Greenberg v. Fornicola

• Decision Date: 05 March 1962
• Docket Number: No. A--62,A--62
• Parties: Irving GREENBERG, Plaintiff-Respondent, v. Donald FORNICOLA, Kendall H. Lee, etc., et al., Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 1

37 N.J. 1

178 A.2d 339

Irving GREENBERG, Plaintiff-Respondent, v. Donald FORNICOLA, Kendall H. Lee, etc., et al., Defendants-Appellants.

No. A--62.

Supreme Court of New Jersey.

Argued Dec. 19, 1961.

Decided March 5, 1962.

Felix A. De Sarno, Asbury Park, for defendants-appellants Kendall H. Lee and City of Asbury Park.

Charles Frankel, Asbury Park, for defendant-appellant Donald Fornicola.

George S. Skokos, Asbury Park, for plaintiff-respondent.

The opinion of the court was delivered by

WEINTRAUB, C.J.

The Appellate Division held that a lease from the City of Asbury Park to defendant Fornicola was void for failure to comply with the law relating to competitive bidding. 65 N.J.Super. 104, 167 A.2d 177 (1961). We granted certification. 36 N.J. 28, 174 A.2d 656 (1961).

Under 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 Fornicola 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 Fornicola 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, 177 A.2d 756 (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, 128 A.2d 673 (1957); Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493, 117 A.2d 585 (1955); Travis v. Borough of Highlands, 136 N.J.L. 199, 55 A.2d 109 (Sup.Ct.1947).

An action to contest the lease should have been brought at least within 45 days. R.R. 4:88--15(a). Subparagraph (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, 139 A.2d 291 (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, 115 A.2d 564 (1955); Asbury Park Press, Inc. v. City of Asbury Park, 23 N.J. 50, 127 A.2d 401 (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.'

Fornicola 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 the best economic result for the public. Weinacht v. Board of Chosen Freeholders of County of Bergen, 3 N.J. 330, 333, 70 A.2d 69 (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, 119 A. 25 (E. & A.1922); Waszen v. City of Atlantic City, 1 N.J. 272, 283--284, 63 A.2d 255 (1949); Township of Hillside, Union County v. Sternin, 25 N.J. 317, 322, 136 A.2d 265 (1957); Fereday & Meyer Co. v. Board of Pub. Works of City of Elizabeth, 27 N.J. 218, 223, 142 A.2d 99 (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, N.J.S.A. 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, N.J.S.A., 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...