In 2004, the claimant advanced a loan of N3,500,000.00 (Three Million, Five Hundred Thousand Naira) to the 1st defendant in order to import certain goods. The parties agreed that the loan was to attract 34% interest rate per annum and that the loan was to be paid back in two months. The goods were imported in the 2nd defendant’s name. The 1st and 2nd defendants defaulted in repayment of the loan after it fell due and the claimant filed a suit against them and the 3rd defendant at the High Court of Lagos State to recover the total sum of N3,698,333.00 (Three Million, Six Hundred and Ninety Eight Thousand, Three Hundred and Thirty Three Naira) being the principal sum and the accrued interest. The case of the claimant against the 3rd defendant was that it owned the warehouse where the goods were kept and that it made an undertaking, after it became aware of the 1st and 2nd defendants’ indebtedness to the claimant that it was going to guarantee payment to it. The 3rd defendant was also a creditor of the 1st and 2nd defendants which secured its interest in the goods by being in possession of the goods and coordinating its sale.
After being served with the originating process, the 1st and 2nd defendants did not file any defence. The 3rd respondent however filed a defence. The claimant applied to join a 4th defendant (Enterprise Bank Limited) alleged to have received and was in possession of the proceeds of the sale of the goods. The court granted the application. Summary judgment was entered against the1st and 2nd defendants in the amount claimed. The claimants sought an order of the court to make the 3rd defendant and Enterprise Bank Limited liable for the indebtedness of the 1st and 2nd defendants. The claimant’s position was predicated on the allegation that the 4th defendant is a shareholder in the 3rd defendant and as such should be liable to it for the indebtedness of the 1st and 2nd defendants.
Held: (Granting the claims against the 1st and 2nd defendants and dismissing the claims against the 3rd and 4th defendants)