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Township of Hanover v. International Fidelity Insurance Co.

Decided: March 5, 1973.

TOWNSHIP OF HANOVER, A MUNICIPAL CORPORATION, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
THE INTERNATIONAL FIDELITY INSURANCE COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, AND PARKER MADISON, INC., ET ALS., DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS



Labrecque, Kolovsky and Matthews.

Per Curiam

This action was instituted by plaintiff township against Parker Madison, Inc. (Parker) and The International Fidelity Insurance Company (International) to recover $12,000, the amount of the bid bond submitted by Parker as principal and International as surety to guarantee that Parker would enter into a contract if its bid were accepted by the township.

The trial court denied cross-motions for summary judgment made by plaintiff and Parker. At the same time it severed for trial the cross-claim and third-party action filed by International against Parker and its indemnitors and a cross-claim filed by Parker. By leave of the court, the township appeals from the denial of its motion for summary judgment, and Parker and International appeal from the denial of Parker's cross-motion.

The essential facts are undisputed. The township had advertised for bids for alterations of its municipal building. The specifications required each bidder to submit with its bid a surety bond in the amount of 5% of the bid to insure that it would enter into the contract if it were the successful bidder. The specifications contained a provision authorizing the municipality to waive informalities in the bids.

On December 2, 1969 Parker submitted a bid of $277,700 and a bid bond under seal, executed by it as principal and International as surety, in the amount of $12,000. The condition of the bond read as follows:

Now, Therefore,

(a) If [the bid of the principal Parker] shall be rejected, or in the alternate

(b) If said bid shall be accepted and the Principal shall execute and deliver a contract in the Form of Contract attached hereto, properly completed in accordance with said bid, and shall furnish a bond for the faithful performance of said Contract, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all

other respects perform the agreement created by the acceptance of said bid;

Then, This Obligation Shall Be Void, otherwise the same shall remain in force and effect; * * *

Parker's bid, $277,700, was the lowest bid submitted and on December 30, 1969 the township committee awarded the contract to it. Notice of the award was given to Parker on January 5, 1970 and contract documents sent to it for execution on January 21, 1970. Parker did not execute the contract documents even though it was advised by letter of March 17, 1970 that a default would be declared and the work readvertised for bids. (Parker contends that it was unable to enter into the contract because International had refused to provide, as allegedly it had promised to do, the required performance bond. The breach of that alleged agreement forms the basis of the cross-claim filed by Parker against International.)

On April 9, 1970 the township committee readvertised for bids. It received new bids and awarded the contract to a company which ...


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