94 N.J.L.J. 454
May 27, 1971
Conflict of Interest - Municipal Attorney
We are asked to consider two questions posed as follows:
1. Is it proper for an attorney to
serve as municipal attorney in a
municipality wherein his father owns
property which may be the subject of
development into a number of houses?
2. May an attorney who is a member of the Board of Education in Town A serve as the municipal attorney in Town B where a member of the governing body is a teacher in Town A?
The facts submitted with the inquiry by the attorney state that in 1964 a corporation named D.D.J. purchased land of approximately two acres in the municipality. At the time of this purchase, the stock in the corporation was owned 50% by X and 50% by the attorney inquirer. Thereafter, in 1967 X transferred his holdings to Y, the father of the attorney inquirer. In 1970, the attorney inquirer transferred his 50% to his father, Y. The attorney's father, Y, now owns all of the stock of the corporation.
During the years 1968 and 1969 the corporation, D.D.J., purchased from the municipality certain parcels of land adjacent to the original parcels. During the summer of 1970 this land was approved preliminarily for subdivision into twelve one-family lots and two two-family lots. On February 1, 1971 the borough council appointed the attorney inquirer as borough attorney for the municipality in which the land was located. In preparation for this event, the attorney states that during December, 1970 he turned over the entire corporate file of D.D.J. to an attorney in another municipality, and made known publicly that he would not rule on any matter affecting the corporation, D.D.J., in its relation with the municipality. The mayor of the municipality has reaccused the attorney to seek an opinion from this Committee.
The second question arises from the fact that the inquiring attorney is a member of the board of education in another municipality and has been since 1965. One of the school teachers
in this municipality is a member of the governing body of the municipality which appointed the inquirer municipal attorney, and voted for the inquirer as municipal attorney.
The inquirer states:
This matter does involve a pending controversy wherein the mayor has stated that he will not allow the inquirer to be paid any salary until such time as this controversy has been decided, and he will accept the ruling of the Advisory Committee as binding, and the inquirer does further state that he will accept the ruling of the Advisory Committee as binding. (Emphasis added).
The inquirer attaches a letter from the mayor of the municipality for which he has been appointed municipal attorney. The mayor states that when the corporation, D.D.J., was formed the inquirer held 98% of the stock of the corporation. He requests the inquirer to set the date the stock was transferred to the inquirer's father, Y; the value for the corporate assets when transferred; the consideration for the transfer; number of building lots involved; the fact that most had been purchased from the municipality; the fact that the original deadline for construction had been extended by the municipality and the fact that the extended time has lapsed and that the corporation is now in default requiring legal action to be taken by the municipality.
The inquirer states that he does not believe there is any potential conflict because he has disposed of the matter of dual representation and cites our Opinion 169, 93 N.J.L.J. 17 (1970). That opinion has no application to the question and facts presented here. In that opinion, the inquiry involved the attorney for a planning board of a municipality when the attorney's law partner was the father of the mayor of the municipality.
Certainly, there is a controversy, not only as to the facts, but as to applicable law. The mayor, in his letter, cites A. and B., 44 N.J. 331 (1965). In A. and B., supra, our Supreme Court states at page 337:
Moreover, as pointed out in New Jersey Advisory Community on Professional Ethics, Opinion 69, 88 N.J.L.J. 97, 103 (1965):
The relationship between the municipality and the developer where the interpretation and enforcement of so many statutes, ordinances, rules and regulations, are brought into play, is indeed a fertile field for conflicting interests, and when the public is involved the municipal attorney must avoid any semblance of divided loyalty. The public image of the legal profession as a whole would be detrimentally affected if such a practice, as here proposed, were permitted. And this is so although the lawyer may be guided by the purest of altruistic intentions because it is the suspicion engendered in the mind of the public by such conduct that creates the mischief. See N.J. Advisory Committee on Professional Ethics, Opinion 8, 86 N.J.L.J. 718 (1963), and Opinion 54, 87 N.J.L.J. 689 (1964).
The mere fact that the inquirer will disqualify himself in any matters that may come before the governing body or any of its boards does not solve the problem. It is not necessary for us to decide whether there is a violation of Canons of Professional Ethics, Canon 6. A situation is created here so that the public will find difficult, if not impossible, to believe, that some advantage will not accrue to the corporation, D.D.J., as a result of the ownership by the inquirer's father of all the stock and the previous interest of the municipal attorney. The public certainly will have difficulty in believing that the inquirer has in fact divested himself of all interest in the property and the corporation.
In Canons of Professional Ethics, Canon 29, the lawyer is admonished:
...at all times to uphold the honor and to maintain the dignity of the profession and to improve not only the law but the administration of justice.
It is the lawyer's duty to make every effort to improve the confidence of the community in the administration of its government. N.J. Advisory Committee on Professional Ethics, Opinion 193, 94 N.J.L.J. 44 (1971); Opinion 191, 94 N.J.L.J. 33 (1971); Opinion 189, 93 N.J.L.J. 789 (1970).
It is our opinion that the answer to the first question is that while not per se improper, under the facts herein stated it is clearly improper for the inquirer to serve as municipal attorney.
In our opinion, the answer to the first question disposes of the second one.