Board of Ed. of Borough of Fair Lawn, Bergen County v. Fair Lawn Plaza Taxi, Inc.

• Court: New Jersey Superior Court — Appellate Division
• Writing for the Court: Francis
• Citation: Board of Ed. of Borough of Fair Lawn, Bergen County v. Fair Lawn Plaza Taxi, Inc., 150 A.2d 793, 55 N.J.Super. 357 (N.J. Super. App. Div. 1959)
• Decision Date: 05 May 1959
• Docket Number: No. A--252,A--252
• Parties: BOARD OF EDUCATION OF the BOROUGH OF FAIR LAWN in the COUNTY OF BERGEN, a municipal corporation of New Jersey, Plaintiff-Respondent, v. FAIR LAWN PLAZA TAXI, INC., Defendant-Appellant.

Page 357

55 N.J.Super. 357

150 A.2d 793

BOARD OF EDUCATION OF the BOROUGH OF FAIR LAWN in the COUNTY OF BERGEN, a municipal corporation of New Jersey Plaintiff-Respondent, v. FAIR LAWN PLAZA TAXI, INC., Defendant-Appellant.

No. A--252.

Superior Court of New Jersey Appellate Division.

Argued April 6, 1959.

Decided May 5, 1959.

Michael Aliotta, Paterson, for defendant-appellant.

Maurice D. Emont, Paterson, for plaintiff-respondent.

Before Judges PRICE, SULLIVAN and FOLEY.

The opinion of the court was delivered by

PRICE, S.J.A.D.

By this appeal defendant seeks to reverse a district court judgment for $989.58 entered in favor of plaintiff on December 3, 1958 amending a prior judgment against defendant entered November 17, 1958 in the sum of $891.58. The case was tried without a jury.

The action was based on a claim that defendant had without right refused to enter into a contract for the transportation of pupils on one of the routes designated as Route No. 10 for the school year 1957--58 after being awarded the contract therefor as the lowest bidder following competitive bidding. The amount of the judgment was the difference between the bid of the next lowest bidder $3,266.55 and defendant's bid of $2,168.55 less $108.42, the amount of a certified check which accompanied defendant's bid. The deposit represented 5% Of $2,168.55 which was the estimated school year total of the contract reflected in defendant's bid. The sum was based on a bid price of $11.85 per day for 183 school days. The next lowest bid was for $17.85 per day which, for the same number of days, reflected the aforesaid total of $3,266.55.

In response to plaintiff's advertisement for bids for the transportation of school children over various routes, plaintiff received a number of bids which were opened July 15, 1957. Defendant was the low bidder for the contract for several of the routes, one of which was for the aforesaid Route No. 10. On July 24, 1957 defendant submitted a written request to withdraw its bid for the aforesaid route. At the next regular meeting of plaintiff board on August 15, 1957 defendant's president again sought to withdraw defendant's bid for Route No. 10 and advised plaintiff that it would not enter into a contract for the transportation of pupils over the designated route. However, the board then awarded defendant the several transportation contracts on which it was the low bidder including the one for Route No. 10. On August 26, 1957 plaintiff forwarded an official notification of the awards to defendant. Defendant refused as aforesaid to sign the contract for Route No. 10. Defendant executed the contracts for the other routes.

Plaintiff retained the aforesaid deposit of $108.42 which it declared forfeited and sued defendant to recover the difference between the two bids. Defendant counterclaimed for the $108.42, asserting that it was entitled thereto because of plaintiff's alleged unwarranted delay in awarding the contract. The record reveals that the trial court dismissed the counterclaim and determined initially that plaintiff, having waived the recovery of $98, the amount in excess of the $1,000 limit of the district court jurisdiction, and having retained the deposit of $108.42, was entitled to the difference between $1,000 and $108.42 or $891.58. This was the amount of the judgment entered against defendant on November 17, 1958. The amended judgment entered December 3, 1958 was based on the following order entered by the court:

'Ordered that the judgment heretofore made and entered on November 17, 1958, in the above matter, be and the same is hereby amended by changing the last two paragraphs of said judgment to read as follows:

"The difference between the defendant's bid and the next lowest bid was $1,098.00. The plaintiff has already received $108.42 as a result of the forfeiture of the deposit. The balance remaining is $989.58.

"Judgment will be entered in favor of the plaintiff and against the defendant for $989.58. The counterclaim filed by the defendant is dismissed."

The statute controlling the making of transportation contracts by a board of education is N.J.S.A. 18:14--11, which provides as follows:

'No contract for the transportation of children to and from school shall be made, when the amount to be paid during the school year for such transportation shall exceed $600.00, unless the board of education making such contract shall have first publicly advertised for bids therefor in a newspaper circulating in the school district once, at least 10 days prior to the date fixed for receiving proposals for such transportation and shall have awarded the contract to the lowest responsible bidder.

