Tatum v. Southern Pacific Co.

California Court of Appeal Apr 12, 1967 No. Civ. 24204Published

Before: Devine

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Holding. A judge is disqualified from presiding over a case if they hold stock in a corporate party as a trustee, regardless of whether the judge was aware of the holding during the trial or whether the interest is substantial.

Issues

Whether a judge's interest as a trustee of stock in a corporate party constitutes disqualification under Code of Civil Procedure section 170.
Whether a judge's lack of awareness of their stock ownership during trial prevents disqualification.
Whether a judgment rendered by a disqualified judge is void regardless of prejudice or the correctness of the decision.

Disposition. affirmed

Quotations verified verbatim against the opinion

“No justice or judge shall sit or act as such in any action or proceeding: ... 2. In which he is interested as a holder or owner of any capital stock of a corporation”

“But the statute is cast in absolute form. It is plain that the object of the peremptory statute is not only to guard jealously the actual impartiality of the judge but also to insure public confidence.”

“Section 170 makes no reference to the judge’s awareness of the holding.”

DEVINE, P. J.

On January 11, 1965, Southern Pacific Company as defendant was awarded judgment after five days of trial on the issue of liability in a personal injury case, the trial having been bifurcated. Motion for new trial was made by plaintiff on the grounds of error in law and insufficiency of the evidence.

On February 4, 1965, before the hearing of the motion, it

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came to the attention of the trial judge, Honorable Edward Henderson, that he held 400 shares of Southern Pacific Company stock, as trustee under the will of Franklin B. West. The judge, immediately responsive to duty, informed counsel. He filed a declaration in which he states that he was appointed trustee on August 2, 1949. Among the beneficiaries are his two children and two nieces. Shortly after distribution he had deemed it advisable to cause a diversification of the assets and he had purchased, as trustee, stock of 19 different issues under the advice of investment counsel. These stocks have at all times since their purchase been in a safety deposit box. On or about February 4, 1965, it became necessary for the judge to make a distribution. On checking the stocks, he discovered approximately 400 shares of Southern Pacific Company. Before that time he had failed to recall the inclusion of these shares among the trust assets. He is not a beneficiary of the trust.

Judge Henderson ordered the motion for new trial transferred to the presiding judge. Motion to vacate the judgment was also made. The court, after hearing argument on respondent’s contentions of insufficiency of the evidence and error in law, as well as disqualification of the judge, granted an order vacating the judgment and for a new trial on the sole ground of disqualification of the judge. Southern Pacific has appealed.

Code of Civil Procedure section 170 provides in relevant part: “No justice or judge shall sit or act as such in any action or proceeding: ... 2. In which he is interested as a holder or owner of any capital stock of a corporation, or of any bond, note or other security issued by a corporation.” The first question is whether the judge’s interest as trustee is sufficient to disqualify him. Section 170 refers to a

holder

Tatum v. Southern Pacific Co.

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DEVINE, P. J.

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