Read what the Supreme Court said in DAURA V. U.B.N. Plc: (2024) 14 NWLR PT. 1957 PG 41.

PARTIES IN FULL:
1. MISS EZE KITA ODIETE DAURA
2. MISS CLEOPATRA BAROBE
[For themselves and on behalf of the Estate of
Late Hon. Justice Odiete Georgman]
V.
UNION BANK OF NIGERIA PLC

Courtesy: Moruff O. Balogun,FIMC,CMC,CMS.

Summary of facts:
The deceased, Hon. Justice Kita Odiete Georgeman, obtained a loan facility of N6,000,000.00 (Six Million Naira Only) from the respondent. The interest accruable thereon was at the rate of 18% per annum. She died a few days after.
The appellants as children of the deceased applied for and obtained letters of administration over the estate of their late mother. The said letters of administration covered a total sum of N15,372,668.97 realized from the deceased’s accounts with First Bank of Nigeria Plc. The appellants used part of the money for the funeral of their late mother and distributed the remainder to the beneficiaries of the estate of the deceased, without defraying the indebtedness of their mother to the respondent.
To recover the debt, the respondent initiated an action at the High Court against the appellants as the administrators of the Estate of late Hon. Justice Kita Odiete Georgemnan. It claimed the sum of N6,.000,000.00 (Six Million Naira) being the loan granted by the Bank to late Hon. Justice K.O. Odiete Georgeman the sum of N4,934,616.90 (Four Million, Nine Hundred and Thirty Four Thousand, Six Hundred and Sixteen Naira Ninety Kobo)
representing the accrued interest, plus 29% (percent) per annum of the principal sum and the accrued interest until judgment and/or when same was fully liquidated.

After the conclusion of hearing on the matter, the trial court dismissed the action finding that the respondent did not prove its case. Dissatisfied, the respondent appealed against to the Court of Appeal, which allowed the appeal.
Dissatisfied, the appellants appealed to the Supreme Court.

Held: Unanimously dismissing the appeal.

AGIM, J.S.C. stated :
The death of the customer would not terminate the loan contract until the loan is fully repaid by his estate. The Court of Appeal was wrong to have ordered interest charges to stop on 5-11-2008, when the respondent became aware of the death of its customer, Late Hon. Justice Kita Odiete Georgman, while the loan remained unpaid by the administrators of the estate that utilized the entire loan sum. Since there is no appeal complaining against that part of the decision of the Court of Appeal that stopped interest charges after 5-11-2008, instead of following it till the loan was fully repaid in keeping with the loan contract, this court will not interfere with it. For the foregoing reasons, I resolve this issue against the appellants. On the whole this appeal fails as it lacks merit. It is accordingly dismissed.
Judgment of the Court of Appeal is hereby affirmed.

On whether death of a customer of a bank brings to an end the banker-customer relationship between the customer and the bank –
Generally, the death of a customer of a bank brings to an end the banker-customer relationship contract between that customer and the bank. However, the banker customer relationship being primarily that of a debtor -creditor, an existing obligation to pay money under the contract and entitlement to be paid money under the contract survives the termination of the banker-customer contract. Just as the obligation of a bank to pay interest on money standing to the credit of a customer in his or her account is not affected by the death of the customer and survives that death as part of his estate, the customer’s obligation to pay periodic interest charges on loans or overdrafts applied for and obtained from the bank survives the death of the customer and becomes a debt on his or her estate.

The agreement to pay interests on the loan subsists so long as the loan remains unpaid and the death of the debtor customer will not affect it.
The accruing interest is money the bank is contractually entitled to be paid on the loan it gave the customer.
In the instant case, it was incontestable that the deceased was indebted to the respondent while she was alive. Upon her death, the debt automatically transferred to her estate. The Court of Appeal was on firm ground in holding the appellants to account in this case. The respondent’s appeal to the Court was rightly allowed.

On duty on administrator of an estate to first identify any debts incurred by the deceased before distributing the estate to the beneficiaries –
The Administrator of an estate has the duty to first take steps to find out or identify any debts incurred by the deceased in his life time, which debts have become due from the estate of the deceased, before distributing the estate to the beneficiaries of the estate. An administrator of an estate cannot avoid this duty by simply claiming or asserting that he or she is not aware of the existence of a particular debt and that, therefore, he or she is not bound to pay an estate debt he or she is not aware of.
It is the duty of the administrator to take steps to identify and inventory both the assets and debts of the estate and pay the debts before distribution. In the instant case, the evidence showed that upon the death of their mother, the appellants proceeded to obtain letters to administer her estate and thereafter withdrew the sum of N15,372,668.77 in their late
mother’s account in First Bank Plc. They expended part of the said money on burying their mother and distributed the remainder amongst themselves,
and after burying their late mother, they did not, as the administrators of the estate, identify and inventory his assets and debts before distributing the remainder of the amount they withdrew from First Bank Plc.

On whether death of the customer terminates loan contract between the deceased and the bank –
The death of a customer would not terminate a loan contract until the loan is fully repaid by his estate.
In the instant case, the loan succeeded the death of the customer and his estate or other properties must be used to liquidate the loan or debt. Thus, the Court of Appeal was wrong to have ordered interest charges to stop when the respondent became aware of the death of its customer, the deceased, while the loan remained unpaid by the administrators of the estate that utilized the entire loan sum.

On nature of the legal relationship that arises between a bank and its customer in a loan transaction-
When a customer applies for a loan from the bank and agrees to repay same on written terms and conditions, the banker-customer relationship is the primary contract that exists before the customer’s application for loan. This primary contract is the platform on which the customer is able to apply for and secure a loan. The loan contract is contained in the application for the loan, the letter granting the loan, and stating the terms and conditions of the loan, his acknowledgment of receipt of the letter and cheque by which he withdraws the loan sum. The acceptance of the written terms and conditions for the grant of the loan brings into being a loan contract with a life of its own separate from the primary contract of banker customer.

On liability of beneficiaries of estate of deceased to pay debt due on his estate from the share of money distributed to them –
The beneficiaries of the estate of a deceased person are liable to pay the debt of the deceased from the share of the money distributed to them.
When an administrator of an estate has distributed the residue of an estate to the beneficiaries of the estate, an unpaid creditor of the deceased intestate can recover the debt due from the estate from that residue and the beneficiaries can be compelled to refund so much of the amount paid to them as may be required to satisfy the claim. In the instant case, it was glaring from the affidavit in support of the motion ex parte for the grant of the letters of administration and the Resolution of the children of the deceased in support of the application that their late mother also had buildings, lands, cars, shares in Zenith Bank Plc, in addition to the monies in the First Bank Plc and that the administrators of the said estate did not intend to pay any debt due from the estate. Payment of such debts was not stated in the affidavit and the resolution as part of the things the administrators were to do. The administrators could pay the debt due from the estate to the respondent from the other assets of the estate, if they had completely expended the money withdrawn from the First Bank Plc.
In any case, assuming those assets did not exist, the appellants as beneficiaries were liable to pay the debt from the residue of what they had benefitted.

Courtesy:
Moruff O. Balogun, FIMC, CMC, CMS
Past Vice Chairman,NBA Ijebu Ode branch.
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