Constitutional Law- State Action and the Equal Protection Clause – Status of Lessee of Public Property

Defendant Wilmington Parking Authority was a tax-exempt state agency organized under the Delaware Parking Authority Act to build and operate a public off-street parking facility. Financing of the project was accomplished primarily by the issuance of self-liquidating bonds, but fifteen percent of the necessary capital was advanced by the City of Wilmington from its public funds. The state agency had statutory authority to lease space in the facility for private commercial uses, but only to the extent that the rentals thereby obtained were needed to meet the state requirement that the facility be self-supporting. In accordance with this authority space was leased to defendant lessee, a restaurant, which installed most of the restaurant furnishings at its own expense. Lessee covenanted to occupy and use the premises in accordance with all applicable laws, but no control over operation of the restaurant was reserved by the state agency. Lessee refused to serve plaintiff, a Negro, because of his race. Plaintiff joined lessee and the Parking Authority in a proceeding to enjoin lessee’s alleged discriminatory conduct. A state chancery court held that lessee’s conduct was prohibited by the equal protection clause of the fourteenth amendment, finding “state action” in the fact of state ownership of the leased property and the importance of the rental income to the continued existence of the parking facility. On appeal, held, reversed. Since the Parking Authority did not locate the restaurant inside the public structure for the convenience of users of the parking facility, and did not directly or indirectly operate the restaurant or financially enable it to operate, lessee was acting in a purely private capacity and thus was not restrained by the fourteenth amendment. Wilmington Parking Authority v. Burton, 157 A.2d 894 (Del. 1960), jurisdictional question postponed, 364 U.S. 810 (1960).