Hillside Tp., Union County v. Sternin

• Decision Date: 25 November 1957
• Docket Number: No. A--31,A--31
• Citation: 136 A.2d 265,25 N.J. 317
• Parties: The TOWNSHIP OF HILLSIDE, in the COUNTY OF UNION, a municipal corporation, Plaintiff-Appellant, v. Shephard STERNIN, trading as Shep Electrical Service, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 317

25 N.J. 317

136 A.2d 265

The TOWNSHIP OF HILLSIDE, in the COUNTY OF UNION, a municipal corporation, Plaintiff-Appellant, v. Shephard STERNIN, trading as Shep Electrical Service Defendant-Respondent.

No. A--31.

Supreme Court of New Jersey.

Argued Oct. 21, 1957.

Decided Nov. 25, 1957.

Arthur E. Dienst, Newark, for plaintiff-appellant.

Leo Yanoff, Newark, for defendant-respondent. (Green & Yanoff, Newark, attorneys).

The opinion of the court was delivered by

FRANCIS, J.

The Township of Hillside sued to recover a monetary loss suffered by it as a result of the defendant Sternin's refusal to enter into a contract for the doing of some public work which had been awarded to him pursuant to a bid which he had tendered. The trial court granted summary judgment against the township, from which this appeal was taken. We certified on our own motion.

Early in April 1956 the governing body of Hillside decided to install two sirens, one at the Abram P. Morris School and the other at the Hillside Avenue School. The cost involved was such as to make the project subject to N.J.S.A. 40:50--1, which then provided as follows:

'No municipality shall enter into any contract for the doing of any work, or for the furnishing of any materials, supplies or labor * * * where the sum to be expended exceeds the sum of one thousand dollars (increased to $2,500, L.1957, c. 30) unless the governing body shall first publicly advertise for bids therefor, and shall award the contract to the lowest responsible bidder.' (Insertion ours.)

In compliance with the statute, a public notice soliciting sealed bids was inserted in certain newspapers. It was entitled 'Notice to Contractors,' and recited among other things that the specifications and forms of bid would be furnished by the township clerk at his office at 1284 North Broad Street, Hillside, New Jersey, or were available for inspection there during business hours. This further condition was specifically imposed on prospective bidders:

'A certified check made payable to the Township of Hillside for not less than 10% Of the amount bid must accompany each proposal.'

The record discloses that in October 1955 similar installations had been contemplated, one of them for the Saybrook School and the other for the Hillside Avenue School. At that time Sternin, an electrical contractor, had been given a copy of the specifications and had submitted bids or estimates for the work. It does not appear whether there was then any public advertising for proposals. In any event, the plan was abandoned until April 1956, when it was reactivated with the Abram P. Morris School being substituted for the Saybrook School as the site of one of the sirens.

There is no proof that Sternin ever saw the April 1956 advertisement for bids. His affidavit is to the contrary. It is undisputed that the project was called to his attention by the secretary of the civilian defense organization of the township, who asked him to submit a bid. There is no suggestion that she informed him of the necessity of submitting a 10% Deposit check. His sworn statement is to the effect that under the assumption that the proposed undertaking was to be the same as that of 1955, he instructed his secretary to copy and resubmit his two earlier bids without first examining the new specifications. On the other hand, the secretary of the defense organization deposed that after she had made a telephone call to his employee to request a bid, Sternin came to her office. She said further that she told him of the availability of the specifications at the clerk's office (in a different building) and suggested that he go there, obtain a copy and submit a bid. After receiving this information, he departed.

On April 16 the township clerk received sealed bids from him, one for each siren to be installed. The total was $1,087.25. No certified check for the 10% Deposit was enclosed or ever delivered. It may be noted here that this requirement did not appear in the specifications, although they do contain a reference to forfeiture of the 'certified check which accompanied the proposal' if the successful bidder fails to enter into the contract. Sternin's figure was $1,544.75 lower than that of his nearest competitor and the contract was awarded to him. However, he refused to execute the written agreement, maintaining (some time later) that the bid was the result of his mistaken belief that the work to be done was the same as that which had been called for in 1955 and that he had never seen the new and more demanding specifications relating to the erection of these particular sirens. He contended also that his bid was invalid because the deposit check did not accompany it.

In September, after some conferences with Sternin, who remained adamant in his refusal to sign the contract, an award was made to the next lowest bidder. The sequel was this suit to recover the difference which had to be paid to the second contractor.

