Blair Lee III, 69, a distinguished member of the one of the nation's oldest political families who had served his native Maryland in both houses of the legislature, as a member of the state cabinet, and finally as acting governor, died of cancer Oct. 25 at his home in Silver Spring.

He served as acting governor of Maryland from August 1977 until after his defeat for the governorship the following year. As Maryland's lieutenant governor, he had assumed the acting governorship when Gov. Marvin Mandel stepped aside after his conviction on political corruption charges. The full powers of the office had been transferred to Gov. Lee in June 1977, due to the illness of Mandel.

Gov. Lee brought a courtly manner, a set of moderate political values and a noted wit to the governor's mansion. If some found him dull, most found him articulate and all found him honest beyond reproach. If he had been a Mandel loyalist in the Annapolis political arena since 1970, his work had been in the nuts and bolts of government.

Observers in the legislature said that Gov. Lee, first as Maryland secretary of state, then as lieutenant governor, was never part of Mandel's inner circle. His value to Mandel was his patrician Montgomery County roots, lending ethnic and geographic balance to the administration. He also brought unquestioned expertise in such areas as health, education, tax reform and fiscal management.

During his 1 1/2 years as acting governor, Gov. Lee remained above reproach personally but, in the opinion of some political observers, had trouble distancing himself from the Mandel administration. He criticized Mandel for his lack of moral leadership and candor, yet surprised some for keeping on certain Mandel aides.

In 1978, he ran for his own term as governor -- and lost the primary to the state's current governor, Harry Hughes. Gov. Lee's gifts as a candidate were both obvious and numerous. His mastery of the English language contrasted sharply with previous governors; his character and dedication to public service were unquestioned. His work in county and regional planning in Montgomery County was widely applauded, and his years in the legislature earned awards.

His failings were those of a candidate rather than of a governor. A son, Blair Lee IV, said his father was not comfortable working crowds. He also managed to give major addresses to the legislature that, while packed with the very essence of government, included no applause lines.

Gov. Lee himself confessed that he lacked "the kind of driving ambition to reach the top." During his campaign for governor, he said that race was "not life or death. It's nice to have your name listed in the Maryland Manual. But it's not an obsessive ambition for me."

One reporter said that Gov. Lee was a first-rate governor but a second-rate politician. Another explained that though he was not a born politician, he had been born to be a politician.

The Blairs' and Lees' influence on this nation is as old as the republic itself. Gov. Lee's grandfather, Blair Lee, was Maryland's first elected U.S. senator. His father, E. Brooke Lee, was a former speaker of the Maryland House of Delegates, secretary of state and comptroller. Other forebears included Richard Henry Lee and Francis Lightfoot Lee, the only brothers to sign the Declaration of Independence; Francis Preston Blair, a newspaper editor and influential ally of Andrew Jackson; and Montgomery Blair, who served as Abraham Lincoln's postmaster general. Other forebears included assorted diplomats, admirals and Robert E. Lee.

Gov. Lee confessed that in the 1970s he became deeply disturbed by the decline of public esteem for elected officials. In 1973, he told one reporter, he had gone through a "period of massive disillusionment," and had seriously considered getting "the hell out of politics."

Scandals, including Watergate and corruption convictions of both his immediate predecessors as governor, had added to the public's image of Maryland politics as one of "dirty business," he said. The history of his family was one that equated politics with honor and pride.

In addition to this, Gov. Lee and his family had gone through their share of personal trouble, all in the public eye. He experienced the trials of a parent very involved in a time-consuming public career who also raised a family of eight children. Stories appeared concerning conflicts common to families of the era, ranging from life styles to foreign policy. In 1973, his 27-year-old second son, Pierre Boal Lee, committed suicide by jumping off San Francisco's Golden Gate Bridge.

Since 1980, Gov. Lee had served on the University of Maryland Board of Regents. Earlier that year, Hughes had unveiled Gov. Lee's official portrait in the State House. Surveying the crowd of about 200, which included both his predecessor and successor as governor, he quipped, "Nothing beats a public hanging for bringing out good friends."

On a more serious note, Gov. Lee recalled in a recent interview how he inherited the job of governor at a time of a "low ebb." He said he had the job of trying to bring esteem back to the office, "and I think we did a right good job of it."

Upon learning of Gov. Lee's death, Maryland House Speaker Benjamin Cardin (D-Baltimore) said he would remember him best for his work on improving the state's system of school funding. "He was a statesman and a person who truly improved the quality of life for all Marylanders."

Mandel yesterday described his former lieutenant governor as "a magnificant public servant," and added, "I can't think of anyone who was more devoted or more interested in what he was doing and so full of desire to do good as Blair was."

Blair Lee III was born in Silver Spring on May 19, 1916. He was a 1938 graduate of Princeton University, where he earned a bachelor's degree in American history, then studied law for two years. He joined the Navy, serving aboard destroyers in the Atlantic and Mediterranean during World War II and attaining the rank of lieutenant commander.

From 1945 to 1949, he was editor of The Maryland News, a family owned weekly published in Montgomery County. He also served as president of both the Silver Spring Board of Trade and the Maryland Press Association in 1949. Between 1949 and 1954, he was vice chairman and park commissioner of the Maryland-National Capital Park and Planning Commission and executive officer of the National Capital Planning Commission.

From 1955 to 1962, he served in the House of Delegates and chaired the Montgomery County delegation. He was chosen 1958 Legislator of the Year by the Maryland Legislative Correspondents Association for his work in resolving disputes between the Maryland Teachers Association and the General Assembly.

Elected to the state Senate in 1966, he became vice chairman of its finance committee and member of the legislative council before being appointed Maryland secretary of state in 1969. He became the state's first lieutenant governor when that office was created in 1970.

Gov. Lee made an unsuccessful run for the Democratic nomination for the U.S. Senate in 1962. Two years earlier, he had been Montgomery County campaign manager for John F. Kennedy. He was a regional coordinator with the 1964 Johnson-Humphrey ticket.

Gov. Lee's survivors include his wife, Mathilde Boal (Mimi) Lee of Silver Spring; a daughter, Jennie Sataloff of Baltimore; six sons, Joseph, of Olney, Md., Christopher, of Boalsburg, Pa., Philip, of Lewiston, Maine., and Blair IV, Frederick, and John, all of Silver Spring; two brothers, Bruce, of New York City, and E. Brooke Lee Jr. of Chevy Chase, and six grandchildren.