Beneficial Interest in Office Building Leased to Party Appearing in Court

December 30, 1991

CJE Opinion No. 91-1

You have requested the advice of this Committee on the applicability of the Code of Judicial Conduct with respect to your hearing and deciding of cases wherein the State Lottery Commission is a party. This request arises as a result of your interest in a realty trust and its lease with the State Lottery Commission. Based on the information contained in your letter to the State Ethics Commission, you have a five percent beneficial interest in an office building, derived from your status as a beneficiary of the realty trust, the owner of the office building. The Lottery Commission is entering into a lease with the realty trust whereby the Commission will rent 10,748 square feet of the office building. As a Justice of the District Court Department of the Trial Court who often sits in the judicial district wherein the Lottery Commission is located, you are presented with the issue of whether you should hear cases involving the Commission.

Canon 3C(1)(c) of the Code provides:

(1) A judge should disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including but not limited to instances where:

        (c) he knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding,or any other interest that could be substantially affected by the outcome of the proceedings; . . . .

While the Committee cannot anticipate every type of case where the Lottery may be named as a party, it seems reasonable that the Commission's status as a party would fall into two general categories, i.e. as a stakeholder or as a party in interest.

Your participation as the trial judge in interpleader actions brought by the Lottery or actions by plaintiffs against the Lottery, limited to disputes regarding the proper payee of Lottery prizes would not violate the canon. Regardless of the outcome of these stakeholder-type actions, the Commission does not in actuality gain or lose anything. Thus without a substantive interest of the Commonwealth at risk, your impartiality in deciding such cases could not reasonably be questioned.

While your letter indicates you hold a minority interest in the trust, you do not mention what portion of the trust income would be derived from the lease with the Commission. However the square footage, to which you refer, indicates the lease amount is of some substance and thus the income benefit to the trust is probably significant. Obviously because of your income interest in the trust and its interest in the lease with the Commission you should not hear any matters concerning the lease. Additionally, your impartiality might reasonably be questioned if you were to decide cases the outcomes of which result in a financial benefit or loss to the Commission. This is especially so when Canon 3C is read in connection with Canon 2. The latter canon provides:

"A judge should avoid impropriety and the appearance of impropriety in all his activities."

It is not unreasonable to expect legitimate questions may arise regarding a judge's impartiality in rendering decisions favorable or unfavorable to an entity from which he is receiving financial benefits, albeit indirectly through trust income distribution. Reference is made to Advisory Opinion No. 27 of the Advisory Committee on Judicial Conduct of the Judicial Conference of the United States wherein a federal judge was advised to abstain from hearing a case involving a party who also happened to be the lessee of a trust whose sole beneficiary was the judge's wife. While we note that your interest in the trust is far less, the fact that you derive income from the lease interest with the Commission subjects you to the same strictures as set out in Advisory Opinion No. 27.

Thus, the Committee's advice is that you may decide cases where the State Lottery Commission is simply a stakeholder but you should not participate in any other cases involving the Commission.