Case Name: The North American Neuchatel Rock Paving Company v. The District of Columbia
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1880-12
Citations: 16 Ct. Cl. 593
Docket Number: 
Parties: The North American Neuchatel Rock Paving Company v. The District of Columbia.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 16
Pages: 593–600

Head Matter:
The North American Neuchatel Rock Paving Company v. The District of Columbia.
On the Proofs.
The District of Columbia being indebted to its contractors, issues to them from time to time, as their work prorgesses, certificates of accounts allowed by the auditor of the District government. Such certificates are issued to the claimants, who sell or hypothecate them, and transfer title by indorsing them in blank. Among such certificates are tivo tlms indorsed and delivered to one Mandel as collateral security for a note of the claimant’s. Before the note becomes due, Mandel collects the full amount of the certificates from the defendants and absconds.
I. The certified accounts which the former government of the District of Columbia gave to its contractors from time to time as their work advanced, in lieu of cash payments, were merely written evidences of money owing to such contractors.
II. Such certificates being rights under a contract not yet reduced to pos- - session were choses in action.
III. As between the contractors and third persons to whom they transferred such certificates for value, with or without indorsement, the certificates were assignable.
IV. Where such certificates were left as collateral security for the payment of a note, being endorsed in blank by the contractor, they were assigned.
V.Where such certificates were tlms hypothecated and indorsed, the defendants were justified in paying the amount thereof to the holder on demand.
VI.Where the person holding such certificates as collateral collected the full amount thereof and absconded with the proceeds, the defendants cannot be required to pay a second time.
The Reporters’ statement of tlie case:
The following are the facts of this case as found by the court ^
I. The claimant is a corporation duly chartered under the laws of England.
II. On the 8th day of July, 1873, one Edwin Glaskin, of New York, was general manager and agent of said corporation, and on that day entered into the contract with the Board of Public Works of the District of Columbia, which is annexed to the petition. - »
III. At the samó time, and afterward, one Charles E. Oreecy,. of Washington, D. C., an attorney-at-law, was the attorney in fact, in that city, of the claimant, and of said Glaskin, under a power of attorney, in the following terms:
“ Know all men by these presents that I, Edwin Glaskin, of New York, general manager and agent of the North American Neuchatel Eock Paving Co., for divers good causes and considerations, have made, ordained, constituted, and appointed, and by these presents do make, ordain, constitute, and appoint O. Eaton Oreecy, of Washington, to be my true and lawful attorney, for me and in my name to collect all sums due to the above company, and generally to do, execute, and perform any other act, deed, matter, or thing whatsoever relative to the premises as fully to all intents and purposes whatsoever as I might or could do in my own proper person in case these presents had not been made, giving and hereby granting unto my said attorney my full and whole power and authority in the premises, hereby allowing, ratifying, and confirming, and agreeing to allow, ratify, and confirm all and whatsoever my said attorney shall .lawfully do or cause to be done in or about the premises by virtue and in execution of these presents.
“In witness whereof I have hereunto set my hand and seal this 14th day of October, in the year of our Lord one thousand eight hundred and seventy-three.
“Edwin Glaskin,
“ Oen’l Manager North American Neuchatel
uRoch Paving Company.
“ Signed, sealed, and delivered in the presence of— “Daniel G. Thompson.”
IY. The claimant, throughits general manager aforesaid, performed work under said contract to the amount of between $40,000 to $50,000. For such work, as it progressed, the board of public works caused to be issued and delivered to said Creecy, as attorney for tbe claimant, from time to time, certificates of accounts allowed by tbe auditor of said board, similar in form to those set out in tbe petition 5 and tbe said Creecy, in order to raise money to pay tbe creditors of tbe claimant, was accustomed throughout tbe whole or tbe most of tbe time of tbe progress of tbe work, to sell or hypothecate such certificates; and whether be sold or hypothecated them be indorsed them in blank, in tbe manner in which tbe certificates herein sued on appear to have been indorsed. Every certificate so issued and delivered to said Creecy was, at one time or another, hy-pothecated by him.
V. On the 12th of January, 1874, the two certificates set out in the'petition, one for $2,335.21, the other for $4,179.41, were issued and delivered by the said auditor to said Creecy for the claimant; and on that day Creecy presented the same to the treasurer of the board of public works, and demanded payment thereof, and the treasurer answered that he had no funds and did not know when he would have any.
Creecy, on the same day, hypothecated the said certificates with one M. Mandel, to secure the payment of said Creecy’s note for $2,600 to him, of that date, payable sixty days after date, with a printed condition annexed, that if, upon the maturity of the note, it was not paid, the holder had it at his op-tion to sell the certificates, and account to Creecy for any balance after cancelling the note. Mandel discounted said note at five per cent, off the face thereof, and Creecy received therefor the sum of $2,470.
