Case Name: Samuel Strong vs. The District of Columbia
Court: Supreme Court of the District of Columbia
Jurisdiction: District of Columbia
Decision Date: 1885-10-05
Citations: 4 Mackey 242
Docket Number: Law. No. 14,576
Parties: Samuel Strong vs. The District of Columbia.
Judges: The Chief Justice and 'Justices Cox, James and Merbich sitting.
Reporter: Reports of cases argued and determined in the Supreme Court of the District of Columbia (District of Columbia - reported by Mackey)
Volume: 15
Pages: 242–254

Head Matter:
Samuel Strong vs. The District of Columbia.
Law. No. 14,576.
Decided October 5, 1885.
The Chief Justice and 'Justices Cox, James and Merbich sitting.
1. Where, under a stipulation, referees return into court, with their award, all the evidence and all their findings of law and of fact, the court may set aside the award for any patent mistakes of law or of fact appearing upon the face of the proceedings; but will observe the same hesitation to disturb the findings of fact as in the case of a motion for a new trial after verdict.
2. The promises of any or all of the members of a municipal board, made by them as individuals at different times and places and without that joint official deliberation which the law requires, are not binding upon the municipality.
3. Where the payee of municipal certificates of indebtedness has delivered them to third parties endorsed in blank, it becomes the payee’s duty to inform the makers of any facts on which he, the payee, might object to the redemption of the certificates in favor of the holder, and claim payment to himself. In the absence of such notice the endorsement in blank and possession by the transferee give him apparent ownership and justify the makers in making payment to him.
4. Where the items in dispute between the parties to an account in an award of referees were numerous and the-evidence voluminous, and the error of law in allowing certain classes of claims permeated all the accounts, Held, that even if the right of the court to cut down an award and adjust the final balance were clear, yet the court would not undertake to discharge the duties of an accountant by comparing all the items of complicated transactions, and then stating the exact balance, but the entire award should be vacated.
STATEMENT OE THE CASE.
Action at law to recover for work done during tbe years under a number of written contracts executed by the Board of Public Works of the District of Columbia, and also for work claimed to have been done outside of these contracts, but arising therefrom, which work was performed under written or verbal orders from members of the Board of Public Works or some of its officers.
The declaration contained substantially the common counts; the defendant pleaded a general denial and several special pleas, among which was one of payment. After issue joined and several ineffectual trials, the action was re ferred by a stipulation of the parties to three referees. By virtue of this stipulation the case was heard by the referees, and an award made and filed in accordance therewith in favor of the plaintiff for the sum of $234,798.48.
From such of the findings of fact by the referees, as are material to the case, it appears that the contracts sued on were ten in number and were all substantially the same in character, being printed forms containing blank spaces filled in with the specific terms agreed upon between the parties. A material provision of all these contracts was that partial payments in monthly instalments should be made as the work progressed. The Board of Public Works, however, in many cases failed to make these monthly payments; whereupon Strong notified them that he would be compelled to suspend the work unless this part of the contract were complied with. Certain members of the board, with the knowledge of all the others and without objection on the part of any, promised the plaintiif that if he would continue the prosecution of the work with money borrowed on his own notes, secured by pledges of certificates, issued to him by the auditor of the Board of Public Works, the board would seasonably provide money for the payment of his notes. The plaintiif thereupon borrowed on his own notes, so secured, large sums of money. When these notes matured the board failed to provide the money to meet them, and in consequence the pledgees sold the hypothecated certificates for about fifty cents on the dollar. These certificates, whenever the plaintiff found it necessary to hypothecate them, were endorsed by him or by his constituted attorneys in blank. In some instances they were sold outright by the plaintiif so endorsed. On the 20th of June, 1874, long after these certificates had passed, in the manner indicated, out of Strong’s possession, Congress passed an act, 18 Stat. at L., 126, ch. 337, creating what was called a Board of Audit, which was directed to examine and audit certain suspended and floating debts of the District of Columbia and the Board of Public Works specified in the act, among which was “the debt purporting to be evidenced and ascertained by certificates of the Audi tor of the Board of Public Works,” to which class belonged the certificates which had been issued to Strong. The 7th section of the act then authorizes the issuing of what are known as 3.65 bonds of the District and gives authority to the sinking fund commissioners “to exchange said bonds at par for like sums of any class of indebtedness in the preceding section of this act named.”
