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Edelstein v. City of Asbury Park

Decided: July 16, 1958.

BENJAMIN EDELSTEIN, PLAINTIFF-APPELLANT,
v.
CITY OF ASBURY PARK, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, AND ASBURY PARK ENTERPRISES, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS, AND SEBASTIAN P. VACCARO AND ROSEMARIE VACCARO, DEFENDANTS, CONSOLIDATED WITH SEBASTIAN P. VACCARO AND ROSEMARIE VACCARO, PLAINTIFFS, V. ASBURY PARK ENTERPRISES, A CORPORATION OF THE STATE OF NEW JERSEY, AND CITY OF ASBURY PARK, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, AND J. OLIVER ARMSTRONG, CITY MANAGER AND DIRECTOR OF PUBLIC WORKS OF THE CITY OF ASBURY PARK, DEFENDANTS-RESPONDENTS, AND BENJAMIN EDELSTEIN, PETITIONER FOR INTERVENTION-APPELLANT



Stanton, Hall and Gaulkin. The opinion of the court was delivered by Hall, J.A.D.

Hall

These consolidated appeals represent the latest chapter in the litigation involving the sale by the City of Asbury Park in 1954 of a parcel of land known as the "Coleman House Tract." The sale was rescinded some three and a half years later through the medium of a consent judgment entered into by the city and the purchaser. We are concerned with the propriety of the dismissal, on procedural grounds, and without a hearing on the merits, of a taxpayer's attempted attack on the rescission.

To put the questions presently involved in proper focus, the history of the matter must be summarized, which we derive from our examination of the files in the prior litigation as well as the record before us in the present appendices.

The city-owned piece in question constitutes about half of the block bounded by Ocean Avenue on the east, First Avenue on the north, Kingsley Street on the west, and Asbury Avenue on the south. It is L-shaped and fronts approximately 250 feet along Ocean Avenue, 350 feet along Asbury Avenue (occupying the entire length of the block on both of these streets), about 125 feet along First Avenue, which also represents the depth of the Ocean Avenue frontage, and about 65 feet on Kingsley Street, similarly measuring the depth of the land along Asbury Avenue. The remainder of the block, fronting only on First Avenue and Kingsley Street, has been owned since 1950 by Sebastian P. Vaccaro and wife (whom we shall hereafter refer to as "Vaccaro").

The lot, the former site of a hotel known as the Coleman House, is a valuable parcel, occupying a prominent position at the southerly entrance to the beach front area. The entire block had been vacant for a number of years prior to 1954. Both the city and Vaccaro were renting their respective portions for parking lot purposes. The former had been desirous for some time of selling its part to restore the property to the tax rolls with a substantial ratable and apparently at the same time to bring about the erection of a building or buildings thereon of appropriate and attractive appearance in view of its prominence in relation to the beach front and boardwalk area. It had received several offers over the years but, as the city manager said in an affidavit in 1954 in one of the earlier stages of the litigation, "the Mayor and Council have refused to sell this lot except for the erection of a certain specific type of building because said lot is located at a corner which is very valuable and also on a corner which is the entrance to the Asbury Park beach front." Vaccaro was one of those interested in buying the lot to combine with his property, and in November 1953 he submitted an unacceptable proposal through his then counsel, the firm of Edelstein and Edelstein, of which appellant Benjamin Edelstein is a member.

By letter to the mayor and council dated December 8, 1953, Michael Weinstein Agency, a local real estate firm, advised of an unnamed client (who turned out to be one David Cronheim) interested in purchasing the site. No price was named but the following conditions were offered:

"It is proposed to build a modern 8 story fireproof apartment house fronting on Ocean Avenue, including a group of stores; the building to consist of approximately 300 rooms divided into 80 apartments; covering an area of approximately 11,500 square feet; and agree to the follow all [sic] conditions, and with the usual setbacks from Asbury Avenue and First Avenue. They will also agree that a parking area for approximately 50 cars will be provided." (Emphasis ours)

The significance of this proposal later appears. It now should be noted that the proposed apartment building would

necessarily occupy substantially all of the Ocean Avenue frontage and depth after allowing for zoning setback and yard requirements and parking area.

On February 19, 1954 Vaccaro, jointly with another, submitted a new offer to purchase the lot for $25,000 on condition that the city grant permission to erect a structure (expressed very generally) to consist primarily of apartment and hotel accommodations with a group of stores at the street level estimated to cost approximately $1,000,000.

There were informal conferences and negotiations on the Weinstein proposal with the governing body which culminated in the submission of a formal offer from Weinstein on behalf of Cronheim on March 9, 1954 to purchase the property for $85,000 in cash, subject to detailed covenants and restrictions, those presently pertinent reading:

"1. The successful bidder shall apply for and obtain a building permit from the City of Asbury Park for the erection of not less than a seven story stores and elevator apartment building on the land facing Ocean Avenue and one story stores on Asbury Avenue.

