40 Del. Ch. 500 | New York Court of Chancery | 1962
This is a taxpayer’s action which seeks to enjoin the sale of property owned by the City of Wilmington in the 800 block, Delaware Avenue to defendant, Metropolitan Associates, Inc. (hereinafter Metropolitan) for the sum of $100,000. The property involved, known as the former Wilmington High School property, ceased to be used for school purposes in 1958. On April 6, 1961 the Board of Public Education in Wilmington, an administrative agency having control and jurisdiction over said property, passed a resolution declaring the property to be no longer required for school purposes and authorized preparations for the transfer thereof to the Mayor and Council of Wilmington. By act of the General Assembly of the State of Delaware, approved May 3, 1961 the Mayor and
Pursuant to the authorization in Resolution 61-070 the Clerk of the Council prepared a form of advertisement for newspaper publication. The material provisions of this form were as follows:
“NOTICE OF SALE OR LEASE OF SURPLUS PROPERTY BY THE MAYOR AND COUNCIL OF WILMINGTON
“PUBLIC NOTICE is hereby given that the Clerk of ‘The Council’ of the City of Wilmington will receive, publicly open and read aloud sealed bids from qualified bidders for the purchase or lease and future use of the property occupied by the former Wilmington High School at Delaware Avenue and Adams Street, and more particularly described herein, on October 30, 1961, at 10 A.M. E.S.T., in his office at Room 368, City Hall, Wilmington, Delaware. ******
*503 “DESCRIPTION OF THE PROPERTY ****** "TERMS OF SALE OR LEASE
“Sale shall be on the basis of not less than one-third cash, the balance to be paid within three years at six per cent interest payable semi-annually, secured by a first mortgage. Lease shall be for a minimum term of 20 years.
“CONDITIONS AND RESTRICTIONS
“The sale shall be subject to the following conditions and restrictions, which will be incorporated in the deed to the purchaser :
“(a) There shall be a minimum setback of 20 feet from the property line along Delaware Avenue.
“(b) Not more than 50 per cent of the total lot area shall be used for building purposes.
“(c) All parking and loading required for future use of the premises shall be accommodated on site.
“(d) The existing buildings on the premises must be demolished.
“(e) If any of the foregoing conditions are violated. The Mayor and Council reserves the right to cancel the deed to the purchaser and/or direct the purchaser to deed the property back to The Mayor and Council. Specific performance shall be available as a remedy.
“CONTENTS OF BID
“Bids shall contain:
“(a) Name and address of bidder and a brief statement of bidder’s qualifications.
“(b) Statement of terms of proposed purchase or lease. Bidder may .submit a bid setting forth alternatively terms for either purchase or lease.
“(c) Description of proposed future use of property in as much detail as possible, including plans, drawings, etc. if possible.
*504 “(d) Estimated time from date of purchase until property shall be put to its proposed future use, and estimated progress schedule in converting to proposed use.
“AWARD OF CONTRACT
“ ‘The Council’ intends to consider the nature and promptness of the proposed future use as well as the bid price and reserves the right to award the contract for sale to the bidder whose proposed future use is most consistent with overall urban renewal planning ‘The Council’ reserves the right to reject any or all proposals, or to accept any proposal, and/or to waive technicalities when in its judgment it is in the best interest of the City of Wilmington.
“RECOMMENDED FUTURE USES AND ADDITIONAL INFORMATION
“Additional information and recommended future uses for the property are contained in a report of the Wilmington Planning Commission to ‘The Council’ dated August 1, 1961. This report is available at the office of the Clerk of ‘The Council,’ and should be consulted by prospective bidders since ‘The Council’ will be guided by the recommendations of the Planning Commission contained in this report in awarding the contract of sale.
“/s/ PAUL SHOCKLEY
“Clerk of ‘The Council.’ ”
This notice was published in the Evening Journal, a daily newspaper printed and published in the City of Wilmington, in its issues of September 27, October 4 and October 11, 1961. An abbreviated notice was published in the Philadelphia Inquirer in its issue of October 1, 1961 and in the Wall Street Journal in its issue of October 3, 1961.
On October 30, the Clerk of the Council received two bids. One of these was the offer of Metropolitan Associates, Inc. for the purchase of the property. The other was the offer of Aims, Incorporated, for a long term lease of the property. The Metropolitan proposal offered the sum of $100,000 for the purchase of the subject property and provided: “Our offer and proposal is conditioned upon the rezoning of
The bids received were delivered to the Wilmington Planning Commission for its appraisal and recommendations. On November 30 the Wilmington Planning Commission made its report to the Mayor and Council. This report analyzed the proposals of the respective bidders, stated that the Metropolitan bid was incomplete in certain particulars and contained alternative recommendations. On the same date the Council passed Resolution 61-103 providing that Metropolitan “submit a draft or a proposed agreement of sale to the City Solicitor, which agreement should set forth and clarify the completion date, construction progress schedule on the proposed motel, zoning requirements, restrictions, conditions, and any and all other limitations effecting the aforesaid parcel of land. FURTHER RESOLVED that upon the City Solicitor approving the aforesaid agreement of sale plans for settlement be scheduled between the interested parties and the Mayor of the City of Wilmington and the Clerk of ‘The Council’ be and they are hereby authorized and directed to execute an agreement of sale and a deed in order to accomplish and effectuate the sale and transfer” of the premises.