A great many of the certificates which had been hypothecated or sold by Strong or by persons assuming to act as his attorneys, were thereupon presented by the holders to the Board of Audit; and the board without notice, it was claimed, to the plaintiff, issued to such holders certificates, called “certificates of the Board of Audit,” for like amounts with interest, which latter certificates were subsequently taken up by the District with the 3.65 bonds, as provided for by the act of Congress. It also appears that on the 18th day of December, 1873, the plaintiff published the following advertisement in the Evening Star, a daily newspaper circulated in the District of Columbia:
“Special Notice.
“All persons are cautioned and notified that I have forbidden the Auditor and Treasurer of the Board of Public Works from paying certificates issued to me for work done, as certain persons holding my scrip have illegal possession of them.
“Samuel Strong.”
And again on the 9th of January, 1874, he published in the same newspaper the following:
“Special Notice.
“All persons holding my notes, bonds or evidence of debt of any description whatsoever, with collateral security for the same, in water bonds of the District of Columbia, bonds or certificates of the Board of Public Works, or any other securities as collateral for the payment thereof, are hereby notified and required to present the same without unnecessary delay to the Hon, Peter Campbell, stock broker, No, 1423 Penn. Ave., Washington, D. 0., who will pay these claims on presentation and take up the securities.
“Samuel Strong.”
The referees here found, as matter of law, that wherever Strong had made an absolute sale or assignment of these certificates, a payment to or settlement by the District authorities with the assignees was, in the absence of proof of other facts, binding upon Strong; but if, on the other hand, the proof showed a pledge of the certificates by Strong, the payment in whole or in part by the District to the pledgee, accompanied by a transfer of the certificate to the District, would not defeat a recovery by Strong from the District of the amount called for by the certificate less the amount realized by him when he pledged it. To the latter part of-this finding, as well as to numerous other findings, the defendant excepted; and the case coming on upon a motion to affirm the award, was certified by the Circuit Court to the General Term to be there heard in the first instance.
Benjamin P. Butler, William A. Cook, Prank T. Browning and 0. D. Barrett for plaintiff:
The provision of statute against contracts to bind the District to “the payment of money,” except after and in pursuance of appropriations, is confined to “written contracts,” and cannot apply to work done for the benefit of the District, at its request without such contracts or prevent the payment of the amount fairly due for such work. Campbell vs. District of Columbia, 2 MacA., 533; County of Randolph vs. Root, 93 U. S., 513; Hitchcock vs. Galveston, 96 U. S., 350; Zabriskie vs. C. C. & C. R. R. Co., 23 How., 398; Marsh vs. Fulton Co., 10 Wall., 684; Thomas vs. City of Richmond, 12 Wall., 349; Chapman vs. Douglas Co., 107 U. S., 355; Ry. Co. vs. McCarthy, 96 U. S., 258; Bridge Co. vs. Utica, 17 Cent. L. J., No. 12; Manville vs. Belden Iron Co., Id.; Kelly vs. Board Pub. Works, 75 Va., 263; Goddard vs. Foster, 17 Wall., 141; 2 Kent Com., 341; Abb. Tr. Ev., 39; 1 Dill. Mun. Corp., 459; 2 Id., 968; Clark vs. U, S., 95 U. S., 539.
Whether or not the contracts wore regular, they have been ratified, and are as if originally valid. 18 Stat. at L., pt. 3, p. 116; Strong vs. District, 1 Mackey, 265.
Nothing can be regarded as payment except lawful money of the United States, unless plaintiff agreed to accept something in lieu thereof. 2 Greenl. Ev., secs. 516-522; Peter vs. Beverly, 10 Pet., 532; The Kimball, 3 Wall., 37; Down vs. Hicks, 14 How., 240.
The certificates of the Auditor of the Board of Public Works issued to the plaintiff were not a payment; they were mere statements of amounts due him, choses in action, and were not as such transferable by delivery or endorsement in blank of the plaintiff; and the possession of any of them conferred no interest or right on the holder which could, in any manner or to any extent, affect the rights of the plaintiff or deprive him of his interests in the certificates. Cowdrey rs. Vandenburgh, 101 U. S., 572; Colebrook, Collateral Securities, sec. 438; Jones, Pledges, sec. 134; Ballard Pavement Co. vs. Mandel, 2 Mac A., 351.
Neither their possession nor endorsement in blank could confer on the holders any right or interest, nor any obligation on the District to pay them in the hands of any holder. Tiernan vs. Jackson, 5 Pet., 580.
