purportedly acting on the mandate and/or instruction of Mr. Njoku (your company General Manager) pleaded and/or contracted for the supply of Diesel (AGO) 11,000 liters worth 1,300,000.00 (One Million Three Hundred and Twenty Thousand Naira) only to your company with a promise and/or undertaking to make payment for the said product within a week from 16th day of October, 2008”.
It is crystal clear from the foregoing paragraphs that the 4th appellant, acted for the 1st appellant. I am also of the firm view that 2nd to the 4th appellants were agents of a disclosed principal. The question to be asked is, what is the position and liability of an agent of a disclosed principal? In the case of Alhaji Isa Bayero vs. Mainasara & Sons. Ltd. (supra) this Court Per Ariwoola, JCA (as he then was) @ p.431 – 432, particularly at paragraphs G – G held that:
“I am therefore satisfied, that the respondent was aware that the appellant was merely acting as an agent for his disclosed principal, who was their party, U.N.C.P. The general law is that a contract entered by an agent acting in the scope of his authority for a disclosed principal is in law the contract of the principal, and the principal but not the agent, is the proper person to sue or to be sued, upon such contract.
In the instant case as the chairman of the party when the contract was entered by the appellant, he was merely acting as agent of the principal
Agency has been described as a fiduciary relationship created by express or implied contract or by law, in which one party (the agent) may act on behalf of another party (the principal and bind that other party by words or action. An agent therefore is one who is authorized to act for or in place of another, a representative.
Generally speaking, anyone can be an agent who is in fact capable of performing the function involved. The agent normally binds not himself but his principal by the contracts he makes. See Black’s Law Dictionary, 8th Edition pages 67 & 68.
In Ogbonnaya N. Godwin vs. Christ Apostolic Church (1998) 14 NWLR (Pt.584) 168 the Supreme Court held that the term “agent” includes any person who acts for another in a capacity of deputy, steward, rent collector or any other agent or trustees
I am satisfied that there was enough evidence before the Lower Court, from the affidavits and various exhibits, to convince the trial judge that indeed the proper party to be sued was not before the court
Any agent acting on behalf of a disclosed and known principal, as in the instant case, is not liable for his acts of agency. Only the principal should be liable.”)
A cursory look at the decision reproduced supra will leave no one in any doubt that the 2nd to the 4th’ appellants fall within the definition and the circumstance of the above case in which the court had rightly decided. See Iwuchukwu vs. Nwizu (1994) 7 NWLR (Pt.357) 379 @ 396. Per Uwais JSC (as he then was). In the case of Yesufu vs. Kupper International N.V. (1996) 5 NWLR (Pt.446) 17 @ 28 – 29 Para. H – B, the apex Court Per Kutigi JSC, (as he then was) held pointedly thus:
“I have no doubt in my mind at all that as Chairman/Director of the 2nd appellant, the 1st appellant was in the eyes of the law an agent of the company for which he acted and the general principle of law of principal and agent would generally have applied. Thus where a director enters into contract in the name of or purporting to bind the company. It is the company the principal which is liable on it, not the director. The director is not personally liable unless it appears that he took personal liability. Even where a director contracts in his own name but really on behalf of the company, the other party to the contract can generally on discovering the company is the real principal, sue the company as undisclosed principal on the contract”.
Again, the apex Court in the case of Osigwe vs. P.M.C.L. 1 – 2 S.C. (Pt.1) p.79. The Supreme Court Per Ogbuagu JSC held that;
“this is why it is now firmly established that a defendant acting on behalf of a known and disclosed principal, incurs no liability, even where the disclosed principal is a foreigner. See the case of Khonan vs. John (1939) 15 NWLR 12; Niger Progress Limited vs. NEL Corpa (supra) and Calen (Nig.) Ltd. vs. University of Jos (1994) 1 NWLR (Pt.323) 631 @ 636 C.A where it was held that as a general rule, a contract made by an agent acting within the scope of his authority for a disclosed principal, is in law, the contract of the principal and as such, the principal and not eth agent, is the proper person to sue or be sued upon the contract”.
