Bismarck Hospital Ass'n v. Burleigh County, 8275

• Decision Date: 08 December 1966
• Docket Number: No. 8275,8275
• Citation: 146 N.W.2d 887
• Parties: BISMARCK HOSPITAL ASSOCIATION, a corporation, Plaintiff and Appellant, v. BURLEIGH COUNTY, North Dakota, a political subdivision of the State of North Dakota, Defendant and Respondent.
• Court: North Dakota Supreme Court

Page 887

146 N.W.2d 887

BISMARCK HOSPITAL ASSOCIATION, a corporation, Plaintiff and Appellant, v. BURLEIGH COUNTY, North Dakota, a political subdivision of the State of North Dakota, Defendant and Respondent.

No. 8275.

Supreme Court of North Dakota.

Dec. 8, 1966.

Syllabus by the Court

1. A contract is either express or implied. An express contract is one the terms of which are stated in words. An implied contract is one the existence and terms of which are manifested by conduct.

2. Under the facts in this case, there was not an express contract but there was an implied contract, under which it was the obligation of the defendant to pay the plaintiff on a Quantum meruit basis for the reasonable value of the services furnished by plaintiff, inasmuch as said implied contract did not specify an amount.

3. The phrase 'quantum meruit' means that the obligation is one imposed by law without regard to the intention or assent of the parties bound, for reasons dictated by reason and justice, and it is consistent with liability on an implied contract proper, or contract implied in fact.

4. On Quantum meruit, recovery is allowed for services performed for another on the basis of a contract implied in law or an implied promise to pay the performer for what the services were reasonable worth.

5. Agency is the relationship which results where one person, called the principal, authorizes another, called the agent, to act for him in dealing with third persons.

6. The relationship of principal and agent is not dependent upon express agreement between the parties--it may be implied from either words or conduct of the parties depending upon the circumstances of the case.

7. Under the facts of this case, a relationship of principal and agent existed between the defendant, Burleigh County, through its county welfare board, as principal and the State Welfare Board, as agent.

Fleck, Smith, Mather, Strutz, Mayer & Stewart, Bismarck, for plaintiff and appellant.

Albert A. Wolf, State's Atty. of Burleigh County, Bismarck, for defendant and respondent.

MURRAY, Judge (on reassignment).

This is a case tried without jury in the County Court of Increased Jurisdiction of Burleigh County.

Plaintiff-appellant Bismarck Hospital Association operates a facility called 'Bismarck Hospital' (to be hereinafter so called), which sued the defendant-respondent Burleigh County, claiming indebtedness arising out of hospital services furnished by plaintiff at the request of the defendant, acting by and through the defendant's welfare department for and on behalf of eight of its welfare patients. The lower court dismissed plaintiff's complaint. Plaintiff appealed and demanded trial de novo.

Defendant-respondent has conceded in its brief that the statement of facts given in plaintiff-appellant's brief is true and correct. Therefore, said statement of facts will be reproduced here verbatim. This lengthy recitation of admitted facts is necessary in order to understand the complex historical relationship of the parties.

'STATEMENT OF FACTS

'The background of the relationship between the plaintiff and the Defendant which gives rise to the litigation here at bar may be summarized as follows:

'Prior to the date of April 1963, the Plaintiff, Bismarck Hospital Association, was bound by virtue of an agreement negotiated between the North Dakota State Welfare Board and the Hospital Association of North Dakota to provide hospital care for welfare patients. These agreements were similar in nature to those set forth in Exhibits A, B, C and D. * * *

'The agreement was on a year-to-year basis and was adjusted annually by the Association and the North Dakota State Welfare Board. * * * The basis of adjustment was predicated upon the schedules of cost submitted by the various hospitals in certain bed group categories. * * *

'In April of 1963 the Hospital Association was notified by the North Dakota State Welfare Department that it would be necessary to adjust the per diem rate schedule on all hospitals, effective July 1, 1963. This for the reason that the appropriated funds of the North Dakota State Welfare Department indicated that an adjustment may be necessary. * * * Thereafter an adjustment was promulgated by the State Welfare Department, purportedly effective July 1, 1963, and the Hospital Association was then notified of the adjustment. * * * The adjustment was made by the State Welfare Department as set forth in Exhibit A, effective July 1, 1963.