'Each transportation bid shall be accompanied by information required on a standard form of questionnaire approved by the State Board of Education and by a cashier's or certified check for 5% Of the annual amount of the contract, which deposit shall be forfeited upon the refusal of a bidder to execute a contract; otherwise, checks shall be returned when the contract is executed and a bond filed.'

Defendant contends that the statute makes the forfeiture of the deposit plaintiff's sole and exclusive remedy for defendant's refusal to execute the contract and, although plaintiff may retain the $108.42 subject to defendant's right of recovery asserted in its counterclaim, plaintiff may not sue defendant for damages.

In support of its criticism of the challenged judgment defendant urges that:

FIRST: It was the intention of the parties and a requirement of N.J.S.A 18:14--11 that a formal contract be executed before 'liability for performance' of the contract could attach to either party, and that the award of the contract to defendant by plaintiff following the invitation to bid amounted to nothing 'more than the preliminary steps in the formation of the contract.'

SECOND: The forfeiture prescribed by the statute 'is equivalent to liquidated damages' and therefore bars plaintiff's action for unliquidated damages for breach of contract.

THIRD: The trial court's finding of fact that plaintiff had not delayed unreasonably in acting upon the bid and its consequent dismissal of the counterclaim was against the weight of the evidence.

Defendant's FIRST contention improperly ignores the existence of a contractual obligation which arose on the acceptance of defendant's bid. True it is that an obligation on the part of defendant to transport the pupils did not thereby arise. The contract under consideration on this appeal is separate and apart from the Performance contract to which defendant refers and which would have existed had the written contract, to which the invitation to bid referred, been executed by plaintiff and defendant. The contract, which did come into existence by virtue of plaintiff's acceptance of defendant's bid, submitted in response to plaintiff's invitation, obligated defendant to enter into the school transportation contract with plaintiff. However, the invitation, the bid of defendant in response thereto, and the award constituted far more than 'preliminary steps' in the creation of a Performance contract. They, of themselves, created a contract, separate and distinct from the contemplated performance contract. The obligation created was described in Lupfer & Remick v. Board of Chosen Freeholders of Atlantic County, 87 N.J.Eq. 491, 497, 100 A. 927, 930 (Ch.1917), as a vested right of contract, supported by an adequate consideration, therein described as 'the privilege of bidding and the legal assurance to the successful bidder of an award as against all competitors.'

Neither do we find any merit in the defendant's THIRD point above stated. We find no reason to disturb the trial dismissal of the counterclaim based on its finding of fact that plaintiff had not delayed unreasonably in acting upon defendant's bid. We have fully analyzed the proofs in the light of our permissible scope of review and find no reason to disturb its conclusion in that regard. R.R. 4:53--1; R.R. 1:5--4(b); R.R. 2:5. Schack v. Trimble, 48 N.J.Super. 45, 52, 137 A.2d 22 (App.Div.1957); Capone v. Norton, 11 N.J.Super. 189, 193, 78 A.2d 126 (App.Div.1951), affirmed 8 N.J. 54, 83 A.2d 710 (1951); Gagliano v. Maggio, 32 N.J.Super. 219, 225, 108 A.2d 185 (App.Div.1954), certification denied 17 N.J. 57, 109 A.2d 814 (1954).

The crucial question on this appeal, reflected in the SECOND point above stated, is whether plaintiff is entitled to recover any sum other than the deposit of $108.42 if the determination be confirmed that defendant refused without right to sign the contract; and specifically, whether plaintiff is or is not entitled to recover the difference between the amount of defendant's bid and the amount of the bid of the next lowest bidder, less the $108.42, which net amount was the sum for which, as stated, the trial court entered judgment.

On this appeal no cases precisely like the case at bar are cited by either party. Among those cited are John J. Bowes Co. v. Inhabitants of Town of Milton, 255 Mass. 228, 151 N.E. 116 (Sup.Jud.Ct.1926); City of New York v. Seely-Taylor Co., 149 App.Div. 98, 133 N.Y.S. 808 (App.Div.1912), affirmed 208 N.Y. 548, 101 N.E. 1098 (Ct.App.1913); United States v. Conti, 119 F.2d 652 (1 Cir., 1941); Independent School District No. 24 v. Weinmann, 243 Minn. 469, 68 N.W.2d 248 (Sup.Ct.1955); Wheaton Building & Lumber Co. v. City of Boston, 204 Mass. 218, 90 N.E. 598 (Sup.Jud.Ct.1910). All of the above cases, through the medium of original complaints or counterclaims, involved claims by governmental bodies against bidders for damages following the failure of the bidders to execute contracts. A deposit or bid security was involved in each case. Recovery of damages was allowed only in Conti and Weinmann, each of which however by reason of factual differences is not controlling in the case at bar.

Plaintiff relies heavily on Conti in which the government was awarded a judgment for...