December 11, 2014
Digest: Under the specific circumstances presented, where a Surrogate entered into a contract to purchase real property in good faith, but, thereafter, learned the property was part of a decedent’s estate, it is sufficient for the Surrogate to disqualify him/herself from any further involvement in the probate proceeding and the Surrogate need not also repudiate the contract.
Rules: 22 NYCRR 100.2; 100.2(A); 100.2(C); 100.3(E)(1)(c); 100.3(E)(1)(d)(iii); 100.4(D)(1)(a)-(c); 100.4(D)(2); Opinions 12-107; 09-134.
The inquiring judge states that his/her spouse, who has bought and sold real estate for years, recently negotiated a contract through realtors to purchase certain real property. On inquiry, the seller’s attorney stated that a particular individual (“Mrs. X”) held title to the real property. The judge states that Mrs. X was the sole beneficiary in an uncontested probate proceeding the judge had presided over several months earlier. The judge further states that Mrs. X’s relative, who was one of two co-executors of the decedent’s estate, was apparently acting as Mrs. X’s agent in selling the real property. However, the judge indicates the papers filed in the probate proceeding “did not indicate any real estate was involved, and no one indicated to” the judge or his/her spouse that the real property “had any connection to an estate.” The judge and his/her spouse signed the contract to purchase the real property, and it appears that both sides have commenced performance under the contract.1 Subsequently, the seller’s representative advised the judge that only the decedent, and not Mrs. X, is listed as owner on the title to the property, and therefore the decedent’s estate is the current title holder. The judge states that he/she will disqualify him/herself from any further proceedings involving the estate but asks whether he/she must also repudiate the contract.
A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]). A judge also must not engage in financial and business dealings that may reasonably be perceived to exploit the judge’s judicial position; involve the judge with any business, organization or activity that ordinarily will come before the judge; or involve the judge in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the judge’s court (see 22 NYCRR 100.4[D][a]-[c]; cf. 22 NYCRR 100.2[C] [a judge must not lend the prestige of judicial office to advance the private interests of the judge or others]). Nonetheless, the Rules Governing Judicial Conduct expressly permit a judge to hold and manage investments of the judge and members of the judges family, including real estate, subject to certain limitations (see 22 NYCRR 100.4[D]). Finally, a judge must disqualify him/herself in a proceeding where his/her impartiality might reasonably be questioned or in other specific circumstances as required by rule or by law, including when the judge knows that the judge or the judge’s spouse “has an economic interest in the subject matter in controversy” (22 NYCRR 100.3[E][c]) or any other “interest that could be substantially affected by the proceeding” (22 NYCRR 100.3[E][c]; 100.3[E][d][iii]).
The Committee previously observed that “judges, in their capacities as private citizens, routinely engage in countless everyday purchases as well as negotiations for more expensive items such as a residence or a motor vehicle, or loans to finance such purchases, and such routine transactions do not ordinarily require a judge’s disqualification” (Opinion 12-107 [citations omitted]). Indeed, the Committee has advised that the Rules Governing Judicial Conduct do not prohibit a judge from participating in a foreclosure sale “on the same basis as any other private citizen, even in his/her own court, as long as another judge will preside over the [foreclosure] proceeding” (Opinion 09-134).2 The Committee has also advised that a support magistrate is not entirely precluded from negotiating the purchase of an expensive leisure item from a seller who recognized the support magistrate’s name and spontaneously expressed gratitude for the support magistrate’s prior decision, where the decision was rendered two years ago and there are currently no pending or open issues in the matter, but the support magistrate must take certain precautions to avoid any appearance of impropriety (see Opinion 12-107).
The present inquiry appears to raise a question of first impression for the Committee, as the inquiring judge did, in fact, preside in the probate proceeding through which the real property in question would presumably pass to Mrs. X if not otherwise disposed of. However, the inquiring judge has represented that the judge and his/her spouse negotiated and signed an arms’-length contract to purchase the real property and that there was, at that time, no apparent connection between the real property and any pending or impending proceeding before the judge. To the contrary, the judge was informed, on inquiry, that a living person held title to the property. Only after signing the contract did the judge learn the real property was part of a decedent’s estate, and that the contract has, in effect, given the judge an economic interest in the subject matter of the probate proceeding and/or an interest which could be substantially affected by the probate proceeding (see 22 NYCRR 100.3[E][c]; 100.3[E][d][iii]).
Under the specific circumstances presented, the Committee concludes the inquiring judge’s proposal to disqualify him/herself from any further proceedings on the decedent’s estate is sufficient to avoid an appearance of impropriety (see generally 22 NYCRR 100.2; 100.2[C]; 100.4[D][a]-[b]). Therefore, the judge need not also repudiate the contract.
1 For example, the purchasers have obtained insurance on the real property, and the sellers have permitted the purchasers to use or occupy the premises.
2 For example, the Committee advised the judge not to “seek or act on” any non-public information, or express an interest in participating in the foreclosure sale to his/her co-judge or court personnel “other than in the same time, place and manner as other members of the public” (Opinion 09-134).