May a newly appointed judge continue serving without pay as shareholders’ agent for a bank-sale escrow?

Plain-English summary

Before becoming a circuit judge, the requester had become an unpaid shareholders’ agent for an escrow arising from a bank sale. The agent could examine claims and make escrow payments; disputed claims would go to arbitration outside Alabama. He was also a shareholder and bank director.

The Commission concluded that he could continue in the fiduciary role on the submitted facts. His work as agent involved no judicial duties and would not reduce the time available for them. Because of his involvement with the bank, the facts also stated that he would be disqualified from hearing any bank matter.

Canon 5D bars fiduciary service that interferes with judicial duties and restricts service likely to involve proceedings ordinarily before the judge. The Commission found those conditions met here and noted that fiduciaries remain subject to the same financial-activity restrictions as judges personally.

In practice

The permission depends on the stated escrow arrangement and lack of interference with judicial work. The opinion also identifies disqualification from bank matters because of the judge’s bank involvement.

Common questions

Q: Did the Commission permit continued service as shareholders’ agent?

A: Yes, under the facts submitted.

Q: Was the fiduciary role compensated?

A: No. The opinion describes the position as unpaid.

Q: Could the judge hear a matter involving the bank?

A: No. The facts state that his involvement with the bank would disqualify him.

Background and rules framework

Canon 5D governs fiduciary activities. It conditions service on performance of judicial duties, the likelihood of proceedings ordinarily before the judge, and financial restrictions applicable to the judge personally.

Citations and references

Alabama Canons of Judicial Ethics:

• Canon 5 and Canon 5D, including Canon 5D(1) and (2)

See also

• AL Judicial Ethics Op. 06-859: Judge’s Spouse and Defendant Share an Employer
• AL Judicial Ethics Op. 06-861: Recusal for Attorney Tenant and Shared Secretary

Source

• Landing page: Alabama JIC advisory opinions
• Original PDF: Advisory Opinion 06-860

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

JUDICIAL INQUIRY COMMISSION
DATE ISSUED: JANUARY 6, 2006 ADVISORY OPINION 06-860
SERVING AS A FIDUCIARY WITHOUT
COMPENSATION - SHAREHOLDER’S
AGENT FOR THE BENEFICIARIES OF AN
ESCROW AGREEMENT
ISSUE
May a newly appointed circuit court judge
continue to serve as the shareholder’s agent for
the beneficiaries of an escrow agreement arising
out of the sale of local bank under the facts
presented? Answer: Yes, a judge may serve in
a fiduciary capacity under the facts presented.
FACTS
Prior to his appointment as a circuit judge, an
attorney was appointed to hold, without
compensation, the fiduciary position of
shareholders’ agent for an escrow account
arising out of the sale of a local bank. The
attorney is a shareholder of the bank and serves
on the bank’s board of directors. Under the
escrowagreement,theamount of$2,500,000.00
is deposited to settle certain claims that might
arise against the shareholders during the sale of
the bank and exchange of stock. The
shareholders’ agent is authorized to examine
claims and make payments from the escrow
account. In the event of a disagreement the
disputed claims must be settled by binding and
non-appealablearbitrationoutside in theStateof
Delaware.
Service astheshareholders’ agent began prior to
the judge’s appointment as judge. His actions
as shareholders’ agent does not involve any
judicial duties. Because of his intimate
involvement with the bank including his
previous service as shareholders’ agent, the
judge would be disqualified from hearing any
matter involving the bank. Service as
shareholders’ agent will not detract from the
time required for the judge to perform his
judicial duties.
DISCUSSION
Canon 5 of the Alabama Canons of Judicial
Ethics governs a judge’s extra-judicial
activities of a business, civic, and charitable
nature. Specifically Canon 5D provides as to
serving a s a fiduciary,
“Fiduciary activities. A judge
should not serve as executor,
administrator, trustee,
guardian, or other fiduciary, if
such servicewill interferewith
the proper performance of his
judicial duties. As a fiduciary,
a judge is subject to the
following restrictions:
(1) He should not serve if it is
likely that as a fiduciary he
will beengaged in proceedings
that would ordinarily come
before him.
(2) While serving as a
fiduciary, a judge is subject to
the same restrictions on
financial activities that apply
to him in his personal capacity.
It is clear under this Canon that a judge may
serve in a fiduciary capacity if certain
conditions are met. These conditions are
stated above and based on the information
provided by the judge appear to be met under
the facts presented the facts presented.
ADVISORY OPINION 06-860
PAGE 2
REFERENCES
Canon 5, Alabama Canons of Judicial Ethics.
This opinion is advisory only and is based on
the specific facts and questions submitted by
the judge who requested the opinion pursuant
to Rule 17 of the Rules of Procedure of the
Judicial Inquiry Commission. For further
information, you may contact the Judicial
Inquiry Commission, P. O. Box 303400,
Montgomery, Alabama 36130-3400; tel.:
(334) 242-4089; fax: (334) 353-4043; E-mail:
[email protected].