Schwartz, L., J.c.c., Temporarily Assigned.
The issue to be determined by the court is whether a municipal governing body may reject the highest bid, after public sale, for the purchase of municipally-owned real property without affording to the highest bidder a hearing and without basing such rejection upon a reason which is in the public interest.
The municipal council of the City of Newark adopted a resolution providing for the public sale of premises known as 204 Johnson Avenue, not needed for public use, and fixing
a minimum price of $500, with the further condition that the sale would be subject to final approval by the council which, in its discretion, could reject all bids.
In accordance with the resolution the public sale was held on June 14, 1974, and plaintiffs offered the highest bid of $5,600. On July 17, 1974 the council adopted a resolution providing that the offer made for the purchase of this property "be, pursuant to N.J.S. 40A:12-13, rejected."
Plaintiffs filed a complaint in lieu of prerogative writs challenging the right of the governing body to reject their highest bid "giving no reason for so doing" and demanding that the conveyance be consummated.
They joined as defendants Mr. and Mrs. James Harley, the occupants of the premises. The complaint made no demand for relief against them, but at the pretrial conference it appeared that they were joined as they had made an offer to purchase the property from the council at a higher price subsequent to the date the auction was held. However, all parties agreed no testimony would be offered in this respect at the plenary trial. The Harleys are improper parties defendant in this cause of action challenging municipal conduct, and we need concern ourselves no further with their position.
At a pretrial conference, upon the court inquiring as to the nature of the testimony to be proffered and whether the municipality would be prepared to offer a reason for the rejection, the parties stipulated they would rely on the exhibits which contained the facts as to the bidding and rejection heretofore recited. The municipality asserted it rested on its absolute right to reject without a hearing, and would not offer testimony as to the reason for the rejection.
Under these circumstances the court advised it would review the exhibits and legal argument and make its determination.
N.J.S.A. 40A:12-13 provides that any municipality may sell real property not needed for public use by various methods, including:
(a) By public sale to the highest bidder after advertisement thereof in a newspaper circulating in the municipality or municipalities in which the lands are situated by two insertions at least once a week during 2 consecutive weeks, the last publication to be not earlier than 7 days prior to such sale. In the case of public sales, the governing body may by resolution fix a minimum price, or prices, ...