'The North Dakota Hospital Association, after being advised of the purported adjustment, indicated its dissatisfaction of any adjustment to the North Dakota State Welfare Department. * * * As a result of the dissatisfaction, a subsequent readjustment was made in September of 1963, but the adjustment did not include the months of July through August of 1963. * * * Thus, during the months of July and August of 1963, there was no existing agreement between the North Dakota State Hospital Association and the North Dakota State Welfare Department as to a per diem rate schedule for hospital services. * * *

'It is also a fact that the North Dakota State Welfare Department notified the Bismarck Hospital Association that the North Dakota State Welfare Department would not pay the Bismarck Hospital on the per diem rate schedule that had been established in the Spring of that year. * * *

'The relationship of the Burleigh County Welfare Department to the Welfare Department of the State of North Dakota is evidenced by virtue of the testimony of Miss Bertha Ellingson, the Director of the Burleigh County Welfare Board. Her testimony is to the effect that the per diem rate schedule of the counties is, in fact, based upon the agreements between the North Dakota State Welfare Department and the North Dakota Hospital Association (not to be confused with the plaintiff, Bismarck Hospital Association). * * *

That in addition, as the Director of the Burleigh County Welfare Board, she knew that there had been a disruption in the per diem rate schedule existing between the North Dakota State Welfare Department and the North Dakota Hospital Association. She admitted that although she knew a disruption existed, she was advised by the State Welfare Department to continue paying the same per diem rate. * * * Miss Ellingson further stated that the Burleigh County Welfare Board accedes by agreement to the supervision and direction of the State Welfare Department. * * *

'The bills for services performed by the Bismarck Hospital Association relating to Welfare Patients of Burleigh County, North Dakota, are set forth in Plaintiff's Exhibits 1 through 21, inclusive, and as evidenced therein, the services were performed in the months of July and August of 1963. It is also disclosed from the exhibits that full payment to the Plaintiff was not made on the basis of the bill charges therein, but on the basis only of per diem schedules arbitrarily concluded by the Defendant. It is submitted that the difference between the actual bill charges and the amounts paid by Burleigh County to the Bismarck Hospital Association for those services is in the sum of $860.57.'

Although each county welfare board purports to be an independent organization, it is subject to some state supervision and has to agree to certain policies of the State Welfare Department because a substantial part of its financing is derived from State and Federal funds. Even though each county has a responsibility of participating financially in all payments made in this public welfare program, these payments are made through the State welfare office, with part of such payments being charged back to the county to be paid out of its individual funds.

The difference between the actual bill charges and the amounts paid by Burleigh County to the Bismarck Hospital for these services is in the sum of $860.57, which is the amount in question in this action.

The Burleigh County Court of Increased Jurisdiction determined that, shortly before the transactions involved in this action, the parties had terminated their agreement as to the per diem hospital rates; that no notice of such termination was given to or received by the Burleigh County Welfare Board; and that the Bismarck Hospital made no effort to inform the Burleigh County Welfare Board that the per diem rates had been terminated. The court also found that the Bismarck Hospital proceeded to treat the patients involved and later filled out authorizations with a set of figures based upon private charges usual in the area but which were not contemplated by the Burleigh County Welfare Board. The court then concluded that there was no meeting of minds between the plaintiff and the defendant, but the plaintiff and the defendant and that the Bismarck Hospital could not recover on the basis of the reasonable value of services performed because an implied agreement existed between the parties created by practice and usage, which by law continued in existence until revoked by one of the parties or until such time as the Bismarck Hospital informed the Burleigh County Welfare Board of the fact that the per diem understanding had been terminated. As a result, the lower court found that the per diem rate agreement was still in effect during the period in question and should be the basis for payment by the Burleigh County Welfare Board to the Bismarck Hospital with the hospital's cause of action being dismissed.

An examination of the transcript reveals no real issues of fact or conflicts of testimony that are material here. This court does have before it a very definite question of law as to the purported existence of an implied contract after the termination of a previous agreement. It is also clear that, during the period of July and August of 1963, no express agreement was in existence.

Section 9--06--01 of the North Dakota Century Code defines express and implied contracts as follows:

'A contract is either express or implied. An express...