[1936] EACA 19

## COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR JOSEPH SHERIDAN, C. J. (Kenya), ABRAHAMS, C. J. (Tanganyika), and KNIGHT-BRUCE, Ag. J. (Zanzibar).

SALEH GANGJI, Appellant (Original Plaintiff)

## MICHEL PAVETTO, Respondent (Original Defendant). Civ. App. No. 19/1935.

Mistake-Money paid by mistake of fact-Banker and customer -Lodgment to wrong account-No mistake by banker.

The respondent was manager in Zanzibar for A. and Co.; he was also local agent for B, and, as such, entered into a transaction with X in respect of which a sum of Rs. 1010.6.9 was payable by X. In payment of this sum X drew a cheque on the appellant. a merchant banker, in favour of A and Co. (apparently because the respondent had no account in his books) and gave it to the respondent's clerk who paid it to the credit of A and Co.'s account with the appellant. The respondent also had an account with the appellant, and, when sued for the balance due by him, claimed the right to take credit for the amount paid to the account of A and Co. by the mistake of his clerk. Judgment was given for the defendant on this point, and the plaintiff $appaled.$

Held (14-11-35).—That, if there was a mistake by the defendant's clerk, there was not mistake by the plaintiff which would render him liable to give credit to the defendant for the money. (Chambers $v$ . Miller (143 E. R. 50), and China Southern Bank v. Te Thoe Seng (A. I. R. 1926 Rangoon 14) followed).

Vellani for the appellant.

The respondent did not appear.

JUDGMENT (delivered by ABRAHAMS, C. J.).—This is an appeal against a decision of Fretz, J., who held that the appellant, having received a sum of Rs. 1010.6.9 from the respondent's agent under a mistake of fact was bound to credit him with that. amount in an account which the respondent had with the appellant.

The respondent was manager in Zanzibar of a French firm known as the Societe pour L'Industrie des Parfums (called, for brevity's sake, the S. I. P.). He was also agent for a Marseilles merchant named N. Couzinet, and in that capacity entered into a copra transaction with one Juma Chagpar. As a result of that transaction a sum of money was paid to Juma Chagpar, which the parties subsequently discovered was Rs. 1010.6.9 in excess

of what was owed. Juma Chagpar agreed to refund this excess amount, and Raza Suleman Versi, who was at that time broker for the S. I. P. and had also acted as broker in the copra transaction, was sent to collect it. Juma Chagpar died before proceedings were instituted, and Versi was the only person who could testify to what took place between him and Juma Chagpar. The substance of his evidence was that Juma Chagpar refused to give a cheque in the name of the respondent, who had no account in his books, though Couzinet had such an account. After some discussion a cheque was made out on the appellant in the name of the S. I. P., and in the counterfoil the words "to the account of N. Couzinet" were introduced.

Versi filled in the payee's name and the amount, and also wrote the words in the counterfoil. Versi took the cheque to the appellant, who is a banker, and had the amount credited to the S. I. P., and then took the paying-in slip to the S. I. P.

The respondent had a personal account with the appellant, and at a subsequent date required the appellant to credit him with the amount which he contended then and at the trial was paid into the S. I. P. account under a mistake of fact, and which should have been paid into his account.

The main issue at the trial was agreed by the parties in these terms: $-$ .

"Was the sum of 1011 rupees paid by the defendant's clerk by mistake of fact into the account of the S. I. P. instead of into the defendant's account with the plaintiff?"

In view of this issue, what was the "mistake of fact" found by the learned trial judge? He referred to the ledger of Juma Chagpar which contained the following item: "Debit to account of N. Couzinet Rs. 1010.6.9 through Khoja Raza Suleman Versi -draft whereof was made out for a larger amount which (excess) 1010.6.9 paid back to-day which is hereby debited." He then continued thus: "The intention therefore, it may reasonably be assumed in the light of this evidence, with special reference to the words 'paid back to-day', was that the excess amount (the 1011 rupees in question) should be 'paid back' to the source from whence it came, i.e. to the defendant.

"The defendant's clerk, Raza Versi, further states that 'Juma Chagpar refused to give a cheque in the name of Paveto (defendant), saying that he had no account of Paveto in his books, but there was an account of N. Couzinet,' and that after some discussion the cheque was made out to the name of the S. I. P. and in the counterfoil the words 'to the account of N. Couzinet' were introduced.

"It would appear therefore that Juma Chagpar, knowing the defendant to be manager of the S. I. P., himself assumed the responsibility of paying this excess into the S. I. P. account; that excess, however, it is clear was derived from an entirely independent transaction, and one which had no connection with the S. I. P: whatever '

Now the defendant's case, as expressed in paragraph two of the written statement, was that the sum of Rs. 1011 was credited by mistake of the defendant's clerk, Raza Versi, to the account of the S. I. P. But we are unable to agree with the learned judge's remarks at a later stage of his judgment that the excess amount was paid to the S. I. P. account under a bona fide misapprehension of fact that it was being paid back to its true and proper source, since the evidence of Raza Versi, who presumably was in a position to inform the Court as to what was the mistaken belief (if such mistaken belief existed) which influenced him to credit the money to the wrong account, does not allege any misapprehension of fact of any kind. It would seem, to put it at its highest for the respondent, that a mistake may have been made somewhere by somebody, but that is insufficient to support a case for the recovery of money paid under a mistake of fact. We think it convenient to add here (though we cannot tind that the point was specifically dealt with) that we are by no means satisfied, in the absence of proof that the cheque made out to the S. I. P. was a bearer cheque, that it was the property of the respondent at all so as to enable him to claim repayment of the money it represented.

A further point was submitted at the trial by counsel for the appellant. He argued, on the authority of *Chambers* $v$ . Miller (143 E. R. 50) and other cases, that no claim could be made against a payee who was not a party to the mistake. The learned judge, however, rejected this submission as appliaable in cases only where fraud arises, and cited China and Southern Bank Ltd. v. Te Thoe Seng (A. I. R. 1926 Rangoon 14). We have examined this case, and although the genesis of the mistake originated in a fraudulent telegram, we do not agree that the case lays down the proposition that fraud must be an element in the transaction. We are of opinion that the principle governing such cases as this was summarized by the learned judges of the Rangoon High Court, when they said the mistake of fact upon which the plaintiff relied was not a mistake of fact as between him and the defendant bank who received the money. The bank was merely conducting an ordinary banking transaction with a stranger. So here.

Finally, we cannot agree that the evidence on the general probabilities supports the finding of the learned trial judge that the appellant agreed to credit the respondent with the money when the mistake was pointed out by the respondent.

The appellant stated in evidence that the respondent, being manager of the S. I. P., could have himself transferred the money from the S. I. P. to his own account. The respondent explained

that he did not do so because the appellant had caused him to believe that he would be credited with the amount. The learned trial judge said that this explanation appeared to him to be reasonable, and to some extent to be supported by the correspondence. With all respect to the learned judge, we cannot agree with either finding. The appellant as a banker obeyed the instructions of a customer. Was he to reverse those instructions without his customer's consent? Which on the face of it was more reasonable: To expect a banker to be guilty of such bad banking practice, or to ask a person in control of two accounts to transfer a sum from one account to the other?

The appellant contends by letter that it is no mistake of his clerks, and that he cannot alter his books "off and on", and he definitely recommends the respondent to adjust matters with the S. I. P., so that the accounts can then be squared. The appellant had the last word in this correspondence, and we certainly cannot agree that the letters show that the respondent is entitled to credit by virtue of any promise made by the appellant.

We allow the appeal with costs here and in the High Court.