Learned counsel for the respondent has made heavy weather of the contents of letters written by them to the 2nd to 4th Appellants in which the respondent pleaded with the appellants (2nd to 4th) to honour their liability and pay for the diesel supplied to the 1st appellant. With respect due to learned counsel for the respondents the contents of the letters had clearly established that the diesel in contention was actually supplied to the 1st appellant. Though in their counter-affidavit the respondents averred as follows:
“5. That 2nd, 3rd and 4th Defendants are not mere agents of the 1st defendant but participated actively in the transaction that led to this case.”
However, learned counsel for the respondents woefully failed to state how the 2nd to the 4th appellants actively participated as canvassed by him. Learned counsel for the respondents again alluded to fair hearing provided and guaranteed in the Constitution contending that failure to join 2nd to 4th Defendants/Appellants will be tantamount to depriving them of their right to fair hearing. He made the point that it would mean that the allegations leveled against them would be heard in their absence.
Let me pause at this juncture and say that at no time did the respondents level any allegation against the appellants in the portions of the letters referred to by the respondents. What the 1st Respondent told the 2nd to 4th appellants was no more than requesting them to settle the amount owed them as a result of the supply of diesel to the 1st appellant. The allegation in respect of violating the right of fair hearing of the appellants does not therefore arise.
In the light of all that has been said, I hold, the view that the 2nd to the 4th appellants are mere agents of the 1st appellant and that being the case, this issue is resolved in favour of the appellants and against the respondents.
The sole issue having been resolved in the favour of the 2nd, 3rd, and 4th appellants, the appeal succeeds and it is hereby allowed. The decision of the lower court refusing to strike out their names is set aside. The names of the said appellants being mere agents of the 1st appellant are struck out. The case is remitted back to the lower court for continuation of hearing. Each party shall bear the cost of prosecuting this appeal.
JOSEPH SHAGBAOR IKYEGH, J.C.A: I had the privilege of reading in draft the well reasoned judgment of my learned brother, T. Abdullahi, JCA, with which I am in complete agreement. I adopt same as mine. I have nothing useful to add to the said lucid judgment.
I too would allow the appeal and abide by the consequential orders stated therein.
ITA GEORGE MBABA J.C.A: I had the privilege of reading the draft of the judgment, just delivered by my learned brother, TIJJANI ABDULLAHI JCA. Everything that needed to be said about the fiduciary relationship between the 1st Appellant and the 2nd to 4th Appellants have been eloquently and exhaustively stated by his lordship in the lead judgment, to show that, as servants or agents of the 1st Appellant, the 2nd to 4th Appellants cannot be sued or held liable, personally, for their acts of agency for which their principal is also being sued. Bayero vs Mainasara & Sons Ltd (2006) 8 NWLR (982) 391; Iwuchukwu vs Nwizu (1994) 7 NWLR (Pt.357) 379 at 396; Yusufu vs Kupper International N.V. (1996) 5 NWLR (446) 17 at 28 – 29; Osigwe vs. P.M.C. (2009) 1 – 2 SC (Pt.1) 79.
It can be seen that failure of the 2nd to 4th Defendants (Appellants) to be parties in the Respondents’ case at the lower court, cannot defeat effective and final determination of the issues in the case between the claimants and the 1st Defendant, (Respondents and 1st Appellant) in this Appeal. To that extent, the 2nd to 4th Appellants were not necessary and desirable parties to the claim before the lower court (GREEN VS GREEN (1987) 7 SCNJ 212; Gbadamosi vs Dairo (2001) 11 WRN 129; Fawehinmi vs NBA (No.1)(2001) 50 WRN 133).
For this and other reasons, more elaborately articulated in the lead judgment, I too, allow the Appeal and abide by the consequential orders in the lead judgment.
Appearances
Tosin Alawode Esq,
R.A. Lawal, Rabana & Co.For Appellant
AND
Michael S.Z. Esq.
Kayode Olatoke & Co.For Respondent
