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Shore Gas and Oil Co. v. Borough of Spring Lake

Decided: July 28, 1953.

SHORE GAS AND OIL COMPANY, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
THE BOROUGH OF SPRING LAKE, IN THE COUNTY OF MONMOUTH, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT



Eastwood, Joseph L. Smith and Haneman. The opinion of the court was delivered by Eastwood, S.j.a.d.

Eastwood

[27 NJSuper Page 35] To provide for its annual consumption of gasoline, the defendant municipality advertised

for sealed bids for 18,000 gallons, more or less, of Esso Extra Gasoline as manufactured by Standard Oil Company. The plaintiff submitted a bid for furnishing "Esso Extra Gasoline, or a product of EXACTLY same quality and specifications," and stated further, "The product to be delivered shall be Cities Service Premium gasoline as manufactured by the Cities Service Oil Co. and which is exactly as quality and specifications of the described item of Esso Extra Gasoline as manufactured by Standard Oil Co." The plaintiff's bid of $.153 per gallon was lower than the only other bid submitted, that of the Standard Oil Company of New Jersey, but the governing body of the defendant municipality refused to consider plaintiff's bid because it was not for Esso Extra Gasoline.

In its complaint, filed in lieu of a prerogative writ, the plaintiff demanded that the defendant be directed to consider its bid and award to it a contract therefor or, in the alternative, that the defendant's receipt of bids be declared invalid.

Defendant asserted that plaintiff had not bid to supply the product called for and that R.S. 40:50-1 did not prevent its specification for bids on brand name products and, therefore, under the circumstances, the municipality was justified in excluding plaintiff's bid.

On plaintiff's motion for summary judgment, the trial court dismissed plaintiff's action holding that it was not necessary for the defendant to advertise for bids under R.S. 40:50-1, since individual purchases did not exceed $1,000; and that the defendant might advertise for bids under a brand name. From the judgment of dismissal the plaintiff appeals.

The pertinent section of the statute under which the issue in the matter sub judice has arisen provides, inter alia:

"No municipality shall enter into any contract for the doing of any work, or for the furnishing of any materials, supplies or labor, or the hiring of teams or vehicles, where the sum to be expended exceeds the sum of one thousand dollars, unless the governing body shall first publicly advertise for bids therefor, and shall award the contract to the lowest responsible bidder."

The legislative intendment of this type of enactment regulating the expenditure of public funds has been held to afford maximum protection to the taxpayer where expenditures will be in excess of the figure mentioned in the statute. As stated in Waszen v. City of Atlantic City , 1 N.J. 272, 283 (1949):

"The philosophy and purposes of the statutes respecting municipal contracts have been enunciated in our decisions upon numerous occasions. The law is well settled that economy must be secured and fraud, favoritism and extravagance prevented to the end that all bidders will be on the same basis in matters material to the proposed municipal action. As said in Tice v. Long Branch, supra , and iterated in Rankin v. Board of Education of Egg Harbor Twp., supra , 'The rule is one which is rooted deep in sound principles in public policy of general application. It should be rigidly adhered to by the courts, and not frittered away by a careless or indifferent application to specifications, that are not clear, precise and definite on all matters, that are material to the proposals, to which bidders are invited to compete. The necessity of having a common standard, and the importance of definite and precise specifications upon which to found corporate action, are too apparent to require argument.' * * *"

Cf. Schwartz and Nagle, etc., v. Bd. of Chosen Freeholders , 6 N.J. Super. 79, 82 (App. Div. 1949); A. C. Schultes & Sons v. Haddon Tp. , 8 N.J. 103, 108 (1951).

In the event that the statute applies, it is mandatory; there is no room for discretion, and the contract must be either awarded to the lowest responsible bidder or all bids must be rejected. Armitage v. Newark , 86 N.J.L. 5 (Sup. Ct. 1914); Paterson Contracting Co. v. Hackensack , 99 Id. 260 (E. & A. 1923); American Water Corp. v. Florham Park , 5 N.J. Misc. 969 (Sup. Ct. 1927); Schwartz and Nagle, etc., v. Bd. of Chosen Freeholders, supra. The statute applying to ...


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