Through Whom Can A Company Act?

Kate Ent. v. Daewoo Ltd (Excerpts)

(2006) 2LC 508, (1984)6 SC 267

Kate Enterprises Ltd…….Appellant

                        v 

Daewoo Nigeria Ltd…….Respondent

Supreme Court Of Nigeria

Mohammed Bello                   JSC

Andrews Otutu Obaseki         JSC

Augustine  Nnamani               JSC

Mohammadu  Lawal Uwais    JSC

Coker                                      JSC

(Delivered Lead Judgment)

Issues

(1). Whether the court of Appeal is right in finding that the principle of corporate personality justified them and made relevant and admissible the evidence of Plaintiff’s and  No. 1  concerning how and what the Plaintiff’s Defendants agreed between themselves in August and September of 1978.

(2). Whether the Court of Appeal was           right in holding that the Defendants/Appellants (who according to the evidence of P.W.I were consignees of the goods) could also become endorsees of the Bills of Lading evidencing the shipment of the goods.

(3). Whether on the evidence led before the trial court, the Court of Appeal is right in observing that there were no answers to the plaintiffs’ case, and the D.W.I gave evidence (of denial of the plaintiffs’ case), for himself and not for the Defendant/Appellant Company.

(4). Whether the Court of Appeal is right in concluding that the plaintiffs/Respondents proved their case and are entitled to the judgment of the court, when there was no evidence at all before the court in proof of the case.

Facts.

Before the High Court, the respondents had claimed against the appellants the sum of N614,085.00 being the balance of the price of building materials sold.

The respondent’s case was that in 1978 an oral contract was made to supply some building materials to the appellant and the goods were to be shipped directly from Korea to the appellant who was charged with the responsibility of clearing the goods from the Seaport. That upon clearing the goods the appellant returned 1,000 cases of roofing nails claiming it was unable to sell because of “bad market.”

The appellant did not deny entering an oral contract with the respondent, but contended that the contract was a contract of sale by sample and that he rejected the roofing nails upon inspection at the warehouse of the respondent for not corresponding with sample. The appellant denied ever clearing the goods from the Seaport and contended that clearing was done by the respondent.

The High Court dismissed the respondent’s claim, but it was reversed by the Court of Appeal and judgment entered for the respondent.

On a further appeal to the Supreme Court the appellant filed six grounds of appeal but was allowed to argue only one ground, i.e. that the Court of Appeal erred in considering the evidence of the respondent’s only witness (marketing manager) who was not present at the  time the contract was made. The other five grounds relate to fresh issues of law not raised in the court below.

Held (Unanimously Dismissing the Appeal)

By Section 15, subsection 2 of the Companies Act 1968, a company becomes body corporate from the date of its incorporation and it is capable of exercising all the functions of an incorporated company. The implication of this is that the company becomes a legal entity. It can sue and be sued – see the well-known case of Salomon v. Salomon and Co. Ltd. (1897) A.C. 22. At common law such company is a persona ficta and can only act through its agents or servants- See Lennard’s Carrying Co v. Assiatic Petroleum Co. Ltd (1915) A.C. 705 per Viscount Haldane, L.C. at pages 713-714 and Bolton (Engineering) Co. Ltd. v. Graham and Sons Ltd (Supra) at p.172 per Denning, L.J. who observed: “A company may in many ways be likened to a human body. It has a brain and nerve center which  controls what it does. It also has hands which holds the tools and act in accordance with directions from the center. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such.”

Companies have no flesh and blood. Their existence is a  legal abstraction. They must therefore, of necessity, act through their directors, managers and officials. And any manager or official of the company well placed to have personal knowledge of any particular transaction in which the company is engaged can give evidence of such transacation.

Uwais JSC.

Mercy Oke –Chinda