Case Name: IRVING GREENBERG, PLAINTIFF-RESPONDENT, v. DONALD FORNICOLA, KENDALL H. LEE, ETC., ET AL, DEFENDANTS-APPELLANTS
Court: Supreme Court of New Jersey
Jurisdiction: New Jersey
Decision Date: 1962-03-05
Citations: 37 N.J. 1
Docket Number: 
Parties: IRVING GREENBERG, PLAINTIFF-RESPONDENT, v. DONALD FORNICOLA, KENDALL H. LEE, ETC., ET AL, DEFENDANTS-APPELLANTS.
Judges: 
Reporter: New Jersey Reports
Volume: 37
Pages: 1–18

Head Matter:
IRVING GREENBERG, PLAINTIFF-RESPONDENT, v. DONALD FORNICOLA, KENDALL H. LEE, ETC., ET AL, DEFENDANTS-APPELLANTS.
Argued December 19, 1961
Decided March 5, 1962.
Mr. Felix A. Be Swrno argued the cause for defendants-appellants Kendall H. Lee and City of Asbury Park.
Mr. Charles Franlcel argued the cause for defendant-appellant Donald Eornicola.
Mr. George 8. 81colcos argued the cause for plaintiff-respondent.

Opinion:
The opinion of the court was delivered by
Weintbaub, C. J.
The Appellate Division held that a
lease from the City of Asbury Park to defendant Eornicola was void for failure to comply with the law relating to competitive bidding. 65 N. J. Super. 104 (1961). We granted certification. 36 N. J. 28 (1961).
Dnder the lease the premises were to be used "for the sale of frozen desserts, ice cream, drinks (soft) and milk products." Subsequently the lease was amended to exclude "frozen desserts" and to substitute therefor "cold sandwich platters, cakes, pies, coffee, frankfurters and hamburgers."
Plaintiff also held a lease from the city of premises some 500 feet away. His lease permitted the sale of frankfurters and hamburgers. Deeming defendant's sale of these products to compete with his business, plaintiff, as a taxpayer, sued to compel the city to enforce the Fornicóla lease as originally drawn. On cross-motions for judgment, the trial court found for the defendants.
Upon appeal to the Appellate Division plaintiff initiated the further claim that the lease to Fornicóla was void because of noncompliance with the bidding statute. The Appellate Division accepted the new issue. Thus a suit to compel performance of a lease became one to void it.
Our practice permits an appellate court to notice plain errors affecting substantial rights of a party, although they were not brought to the attention of the trial court. R. R. 1:5-3 (c). In Howard D. Johnson Co. v. Township of Wall, 36 N. J. 443 (1962), we said:
" Unquestionably, this authority of an appellate court will not be casually invoked. The rule does not contemplate that litigation shall be routinely rerun to explore all questions which may conceivably be involved. But where upon the total scene it is manifest that justice requires consideration of an issue central to a correct resolution of the controversy and the lateness of the hour is not itself a source of countervailing prejudice, the appellate court may accept the question and indeed itself raise it, as on occasions we have."
The Appellate Division acted under this residual power to do justice. The difficulties here are twofold. First, the new issue was foreign to what was tried below, and hence a record was not developed in the light of it. Second, sight seemingly was lost of the principle that attacks upon public contracts must be seasonably made. See Robbins v. City of Jersey City, 23 N. J. 229, 237-239 (1957); Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N. J. 493 (1955); Travis v. Borough of Highlands, 136 N. J. L. 199 (Sup. Ct. 1947).
An action to contest the lease should have been brought at least within 45 days. R. R. 4:88-15(a). Sub-paragraph (c) of that rule provides the court may enlarge the period "where it is manifest that the interests of justice require." Here the lease was first challenged in a brief filed 14 months after it was made. The transaction had been fully publicized. The authority to lease is not disputed, and the city had sought to comply with the bidding statute. Thus the issue is not one of power to act. See Oldfield v. Stoeco Homes, Inc., 26 N. J. 246, 262 (1958). Nor is corruption alleged. Rather, plaintiff projects at best a debatable question concerning the sufficiency of specifications. It may be doubted that an original suit so long after the event would be entertained except upon a moving explanation of the delay and a demonstration of the fairness of a quarrel at so late an hour.
Defendants, however, do not complain, and the matter having reached the present stage, we will accept this additional issue.
I.
For the reasons we have stated, the record is not too satisfactory. We gather these facts: In the spring of 1959, the city erected a pavilion on its boardwalk, consisting of bathing facilities and six stores, at the approximate cost of $450,000. The city advertised for bids for the stores as it was required to do by N. J. S. A. 40:61-36 to 40. Asbury Park Press, Inc. v. City of Asbury Park, 19 N. J. 183 (1955); Asbury Park Press, Inc. v. City of Asbury Park, 23 N. J. 50 (1956). The city also communicated directly with leading restaurant operators to excite their interest in the proposals.
