On this date in 1977, the Supreme Court decided Manning Engineering, Inc. v. Hudson County Park Comm’n, 74 N.J. 113 (1977). The unanimous opinion by Justice Pashman vacated a judgment obtained by the plaintiff engineering firm for payment for its services, an award that the Supreme Court itself had approved. See 71 N.J. 145 (1976). The Court acted to vacate the judgment because, about three weeks after that 1976 ruling, the Court was advised of “illegality in the procurement of the contract” on which the judgment was based. More particularly, “Manning had been awarded the contract in question in return for his role as a conduit for illegal ‘kickbacks’ to John V. Kenny, one of the parties to the “Hudson Eight” federal corruption trial that had occurred in 1971.
In order to vacate the judgment, the Court first had to reopen the case. Justice Pashman thus first addressed the question whether Rule 4:50 offered grounds to reopen the matter. In a lengthy discussion of that Rule that is still valid today, he concluded that the “catchall” provision of Rule 4:50-1(f) permitted reopening.
Justice Pashman was harshly critical of defendants for not bringing forth the illegality defense earlier. “Defendants’ conduct in this case, in holding back their defense of illegality through several years of litigation in the Law Division, Appellate Division and Supreme Court, and advancing it on a motion to reopen the judgment only after finally losing their appeals based on other defenses, constitutes, in our opinion a rank abuse of the judicial process of this State and deserves the severest condemnation. It is simply incredible that all or most of the members of the Board of Freeholders and the Park Commission, and their attorneys, did not know of that well publicized testimony all during this litigation.” Despite that delay, which in a more ordinary case might have been fatal to reopening under Rule 4:50, reopening was warranted “because of the public policy to prevent recovery of damages for breach of an illegal public contract executed by plaintiff as part of a fraudulent scheme.”
The Court then ruled that there was a factual basis for reopening and rebuffed Manning’s argument that use of his compelled testimony in the federal case in finding a factual basis was improper. The remaining issue was whether Manning should be deprived of all benefit of the contract. The Court held that that was the proper result.
Manning contended that “his arrangement with Kenny was sufficiently ‘collateral’ or ‘remote’ to the contract with the county so that the corruption inherent in the former should not be deemed to taint the latter.” Justice Pashman did not agree. “The gravity of the evil apprehended here is trafficking in the award of public contracts, enhanced in this case by the scurrilous nature of Manning’s services to Kenny which brought him this contract. The ‘evil’ is thus of first-level ‘gravity.'” Manning might have had a better argument “if he were free of moral culpability in the matter, for instance, if he were an innocent subcontractor under the engineering contract.” But that was not so, and “the doctrine of collateralness must give way to the public policy of discouraging such illegal activities as those admitted by Manning and found below on adequate proofs to have led directly to the award of the instant contract to his firm.”
The Court’s ruling on illegality, like its discussion of Rule 4:50, remains vital to this day. The type of corruption at issue in this case is perhaps less frequent now than it was, but it has not disappeared.