Court: Appellate Division of the Supreme Court of the State of New York; July 11, 1996; New York; State Appellate Court
An appeal has been made from a judgment by the Supreme Court in Washington County, which denied petitioners’ request for a permanent injunction in a combined proceeding under CPLR article 78 and a declaratory judgment action. In June 1991, the Town Board of Kingsbury established the Kingsbury Industrial Park Corporation (KIP) to promote local business development, with Town Supervisor Robert J. Corrigan as its president. In December 1993, the Board proposed purchasing a 14.5-acre parcel on Dix Avenue, owned by RV USA, Inc., for industrial park development, authorizing Corrigan to negotiate a purchase not exceeding $150,000, with legal assistance from Town Attorney Richard McLenithan. McLenithan advised that the purchase should be for municipal purposes, not on behalf of KIP. Despite this, the Board proceeded with the purchase and secured $160,000 in funding from Glens Falls National Bank, acquiring the property for $150,000.
Following the acquisition, petitioners Schulz and Gage raised concerns about potential violations of the New York Constitution regarding the sale or lease of the property to KIP. They, along with other petitioners, initiated legal action against the Town, Corrigan, McLenithan, KIP, and others, seeking to reverse the transaction and impose penalties on Corrigan and McLenithan. The defendants moved to dismiss the case, and the court ruled that the petitioners failed to state a cause of action against several defendants, including First National Bank of Glens Falls, Corrigan, and McLenithan in their individual capacities. Additionally, the court found that the purchase was invalid due to non-compliance with the State Environmental Quality Review Act.
The Supreme Court directed the sale of a parcel to an unrelated third party, using the proceeds to satisfy a $160,000 bond anticipation note owed to GFNB. Petitioners appealed the dismissal of their complaint against individuals Corrigan and McLenithan, arguing they were improperly dismissed in their personal capacities. The court affirmed the dismissal, stating that to impose personal liability under General Municipal Law § 51, petitioners must prove that the officials’ actions were illegal, fraudulent, collusive, or for personal gain. The court found no support in the record for the petitioners' allegations against Corrigan and McLenithan.
Regarding criminal allegations based on a purported violation of General Municipal Law § 804, which makes contracts with prohibited interests unenforceable, the court noted that petitioners failed to substantiate their claims. They speculated that KIP was not a legitimate not-for-profit and that Corrigan and McLenithan had undisclosed prohibited interests. However, the court pointed out that the stated purpose of KIP was legitimate and that its certificate of incorporation explicitly stated that no income would benefit any individual or private entity. Furthermore, the absence of a valid accusatory instrument meant that criminal prosecution could not proceed, leading to the dismissal of those allegations. The court found petitioners' remaining arguments lacking in merit and affirmed the judgment without costs.
