Lake George Steamboat Co. v. Blais, 30 N.Y.2d 48 (1972)

A municipality cannot lease property acquired for public use to a private entity for private profit without specific legislative sanction.

Summary

Lake George Steamboat Co. challenged the Village of Lake George’s lease of a dock to Lake George Marine Industries, Inc., arguing it was an improper diversion of public land for private use. The land was granted to the Village by the State with restrictions for public park and dock facilities. Marine Industries operated sightseeing boats from the dock. The New York Court of Appeals held that the lease was invalid because it diverted public property to private use without explicit legislative approval. The court emphasized that municipalities must obtain clear legislative sanction before leasing property held in public trust for private profit, safeguarding against potential abuses.

Facts

The Village of Lake George received land grants from New York State. These grants restricted the land’s use to public park purposes and dock facilities for the benefit of the Village. The Village leased a portion of the dock to Lake George Marine Industries, Inc., a private corporation, for operating sightseeing boat tours. The lease allowed Marine Industries to use the dock for its commercial purposes, generating private profit.

Procedural History

The petitioners initiated an Article 78 proceeding to prevent the Village and Marine Industries from complying with the lease. Special Term nullified the lease, prohibiting the Village from leasing the dock. The Appellate Division reversed, upholding the lease. The New York Court of Appeals reversed the Appellate Division’s decision and reinstated the Special Term’s order, invalidating the lease.

Issue(s)

Whether the Village of Lake George could lease land, granted to it by New York State for public use, to a private corporation for commercial purposes without specific legislative sanction.

Holding

No, because a municipality cannot divert property held for public use to exclusively private purposes without clear legislative authorization.

Court’s Reasoning

The court reasoned that the land was explicitly granted to the Village for public use, including public park and dock facilities. The lease to Marine Industries, a private corporation profiting from sightseeing tours, constituted a diversion of this public trust to a private purpose. The court emphasized that municipalities lack the inherent power to unilaterally convert public property to private use; such power is derivative from the legislature. “Sound public policy forbids that there should be any power to divert a part thereof to a private use, for, once such power being assumed, the dangers which may follow either from favoritism or ill-judgment may speedily hamper or practically destroy the fundamental purpose of the public use.” Absent explicit legislative authorization, the lease was deemed invalid. The dissent argued that a public purpose was served by the lease (providing a public benefit through private enterprise), but the majority insisted on a stricter standard of public use, requiring explicit legislative approval for any private commercial activity on land held in public trust.