To bind the plaintiff by the action of the Board of Audit he must not only have voluntarily appeared before it or presented his claim to it, but have continued to do so, and acquiesced in its proceedings, and afterwards accepted, in satisfaction of the submitted claims, the amounts found to be due by the board. U. S. vs. Justice, 14 Wall., 535; U. S. vs. Childs, 12 Id., 232; U. S. vs. Adams, 7 Id., 463; Mason vs. U. S., 17 Id., 67.
The act of June 20, 1884, ratified all oral and written contracts of the District, and rendered all pleas of ultra vires ineffectual. The only questions are: what and how much work was done, and materials furnished by plaintiff? What was the fair cost? Has the plaintiff been paid; if not, what balance is due him? Strong vs. District, 1 Mackey, 265; Mattingly vs. District, 97 U. S., 687; Bissell vs, Jefferson- ville, 24 How., 294; Supervisors vs. Schenck, 5 Wall., 784; Gelpcke vs. Dubuque, 1 Wall., 220; Clinton vs. Englebrecht, 13 Wall., 446; Beloit vs. Morgan, 7 Wall., 623; Cooley, Const. Lim., 369-371.
Francis Miller and Henry E. Davis for the District of Columbia:
Action in assumpsit; but assumpsit will not lie on an instrument purporting to be under seal of both parties, though only one seal is attached. Hatch vs. Crawford, 2 Port., 54; Young vs. Preston, 4 Cranch, 239; Wood vs. Edwards, 19 Johns., 205.
The District is not liable for expense incurred on private property in changing the grade. 2 Dill., Mun. Corp., secs. 543, 782-3; Smith vs. Washington, 20 How., 135: Taylor vs. St. Louis, 14 Mo., 20; St. Louis vs. Gurno, 12 Mo., 414.
Plaintiff cannot maintain replevin to regain possession of the certificates without tender of the amount due the transferees, nor an action against the District for the work evidenced by the certificates when he cannot pass to the District the rights of the transferees. Talty vs. F. T. Co., 1 Mac A., 522; 93 U. S., 324; Ballard Co. vs. Mandel, 2 Mac A., 351; Fullerton vs. Sturgess, 4 Ohio St., 529; Weirick vs. Mahoning Bk., 16 Ohio St., 297; McNeil vs. 10th Nat. Bk., 46 N. Y., 325; Savage vs. U. S., 92 U. S., 382.
As to duress, see Mason’s Case, 17 Wall., 73, and Child’s Case, 12 Wall., 243; Russell vs. Langstaff, Douglass, 514.
There is no right of action for recovery of the difference between the face value of auditor’s certificates and the market value or value realized. Adams’ Case, 17 Ct. Cls., 351; Laughlin’s Case, 17 Id., 376; Brown’s Case, 17 Id., 402; Neuchatel Co.’s Case, 17 Id., 386; Morgan’s Case, 19 Id., 156; Looney’s Case, 19 Id., 230; S. C., 113 U. S., 258. See Baldwin vs. Ely, 9 How., 580.

Opinion:
Mr. Justice Merrick
delivered the opinion of the coart.
These cases come before this court, in the first instance, certified from the circuit court upon exceptions taken to the award of referees.
The reference stipulated that the referees should make separate findings of law and of fact, and should, together with their award, and as part of it, certify and return all the evidence, and all their findings of law and of fact into the circuit court.
The evidence and the findings of law and of fact are, therefore, all brought into court for revision. Now the power of a court, when all the facts and the law are brought before it on the face of the award, plainly is to review and set aside the award if it can be successfully challenged for any patent mistake of. law or fact apparent upon the face * of the proceedings. The court will, of course, observe the same hesitation to disturb the findings of fact upon evidence, which it would observe were there a motion for new trial after the verdict of a jury, and will not disturb such findings unless they be unsupported by evidence, or be so far opposed to the great preponderance of evidence as to leave the court free from doubt that the referees have erred in their conclusions of fact. The rules governing courts in such predicament are nowhere more clearly and concisely stated than in that admirable book, Adams' Equity, marginal pages 192 and 193.
