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Leonardis v. Bunnell

Decided: January 26, 1977.

PETER A. LEONARDIS, MARY A. LEONARDIS, MARVIN L. RUBIN, JOYCE RUBIN, STANLEY GOLDBERG, KENNETH SCHEIHOFER, GARY W. PARIS, VIRGINIA PARIS, MYRNA LOPAT AND SHERMAN LOPAT, ON BEHALF OF THE TOWNSHIP OF UNION, A MUNICIPAL CORPORATION, IN THE COUNTY OF UNION, IN THE STATE OF NEW JERSEY, PLAINTIFFS,
v.
ROBERT BUNNELL, BUNNELL BROS., INC., ALTON VAN HORN, HENRY H. KAGEL, HUGO C. BIERTUEMPFEL, LEONARD ZEHNBAUER, INC., LAWRENCE SCHRECK, JAMES P. GENOVESE, WILLIAM HEBEL, MAX SEROTA, BURTON CO., INC., EUGENE M. ECKLUND AGENCY, UNITED POLICY-HOLDERS SERVICE CORP., RICHARD DREHER, JR., WILLIAM BAUER, JR., KOLOMON KISS, EUGENE ECKLUND, JOHN S. ZIMMERMAN, JAMES C. CONLON, ANTHONY RUSSO, ROBERT R. LACKEY, ROY KITCHELL, SAMUEL L. RABKIN, JOHN YACOVELLE, AND REV. WILLIAM F. STATON, DEFENDANTS



Brody, J.J.D.R.C., Temporarily Assigned.

Brody

The Union Township Committee retained defendant Bunnell Bros., Inc. (Bunnell) from 1961 through 1974 to serve as the township's insurance broker. Bunnell shared its commissions equally with other Union Township brokers, each of whom was privately designated by a different one of the five committeemen.

This action, initiated and prosecuted by several of the township's residents and taxpayers, was brought by leave of court to recover these commissions, totaling $59,186.52, after the committee refused to institute the suit. N.J.S.A. 2A:15-18. Joined with Bunnell as defendants are its principal and various committeemen and brokers who are alleged to have participated in the arrangement.

Without objection, I dismissed the complaint for lack of prosecution as to several defendants not served because of death, dissolution, unknown address or misnomer. The parties remaining have by motions for partial summary judgment submitted the questions of whether the Bunnell contract with the township is legal; if illegal, whether the township is entitled to recover the commissions from Bunnell, and if so, whether that recovery must be curtailed by limitations.

Defendants' main position is that Bunnell was free to share commissions with the other brokers who aided in executing its contract with the township. N.J.S.A. 17:22-6.18 impliedly lends support to this statement in generally prohibiting the payment of brokerage commissions to anyone

not licensed by the Commissioner of Banking and Insurance as an agent, broker or solicitor.

But this argument, however sound as far as it goes, diverts attention from the conceded fact that the other brokers were not chosen by Bunnell. Tainting the arrangement was the sub rosa designation of those brokers by the individual members of the township's governing body. True, it is not alleged that the committeemen had a pecuniary interest in the contract. Nevertheless, their undisclosed power to appoint the participating brokers constituted a private interest capable of influencing the committeemen to award the contract to Bunnell. That interest was sufficient to render the contract voidable. Cf. Griggs v. Princeton , 33 N.J. 207, 219-220 (1960); Pressey v. Hillsborough Tp. , 37 N.J. Super. 486 (App. Div. 1955).

Defendants' alternate approach is to view the contract as running directly from the township to the participating brokers. They argue that since all the committeemen engaged in the practice, either actively or by acquiescence, in effect the committeemen ratified the appointment of the brokers as an "insurance board" when, as the governing body, they awarded the contract to Bunnell. See De Muro v. Martini , 1 N.J. 516, 521-522 (1949). By viewing the designation of the brokers as an appointment by the governing body, defendants seek to legitimate each committeeman's power of appointment.

Appointment by the governing body of an "insurance board" might well have been legal even though, as a political compromise, a different committeeman designated each broker. Under those circumstances, while the committeemen's private interest would be the same as their invalidating interest in the case at bar, it would be legally acceptable as a necessity of government so long as the action was taken by the governing body at a public meeting. The opportunity for public scrutiny is the critical difference. Concern for public scrutiny tends to keep private or political interests in line with the public interest. In this

regard, the words of Chief Justice Vanderbilt bear repeating:

In addition, during all but the first three months of the period in question the Legislature required that votes of a public body be taken at a public meeting. Official action otherwise taken by a public body was declared voidable. L. 1960, c. 173. That legislation was expanded in the superseding Open Public Meetings Act which requires that even the deliberations of ...


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