Some days before the maturity of this note, Creecy called at Mandel’s office to pay it, and found the office shut up, and could not find Mandel, or any person to answer any inquiry, and he then learned that Mandel had absconded from Washington.
Creecy then called upon the treasurer of the board of public works, and told him that he had been swindled ; and the treasurer made memorandum of the certificates and the facts, and said that the certificates should not be paid.
Creecy then called on Governor Shepherd, the governor of the District of Columbia, and a member of the board of public works, and made the same statement to him, and requested him to see that he was protected; and Governor Shepherd promised that the certificates should not be paid.
On the 26tli of March, 1874, Creocy wrote to the board of public works the following letter, which was delivered to the board on the 30th of March:
“ Washing-ton, March 26,1874.
“ To the Board of Public Works, Washington, !>.' 0.:
“Gentlemen : Having been informed by reliable authority that the certificates received by me in January last, drawn to order of our Co., numbered 195 & 196, for $2,335-1 and $4,199A±, respectively, have been fraudulently disposed of, I have to request that no payment be made upon either of them until the question of legal ownership be settled by the board or the courts. I claim in behalf of our Co. the legal ownership.
“Yours, very truly,
“C. E. Ceeeoy,
uAg’t & AWy for the W.A. JSr. B. P. Go., “Per O. P. Latjbensen.
“Rec’d M’ch 30, ’74.”
YI. Meantime on the 28th of January, 1874, the said certificates were presented — by whom does not appear — at the office of the treasurer of the board of public works, and according to the entries in the books of the board appear to have been then paid; but whether they were paid in money, or in sewer certificates or other securities issued by the board, does not appear. On the books the payment was charged as in cash; but all payments, however made, were, in the entries in those books, treated as cash. • There was then written across the face of the certificates the words, “ Canceled by board of public works,” and the certificates have ever since remained in the possession of the defendant. Nothing has been written over Oreecy’s in-dorsements on the certificates. It does not appear that any officer or employé of the board of public works or of the District of Columbia had any knowledge, on or prior to January 28, 1874, of the hypothecation of said certificates, as above set forth.
Mr. Montgomery Blair for the claimant:
The payment to Man del, being unauthorized, did not discharge the debt of the District to the company. The payment was made to Mandel under the erroneous idea that his possession of the certificates vested him with all the rights of the contractor, just as if they had been negotiable instruments. But the au ditor bad no riglit to make orders on tbe treasurer which would be negotiable instruments, and by the indorsement of which the company would cut itself off from its right to receive actual payment for its work, and enable the district authorities to deal with the holder as if all the rights of the contractor were vested in him. (Police Jury v. Britton, 15 Wall., 566.)
And the certificates in question do not purport to be instruments of that character. They are simply vouchers, stating that a certain amount of work had been done by the company under a specified contract. It is well settled that the transfer of such an instrument to another party does not invest that party with all the rights of the contractor, for the reason that it is not a negotiable instrument.
For the purposes of this case it is not necessary to determine the exact status of the holder of such an instrument. It is enough that every assignee of unnegotiable paper takes it subject to the rights of the original holder and charged with notice of those rights. (Ballard Pavement Company v. Michael Man-del and others, 2 McArthur, p. 351. Goiodrey v. Vandenburgh, 11 Otto, 574.)
There is no difference whatever, in principle, between the Cowdrey case and this. In both the certificates were indorsed • in blank by the contractor. This authorized an assignment for value to be written above the indorsement, and hence the in-dorsement itself imported an assignment for value. Cowdrey held, therefore, precisely the same relation to the certificate as the District holds, for the presumption of payment by Cowdrey is equivalent to the proof of actual payment made by the District. And, as the court held Cowdrey to be charged with the knowledge of the fraud of Blumenberg, notwithstanding he held the certificate under the blank indorsement of the contractor, it is impossible to shield the District from being charged with the same knowledge under circumstances exactly identical in legal effect.
And if the judgment ought not to go against the District because it paid in actual ignorance of the fraud, it ought not to have gone against Cowdrey, because he denied all knowledge of the fraud, and there was no proof to connect him with it, and his possession of the certificate under a blank indorsement of the contractor carried with it the presumption of payment by him in like ignorance of the fraud.
Mr. Assistant Attorney-General Simons (with whom was Mr. O. Fay) for the defendant:
The defendant is not bound by the contract mentioned in the petition, or any acts of the board of public works thereunder, because the board had no power to make it, there being no appropriation under which it could be made. (16 Stat. L., 427, §37.)
That these certificates are not negotiable instruments is settled. (101 U. S., 572.)
