Division: IN THE HIGH COURT, KUMASI
Date: 24 NOVEMBER 1964
Before: SOWAH J
JUDGMENT OF SOWAH J
The facts of this case are simple. The defendant is a customer of the plaintiff bank (hereinafter called the bank) and holds pass-book No. I.D. 88855 issued to him by the bank. The system by which savings accounts of illiterates are kept by the bank has been explained by the representative of the bank in evidence and I do not propose to recount it. In the case of this particular defendant, I was informed that before opening his account, finger print impressions of all the fingers of his right hand were taken and the first deposit of £G100 was entered into the savings pass-book which was given to him.
A ledger account was also opened which was always in the custody of the bank. When the defendant wants to deposit any moneys, a slip is filled in, such as the slips tendered in evidence, and if he is paying in the account himself, his thumb print impression is taken of the right thumb and the amount deposited is entered into his pass-book and later an entry is made in the ledger. If the defendant wishes to withdraw any amount, a slip is filled in for him and impressions are taken of all the fingers of the right hand, the amount he wants to withdraw is entered in the pass-book and then entered in his ledger account.
The bank says that on 4 April 1961, 12 April 1961 and 13 April 1961 they credited the defendant’s account with the sums of £G200, £G150 and £G186 2s. respectively through a mistake of fact, namely through forgeries perpetrated in the defendant’s pass-book and ledgers which forgeries made the bank believe that the sums on the dates shown were deposited with the bank by the defendant, when in fact no such deposits had been made by the defendant.
As a result of one Madam Adjoa Pokua coming to withdraw a sum which she had deposited with the bank, the forgeries were discovered and one Badu a bank counter clerk was successfully prosecuted and convicted and is serving a term of imprisonment. Entries had been made both in the pass-book of the defendant and in his ledger account with the bank which gave the impression that the deposits had been made when in fact there had been no such deposit. From 4 April to 4 May the defendant was enabled to withdraw all those amounts which totalled £G536 2s.
The defendant says that in or about February 1961 he purchased a vehicle for a brother of his and opened a savings account in his own name with an initial deposit of £G100. He handed his pass-book to the brother who was to put into the savings account earnings from working the vehicle. It is of interest to note that apart from the initial deposit of £G100 made on 18 February, the sums paid in thereafter, i.e. from 15 February to 3 April were between £G7 and £G11. The defendant admits that he did not pay in the sums of £G200 on 4 March 1961; he did not pay the sum of £G150 on 12 April nor did he pay in £G186 2s. on 14 April 1961. He, however, admits withdrawing the various sums totalling £G536 2s. He says that between
the period 4 April to 12 April he went to the bank with his brother and withdrew these sums in his pass-book.
His brother was not called to give evidence and no explanation has been given for his absence. But examining the defendant’s story, it is quite obvious to me and should be obvious to any reasonable man, be he illiterate or otherwise that the vehicle would be incapable of earning within a matter of ten days the sum of £G536 2s. In my view he must have been aware that he was withdrawing moneys which did not belong to him and was doing so quickly before any discovery was made. From the evidence before me I am satisfied that the defendant did not deposit these amounts nor were they deposited by any agent or brother of his and that the defendant was enabled to withdraw these amounts which he admits he withdrew by reason of the forgeries perpetrated on his employers by their servants.
The defendant has however raised a number of legal defences. First he has submitted that there was no mistake of fact on the part of the bank. In my view there was such a mistake of fact. Owing to the activities of Badu the bank was under the impression that the defendant had deposited these amounts. The pass-book which should have been in the possession of the defendant showed that the moneys had been deposited, the ledger account which was in the possession of the bank showed that the bank was indebted to the defendant in the sums withdrawn. In other words, the defendant is entitled to payment of the sums he withdrew, but in truth, the defendant had made no such deposits and was not entitled to the withdrawals. The mistake on the part of the bank emanated from the forgeries and falsifications by their servant.
The second legal defence was that even if there was a mistake on the part of the bank the defendant was relying on the principle that entries made in a pass-book by the bank are “statements on which a customer is entitled to act.” See Akrokerri (Atlantic) Mines v. Economic Bank.1 This statement taken from its context is misleading. In any case in British and North European Bank Ltd. v. Zalzstein,2 Sankey J. said3:
“I do not think it can be dogmatically asserted that an entry made in a pass book is in all cases conclusive and binding on the bank, or conclusive or binding on the customer, but each case must be judged on its own particular facts, although the customer in whose favour the entry stands starts with the advantage that prima facie it is an admission by the bank in his favour, which cannot in some cases be rebutted.”
I adopt this passage. The defendant’s conduct in this instance cannot stand scrutiny. First of all no explanation has been given by him how Badu got hold of his pass-book which should have been in his possession. Secondly, he admits that he did not deposit these amounts. And as was said before, his brother was not even called to say if he had made any deposits or just how it came about that the pass-book got into the hands of the fraudulent Badu. For the whole of February and March 1961 he made only one withdrawal, yet from 4 April 1961 to 12 April 1961 the defendant made over four withdrawals of sums which he had not deposited.
