Brief Facts – The deceased, Hon. Justice Kita Odiete Georgeman, obtained a loan of N6,000,000.00 from the respondent bank at 18% interest per annum, but died shortly thereafter.
Her children (the appellants) obtained letters of administration over her estate, which had a total of N15,372,668.97 in her accounts. They used the funds for funeral expenses and distributed the remainder to beneficiaries without settling the debt owed to the bank.
The respondent sued the appellants as administrators of the estate to recover the loan amount and accrued interest (N4,934,616.90), plus additional interest at 29% per annum until full repayment.
Decision of the Trial Court:
The trial court dismissed the case. The court held that the defendants (appellant) will only be responsible as administrators of the estate to pay off the loan if the claimants(Respondent) had notified the defendants before they distributed the proceeds from the estate of the deceased.
Dissatisfied, the Respondent appealed to the Court of Appeal, insisting on the right to recover the loan from the estate of the deceased.
Decision of the Higher Courts:
Court of Appeal;
The court of allowed the appeal and gave judgment partially in favour of the respondent. It held that the first duty of the administrator is to settle debts of the estate. It is unjustified to beguile a debtor on the premise that the assets and estate of the debtor has been distributed amongst beneficiaries. The court further held that the interest over the loan is terminated, because the relationship of the parties was founded on simple contract and death of one party terminated the agreement.
The supreme court also upheld the above decision, relying on the case Folarin v. Agusto (2023) 11 NWLR(Pt. 18956) 559;where the court held that “the powers conferrable on an Administrator by a Letter of Administration are wide. It includes the power to hold the real estate as a trustee and also to bear the liabilities of the estate. Put succinctly, the administrator of the estate has the duty to find out and paid any debt incurred by the deceased.
However, while the dissatisfied with the decision of the court of appeal over the termination of interest. The court further restated the law that, although the death of a customer, bring to an end the banker-customer relationship. However, if the relationship is primarily that of a debtor-creditor, an existing obligation to pay money under the contract and entitlement to be paid money under the contract survive the termination of the banker-customer contract.
Brief comment:
The decision of the Supreme Court in Daura v. U.B.N. PLC is a landmark judgment that clarifies and restates essential principles of estate administration and contract law in Nigeria, particularly as they relate to the obligations arising from loan agreements after the death of a party.
First, the Court rightly emphasized that the death of a debtor does not extinguish a contractual debt owed to a creditor. This aligns with long-standing principles of succession and trust law: liabilities incurred by a deceased during their lifetime are chargeable against their estate. The Supreme Court correctly held that administrators of an estate bear a fiduciary duty to identify and settle all valid debts before distributing the estate amongst beneficiaries. The appellants’ failure to do so, despite having access to sufficient funds, was a breach of that duty.
Secondly, the Supreme Court refined the legal distinction between the banker-customer relationship and the debtor-creditor relationship. While the former terminates upon the death of the customer, the latter survives, especially where the bank’s position is that of a creditor with a legally enforceable contract. This doctrinal clarification is critical in protecting financial institutions and ensuring accountability in estate management.
Additionally, the Supreme Court’s rejection of the Court of Appeal’s position that interest terminates upon death reinforces the sanctity of contracts. It underlines that obligations under a contract, including interest accrual, can continue posthumously unless the contract explicitly states otherwise.
In sum, this decision underscores the responsibilities of estate administrators to act diligently, equitably, and in accordance with the law. It further serves as a cautionary precedent that debts cannot be ignored simply because the debtor is deceased, preserving the rights of creditors and strengthening the legal framework surrounding estate obligations.
Lamid Azeez Arisekola is a 300Level law student at Usmanu Danfodio University, Sokoto. He can be reached through 07063848823 or lamidazeez8@gmail.com