It may be that, in the absence of proof of the real intent of the indorser, the law will hold that such an indorsement does not by itself transfer the title; but there is no question that it is so far an evidence of such an intent that, if a formal assignment is written over it by the transferee, the signature will be presumed to have been indorsed for that purpose. (Kortwright v. Buffalo Commercial Banlc, 20 Wend., 91.) But affirmative evidence of the intent is always receivable, and when shown by words, actions, or the circumstances of the case, dispenses with all formal requirements, operating by way of estoppel on the party to deny the purpose so indicated toward another who has acted on the faith of it. (Jarvis v. Rogers, 13 Mass., 105; MoNeil v. Ninth National Banlc, 46 N. Y., 325; N. Y. & N. H. R. R. v. Schuyler, 34 id., 30.)
The claimant is estopped by his laches, if in no other way, from maintaining the claim. Besides the delay in giving notice after maturity of the note, he has for seven years acquiesced in the payment, neglecting to exercise such legal rights and remedies as he might have. The result is that the District, if liable to him, is in a worse position by reason of his neglect. It cannot now pursue the party to whom it made payment, and could not probably realize anything from prosecuting the bond of the treasurer.

Opinion:
Drake, Ch. J.,
delivered the opinion of the court:
Upon the facts found the questions of law are few and simple, and do not require extended discussion. We will state them succinctly.
1. What, in legal view, are the certificates sued on? We answer that they are merely written evidences of money owing ' to tbe claimant under a contract between it and tbe defendant represented by tbe board of public works.
2. Was tbe indebtedness so evidenced a chose in action? Tbe claimant contended that it was not; but surely we need go no further than to tbe handbooks of tbe law to show that any right under a contract, either express or implied, which has not been reduced to possession, is a chose in action.
3. Was that chose in action assignable? Beyond doubt, as between tbe claimant and to any one to whom be transferred tbe certificates for value, whether with or without indorsement.
4. Was it assigned in fact? Of this there can be no question. The claimant avers that the certificates "were left with Man del, as collateral security for the payment of a certain note running for sixty days, amounting to the sum of $2,600"; and the finding of facts shows such to have been the case; and, moreover, that they were so left, with the indorsement ¡thereon, in blank, of the claimant's attorney; whose authority to make such indorsement was not at all disputed or questioned at the trial. On the contrary, the petition, in effect, admits his authority, by asking judgment, not for the amount specified in the certificates, but for the balance thereof after deducting the amount of the note given to Mandel; and furthermore, it is found as a fact that the attorney, in order to raise money for the claimant, had at one time or another hypothecated every one of the certificates which were issued to the claimant under the contract in question, and also sold some; and in every instance of either hypothe-cation or sale, indorsed the certificates in blank.
5. Was the defendant justified in paying that indebtedness to the holder of those certificates, so indorsed in blank by the claimant's recognized attorney? We do not hesitate to answer affirmatively. That indorsement, was a full authority to the holder of the certificates to demand and receive payment thereof from the defendant; unless the latter could be shown to have had notice that such payment would be a fraud upon the claimant. No such notice was given to any officer of the defendant until long after the certificates had been presented to the treasurer of the defendant, and paid. For aught that appears, the treasurer may have supposed, as he would have been fully justified in doing, that the person presenting the certificates, so indorsed, was an agent or servant of the claimant. Whether so or not, the claimant's acknowledged attorney, by that indorse ment, put it as much, in the power of the holder to receive tbe payment, as if be bimself bad personally presented tbe certificates and received tbe money for them.
6. Tbe defendant having- made tbe payment under such circumstances, tbe next and final question is, whether tbe District of Columbia shall be condemned to pay tbe debt a second time? We can see no justification for doing so. If one of two parties must lose through such a payment, it must be tbe one whose act authorized it to be made, and not tbe one who, on tbe face of tbe transaction, appears to have been innocent of any wrong.
In argument tbe claimant's counsel urged that this case is controlled by tbe decision of tbe Supreme Court of tbe United States in Cowdrey v. Yandenburgh (101 U. S. R., 572) j but, in our judgment, that case has no bearing here. True, tbe matter out of which tbe controversy grew there was just such a certificate of tbe auditor of tbe board of public works as those involved here, indorsed in blank by the party to whom it was issued, and by him hypothecated to secure payment of a loan; but at this point the similarity between tbe two cases disappears. There, tbe controversy was over tbe ownership of tbe certificate, between tbe party to whom it was issued, and who bad hypothecated it, and. a party claiming title to it through tbe pledgee, and not showing that be bad obtained it from tbe pledgee for valué.. Tbe Supreme Court held, that, as between a bolder who bad given no value for tbe certificate and tbe hypothecating owner, tbe former stood in tbe position of the pledgee, and could assert no rights which tbe pledgee could not assert; and decreed tbe certificate to tbe original owner.
But in tbe course of their opinion that court declared a principle to be well settled, which applies here with great force, that "when tbe owner of property in any form clothes another with tbe apparent title or power of disposition, and third parties are thereby induced to deal with him, they shall be protected." Much more, in such a case, should a debtor be protected in making payment of a debt to one whom tbe creditor has clothed with tbe apparent right to receive it.
Tbe judgment of tbe court is, that tbe claimant's petition be dismissed.