A, having done work on the streets of Washington under a
contract with the Board of Public Works, received certificates that
his accounts were audited and allowed for specified amounts, on
pledge of which he borrowed money of B, giving his note therefor
shortly before the abolition of the board by Congress and the
creation of the Board of Audit. A requested the Treasurer of the
Board of Public Works in writing not to pay these certificates, but
assigned no reason for the request. Afterwards, C presented them to
the Board of Audit, by whom they were allowed, and C received
district bonds for them under the law. Neither B nor C has
accounted to A for the certificates nor returned his note. A sued
the District for the amount due on the certificates.
Held
that he had no cause of action
Page 116 U. S. 486
This was a suit in the Court of Claims against the District of
Columbia. The facts are stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This is a suit brought July 28, 1880, under the Act of June 16,
1880, c. 243, 21 Stat. 284, by Matthew J. Laughlin against the
District of Columbia to recover an amount claimed to be due upon
five certificates of the Auditor of the Board of Public Works. The
facts are these:
Laughlin contracted with the Board of Public Works to do certain
work and furnish certain materials in grading the streets in
Washington. The work was done, and the board, according to its
usage with contractors, issued to the attorney in fact of Laughlin
certificates of accounts allowed by its auditor, as follows:
"No. 4763. Office of Auditor of Board of Public Works"
"Washington, D.C., December 24, 1873"
"I hereby certify that I have this day audited and allowed the
account of M. J. Laughlin, per J. F. Murray, att'y, for work as per
schedule, amounting to fifteen hundred dollars."
"$1,500."
"J. C. LAY, Auditor"
Three other certificates for $6,000, $5,000, and $2,000,
respectively, numbered 4,764, 4,766, 4,767, were issued to the same
person and in the same form, all having the same date. Another
certificate for $597 was also issued, but as the right to recover
on that was abandoned at the argument, it need not be specially
referred to. After the certificates were issued, Laughlin demanded
payment from the Treasurer of the Board of Public Works, which was
refused for want of funds. He then borrowed money on them from
Rudolph Blumenburg at the rate of thirty-three cents on the dollar
of their face value, giving his notes for the
Page 116 U. S. 487
amount borrowed, and delivering the certificates endorsed by him
in blank as collateral. Certificates Nos. 4,764, 4,766, and 4,767
were hypothecated January 20, 1874, and No. 4,763, February 14,
1874. On or about the 5th of June, 1874, a written document was
delivered to James A. Magruder, Treasurer of the Board of Public
Works, which he filed with the papers of the board, where it has
ever since remained, and of which the following is a copy:
"Washington, D.C., June 5, 1874"
"Col. James A. Magruder, Treasurer B. P. W."
"Sir: I do most respectfully ask of you not to pay the following
auditor's certificates, dated December, 1873, issued to 'M. J.
Laughlin, per J. F. Murray, attorney,'
viz., No. 4,763,
for $1,500; No. 4,764, for $6,000; No. 4,766, for $5,000; No.
4,767, for $2,000."
"Also a certificate issued in the name of M. J. Laughlin, No.
4,426, for $597."
"Very respectfully,"
"J. F. MURRAY"
Previous to that date Laughlin had orally notified Magruder not
to pay the certificates, but at what exact time does not appear. He
did not, however, bring any suit to enjoin the payment or
conversion of the certificates, or to establish his interest in or
title to them.
"On the 20th of June, 1874, Congress passed 'An act for the
government of the District of Columbia, and for other purposes,' c.
337, 18 Stat. 116, by which"
"all provisions of law providing for an executive, for a
secretary for the District, for a legislative assembly, for a Board
of Public Works, and for a delegate in Congress in the District of
Columbia,"
were repealed, and a commission created to exercise "all the
power and authority now lawfully vested in the governor or Board of
Public Works of said district," except as thereinafter limited.
This commission was authorized to
"take possession and supervision of all the offices, books,
papers, records, moneys, credits, securities, assets, and accounts
belonging or appertaining to
Page 116 U. S. 488
the business or interests of the government of the District of
Columbia and the Board of Public Works, and exercise the power and
authority"
conferred by the act. By § 6, the First Comptroller of the
Treasury and the Second Comptroller of the Treasury of the United
States were constituted a Board of Audit "to examine and audit for
settlement," among other things, "the debt purporting to be
evidenced and ascertained by certificates of the Auditor of the
Board of Public Works." This board was required to
"Issue to each claimant a certificate, signed by each of said
board and countersigned by the Comptroller of the District, stating
the amount found to be due to each, and on what account."
Power was given the board to "subpoena witnesses, administer
oaths, and examine witnesses under oath," and it was allowed
"full access to all of the records, books, papers, and vouchers
of every kind whatsoever of the Board of Public Works, . . . and to
the end that said books and accounts may be thoroughly examined,
and the indebtedness of the District and of the Board of Public
Works and the State of the books and accounts of the officers
aforesaid, may be accurately ascertained,"
the board was authorized to
"employ one or more skillful and impartial accountants, . . .
and such other assistants as they may deem necessary, to make
examination of said books, vouchers, and papers, and discharge
their duties, . . . and shall procure inspection of such bankbooks
and papers as may be necessary."
