➥ CASE SUMMARY OF:
Chief F.S. Yesufu v. Kupper International N.V. (1996) – SC
by “PipAr” Branham-Paul C. Chima.
Supreme Court – SC.302/1989
➥ JUDGEMENT DELIVERED ON:
Tuesday, 2nd April 1996
➥ AREA(S) OF LAW
Dissolution of partnership;
➥ PRINCIPLES OF LAW
⦿ WHERE DIRECTOR ENTER CONTRACT FOR COMPANY, IT IS COMPANY WHO IS LIABLE
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 principles of the law of principal and agent would generally have applied. Thus where a director enters into a contact in the name of or purporting to bind the company, it is the company which is liable on it, not the director. The director is not personally liable unless it appears that he undertook 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 that the company is the real principal, sue the company as undisclosed principal on the contract. — Kutigi, JSC.
⦿ WHERE PARTNERSHIP IS DISSOLVED, PARTNER IS ENTITLED TO BE INDEMNIFIED
Where a partnership is dissolved whether mutually, or by a court decree, a partner is entitled to be indemnified for expenses incurred by him genuinely on behalf of the partnership in the ordinary and proper course of its business or necessarily incurred for it’s preservation. See Charlesworth: Mercantile Law, 13th Edition, P.219 paragraph 8. — Wali, JSC.
⦿ ANY PARTNER MAY DETERMINE THE END OF PARTNERSHIP WHERE UNDEFINED
The legal position is that any member of a partnership, the duration of which is undefined as in the present case, is at liberty subject to any agreement between the partners, to determine the whole partnership at any moment he pleases. The right must of course be exercised bona fide, and not for the purpose of an undue advantage from the state of the partnership’s engagements. No question of that kind arises here… See Neilson V Mossend Iron Company & Ors. (1986) 1 A.C. 298. — Ogwuegbu, JSC.
⦿ COURT MAY RELY ON EVIDENCE UNCHALLENGED
It is trite that where evidence tendered by a party to any proceedings was not challenged or put in issue by the other party who had the opportunity to do so, it is always open to the court seised of the matter to act on such unchallenged evidence before it. See Isaac Omoregbe V Daniel Lawani (1980) 3-4 S.C. 108 at 117; Odulaja V Haddad (1973) 11 S.C. 357; Nigerian Maritime Services Ltd. V Alhaji Bello Afolabi (1978) 2 S.C. 79 at 81; Adel Boshali V Allied Commercial Exporters Ltd. (1961) All NLR 917; (1961) 2 SCNLR 322. — Iguh, JSC.
➥ LEAD JUDGEMENT DELIVERED BY:
⦿ FOR THE APPELLANT
⦿ FOR THE RESPONDENT
➥ CASE FACT/HISTORY
The plaintiff, a foreign company, was awarded two contracts by the government of the defunct Bendel State in 1977 for the construction of Ikpoba Dam Hotel, Benin City, and Afuze-Uma-Otuo – Ekeri-Fugg Road respectively. The plaintiff, in compliance with the government’s directive invited the 1st defendant to join him in the execution of the two contracts. The 1st defendant agreed and their business relationship culminated in the formation of a partnership and the subsequent incorporation of the 2nd defendant by the plaintiff and the 1st defendant. The technical designs, civil engineers, land surveyors, survey equipments and some personnel for the projects were among the inputs provided by the plaintiff. The Ikpoba Dam Hotel Company Ltd was also incorporated by the Government to finance the Ikpoba Dam Hotel project. The execution of the projects seriously and progressively got underway when a serious disagreement developed between the partners which necessitated a meeting with the Government. The minutes of that meeting Exhibit 14, showed that the partnership between the parties was mutually dissolved, because while the 1st defendant first gave an indication of the dissolution the plaintiff was agreeable to same. Exhibit 14 also showed that the 1st defendant at the meeting undertook to settle all genuine claims submitted by the plaintiff. When the plaintiff submitted its claims to the defendants, the 1st defendant refused to settle same, saying that they were not authorised by the defendants and the plaintiff then instituted this action.
