Joseph C. Waddy, 67, a judge of the U.S. District Court for the District of Columbia, died yesterday at the Washington Hospital Center. He had been suffering from emphysema and a heart disorder.

Judge Waddy, whose death occurred one day after he had retired from the court for reasons of health, once said that he believed that lawyers were "social engineers (who) had a responsibility . . . to improve society."

That he sought to live by this precept was evident from much of his career.

During his 11 years on the federal bench, to which he was appointed by President Lyndon B. Johnson in 1967, he issued a series of rulings aimed at improving the education provided by the D.C. public school system to handicapped children. At one point, he held Mayor Walter E. Washington and other city officials in contempt of court for failing to obey his orders.

On another occasion, he ruled that city police had acted improperly during the massive protests against the Vietnam war that occurred in the city between 1969 and 1971. (He later was reversed by the U.S. Court of Appeals).

He also liberalized the conditions under which abortions could be obtained in the District of Columbia, ordered the Department of Human Resources, the city's welfare agency, to speed the process by which lost or stolen welfare checks are replaced, and held that President Nixon could not use a Christmas recess by Congress to kill a piece of medical legislation by pocket veto.

For five years before he was appointed to the federal court, Judge Waddy was a judge in the domestic relations branch of the D.C. Municipal Court, now the D.C. Superior Court, to which he was appointed by President John F. Kennedy in 1962.

For more than 20 years before that appointment, he was one of the leading black lawyers in Washington. He took part in several important cases that forced railway unions to protect the rights of black workers as well as those of white workers. Three of these cases were decided by the U.S. Supreme Court.

In the last of these decisions, handed down in 1957, the late Justice Hugo L. Black said for the Supreme Court:

"Once again, Negro employees are here under the Railway Labor Act asking that their collective bargaining agent be compelled to represent them fairly . . . This court has emphatically and repeatedly ruled that an exclusive bargaining agent, under the Railroad Labor Act, is obligated to represent all employes in the bargaining unit fairly and without discrimination because of race and has held that the courts have power to protect employes against such invidious discrimination."

Judge Waddy handled that case from start to finish. At the time, he was a member of the Washington law firm of Houston, Waddy, Bryant & Gardner.He was the general counsel of the Association of Railroad Trainmen & Locomotive Firemen, the International Association of Railway Employees and the Colored Trainmen of America.

Other former members of the Houston law firm include William B. Bryant, now the chief judge of the U.S. District Court here, and Theodore R. Newman, chief judge of the D.C. Court of Appeals.

Judge Waddy was born in Louisa Couty, Va. When he was 7, his family moved to Alexandria, where his father worked for the Chesapeake and Ohio Railroad and for an ice company. The family later moved to Washington and the future judge graduated from Dunbar High School.

The year was 1931 and the Great Depression already was two years old. Young Waddy won a national oratorical contest and the prize was a $1,000 scholarship and $500 in cash. He used the money to go to Lincoln University in Pennsylvania, from which he graduated with honors in 1935. He then won a scholarship to Howard University Law School and graduated first in his class in 1938.

Judge Waddy recalled years later that there was a $25 fee for taking the D.C. Bar exam at that time and that an electrician who lived nearby gave him the money to do so. He was admitted to the bar in 1939 and joined the Houston firm.

The firm was headed by Charles Hamilton Houston. Judge Waddy said that he went to work for Houston for nothing, supporting himself as a $40-a-month elevator operator. Houston eventually told him that he would have to decide whether he wanted to be an elevator operator or a lawyer and he chose the latter, Judge Waddy recalled. At the same time, Houston began paying him for the legal work he performed. In 1946, after two years of Army service in World War II, Judge Waddy became a partner of the firm.

Despite the prominence of the Houston law offices and the scope and importance of the work it did, there was little money in it, Judge Waddy said years later. He said that representing indigent clients without fee was routine. "It was just part of the dues you paid," he said in 1976. The prospect of financial stability was a factor in his accepting appointment to the old Municipal Court, according to friends.

Perhaps the most publicized of the cases that Judge Waddy had as a federal judge was the litigation concerning the provision of education for handicapped children by the D.C. public school system. The case lasted six years. The basic issues were decided in 1972, when Judge Waddy ordered that the city's public schools give adequate, publicly support instruction to all physically, mentally and emotionally handicapped youngsters of school age.

The most difficult phase of the case was in getting that order implemented. It was in the course of these efforts that Judge Waddy held Mayor Washington and other city officials in contempt in 1975. The judge did not give final approval to the city's implementation plan until 1977.

One of his more controversial rulings was that involving the conduct of police during the antiwar demonstrations here from 1969 to 1971. In 1975, he found that the police had exceeded their authority and violated the rights of demonstrators. Among the corrective steps he ordered with the preparation of a manual on police practices in such situations. He directed that the police department expunge the records of those arrested.

Except with respect to the dropping of arrest records, the Court of Appeals reversed Judge Waddy.

Chief Judge Bryant said of Judge Waddy yesterday that as "members of the court we've lost a good judge, a good colleague, and all of us, and especially me, have lost a good friend. He'll be missed."

Judge Waddy's survivors include his wife, the former Elizabeth Hardy Gregg, whom he married in 1941, of the home in Washington, and a son, Joseph C. Jr.