The board was also to give notice for the presentation of
claims, and no claim could "be audited or allowed unless presented
within ninety days after the first publication of such notice." By
§ 7, the sinking fund commissioners were required to exchange the
three-sixty-five bonds of the District at par for like sums of any
debt evidenced by certificates of the Board of Audit.
On the 16th of July, 1874, N. A. Cowdrey presented the
certificates now in dispute to this Board of Audit for allowance
and settlement. Before their presentation, and after their delivery
by Laughlin to Blumenburg, there had been printed over the
endorsement in blank which was on them when delivered the
following:
Page 116 U. S. 489
"For value received, the within debt is assigned and transferred
to N. A. Cowdrey, who is authorized to collect the same for his own
use." This was done without the knowledge of Laughlin. Certificates
of allowance were issued to Cowdrey in due form by the Board of
Audit, and these were taken up by an exchange of bonds for them by
the sinking-fund commissioners. Neither Blumenburg nor any assignee
of his has accounted to Laughlin for the proceeds of the
certificates, nor returned the notes for which they were
transferred as security.
Upon these facts the Court of Claims gave judgment against
Laughlin, and to reverse that judgment this appeal was taken.
It has been settled in this Court that if the owner of
certificates of the auditor of the Board of Public Works, like
those now in question, places them in the hands of a third person,
endorsed in blank so as to give him apparent authority for their
collection, payment by the District to the person so invested with
apparent authority, without notice of a want of actual authority,
will discharge the debt.
Cowdrey v. Vandenburgh,
101 U. S. 572;
Looney v. District of Columbia, 113 U.
S. 258. The Court of Claims so held in
Adams v.
District of Columbia, 17 Ct.Cl. 351, decided at the December
term, 1881, which was but a little more than a year after the act
giving that court jurisdiction in this class of cases was
passed.
Such being the law, the only question we have now to consider is
whether the letter of June 5, 1874, addressed by the attorney of
Laughlin to the Treasurer of the Board of Public Works and placed
on file with the papers of the board, makes the District answerable
to Laughlin for the amount due on the certificates, notwithstanding
the payment to Cowdrey upon the allowance by the Board of Audit.
The Court of Claims was of opinion that it did not, and in this we
concur.
The Board of Audit was in no sense the Board of Public Works or
its successor. It was a department of the District government,
established "to examine and audit for settlement" certain classes
of the debt of the District. It was invested for this purpose with
quasi-judicial powers. The commission, which was the
general governing body of the District, had no
Page 116 U. S. 490
control over it. No claim against the District of either of the
classes this board was required to audit could be paid, except upon
a certificate of allowance signed by each of the members of the
board and countersigned by the Comptroller of the District. The
board could not begin its work until public notice had been given
the creditors of the District to appear and present their claims,
and it could act only for a limited period. This notice was to all
the world, and required all who had claims to appear or suffer the
consequences if they kept away. Laughlin was bound to take notice
of the statute creating the board and of the duties of the board in
respect to claims like his. He knew that his certificates were
outstanding in the hands of some one invested by him with an
apparent title as owner, or at least with an apparent authority to
collect them. He knew, or ought to have known, that the holders of
the certificates might present them and demand their allowance. The
law charges him also with notice of the power of the board to
examine witnesses and consider the rights of contesting parties. It
is true he may have had the right to suppose that his letter to the
Treasurer of the Board of Public Works would be brought to the
attention of the board, but that letter was nothing more than a
request to the treasurer not to pay. No reason was assigned for the
request, and no statement was made of the facts connected with the
title or authority of the person who might present them for
payment. If the certificates had been presented to the treasurer
after the letter was delivered to him, it would have been his duty
to notify Blumenburg before payment, so that the proper steps might
be taken to contest the right of the holder to the money. But when
the office of Treasurer of the Board of Public Works was abolished
and the Board of Audit created, an entirely new condition of things
arose. The statute authorizing the board gave notice to Laughlin
that he must himself appear before that tribunal to assert his
rights as against the holder of his certificates, or take some
other steps to prevent their payment, and, if he did not, that his
claim against the District might be lost. The board, even if his
letter had been brought to its attention, would not have been
compelled to give him any other notice to appear than that
which
Page 116 U. S. 491
he already had. As he failed to appear at all, there was nothing
for the board to do but to act upon the evidence which was before
it, and decide accordingly. In
Cowdrey v. Vandenburgh, the
suit was by Vandenburgh, the owner of a certificate like those now
in question, against Blumenburg and Cowdrey, to compel surrender of
the certificate to him upon allegations as to their title very
similar to those which are here made against them. Upon proof of
the charge against Blumenburg and a failure by Cowdrey to show that
he paid value for the certificate, the decree sought was granted.
So here, if Laughlin had appeared before the board, and made his
showing, it is possible he might have got the pay instead of
Cowdrey; but he failed to do so, and it is now too late for him to
assert his rights against the District.
The judgment of the Court of Claims is
Affirmed.