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Opinion 40

The Commission has been requested to render an opinion on the question of whether a judge would be disqualified to hear a case in which a financial institution was a party where the judge has an outstanding loan with the institution.

The inquiry relates to the provisions of Rule 2.11(A) dealing with disqualification. It is the opinion of the Commission that by making a loan with a regular lending institution the judge does not have “a financial interest” in the institution or an “interest that could be substantially affected by the outcome of the proceeding,” nor does it place the judge in a position “in which his impartiality might reasonably be questioned,” and that therefore the judge is not disqualified to sit in cases in which the financial institution is a party.

It should be pointed out, however, that the foregoing conclusion might not follow where a judge has made a loan from private parties since the particular circumstances surrounding such a loan might well be such that the judge’s “impartiality might reasonably be questioned” in connection with a case in which the private lender was a party. It is likewise true that even with respect to a loan made from a regular lending institution a judge, because of the peculiar circumstances relating thereto, may have developed a “personal bias or prejudice” for or against the institution, in which event the judge should disqualify himself.

With the foregoing reservations, the mere making of a loan by a judge from a lending institution is not a matter of disqualification in cases in which the institution is involved as a party.

[Pertinent Code of Judicial Conduct provisions: Rules 2.11(A), 3.11. Cross reference to other relevant opinions for review: #11, #32, #42, #53, #61, #76, #148, #160.]

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