Clapp, Jayne and Francis. The opinion of the court was delivered by Francis, J.A.D.
The Law Division declared invalid section 2 of an ordinance of the Village of Ridgewood under which, by instrument designated a "license agreement," the exclusive privilege of collecting and disposing of garbage and refuse was granted to a scavenger contractor, the appellants Frank Capasso and Gerald F. Capasso, trading as Capasso Bros. Both the village and the contractor appeal.
"That the Board of Commissioners shall have the right to grant the exclusive privilege of removing and transporting said garbage, offal, decomposing solid, fluid substance, ashes, rubbish or waste upon competitive bidding. The term of such exclusive privilege shall be for not more than five years. An award of such exclusive privilege may be granted to the bidder, whose bid provides for the lowest rates for the removal of such garbage , offal, decomposing solid, fluid substances, ashes, rubbish or waste, provided such bidder shall show that he or it in all respects complies with the rules and regulations prepared by the Board of Health prior to the advertising for bids for the granting of such exclusive privilege. Such exclusive privilege shall not be granted to the successful bidder unless he shall furnish a bond satisfactory to the Board of Commissioners of the Village of Ridgewood in the sum of not less than $5,000, the condition of which shall be that he or it shall perform the services set forth in his or its bid for a sum not in excess of the amount quoted in such bid and that he or it shall comply with the rules and regulations of the Board of Health of the Village of Ridgewood, in connection with the removal of such garbage, offal, decomposing solid, fluid substance, ashes, rubbish or waste."
This section was engrafted on the original ordinance in 1934 and the village has operated under it since that time. For ten years prior to December 31, 1953 the plaintiff, Marangi Bros., Inc., was the low bidder and held the license agreement. For the current year Capasso Bros.' bid was lower and upon the furnishing of a $25,000 bond, as required by
the board of commissioners, they were awarded the exclusive privilege contract.
It is not suggested that the rules and regulations of the board of health or the specifications for the work to be performed were not prepared prior to the advertising for bids. Nor is it said that the public request for bids on rates to be charged to the various type users of the scavenger service was not properly or fairly made.
Plaintiff contends that such an ordinance provision is invalid under McKim v. Village of South Orange , 133 N.J.L. 470 (Sup. Ct. 1945). The trial court agreed that the case was controlling and added as a further ground for the invalidation that the use of the word "may" in the ordinance, in declaring that "an award of such exclusive privilege may be granted" to the bidder whose proposed rates are lowest, does not make it mandatory on the board of commissioners to recognize the lowest bidder.
In the McKim case it appeared that the Village of South Orange adopted an ordinance making it unlawful for any one to collect or remove garbage without having procured a license from the board of trustees, and providing that only one such license should be issued and in effect at a time. It provided also that the fees to be charged by the licensee to the users of the service were to be fixed by resolution of the board.
Pursuant to this authority, the board by resolution established the scale of rates to be charged and then licensed one contractor to collect the garbage within the village at rates fixed.
The Supreme Court held that the ordinance was not a reasonable exercise of the municipal authority and quoted with approval the following language of the Court of Errors and Appeals in Eckert v. Town of West Orange , 90 N.J.L. 545, 548 (1917), which was considered controlling:
"'It thus appears that the town council has authority to provide for the collection and disposal of rubbish and garbage in either of two ways, but not otherwise: First, it may provide for the doing of the work by the town itself. If it adopts this course, it must
do so by ordinance, with all the formalities necessary to enact a valid ordinance; Second, it may make a contract with some one to do the work. But, where more than $500 is to be expended (now $1,000; R.S. 40:66-4), it has no authority to make a valid contract until it has first publicly advertised for bids, and the contract can then be awarded only to the lowest responsible bidder.'" (Insertion ours.) (133 N.J.L. , at page 472.)
After pointing out that the householder was not permitted to remove his own garbage and that an obligation was imposed upon him to employ the services of the licensee at rates fixed by the board, the court said:
"The work has been costing the municipality more than $75,000 per year; and the cost under the proposed method will be but little, if any, less than that. Certainly the aggregate of such moneys to be paid to and received by the scavenger will greatly exceed the sum of $1,000, which is the cost limit for contracting without public bidding, R.S. 40:50-1, incorporated by reference in R.S. 40:66-4, supra. Obviously, the village could not contract directly for the doing of the work without calling for bids. The proposed method is, we think, in violation of a public policy, implicit in these and other statutes, that public work exceeding a limited sum shall not be awarded except upon advertisement and to the lowest responsible bidder. The evils attendant upon an award without open bidding are not less under license than under direct contract. Splitting the total cost among the property-users by a system that leaves to them no choice but to incur and pay the expense does not alter the fact that in essence an award of public work at a price of many thousands of dollars is being made to a private contractor without competition in bidding." (Id. , 133 N.J.L. at pages 473, 474.)
Subsequent to the decision in the McKim case, the Legislature passed a special statute relating alone to villages in counties of the first class (N.J.S.A. 40:162 A -1). That statute is not relevant here as Ridgewood is not in such a county.
The contractor and the village in this case urge, and we agree, that the fundamental basis for striking down the South Orange measure was the absence of competitive bidding. And they contend that the Ridgewood requirement for such bidding justifies judicial approval of its ordinance.
More specifically, appellants say that the municipal authority should be sustained on either one or ...