The initial approach was to specify the class of goods to be sold in each store. Some seven advertisements of specifications so phrased were unproductive. The city then amended the specifications to provide that:
"The bidder be permitted to submit an offer for some other line of business suggested by the bidder, and subject to the approval of the City Council."
Eornicola submitted a bid in which he specified the products to be sold. We gather he was the sole bidder for the store in question. An award was made and a lease executed.
Competitive bidding is designed to obtain tbe best economic result for tbe public. Weinacht v. Board of Chosen Freeholders of County of Bergen, 3 N. J. 330, 333 (1949). Inherent is the requirement that the public body shall prescribe a common standard on all matters that are material to the proposals, to the end that interested persons may bid intelligently and will be induced to bid by the promise of impartiality which only specifications of that quality can give. Tice v. City of Long Branch, 98 N. J. L. 214, 215 (E. & A. 1922); Waszen v. City of Atlantic City, 1 N. J. 272, 283-284 (1949); Township of Hillside, Union County v. Sternin, 25 N. J. 317, 322 (1957); Fereday § Meyer Co. v. Board of Pub. Works of City of Elizabeth, 27 N. J. 218, 223 (1958).
The Appellate Division found the provision permitting a bidder to suggest a line of business enabled each bidder to fix his own standard, thus violating the principles we have set forth. It said the rental value of premises depends upon the use to which they are put, and hence there was no "common standard" for the bidding. We agree, of course, that the nature of the authorized use may affect rental value, but we are unable to agree that a common standard is lacking when all bidders have the common right to suggest the use, notwithstanding that the right to disapprove is reserved.
A prospective tenant knows what business he wants to conduct. He starts with that interest and seeks a place to further it. If the location appeals to him, he is concerned with the amount of space and the length of the term; and if the space and term are specified, he is able intelligently to submit an offer.
Restrictions upon use of course may affect the bidding. Perhaps, analytically, they so operate by way of limiting the number of persons who are interested rather than by altering the common standard, i. e., space and term. At any rate, the question is whether they are legally permissible, and if so, whether they may take the form the municipality here employed.
Although limitations upon use tend to reduce the likelihood of the greatest dollar yield, yet a prudent owner cannot be indifferent to the use of his property. Some uses may injure or degrade the premises or impair the return from the remainder of the property. And in special circumstances the owner may wish only a particular use, to further another interest he has in the total scene, even though that use may not attract the highest rent. Thus, for any of the suggested reasons, good management may dictate that the owner accept something less than the best return.
We think it clear the Legislature did not intend to deny to the municipality the right thus to protect its total interest by suitable restrictions upon use. R. S. 40:61-37 expressly authorizes a letting "upon such terms and conditions as it [the municipality] may prescribe." This provision is not as explicit as, for example, the provision of another statute, not here involved, which authorizes a municipality to lease "to the person who will pay the highest rent therefor, for any use not detrimental to such building or the use of the remainder by the municipality," R. S. 40:60-42, but we have no doubt the statute here involved embraces the same thought.
Plaintiff argues, however, that a limitation upon use is compatible with the bidding statute only if the acceptable uses are specified in the proposal for bids, and hence a proposal for any use, subject to disapproval, violates the statutory policy. The statute does not express that distinction, and we should not find it by implication unless the sense of the situation so requires.
A private owner would hardly take the route urged by plaintiff. He would not limit his opportunity for the highest return by divining in advance the particular uses he would consider to be appropriate. Rather he would welcome all offers and then decide whether the highest should be refused because of some disadvantage in the use proposed. The soundness of that course is illustrated by the experience in this case. The original plan for bids for predetermined uses evoked no response, whereas the broader approach proved productive. The broader approach is well calculated to achieve the highest bid, the very aim of the bidding statute. It thus comports with the statute unless it is so beset with the prospect of evil that we must find incompatibility on that account.
The bidding statute seeks to prevent a predetermined result for a favored bidder. We see no special prospect of this evil in a proposal for bids for any use, subject to disapproval. Indeed, the specification by the public body of a particular use can more readily be turned to an improper end, for the more specific the use, the fewer will be the interested parties. Here, as in other settings, undue specificity can be the vehicle for favoritism. See, for example, Waszen v. City of Atlantic City, supra (1 N. J. 272); Shore Gas & Oil Co. v. Borough of Spring Lake, 27 N. J. Super. 33 (App. Div. 1953). True, a reserved right to reject could be exercised invidiously, but overall the opportunity to reach a preconceived result is much narrowed, for if the highest bid should be refused, the public body would be under the compulsion of public opinion and judicial review to give a tenable reason for accepting less. Hence when all bids are in, it is easier to detect a corrupt motive than when the attack is upon specific limitations contained in the specifications. Por these reasons an interested person would not be dissuaded from bidding because of a fear that the contest has been rigged.