Turning now to the exceptions in this case, the most important in principle and in the amount involved, are taken to the determination of the referees, that the defendant is responsible to the plaintiff for the face value, less what is shown to have been realized by him, of all the certificates of the Auditor of the Board of Public Works which were issued to him for work done, and which he hypothecated with third parties by endorsement in blank of himself or his constituted attorneys,' and which were, by the holders thereof, presented to and redeemed by the Board of Audit with 3.65 bonds, issued in virtue of the act of June 20, 18J4. So far as we can understand the somewhat confused findings, the referees base their conclusions in great part upon the tenth general finding of facts (p. 126, printed award) to the effect that the Board oi Public Works having failed to make monthly payments according to contract, Strong notified the defendant that he would be compelled to suspend work if the monthly payments were not made; whereupon certain members of the Board of Public Works, with the knowledge of all the others and without objection on the part of any, promised that if he would continue his work by borrowing money on his own notes, secured by pledges of auditor's certificates, the board would seasonably provide money for the payment of his notes; but they did not promise to make good all or any losses incurred from the sales of certificates at a sacrifice, in satisfaction of such pledges.
Now, assuming for the moment this finding to be accurate in point of fact, it is difficult to understand how such a promise to provide money to meet notes at maturity, or, in other words, to pay their already past due and dishonored debt at some newly designated period, could render the promisor liable in damages for not maintaining their own credit. The promise is, in substance and effect, an iteration of this existing or continuing obligation to pay an overdue debt, and nothing more nor less. But it is to be noted that the referees do not find any act or resolution of the board in their official character; and we are not aware of any authority or principle of justice, for holding that unofficial statements by any or all the members of a public body, at different times and places, made without that joint official deliberation for which the law provides, can be binding upon the municipality. There is no record of any such action or conclusion of the members of the Board of Public W orks. The testimony of Magruder, the treasurer, contradicts the conclusion of the referees; and the testimony of Shepherd, the president, was not even taken upon this subject. It would be of most dangerous, not to say fatal tendency, to sanction the notion that parol testimony of witnesses, were it clear and unqualified, could be admitted at the end of ten or twelve years to establish a contract of any kind by a municipal agency required by law to act within a very narrow range of power, and to keep a record of its public transactions. But to so loose an undertaking as the one now asserted (and which, moreover, was not within the scope of the delegated powers of the board, however formally it might have been entered into), a court could attach no efficacy. But how stands the matter in other aspects of the referee's findings, so far as the rights and obligations of the District are involved ? Samuel Strong was in need of money to prosecute large contracts which he deemed valuable to himself, and which, if you please, he was much urged to consummate. He did what many other persons were doing to the extent of perhaps millions of dollars; he took the certificates of the auditor for debts due by the District, and hypothecated them with third parties, in some cases in proper person, in others through attorneys and agents by him authorized, and delivered the hypothecated certificates to his pledgees endorsed, sometimes in blank or with a printed power of attorney or assignment over the signature, and threw them thus upon the public market. Floating side by side with such certificates and with precisely similar forms of endorsement, were other like certificates which he had sold, out and out. He made no distinction in the forms of his endorsements, as a prudent man would and ought to have done, between hypothecated certificates and those he had sold absolutely. In this state of things, the act of June 20, 1874, was passed (18 Stat. at L., p. 126, ch. 337), reorganizing the whole structure of the District government. By the 6th section of that law, all and every of the claims of Samuel Strong against the District derive their efficacy, if they have any force at all. W ithout the vitalizing influence of that statute, as this court has already adjudged in 1 Mackey, 265, he would have no standing in court for any purpose upon the claims advanced in this controversy. All the world had constructive notice of the functions conferred upon the Board of Audit by that law; and the board was required by it to give, and did give, notice to all persons having claims against the District to present them for liquidation, and the board was authorized to give to the claimants certificates of indebtment for their claims, which might be presented and allowed after full investigation, which certificates were to be exchanged at par for 3.65 bonds, by a sinking fund commissioner. Now Strong knew that his auditor's certificates had -been endorsed as above described and were outstanding, and might be presented to the Board of Audit for redemption, as in fact they all were presented and redeemed in 3.65 bonds.
It became, then, his duty to see to it that the Board of Audit should be in possession of any facts on which he might rely as an objection to the redemption of the certificates in favor of the possessors who, he knew, held through himself or his attorneys prima facie title to them. He did not do so; and not having done so, he was guilty of laches, and must be held to have allowed their payment in that manner without objection. See Adams' Case, 17 Ct. Cls., 351.
But it is said that Strong gave notices by virtue of which the District is chargeable with knowledge of the infirmity of the title of his assignees, viz., by his advertisements in the Evening Star of the 18th of December, 1813, and January 9, 1814, see 12th finding. And the 13th finding conveys the idea that the Board of Audit was not authorized to pay those who held Strong's hypothecated certificates without giving him notice in fact of their presentation.
