Question: A full-time justice court judge has asked whether he may serve on the Board of Trustees of Utah Certified Development Company, which is an approved lender under the U.S. Small Business Administration Loan Program.

Answer: The judge may serve as a trustee.

Discussion: According to the facts provided by the requester, the judge has been asked to serve on the Board of Trustees of the Utah Certified Development Company (“Utah CDC”). The Utah CDC is a non-profit corporation that is an approved lender under the U.S. Small Business Administration 504 Loan Program. The 504 loan program works in conjunction with commercial lenders to finance small business loans. The loans are primarily secured by the Utah CDC issuing twenty year second trust deed secured loans subordinate to the first lien trust deed held by the commercial bank. Once the loans are closed, the loans are assigned to the U.S. Small Business Administration, which becomes the owner and holder of the loan, the note, the trust deed, and of other guarantees or collateral. The CDC continues to service the loans.

If any of the loans are defaulted, the Small Business Administration initiates and prosecutes any foreclosure or other collection efforts in its name as the assignee of Utah CDC. The judge asserts that any court appearances are by the SBA and actions are brought either in state district court or federal district court, and not by the Utah CDC.

Canon 4C(3) permits a judge to “serve as an officer, director, trustee or non-legal advisor . . . of an educational, religious, charitable, fraternal or civic organization not conducted for profit” as long as the organization is not frequently engaged in proceedings before any court and the judge does not engage in membership solicitation or fund-raising. According to the facts provided by the requester, the organization is a non-profit entity that would not be regularly appearing in court, and the judge would not be engaging in membership solicitation or fund-raising. Therefore, provided the judge does not act as a legal advisor to the organization, the question to be answered is whether the Utah CDC is “an educational, religious, charitable, fraternal or civic organization.” The Code does not define these terms and therefore we look to the terms plain meanings or to other resources to answer this question.

Under the plain meaning of the terms, the Utah CDC does not appear to be an educational, religious, charitable, or fraternal organization. The Utah CDC does not engage in educational or religious activities, and does not appear to be organized for purposes of charity. The Utah CDC also does not appear to be a fraternal organization. The Utah Code provides one definition of a fraternal organization. Utah Code Ann. § 31A-9-101 states that a fraternal society is a “cooperation organized or operating under this chapter that: has no capital stock; exists solely for the benefit of its members and their beneficiaries and any lawful social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purpose for the benefit of its members or the public, carried on through voluntary activity of its members and their local lawyers or through institutional programs of the fraternal society or its local lodges; has a lodge system; has a representative form of government; and provides insurance benefits authorized under this chapter.” Although this definition is not binding, it provides a fairly common understanding of what is considered to be a fraternal organization. The Utah CDC is not a fraternal organization.

The Utah CDC may, however, be considered a civic organization. Utah Code Ann. § 35A-3-302 defines a civic organization as “community service clubs and organizations, charitable health care and service organizations, fraternal organizations, labor unions, minority and ethnic organizations, commercial and industrial organizations, commerce and business clubs, private non-profit organizations, private non-profit corporations that provide funding to community service organizations, organizations that advocate or provide for the needs of persons with low incomes, religious organizations, and organizations that foster strong neighborhoods and communities.” Under this definition, it appears as if the Utah CDC might qualify as a civic organization. The organization could be considered a commercial organization, a private non-profit organization, or private non-profit corporation that provides funding to community service organizations. Under this definition, the judge would be permitted to serve the Utah CDC as a trustee.

As noted above, the judge should not act as a legal advisor, engage in membership solicitation or engage in fund-raising. The judge should be careful to avoid conflicts, but service appears to be permitted.