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AMADU FULANI AND OTHERS
V.
BANK OF BRITISH WEST AFRICA, KUMASI
WEST AFRICAN COURT OF APPEAL, HOLDEN AT ACCRA, GOLD COAST
23RD DAY OF MARCH, 1953
W.A.C.A NO. 34/52
2PLR/1953/48 (WACA)
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OTHER CITATION(S)
2PLR/1953/48 (WACA)
(1953) XIV WACA PP. 292 – 294
LEX (1953) – XIV WACA 292 – 294
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BEFORE THEIR LORDSHIPS:
FOSTER-SUTTON, P.
COUSSEY, J.A.
KORSAH, J.
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BETWEEN:
AMADU FULANI AND IBRIHIM KANO, ADMINISTRATORS OF THE ESTATE OF MOHAMA DANTANTIN DECEASED AND MAHAMON LAWRA KANO AND FATI KANO INFANTS BY THEIR GUARDIAN AMADU FULANI – Appellants
AND
BANK OF BRITISH WEST AFRICA, KUMASI – Respondents
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ORIGINATING COURT(S)
Appeal by plaintiff:
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REPRESENTATION
E. P. Cawston — for Appellants
J. W. Mead — for Respondents
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ISSUE(S) FROM THE CAUSE(S) OF ACTION
ESTATE ADMINISTRATION AND PLANNING:- Will with trusts – Testator leaving property to executor in trust for his children – Executor opening an estate account – Executor drawing cheques in breach of trust – Bank without notice of trusts – How determined
BANKING AND FINANCE:- Banking operations – Claim against Bank in negligence – Honouring checks endorsed by Executor/trustee on account for a deceased estate – Evidence Bank had no “trust department,” and had never acted as trustee and it was their general practice to open an ordinary estate account – Evidence there was no evidence that the trust was expressly brought to bank’s notice
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CASE SUMMARY
By his will the deceased left his property to his executor in trust for his children. The executor took out probate and produced the probate and the will to the Bank, where he opened an “Account of Estate of M.D. deceased”, to which he transferred the money found in the deceased’s name; and in breach of trust he drew cheques on the estate account, which he nearly exhausted. When the executor died, administrators were appointed, and they with the children’s guardian sued the Bank for negligence on the ground that the Bank became or should have become aware of the trust and ought not to have allowed the breaches. The defence was, briefly, that the Bank, though having a copy of the will, did not know of the trust and honoured cheques on what was merely an estate account, as they were bound to do. The action was dismissed and the plaintiff appealed.
According to the evidence the Bank had no “trust department,” and had never acted as trustee; and it was their general practice to open an ordinary estate account. There was no evidence that the trust was expressly brought to their notice.
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DECISION(S) OF THE WEST AFRICAN COURT OF APPEAL
Held (dismissing the Appeal) that:
1. On the evidence the Bank could not be held to have known of the trust or to have had notice of it by the mere production of the will and probate, or to have had a duty to make inquiry into the purposes of the estate account when opened by the executor.
2. The Bank was bound to honour his cheques as his debtor on the account, and in honouring them incurred no liability to any third person with whom the Bank had no contract either express or implied.
Case cited:-
(1) Ex parte Adair, In re Goods, 1871, 24 L.T. 198.
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MAIN JUDGMENT
The following judgment was delivered:
KORSAH, J.
By the will of Mohama Dantantin, who died on 6th December, 1943, Adamu Sokoto was appointed executor and trustee, and on 6th January, 1944, probate of the said will was granted to the said Adamu Sokoto. He later produced the said will and probate to the defendants’ representative in charge of their bank at Kumasi, with which branch the testator had, during his lifetime, an account. He was informed that the testator had the sum of £4,895 3s. 2d. standing to his credit in their books. At the request of the said Adamu Sokoto, defendants opened a new account in their books known as “Account of Estate of Mohama Dantantin deceased”, and transferred the sum of £4,895 3s. 2d., balance then standing to the credit of the deceased, to that account. Thereafter the said Adamu Sokoto operated on the said estate account by drawing cheques on it, from time to time, until he also died on 1st June, 1948. It was then found that the balance standing to the credit of the Estate of Mohama Dantantin, deceased, was £90 10s. 7d.
Plaintiffs, as administators de bonis non of the Estate of Mohama Dantantin, deceased, have sued the defendants claiming £5,513 damages for negligence. Plaintiffs contend that upon production of the will and probate to the defendants on or about 7th January, 1944, defendants became aware of the trust created under the will, and henceforth they were in duty bound not to allow the executor and trustee to draw money from the estate account of Mohama Dantantin for purposes inconsistent with the trust, and further that defendants should not have allowed the trust money to remain on current account yielding no interest. On his death, the testator left two sons and one daughter, all of whom were at the time minors; he therefore gave directions in his will with respect to them. The relevant portions of the said will are as follows:-
“Clause 3.-1 hereby devise to my executor in trust for my children, namely Ibrahim Kano, Mahaman Lawan Kano and Fati Kano my house situate on plot No. 21, etc., Kumasi and my house situate at Bogosu.
