Opinion: 97-38

May 8, 1997


Digest:         A judge ordering the deposit of settlement funds of infants' claims pursuant to CPLR §1206, may direct such deposits to an authorized financial institution in which the judge and family members maintain accounts, provided that such deposits could not substantially affect the value of the interest of the judge and family members in that financial institution.


Rules:          22 NYCRR 100.0(D)(1),(3); 100.2(B),(C); 100.3(E)(1)(c); CPLR §1206.


         A Supreme Court justice poses the following inquiry:


I am currently assigned to the Supreme Court Civil Term-Medical Malpractice Part. As a result, I routinely review and sign In fact Compromise Orders. These orders typically involve large settlement sums on behalf of an infant's claim.


Pursuant to CPLR §1206, I have the authority to direct the deposit or investment of these funds in a variety of financial institutions. The question has arisen as to whether or not a judge may direct the placement of funds into a financial institution, such as Smith Barney, if the judge has an existing account at that institution.


         The judge has further informed the Committee that the account maintained is a retirement account, and that several family members have accounts at the institution.


         Assuming solely for the purposes of this opinion that Smith Barney or a similar financial institution is a lawful depository under CPLR §1206, the Committee perceives no ethical impropriety in directing the placement of settlement sums with the institution even though accounts are maintained thereat by the judge and family members.


         Section 100.2(C) of the Rules Governing Judicial Conduct provides that "A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others." "Here, the fact that the deposits of funds would advance the private interests of Smith Barney or any other depository is of no consequence since CPLR §1206 requires that such funds be deposited in an authorized financial institution. However, the question remains whether the private interests of the judge are being advanced by ordering the deposits into an institution where the judge and some family members have accounts; and, further, whether the judge is thereby allowing "family, social, political or other relationships to influence the judge's judicial conduct or judgment." (22 NYCRR 100.2[B]).


         The Committee is of the view that the answer is to be found in the rules concerning disqualification. Section 100.3(E)(1)(C) provides that a judge shall disqualify himself or herself in a proceeding in which the judge "has an economic interest in a party to the proceeding or has any other interest that could be substantially affected by the proceeding." In defining "economic interest," Section 100.0(D)(3) excludes from its scope "a deposit in a financial institution... unless a proceeding pending or impending before the judge could substantially affect the value of the interest,"; and subparagraph (1) likewise excludes ownership of an interest in a mutual or common investment fund, with the same qualification. It therefore follows that if, because of the nature of the inquiring judge's interest, disqualification would not be required in a proceeding involving the proposed depository as a party, then the judge is not barred from ordering a deposit to be made, in that institution pursuant to a settlement of an infant's claim. That assumes, of course, that the sums being added to the assets of the institution could not substantially affect the value of the judge's and his/her family members' interest in that institution.