In Adams' Case, 17 Ct. Cls., 351, it was shown that the plaintiff had filed a protest with the treasurer of the Board of Public Works, specifically claiming certain enumerated certificates which had been fraudulently disposed of by his pledgee; that notice was not filed with the board, and what became of it did not appear. Yet it was held that in the absence of the fact of this specific notice being brought home to the knowledge of the Board of Audit, he was concluded from claiming those certificates, they having been redeemed and paid to the holders in 3.65 bonds by the Board of Audit. In that case it having been held, first, that it was the duty of the original owners to appear before the Board of Audit and there give notice of their claims; and, secondly, that a specific notice which had been given to the treasurer of the Board of Public Works, who was a member of that body, not brought home to the knowledge of the board was of no avail to preserve- the equities of the original holder — it is vain to assert that the general notices of Strong, published in an evening paper, can signify anything. The decision in Adams' Case is adopted by the Supreme Court in Looney's Case, 113 U. S., 260. They there say that the nature and history of auditors' certificates, the so called sewer certificates and other securities of the District, as well as the legislation of Congress relating to them, have been fully stated in opinions delivered by the Court of Claims, and need not be recapitulated, and then refer by name to Fendall's Case, Adams' Case and Morgan's Case. The Court of Claims then having -stated the nature of these certificates and the effect under the legislation of Congress of their redemption, and the Supreme Court having unqualifiedly approved" those cases, which contain explicit statements that, by the endorsement in blank of the original holders, the possessors became clothed with an apparent ownership, which, in the absence of explicit notice of the equities of the original party, justified the Board of Audit in causing -them to be extinguished by an issue of 3.65 bonds to the possessor and ostensible proprietor; and that unless the true owner did give notice in fact to the Board of Audit he was guilty of laches, and must be held to have consented to and allowed their payment in that manner. The position taken by the referees that Samuel Strong is not chargeable with the full face value of all the auditor's certificates which he ever held, and which have been liquidated with 3.65 bonds, is manifestly erroneous. But long before those cases, the Supreme Court had decided in Cowdrey vs. Vandenburgh, 101 U. S., 576; the principle applicable to all choses in action whether negotiable or non-negotiable in the commercial sense, to wit: that when a party makes a blank assignment lie contemplates that the blanks may he filled up, if necessary, by the holder, and that the rights of innocent parties do not depend upon the actual title or authority of the party with whom they deal directly, but are derived from the act of the real owner which precludes him from disputing, as against them, the existence of the title or power which, through negligence or mistaken' confidence, he caused or allowed to appear to be vested in the. party making the conveyance thereof. It is further to be considered that this case is not a dispute between the first owner and any assignee, hut it is a.dispute between the creditor and his debtor, which debtor by and through a means and apparent authority furnished to him by the creditor himself, and after a public notice warning him and all others, to produce their claims, if any, before a lawful agency for liquidation, has been induced to pay the demand in full.
To allow him under such circumstances to he paid over again, would be gross injustice to an innocent public.
The errors into which the referees fell upon this' question, being patent on the face of their award, permeating nearly all of the claims, and the consequence of them being an allowance of largely more than double of what the plaintiff could recover upon all his claims together, were there no mistake of law or fact in any other matter, the court would he compelled to set aside the award.
Besides this fatal defect, and making every allowance for liberty of judgment in doubtful matters to the referees, there is an eminent probability that, with respect to some large allowances to which exceptions was taken, the referees have fallen into error. ;
Multitudinous as are the items in dispute between the parties and voluminous as is the evidence, this court cannot undertake to discharge the duties of an accountant, comparing all the items of complicated transactions, and then striking the exact balance. ' Without so doing we could suggest no exact basis of settlement, even were the right of a court to cut down an award and adjust the final balance clear, a question on wbicb we express no opinion. Being therefore unable to indicate an exact and definite result,, we are satisfied, after mature consideration, that it would not be appropriate to designate those eminently probable miscarriages to which'allusion is made; possible prejudices might arise to one or other of the parties from such expression, and we are not satisfied that an identification of those questionable allowances would result in promoting any settlement of the controversy. We are the more induced to this course from the fact that, after all the investigations which have taken place, the skilled professional advisers of the parties have before them all the elements to enable them, upon a careful review of the case, to approximate at least a result which will accomplish substantial justice, and terminate, by private convention between themselves, a protracted and vexatious litigation. The court will give an order vacating and annulling the whole award.