“Clause 4.-I hereby bequeath to my executor in trust for my children (names) my touring car.
“Clause 6.-I hereby bequeath to my executor in trust for my said children (names) all my money in the Bank of British West Africa Ltd., Gold Coast and Ashanti or elsewhere in British West Africa.
“Clause 8.-I hereby charge my executor to use what money is reasonable out of my estate to look after my children until the eldest of them becomes of age.”
Defendants admit the said will together with the probate annexed thereto was produced to a representative of their branch at Kumasi, but they deny that they thereby became aware of the provisions thereof, before the opening of the estate account, nor do they admit that the estate account was opened as a trust account. They further deny that they had knowledge of any of the purposes for which the drawings were made by the said Adamu Sokoto on the estate account, but say that they honoured the cheques presented by the said Adamu Sokoto in the ordinary course of business without enquiry as to the purpose of the drawings, as they were bound to do; that in honouring the said cheques they had no notice of any breach of trust by the said Adamu Sokoto. They also deny that upon the production of the will to their representative aforesaid, they became ipso facto under a duty to control the executor in the discharge of his duties under the said will.
There is evidence on record which proves that the defendants have no trustee department in this country, that they did not regard themselves as trustees when the account was opened, and in fact the account was not opened as a trust account, but merely as an estate account. It was further proved that all the amounts withdrawn from the estate account were withdrawn by Adamu Sokoto. Plaintiffs’ claim is based on the allegation that the defendants either knew or should have known that the money with which Adamu Sokoto opened the estate account was trust money. To prove this they called two witnesses, the first was the manager of defendants, and the second witness was one of the plaintiffs. First witness for the plaintiffs inter alia testified as follows:-
“On 7th January, 1944, balance transferred to estate account. Sokoto produced probate of the will. A copy was filed. The bank was in a position at any time to look at the terms of the will. It is the practice to open executor’s account named after deceased.”
In my opinion, the main issues to be determined before deciding the liability or otherwise of the defendants in this suit are:-
(a) Had the defendants knowledge at the time the account was opened that the money which was transferred to the estate account was trust money?
(b) If not, should they have known, or was it their duty to have made enquiries to find out what the account was intended for, beyond the statement of the executor?
(c) Was the mere production of the will and/or probate to the defendants, prior to opening of the estate account, sufficient notice to defendants of the trust?
Upon very careful consideration of the whole of the evidence, and the admissions of the defendants, I have no doubt whatsoever that the answers to these questions must be in the negative. The defendants had not held themselves out to the public that they had a “Trust Department”; there is no evidence that they had previously acted as trustees for anyone in this country. Upon the production of the will and/or probate, they treated Adamu Sokoto merely as an executor; in that belief and acting upon his instructions, defendants opened an ordinary estate account for the estate of Dantantin, deceased, according to their general practice. In the absence of evidence that at the time the estate account was opened it was expressly brought to their notice that the money was trust money and that a trust account should be opened, the defendants cannot be held to have known the object for which the account was being opened. Had this been brought to their notice they would in all probability have advised the applicant what to do, as they had no Trustee Department in the country.
Defendants as bankers were normally the debtors of Adamu Sokoto as executor of the estate of Dantantin, and they were bound to discharge their indebtedness by honouring his cheques issued in the name of the estate. In discharging this duty, they incurred no liability to any third person with whom they had neither expressly nor impliedly entered into any contract. In the case of Ex parte Adair, In re Goods (1), which counsel for plaintiffs cited in support of plaintiffs’ claim, the following principles of law were enunciated:-
“By the terms of the contract between them, a banker is bound to honour his customers’ drafts, and doing so is freed from all responsibility to anyone. But if by the terms of the contract, expressed or implied, the banker takes into his possession moneys of which the customer has become the owner in a fiduciary character, he contracts the obligation not to part with them for purposes which he knows are inconsistent with that fiduciary character.”
When, therefore, a customer has opened with his bankers separate accounts, specially headed with the names of the trusts to which the moneys paid into those accounts belong, the bankers are not at liberty, upon the bankruptcy of the customer, to apply those moneys in payment of the customer’s overdrawn account.
A banker holding securities which have been deposited with him by way of equitable mortgage must deliver up the securities upon being paid the amount covered by the deposit.
It will be seen that none of the principles enunciated in the above cited case is applicable to this suit. All the other cases cited were cases in which there was clear evidence of knowledge of the bankers of the existence of the trust.
For these reasons I consider that this appeal should be dismissed.
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FOSTER-SUTTON, P.
I concur.
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COUSSEY, J. A.
I concur.
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Appeal dismissed.