March 14, 1988
Topic: Participation in a business enterprise.
Digest: A judge of a court of record may continue to own stock in a small corporation which operates an apple orchard for profit, but may not be an officer or director of the corporation, or participate in the conduct of the business in any manner.
Rules: Canon 5C; 22 NYCRR 100.5(c) 2
A recently-elected judge of a court of record has inquired as to the propriety of his continued participation in an apple orchard which is operated by a corporation owned by three families. The Judge owns a one-third share of the corporate stock and assists in the harvest of apples during weekends in September and October of each year, but is not an officer or director of the corporation, nor does he draw any salary for his activities on behalf of the business.
Canon 5C of the Code of Judicial Conduct states:
C. Financial Activities.
(1) A judge should refrain from financial and business dealings that tend to reflect adversely on his impartiality, interfere with the proper performance of his judicial duties, exploit his judicial position, or involve him in frequent transactions with lawyers or persons likely to come before the court on which he serves.
(2) Subject to the requirements of subsection (1), a judge may hold and manage investments, including real estate, and engage in other renumerative activity, but should not serve as an officer, director, manager, advisor, or employee of any business.
The Rules of the Chief Administrator of the Courts further provide (22 NYCRR 100.5 [c]):
(2) No judge or justice of the Court of Appeals, Appellate Division, Supreme Court, Court of Claims, County Court, Surrogate's Court, Family Court, District Court, Civil Court of the City of New York, or Criminal Court of the City of New York shall be a managing or active participant in any form of business enterprise organized for profit, nor shall he or she serve as an officer, director, trustee, partner, advisory board member or employee of any corporation, company, partnership or other association organized for profit or engaged in any form of banking or insurance.
The Rules of the Chief Administrator are more stringent than the Code of Judicial Conduct. Assisting in the harvesting of the crop of this farming enterprise would constitute active participation in a business enterprise, and in so doing, the judge would be an employee of the business, even if he received no direct remuneration for such activity (see Nalli v Peters, 241 NY 177).
The Judge may retain his stock ownership in the corporation, but under the Rules of the Chief Administrator, he should refrain from assisting in the operation of the farm, including harvesting the crop during weekends in the fall of the year. This does not mean the judge may not accompany his family on weekends and engage in appropriate social activities.
This Opinion is advisory only and is not binding upon either the Office of Court Administration or the Commission on Judicial Conduct.