Credit Bureau Enterprises, Inc. v. Pelo

Dispute

Pelo was involuntarily committed to a hospital for severe mental impairment and asked to sign a payment consent form. He initially refused, then later signed. After his release, he refused to pay, stating he did not consent to the services. The hospital transferred the account to a creditor, who brought a small claims action. The small claims court entered judgment for the creditor, which Pelo appealed to the district court, which affirmed. Pelo appealed to the Iowa Supreme Court.

Rule of law

A person who supplies services to another without the other’s consent is entitled to restitution if he acted unofficiously with intent to charge, the services were necessary to prevent serious harm, the supplier had no reason to think the recipient would refuse consent if mentally capable of it, and consent is impossible.

Arguments

Pelo argued that his consent to payment was given under duress. He also argued that because the hospitalization referee later determined he did not need to remain hospitalized, the original hospitalization was unnecessary and he should not be required to pay. He further argued that being required to pay was a violation of his due process rights and freedom to contract.

The creditor argued that the consent to payment was sufficient, and even if it was not, it would be unjust enrichment for Pelo to receive services he did not pay for, when the services were required by court order.

Conclusion

The court held that the question of the consent form was immaterial because the plaintiff was entitled to recover the value of medical services under the theory of restitution. This was held to be a quasicontract or contract implied in law, not a contract implied in fact. The court stated that Pelo’s due process rights were not violated because a quasicontract was implied in law, not in fact, and thus was not subject to the ordinary limitations of contract law.

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