May 18, 1983

Opinion No. 83/6
Directorship in family-owned corporation

Dear Judge

This is in response to your recent inquiry. In 1934 your father formed a corporation, which is still in business. Its business is confined to one of the northern states. It has always been a private corporation, restricted to members of the family. There are presently approximately sixty stockholders. Your father died in 1960 and your brother took over the operation. Your brother died leaving you, your mother, and your sister as the only surviving members of the original family. You have been asked to serve on the board of directors. Your question is whether you may do so.

Six members of the Committee on Standards of Conduct Governing Judges responded. All were unanimous that this activity violates Canon 5C(2), which provides a judge "should not serve as an officer, director, manager, advisor, or employee of any business."

It is not the function of the Committee on Standards to pass on the validity of the Canons of Ethics. The Committee has no power to amend the Canons. Nevertheless, the Committee has never been comfortable with this particular Canon. In Opinion 77/1 we advised a judge it was necessary for him to resign his position as an officer of a family owned corporation (a hardware store) upon assuming duties as a county judge. We went on to say:

"Accordingly, while it would seem that your continued service as president of a family owned corporation ought to turn on whether such activity creates a type of conflict as set forth in Canon 5C(1), nevertheless, the language of Section 5C(2) is explicit in its proscription.

The Committee's determination of your inquiry must, in the last analysis, be guided by the intent of the Canons, as reflected by the express language and the necessary implications without regard to the wisdom or propriety thereof."

Five of the responding members agreed the restrictions of Canon 5C(1) are more than adequate to assure that financial activities of a judge do not reflect adversely on his office.

The Canons specifically provide a judge can engage in remunerative activity and manage investments so long as his activity does not reflect on his impartiality, interfere with his judicial duties, exploit his judicial position to gain a business advantage, or involve him in frequent transactions with lawyers or persons likely to appear before the court. He can be an author, run a school, be a farmer, a rancher, rent office space in a building he owns, operate a hardware store, a restaurant, or play a banjo, so long as he does not violate one of the specific standards of Canon 5C(1). Canon 5C(2) is a form of canonical overkill. Canon 5C(2) prohibits certain forms of business activity as distinguished from specific kinds of conduct. It prohibits corporate activity, but does nothing to protect the judge's impartiality, assure non-interference with his judicial duties, prevent him from exploiting his judicial position, or keep him from frequent transactions with lawyers or persons likely to appear before the court. The judge can play a banjo for money, but not a corporate banjo.

As noted by Justice Alderman in In Re Code of Judicial Conduct, case number 60-181, 409 So.2D 488, persons who held judicial office prior to September 30, 1973, are permitted to continue to act as officers, directors of family businesses. Justice Alderman could see no reason why all judges should not have the same privilege.

None of the responding members were able to discern any way in which this Canon assures the good name of the judiciary or protects the people of the State of Florida in any way not done by other Canons of Ethics. Two of the members suggested this Canon in no way protects the public health, safety, morals or general welfare.

Two of the members stated as follows:

(1) "It occurs to me that if the corporate activity is remote to anything that (the judge) will have to pass upon in his duties, then the Canon is an unreasonable exercise of the police powers applied to him. Moreover, when compared to those that may hold and manage real estate and engage in other remunerative activity, it may deny equal protection of the law. For a judge to be able to hold a considerable interest in land trusts in Florida holdings and prohibit a judge from managing the affairs of the corporation which is located out of state creates some problems.

(2) "Canon 5C(2) probably creates more problems than it solves. Judges should not be thus singled out on the assumption that some fanciful conflict might arise in some fanciful case.

The Canon should be redrafted so as to avoid financially crippling members of the judiciary. This particular Canon 5C(2) probably discourages more qualified lawyers from serving as judges than any other. This consideration alone is enough to justify a revision of Canon 5C(2)."

As previously noted, the function of the Committee is simply to render advisory opinions to inquiring judges as to the propriety of contemplated conduct. Speculation as to the constitutional validity or necessity for certain canons is simply that. Regretfully we must advise the acceptance of the directorship violates Canon 5C(2).

Yours truly,

James T. Carlisle
Chairman, Committee on Standards
of Conduct Governing Judges

Copies to:

All Committee members
Sid White, Clerk of Court, Florida Supreme Court
Linda Yates, Managing Editor, Florida Bar Journal
Mark Hulsey, Esq., Chairman, Judicial Qualifications Commission
Hon. Howard T. Markey, Chairman, Ethics Advisory Panel of the Judicial Conference of the.
United States
Scott Rueter, Research Assistant, The Center for Judicial Conduct Organizations