In my view if these deposits had remained in the defendant’s pass-book for a long period, the defendant may perhaps have been able to hide behind the principle that he was led to believe that the moneys were his and could be drawn upon. It may also be that if the defendant had been operating a large account and there were these mistakes, he might not have discovered them and thus thought he was legitimately entitled to withdraw them.
I am of the view that the speed with which the defendant withdrew these amounts as they appeared in his pass-book is an indication that he was aware that these moneys did not belong to him and that he was making hay while the sun shone.
The third legal defence is that the bank is estopped by their conduct from claiming the amount involved, since the defendant has parted with the moneys which he withdrew and has paid it to R.T. Briscoe. For this proposition the defendant relied on Holt v. Markham.4 Firstly the decision in this case turned on the premises that there was no mistake of fact by the plaintiffs and that their mistake was one of law arising out of their own misinterpretation of various war-time regulations affecting officers of the Royal Navy and the Royal Air Force. Further that the plaintiffs were estopped because they waited too long before making their demand for refund and even when the demand was made and the defendant disputed the demand the plaintiff again said nothing about the matter for some time.
The Court of Appeal in England held that judging from the conduct of the parties, the defendant having done nothing to induce the mistake of the plaintiff, the long wait by the plaintiffs, a period of over twenty months before making the demand, the defendant disposing of the war bonds, then the plaintiffs were estopped from making their demand. In any case the mistake is one of law and not of fact. The Holt case (supra) depends upon its own particular facts, especially with respect to the conduct of the plaintiffs.
In this case the only conduct the defendant relies upon is that he has already made use of the money. The bank was not even given the chance to make a discovery of the falsifications, the money evaporated as quickly as it was put in and on discovery the evidence shows that the bank acted promptly. In the case of Jones Ltd. v. Waring & Gillow,5 Viscount Cave L.C. even though dissenting, made the following observation on the principle of estoppel, which principle was vigorously canvassed in the case but rejected by all the law lords,6 “It is true that, where the payee has done nothing more than to expend the money on his own purposes, that has been held to afford no defence . . . but this may be because the payee has suffered no real detriment.”
In the case at hand the defendant produced two receipts to show that he made payments to R.T. Briscoe with some of the moneys he withdrew. I do not see how the defendant could be said to have suffered any detriment. Before opening the savings account he was already indebted to R.T. Briscoe as a result of the purchase of the vehicle; consequently he was bound to pay the instalments as they fell due. I do not see how, without effrontery, he could maintain that he suffered detriment for doing what he should do, failing which an action would be maintained against him for the non payment of his debts. Therefore I hold that the defence of estoppel fails.
The defendant has still more ammunition in his armoury and has relied upon the case of Lloyd v. Grace, Smith & Co.7 The principle in this case is that a principal (for that matter an employer) is responsible for the fraud of his agent or servant committed in the course of his duties or on his master’s business, though no express command has been given by the master or privity of the master proved. It appears to me that there has not been a proper appreciation of this case. The principle deals with a servant or an agent who in the course of his duties perpetrates a fraud on a third party who had either gone to do business with the servant for his master, which business is within the scope of the servant’s authority, or has been held out by his master to be within his scope of authority or duties, though in fact he was not.
The facts in the Lloyd case (supra) were that one Sadles was the managing clerk for the firm of solicitors practising under the style and name of Grace, Smith & Co. A woman, Mrs. Lloyd, went to consult the said firm and saw the said Sadles who inter- viewed her. In brief, she wanted to sell some properties. She was induced to part with the title deeds and the managing clerk sold the properties and pocketed the proceeds. The fraud was discovered, Sadles was prosecuted and Mrs. Lloyd took action against the firm. She was successful because it was held that a principal was liable for the fraud for his agent acting within the scope of his authority, whether the fraud was committed for the benefit of the principal or for the benefit of the agent.
To illustrate that principle from the evidence in this case, Madam Adjoa Pokua paid in the sum £G186 2s. to Badu, the fraudulent clerk, who did not enter the amount into her ledger, although he did enter it in her pass-book. If Badu had pocketed the money, or as in this case, assisted the defendant to withdraw the amount the conduct of Badu would have been a fraud on Madam Adjoa Pokua. Nevertheless the bank had put Badu there as a person to whom deposits could be made and Madam Adjoa Pokua could therefore recover the money she deposited from the bank. In other words, the bank must be held responsible for the fraud of Badu. But where the fraud of the servant is on the master, as in this case, the master could recover any loss sustained by him from the servant and if the property lost can be traced to a third party, the master in certain cases may recover it. Badu’s fraud is on the bank and on no one else in this case.
If Badu instead of forgeries stole jewellery which had been entrusted to the bank and had handed or sold the same over to a third party the bank would have been entitled to recover the jewellery from the third party. The third party would not be heard to say that the bank is responsible for the fraud of his servant and therefore the jewellery is irrecoverable. I consider that there is no defence to the bank’s action. I do not believe that there was any brother who was making payments as alleged, in my view this was a story invented to cover the activities of the defendant vis-a-vis the forgeries and falsifications committed by Badu.
DECISION
I will therefore give judgment for the plaintiffs in the sum of £G536 2s. with cost of 60 guineas.
Judgment for plaintiffs.
T. G. K.