We do not say that a municipality may not specify in advance the uses it will permit. It doubtless may do so if under the circumstances that course is reasonable. Rather we hold that an open proposal, subject to disapproval as to use, is not incompatible with the bidding statute.
It may well be that the reservation here could have been more explicit. Por example, it might well have expressed the basis for rejection, i. e., if the use is injurious to the demised premises, or prejudicial to the interest of the city in its remaining property, or incompatible with the pur poses of a boardwalk pavilion. Perhaps a standard of that nature is implicit and would be judicially inferred. At any rate, we are not inclined, at this late date, to consider the degree of perfection which the city could have achieved in its phrasing of the reservation. ETo bid was in fact rejected, and the likelihood that any bid was deterred is too remote to warrant upsetting a completed transaction.
II.
This brings us to the issue advanced in the complaint, upon which the Appellate Division expressed no view because of its holding that the lease was void.
Plaintiff does not charge bad faith, arbitrariness or improvidence. Rather he presses only a proposition of law, to wit, that the bidding statute forbade any modification or relaxation of the terms of the lease. Expressed otherwise, plaintiff contends the product of competitive bidding is immutable, and that if the parties wish a modification, they must rescind the lease and submit the subject anew to competitive bidding.
The undisputed facts are these: After the lease was executed, the city received a bid for another store in the pavilion, the purpose of the bidder being to sell frozen custard. The practical impediment was the authority in the Eornicola lease for the sale of "frozen desserts." The city asked Eornicola to agree to delete "frozen desserts" in exchange for permission to sell cold sandwich platters, cake, pie and coffee. Eornicola agreed. Later, but prior to formal approval by the Council, Eornicola was permitted also to sell hamburgers and frankfurters, under circumstances we will presently relate. The amendment of the lease as formally approved included these additional items as well.
Quite obviously it would not be feasible to say the city's right to meet an unanticipated need is conditioned upon a tenant's willingness to risk the result of new bidding. The city was the moving party. Fornicóla was agreeable to the change upon his evaluation of its economic worth. It would have been foolish of him to jeopardize his investment and business to accommodate the city. The goal of the bidding statute is not impaired when the public body in its own interest seeks an amendment to meet an unanticipated development in circumstances in which new bidding would be inappropriate or impractical. See Home Owners Const. Co. v. Borough of Glen Rock, 34 N. J. 305, 315 (1961). It would be unreasonable to construe the act to deny to the municipality an opportunity to bargain for a needed change.
So much of the amendment as relates to hamburgers and frankfurters presents a different problem, if we assume, as the record suggests, that permission to sell them was not part of the bargained consideration. It appears that the city suggested that Fornicóla handle those delicacies to meet the complaint of visitors and city employees that they were not available at the pavilion. We gather the nearest place they could be bought was beyond a public street and the city's ordinance forbade anyone to cross the street in bathing attire. The question then is whether the city may relax a restriction upon use to obtain a service the city wishes to be provided.
A municipality may deal with its contracts in the same manner as a natural person in the absence of statutory or constitutional limitation. Carlin v. City of Newark, 36 N. J. Super. 74, 92-93 (Law Div. 1955). Here the restriction upon use was not a term of the bidding specifications, and hence the case is unlike Vaccaro v. Asbury Park Enterprises, 42 N. J. Super. 288 (App. Div. 1956), where lands were sold upon the condition that a structure of specified type be erected and then, without any justification (see Oldfield v. Stoeco Homes, Inc., supra (26 N. J. 246, 261)), the city permitted a change which would have materially altered the basis upon which bids had been submitted. So far as the present record goes, any inter ested party could have bid for the store upon a proposed use which would have embraced all of the items Eornicola was later permitted to sell. Since the restricted use here was not part of the specifications upon which all bidders had to bid, the restriction was simply a restraint imposed by the city to protect its continuing interest as owner. The city accordingly could relax the restriction to serve its own ends without generating an issue under the bidding law.
We appreciate that an amendment of the lease, as distinguished from a grant of revocable permission to sell hamburgers and frankfurters, could prejudice the city if one of the other stores should become vacant during the term of the Eornicola lease. Whether the city is irrevocably bound is not crucial and hence we need not explore that question. Eor the present case it is enough to hold the city could grant such permission and hence could not be compelled to enforce the restriction contained in the lease.
The judgment of the Appellate Division is accordingly reversed and the judgment of the trial court is affirmed.