Without setting forth all of the data, the attendant circumstances, and the inferences that may be drawn, we are of the opinion that a factual issue was presented in the Law Division as to whether the specifications were examined by the defendant and as to whether he intended to make his proposal on the basis of them. The trial court held that no such issue existed and predicated the summary judgment for the defendant in part on such finding. However, because of our concurrence with his view on the aspect of the controversy concerning the deposit check, a reversal is not warranted.

In the memorandum declaring that summary judgment would be granted, one of the reasons assigned was the failure of the defendant to furnish the security deposit with his bids. Study of the record has led us to assign that issue as the critical one for determination.

For many years our statutory law has required contracts for the performance of public work involving the expenditure of money in excess of $1,000 to be let upon competitive bidding solicited through public advertisement. It is an almost universally recognized practise, McQuillin, Municipal Corporations, § 29.28 (1950), and one which is rooted deep in sound principles of public policy. Waszen v. City of Atlantic City, 1 N.J. 272, 283, 63 A.2d 255 (1949); Tice v. Long Branch, 98 N.J.L. 214, 119 A. 25 (E. & A.1922). The purpose is to secure competition and to guard against favoritism, improvidence, extravagance and corruption. Statutes directed toward these ends are for the benefit of the taxpayers and not the bidders; they should be construed with sole reference to the public good; and they should be rigidly adhered to by the courts. Weinacht v. Board of Chosen Freeholders of County of Bergen, 3 N.J. 330, 333, 70 A.2d 69 (1949); Tice v. Long Branch, supra; McQuillin, supra, § 29.29.

Our statute set forth above requires public advertisement for bids and award of the contract to the lowest responsible bidder. Of course, the advertisement could contain the specifications and all of the conditions upon which proposals are sought. However, there can be no doubt about the propriety of depositing the specifications at some convenient place where they are available to all interested parties, so long as adequate reference is made thereto in the public notice. Nor can there be any question as to the validity of the inclusion in the advertisement of additional conditions of bidding, such as a requirement for the deposit of specified security with the bid. Such factors in conjunction with the specifications establish and measure the obligation of persons who seek the contract.

The conditions and specifications must apply equally to all prospective bidders. Otherwise, there is no common standard of competition. Every element which enters into the competitive scheme should be required equally for all and should not be left to the volition of the individual aspirant to follow or to disregard and thus to estimate his bid on a basis different from that afforded the other contenders. Tice v. Long Branch, supra; Armitage v. Newark, 86 N.J.L. 5, 90 A. 1035 (Sup.Ct.1914); Case v. Trenton, 76 N.J.L. 696, 74 A. 672 (E. & A. 1909). So it follows that all bids must comply with the terms imposed, and any material departure therefrom invalidates a nonconforming bid as well as any contract based upon it. If this were not the rule, the mandate for equality among bidders would be illusory and the advantages of competition would be lost. Albanese v. Machetto, 7 N.J.Super. 188, 191, 72 A.2d 521 (App.Div.1950); Armitage v. Newark, supra; Hornung v. West New York, 82 N.J.L. 266, 269, 81 A. 1116 (Sup.Ct.1911); Case v. Trenton, supra, 76 N.J.L. at pages 699--700, 74 A. 672.

The financial capacity of a bidder is a material and substantial consideration in connection with the award of contracts for public work. Manifestly it is one element which must enter into the determination of responsibility; the statute itself speaks of the lowest 'responsible' bidder. Waszen v. City of Atlantic City, supra, 1 N.J. at page 283, 63 A.2d 255; Sellitto v. Cedar Grove Township, 133 N.J.L. 41, 43, 42 A.2d 383 (Sup.Ct. 1945). In this connection, obviously the Legislature regarded that factor as important because it adopted a separate act to provide municipalities with a means of requiring a prospective bidder to furnish in advance a statement of his financial ability. N.J.S.A. 40:50--5; William A. Carey & Co. v. Borough of Fair Lawn, 37 N.J.Super. 159, 166, 117 A.2d 140 (App.Div.1955). And in our judgment a demand in a public advertisement for the deposit of some form of security as a guaranty that the contract will be entered into if the bid is accepted, is properly imposed as an aid to the governing body in reaching its decision. Moreover, the deposit is material for another reason. It is recognized that failure of the successful bidder to execute the contract results in its forfeiture, 63 C.J.S. Municipal Corporations § 1152(b)...