Pursuant to the provisions of Resolution 61-103 Metropolitan prepared and submitted to the City 'Solicitor a proposed agreement of Sale. Paragraph 4 of the proposed agreement provides: “4. Zoning. Seller shall insure proper zoning of the site to permit the construction of the motor hotel. Seller shall also insure that in the event Monroe Street has not been vacated, said street will be vacated and the bed thereof become an integral part of the site.”
Paragraph 5 of the proposed agreement provides: “5. Access and Egress to Premises. Buyer shall have the privilege of voiding this agreement in the event exit and/or entrance ramps to FAI-2, the
Other provisions of the proposed agreement provided for avoidance thereof upon the happening of certain contingencies beyond Metropolitan’s control. The testimony discloses that the City Solicitor considered the provisions of the proposed agreement and conferred with Metropolitan’s attorney with respect thereto. It is evident that these attorneys were in agreement with respect to some of the terms proposed by Metropolitan but were in disagreement as to other terms.
The record shows that defendant Brady, one of the councilmen, voted against Resolution 61-103, and that said defendant, at a council meeting on December 14, 1961, moved to rescind Resolution 61-103. Defendant Albert joined defendant Brady in voting for the motion. The remaining councilmen voted against it. Since these defendants, as plaintiffs say, “voted against making the sale to Metropolitan,” plaintiffs have abandoned any claim for relief against Brady and Albert individually and have agreed to the entry of judgment in their favor.
On December 20, 1961, at plaintiffs’ instance, Harry R. Brown, a real estate appraiser, made an appraisal of the subject property. He appraised it to be of the value of $225,000 plus demolition costs. This action was commenced on the same day.
The facts as stated sufficiently show the general picture made by the record. There are many details which it would be necessary to recite if the court was called upon to determine all of the issues which plaintiffs raise. Plaintiffs point to many matters of procedure which they contend were violative of statutory and ordinance provisions and resulted in stiffing competition in the bidding. They argue that the Metropolitan bid could not be legally accepted by the Council because Metropolitan did not have corporate existence on October 30, 1961 when its bid was submitted. They contend that the sale to Metropolitan as proposed in Resolution 61-103 would be for a grossly inadequate consideration and that the sale must therefore be enjoined. Plaintiffs also complain that Metropolitan’s bid was not responsive to the invitation to bid in that it was conditional and at variance with the pro-
It is the general rule that a bid must conform substantially to the advertised plans and specifications, and where there is a failure to comply substantially with the terms of the proposal it is the duty of public authorities to reject the bid. Bader v. Sharp, 36 Del.Ch. 89, 125 A.2d 499 ; 43 Am.Jur. § 40; Coller v. City of St. Paul, 223 Minn. 376, 26 N.W.2d 835. Whether or not there is a material variance “is determined largely with reference to whether the bidder’s proposal gives him an advantage or benefit which is not enjoyed by other bidders.” 43 Am.Jur. § 40. It is a question of fact, to be resolved in the light of all the circumstances. Bader v. Sharp, supra. Nor does it matter in considering the materiality of a bidding variance whether there is only one or several bidders. Coller v. City of St. Paul, supra.
The circumstances of the present case clearly indicate a material variance in one or more respects. As heretofore observed Metropolitan’s bid was subject to three conditions, namely, (1) rezoning of the property to permit construction of a motor hotel, (2) the vacation of a portion of Monroe Street, and (3) non-interference by the ramps of the proposed Freeway with means of access and egress to the property.
As I am of the opinion that the condition of non-interference by the Freeway ramps is clearly a material variance from the proposal, consideration need not be given to the materiality of the conditions relating to zoning and the vacation of a portion of Monroe Street. The effect of the condition of non-interference in Metropolitan’s bid is to provide an avoidance of the bid upon the happening of a contingency which is in the control of neither the Mayor and Council of Wilmington or Metropolitan. As I read the city’s proposal, it calls for the submission of bids for the purchase of the subject property for such use as may be agreeable to the Council. The only conditions to which the sale is subject are those mentioned under the title “CONDITIONS AND RESTRICTIONS.” Metropolitan calls
Plaintiffs contend that the record establishes that the Mayor and councilmen have individually committed breaches of trust in the circumstances leading up to the acceptance of bids and the consideration of bids received. Plaintiffs, therefore, say that the Mayor and individual councilmen should be held accountable for any loss suffered by the city as a result of such breaches of trust. They contend also that in the circumstances the court should assess all costs, including their counsel fees, upon the Mayor and individual councilmen. The record does not establish any bad faith on the part of any of the defendants. Though it may be properly said that a more strict adherence to established procedure than was followed in the attempted disposal of the subject property is desirable, I am satisfied that the actions of the Mayor and councilmen were not such as to warrant the
Plaintiffs’ application for the assessment of counsel fees against the Mayor and individual defendants must also be denied. There is no precedent in this state for the allowance of fees under the circumstances presented, and, since plaintiffs have failed to show bad faith, I do not regard the case as a proper one for the assessment of fees.
The costs of this proceeding are taxed against the Mayor and Council of Wilmington, a municipal corporation.
Plaintiffs are entitled to judgment nullifying the sale to Metropolitan and enjoining The Mayor and Council of Wilmington and Metropolitan from entering into and performing a contract pursuant to the award.
Order on notice.