The trial Court non-suited the Plaintiff. Both parties being dissatisfied appealed to the Court of Appeal. The Court of Appeal allowed the Plaintiff’s appeal. The Defendant did not pursue his cross-appeal.
Aggrieved by the decision of the Court of Appeal the defendants, hereinafter referred to as the appellants, have now appealed to this court. The plaintiff will be referred to as the respondent from now on.
➥ ISSUE(S) & RESOLUTION(S)
I. Whether the claim in quasi-contract for money paid or expenses incurred on behalf of the appellants at their own request was properly allowed by the Court of Appeal (vacating the order of non-suit) having regard to the primary finding of fact by the trial court against which there was no appeal?
RULING: IN RESPONDENT’S FAVOUR.
A. A PARTNER IN BUSINESS DOES NOT NEED TO TAKE AUTHORISATION FROM OTHER PARTNER TO SPEND
“I think having so properly found that the parties were in partnership the demand by the appellants from the respondents of a prior “request,” “authorization” or “approval” was merely an after-thought and a mere ploy to avoid payment of legitimate and just debts and to defeat the justice of the case. It was never the appellants’ case in the lower courts that they did not know of the services rendered nor that they did not benefit from such services. I agree with the Court of Appeal that the learned trial Judge having correctly found as above, failed to properly evaluate the evidence which Exhibits 7 to 10 constituted. These Exhibits were neither challenged nor contradicted by the appellants at the trial. The Court of Appeal in my view, rightly evaluated the documentary Exhibits and gave judgment for the respondent. A partner is entitled to be indemnified by the partnership in respect of payments made and liabilities incurred in the ordinary and proper business of the partnership. That was the case here. It has been clearly demonstrated above that want of prior authority or approval on the part of the respondent was never the case of the appellants even on their pleadings and that there were other findings by the same High Court to the contrary.”
II. Whether an action for accounts or any (sic) between partners is properly constituted without a dissolution or a claim for dissolution of the partnership and incidental to this, whether the partnership between the 1st appellant and the respondent in this case had been dissolved without a winding up of the firm which is the 2nd appellant?
RULING: IN RESPONDENT’S FAVOUR.
A. WHERE PARTIES HAVE VOLUNTARY WITHDRAWN FROM PARTNERSHIP, COURT ORDER NO LONGER NEEDED TO DISSOLVE
“The court below cited with approval the view expressed in Lindley On Partnership 14th edition P.556 – 558 which reads: ‘The old rule, therefore, that a decree for an account between partners will not be made save with a view to the final determination of all questions and cross-claims between them, and to the dissolution of the partnership, must be regarded as considerably relaxed, although it is still applicable where there is no sufficient reasons for departing from it. Where the partnership is for a term of years still unexpired, and one partner has sought to exclude or expel his co-partner or to drive him to a dissolution.”
The court below then held: ‘The present case on appeal comes under this umbrella. The partnership between the parties is for an indefinite term of years, and the respondents have undoubtedly not expressed an intention to but have infact excluded the appellant from the operations of the 2nd respondent company. The obvious course to which it is thus being forced is a dissolution of the partnership. The answer to the first question raised must therefore be answered in the negative i.e. that the appellant can bring an action for account in the circumstances of this case without’ first seeking a dissolution of the partnership between the parties.’”
B. NO PROVISION IN THE MEMORANDUM REQUIRED A RESOLUTION OF THE COMPANY FOR THE PARTNERSHIP TO END
“Besides, there is no provision in the memorandum and articles of association of the 2nd defendant/appellant (Exhibit 18) which provides that a resolution by the company is required to dissolve the partnership. The action of the 1st appellant at the meeting giving rise to Exhibit 14 which forced the respondent to withdraw from the partnership was effective in law to entitle the respondent to terminate the partnership.”
“All the issues having been resolved against the appellants, their appeal must fail. It is accordingly dismissed with N1,000.00 costs to the respondent.”
➥ MISCELLANEOUS POINTS
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)