CORAM
ELIAS JUSTICE, SUPREME COURT
LEWIS JUSTICE, SUPREME COURT
UDOMA JUSTICE, SUPREME COURT
PARTIES
UNITED NIGERIA INSURANCE COMPANY APPELLANTS
RESPONDENTS
AREA(S) OF LAW
SUMMARY OF FACTS
The plaintiff, an insurance company, wrote a cheque in favour of Mr. Olatunde Odubiyi, in settlement for his insurance claim for his client. The plaintiff claimed against the defendant, damages for the negligence of the defendant in paying money to a fictitious account without proper inquiry to the identity of the customer.
HELD
The Supreme Court held that the defendant/appellant bank was negligent.
ISSUES
Whether no negligence had been proved against the defendant bank.
RATIONES DECIDENDI
LIABILTY OF A BANK TO INQUIRE INTO THE IDENTITY OF A CUSTOMER
“if X draws a crossed cheque, marked “A/c Payee Only” on the Y bank in favour of Z and sends it by ordinary post in the course of which is stolen and comes into Ws hands who personates Z by forging his signature and opening an account with a banker with the stolen cheque, the banker will be liable in negligence and will not be protected under Section 82 of the Bills of Exchange Act, 1882 if he fails to make necessary inquiry about Ws identity or character before collecting the cheque for Ws account” Per ELIAS, CJN
CASES CITED
Lloyds Bank v. Savory & Co. (1933) AC 201
Ladbroke & Co. v. Todd (1914) 11 LT 43
STATUTES REFERRED TO
Bills of Exchange Act, 1882