Looney v. District of Columbia

Looney v. District of Columbia, 113 U.S. 258 (1885), was a U.S. Supreme Court case testing whether a government contractor could sue for outstanding payment when those debts had already been sold off to other parties. The court ruled a street contractor could not both sell the debts at a discount as a security and also sue District of Columbia for the difference in what they were owed.

Background
The case involves a written contract made on September 11, 1872, between Dennis Looney and the Board of Public Works of the District of Columbia wherein Looney agreed to provide materials and labor and to grade and gravel Fourteenth Street East between B Street South and Boundary, in the City of Washington; agreeing to punctually pay in cash the workmen employed by him with the Board of Public Works paying him the amount found to be due to him periodically according to the contract. Looney held to his part of the contract terms. After evaluating the work and the account statements during the progress and completion of the work, it was calculated Looney was due $27,364.75; but due to a mistake in the calculations of which neither party was aware, this amount was $500.00 too much, Looney received standard certificates by the Auditor of the Board of Public Works in different sums, some of which Looney assigned to others as payment to them.

According to the case syllabus: "A creditor who receives from his debtor a certificate in writing, not negotiable, of the amount of his debt, and sells the certificate to a third person for value less than its nominal amount, thereby authorizes the purchaser to receive the amount from the debtor, and cannot, after the debtor has paid it to the purchaser, maintain any action against the debtor."

Decision
Justice Gray delivered the opinion of the court, which stated:

"The nature and history of the auditor's certificates and of the so-called sewer certificates and other securities issued by the District of Columbia as well as the legislation of Congress related to them, were fully stated in opinions delivered by the Court of Claims in other cases, so for this case it was sufficient to observe that the sewer certificates and other interest-bearing securities of the district were negotiable instruments, and that the auditor's certificates were not negotiable, but were merely evidence of the debt of the district to the claimant under its contract with him.

If he had kept the auditor's certificates, he could have used them as evidence to recover the full amount of the debt from the district.

But the facts found show that he has so dealt with these certificates as to prevent him from maintaining this suit. The amount of some of the certificates he has been paid by the District in money. Others of the certificates he has sold and assigned for value, and thereby transferred the equitable title in them to the assignee, and authorized him to receive payment of their amount from the District, and the payment of that amount in full by the District to the assignee is a discharge of so much of its debt to the claimant. The remaining certificates he has exchanged with the District for an equal amount of its negotiable securities, payable on time, with interest, and he has since sold those securities for their value in the market. The District is liable to the purchaser either upon those securities themselves or upon the other bonds since taken by him instead of some of them, and cannot be also held liable to the original creditor for the same amount or any part thereof.

The conversation was found to have taken place between the treasurer of the District and the claimant before he sold the negotiable securities has no tendency to prove any authority or any intention of the treasurer to make a new or different contract in behalf of the District."

The judgment was affirmed.