Municipal Corporations – Contracts – Ratification and Estoppel in Contracts Made By Unauthorized Agent

Plaintiff’s infant daughter, admitted to Newark City Hospital as an emergency case, received hospitalization and medical treatment worth $1,190 during her seventy-day period of confinement. The medical director of the hospital had made an agreement with the Hospital Service Plan of New Jersey which provided that regardless of the amount or quality of the hospitalization required, payment of the flat sum of $100 for any subscriber-patient would constitute payment in full to the city. The city accepted the $100 check paid by the Plan as billed by the hospital for the care of the child. In order to facilitate settlement with the person whose alleged negligence had caused his daughter’s injuries, by removing the city’s hospital lien for the balance of the charges for treatment, plaintiff sued for a declaratory judgment absolving him of any liability to the city. The real contest having evolved between the city and the Plan, the trial court rendered judgment for the Plan ordering cancellation of the lien. On certification to the New Jersey Supreme Court, held, affirmed, one justice dissenting without opinion. Even assuming that the medical director was without authorization to consummate the agreement, the city is bound by its subsequent course of conduct which impliedly ratified the contract, and is also estopped to deny its validity. Johnson v. Hospital Service Plan of N.J., (N.J. 1957) 135 A. (2d) 483.