5. The successful purchaser shall provide parking facilities in excess of the apartments that are constructed.

6. As an alternate, the City will permit the successful bidder to erect part hotel suites and hotel rooms if he so desires." (Emphasis ours)

While stores of one story on Asbury Avenue are here first introduced, it seems reasonable to assume the offeror was still talking about the same general kind of building along Ocean Avenue as more specifically described in the initial proposal, at least to the extent that any structure on that street was to be multi-story and not single-story.

There were further conferences and negotiations. The governing body, in private session rather than in public meeting, determined to make the sale to Cronheim and reject the Vaccaro proposal. Consequently at the meeting of the mayor and council held April 22 the city Manager reported the receipt of the Cronheim bid and requested permission to advertise the property for sale, "with terms and conditions

to be set forth." Authority was given, amounting to approval of the offer, with final action fixed for the council meeting of May 11.

The proposed sale was to be made under the authority of subsection (c) of R.S. 40:60-26 as amended, permitting a municipality to sell land not needed for public use at private sale, upon receipt and approval of an offer and subject to final action of confirmation at a further public meeting of the governing body not less than 10 days thereafter, with advertised notice thereof, "provided, that no higher price or better terms shall then be bid for said property by any other person, in which case the sale is to be made to the highest bidder * * *." The statute further permits the governing body to "impose any restrictions on the use to be made of such land and any conditions of sale as to buildings or structures to be erected thereon, or as to the type, size or other specifications of such buildings or structures * * * or any other conditions of sale in the manner and to the same extent as any other vendor of real estate * * *." In private sales made pursuant to subsection (c), it is obvious, and in fact frankly conceded in this case, that the detailed terms and conditions which appeared in the advertised notice, are not imposed by the municipality in the usual sense, but originate basically with the offeror and then are negotiated and finally agreed upon between the municipality and the prospective purchaser in advance of the formal action. The frequent practical result is that there is no other bid at the time fixed for confirmation, in view of the short space of time between the two meetings and especially where the specified terms and conditions are numerous, precise and narrow. While theoretically the procedure provides for competition, in practice there is frequently none. The protection of the public interest from favoritism, fraud or inadequacy of price must come from good faith, conscientiousness and hard-headedness of the governing body in the advance negotiations and in continued diligence after the sale to assure that conditions and restrictions are adhered to and carried out.

The full terms and conditions of sale set forth in the advertised notice were generally much more detailed, and in some respects different, from the letter of March 9. As to terms of payment, they called for $25,000 in cash to be paid at the time of confirmation, payment of an additional $10,000 in cash on execution of a contract of sale, which was to be delivered no later than five days after confirmation, and the balance of $50,000, in cash or by purchase money bond and mortgage payable in five years, to be delivered at the closing of title, which was required on or before October 1, 1954. The use of the premises was specified and restricted in the following language:

"The successful bidder shall apply for and obtain a building permit from the city of Asbury Park [within 8 months from the date of the deed] for the erection of an elevator apartment or apartment hotel building of not less than seven stories on the land facing Ocean Avenue and a building consisting of not less than one story store building on the land facing Asbury Avenue , costing not less than One Million ($1,000,000) Dollars." (Emphasis ours)

Note that a minimum cost requirement appears for the first time, and that the restriction as to the building to be erected on Ocean Avenue was phrased substantially like the March 9 letter, but without the right to have stores therein.

It was further provided that, upon the closing of title, the purchaser must deposit with the city cash or surety company bond in the sum of $200,000, conditioned upon the fulfillment of all of the covenants and restrictions and upon the erection and completion of the building or buildings within a period of two years from the date of the passage of title.

On May 11 the mayor and council passed a resolution ratifying the sale to Cronheim, no other bids being made. Three days later Vaccaro, through Edelstein, notified the governing body that the sale was defective since more than ten days had elapsed between the publication of the notice and the date of the sale in violation of the statute. So, on May 18 the sale was rescinded, and a new offer from Cronheim received and accepted, subject to confirmation at the meeting of May 28. The new offer was upon the same covenants,

conditions and restrictions as the former one, except that stores were to be permitted on the street level of the apartment building on Ocean Avenue. The new advertisement made the single change to rephrase this use restriction to require "the erection of an elevator apartment or apartment hotel building of not less than seven stories with stores on the street level on the land facing Ocean Avenue and a building consisting of not less than one story store building or store and apartment building on the land facing Asbury Avenue, costing not less than $1,000,000." (Emphasis ours) This change reverts substantially to the language of the March 9 letter, again appearing to indicate that any structure along Ocean Avenue was to be multi- and not single-story. On May 21 Vaccaro, through Edelstein, protested the sale, charging that the notice was ambiguous and not in compliance with the statute. At the meeting on May 28 ...


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