Court Opinion

ID: 9719232
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:46:14.274338+00
Date Added: 2024-06-11T18:24:05.329973
License: Public Domain

Ekancis, J.
(dissenting). The majority opinion argues persuasively for the legality of the amended lease under attack. But we are not dealing with a private property owner endowed, as he is, with an almost unlimited freedom of contract. Lieberman v. Neptune Tp., 50 N. J. Super. 192, 198 (App. Div. 1958). We are concerned solely with a municipal corporation whose power to demise the premises in question is circumscribed by specific legislation. N. J. S. A. 40:61—36 to 40.
The Legislature has decreed that any letting of this store shall follow advertisement for bids, and shall be granted to the highest responsible bidder. R. S. 40:61-39 to 40. The requirement for competitive bidding, designed as it is to secure competition and to guard against favoritism, improvidence, extravagance and corruption, is rooted deep in sound principles of public policy. It is in the highest degree mandatory and represents a deliberate decision on the part *12of the lawmaking branch of our government to deprive contract-making municipal officials of discretion, or to limit their discretion, in areas susceptible to the abuses mentioned.
Uo one can doubt that the statutory scheme is a wholesome rule of public policy, or that its high purpose is to afford maximum protection to taxpayers. Consequently, in its administration by the courts the sole reference must be to the public interest, which can be safeguarded only by a demand for strict compliance. Hillside Tp., Union County v. Sternin, 25 N. J. 317 (1957); Asbury Park Press v. City of Asbury Park, 19 N. J. 183, 188 (1955); A. C. Schultes & Sons v. Haddon Twp., 8 N. J. 103, 108 (1951).
Where competitive bidding is necessary and, as is usually the case, the terms and specifications of the work to be done or the article or property to be bought or sold or leased are set forth in the public advertisement, the bids submitted must conform to the terms and specifications. Any material departure invalidates the bid. Moreover, after the conforming lowest bid (or the highest, in the case of the lease of property) is accepted, the contract entered into between the municipality and the bidder must likewise match the terms and specifications. Any material change or departure therefrom vitiates the agreement. Where the variance is substantial, advantage to the bidder or to the municipality is immaterial; the same result must follow. Hillside Tp., Union County v. Sternin, supra; McDermott v. Jersey City, 56 N. J. L. 273, 276 (Sup. Ct. 1893); Shaw v. Trenton, 49 N. J. L. 339 (Sup. Ct. 1887); Diamond v. City of Mankato, 89 Minn. 48, 93 N. W. 911 (Sup. Ct. 1903); Gjellefald v. Hunt, 202 Iowa 212, 210 N. W. 122 (Sup. Ct. 1926); City of Bemidji v. Ervin, 204 Minn. 90, 282 N. W. 683 (Sup. Ct. 1938). The law permits no private negotiations with an individual bidder, and no material alteration in his bid for the purpose of consummating a contract. Chippewa Bridge Co. v. City of Durand, 122 Wis. 85, 99 N. W. 603 (Sup. Ct. 1904).
*13The reason for the strict rule is obvious. Any other result would emasculate the whole system of competitive bidding on public projects and defeat the purpose which the Legislature intended to safeguard. As the Supreme Court of Alabama said in Inge v. Board of Public Works, 135 Ala. 187, 33 So. 678 (Sup. Ct. 1903) :
“ ‘To require the bids upon one basis, and award the contract upon another, would, in practical effect, be an abandonment of all bids.’ * * * Any material departure, in the contract awarded, from the terms and conditions upon which the bidding is had, renders the contract, in a sense, a private one. To permit such in the awarding of public contracts by public officers would be to open wide the door for favoritism, and defeat the thing which the law intended to safeguard, in requiring the contracts to be let upon bids made on advertised specifications. It is unimportant whether the additional stipulation contained in the contract awarded to one who is not the lowest responsible bidder be in itself an advantage to the city or not. If it constitutes a material change, and therefore a departure from the basis of the bidding, and becomes an element or consideration in the determination of who is the lowest and best bidder, it will invalidate the contract entered into.” 33 So., at p. 682.
When the contract entered into represents a substantial departure from the proposal, it is of no consequence that the parties acted in good faith or that one or the other or both derived some benefit. If the forbidden act is in fact done, the contract is void without reference to the intent with which it was done; such result follows, as of course, in the wake of the transgression. Diamond v. City of Mankato, supra, 93 N. W., at p. 913. Assertion by municipal officials, by way of justification of their action, that the method they chose to accomplish legitimate ends was better than the one provided by law and produced gain for the public body, can only be regarded as futile. Chippewa Bridge Co. v. City of Durand, supra, 99 N. W., at p. 610. Plainly, the courts have concluded that in the field of public contracts it is too difficult to look into the minds and hearts of men for motives which are opposed to the taxpayers’ interests, that the external symbols by which such motives *14are indicated are too difficult to search out and evaluate. Consequently, they have espoused the doctrine that the legislative purpose can be effectuated only by an automatic condemnation of any such contract which is materially different from the bid.
Assuming as the premise of the majority that under the special circumstances of this case an open bid of the nature employed in this instance is statutorily permissible (but see, proposed revision of N. J. S. 40A :6-17 to 19 incl., Report of County & Municipal Law Revision Commission, March 1961), what are the significance and the application of the principles just discussed? The Eornicola bid, made May 12, 1959, was $39,885 for a ten-year lease of the particular boardwalk store to be used “for sale of frozen desserts, ice cream, drinks (soft) and milk products.” On May 26 a lease was executed in accordance with the bid authorizing use of the premises “as a store for the sale of frozen desserts, ice cream, drinks (soft) and milk products, and for no other purpose whatsoever * * *.” Yery shortly thereafter the agreement was altered by mutual consent on two occasions. The amended lease in its final form withdrew the • right to sell frozen custard and conferred authority to engage in much broader operations. More particularly, the present scope of use is for sale of “ice cream, drinks (soft), milk products, cold sandwich platters, cakes, pies, and coffee, frankfurters and hamburgers, and for no other purpose whatsoever.” The extent of the change is indicated by signs on the store describing it as a “luncheonette” (instead of a milk bar) and
“Ducky’s Sea Breeze Soda Shop, Luncheonette, Fountain Service, Sodas, Sundaes, Ice Cream, Franks, Hamburgers, Breakfast, Milk Shakes, Soups, Sandwiches, Salads, Fresh Fruit Drinks, Orangeade, Lemonade, Limeade, Tea, Coffee, Lunch.”
If, instead of the open bid tactic, the city had advertised for bids to lease the store in question for the purpose of selling “frozen desserts, ice cream, drinks (soft) and milk products,” and Eornicola had offered $39,885 for such a ten-*15year lease, under the legal principles discussed above would not the authority to let necessarily have been limited to such purposes ? If a lease had been entered into immediately which omitted frozen custard and included instead cold sandwich platters, cakes, pies, coffee, frankfurters and hamburgers, would not the modification have constituted a material departure from the terms of the public advertisement for bids? To me, an affirmative answer is the only one that can reasonably be given. Such a contract, with its materially altered subject matter, being in conflict with the bid, would have to be declared void as violative of the mandate for open, competitive bidding; it would not be the contract bid for. And it would make no difference in such ease that Fornicóla happened to be the only bidder. See City of Bemidji v. Ervin, supra; Le Tourneau v. Hugo, 90 Minn. 420, 97 N. W. 115 (Sup. Ct. 1903).
I am unable to perceive any distinction between the hypothetical situation just described and the present ease. Compare, Asbury Park Press v. City of Asbury Park, 19 N. J. 183 (1955). The fact that the two differences between the bid and the final form of the lease occurred a short time after the original document was executed, rather than as part of the original, does not justify a different conclusion as to legality. The lease assailed is not the one bid for; the alterations in the bid are not inconsequential or mere irregularities, or matters of detail; they are manifestly substantial, and so opposed to the policy of the compulsory bidding statute. Thus, the only course that was open to the city to accomplish a letting of the type now allegedly covered by Fornicola’s lease was readvertisement for bids.
The amendments to the lease being void, I vote to modify the judgment of the Appellate Division to conform with this view.