Who Shall Own the Property?

[N.B.: there is an update to this post below, in light of the Virginia court's 6/27/2008 decision.]

Frank Kirkpatrick, a professor of religion at Trinity College who has contributed some notable articles about the split that has occurred in the Anglican Communion and in The Episcopal Church itself, has a new article which observes that as of December 2007, there were some 55 lawsuits pending in the courts over issues of who owned or controlled property that had belonged to churches which were once in TEC, but which had since voted to leave. Given that the Church has just 100 dioceses within the United States, that is a remarkable number: on average, there is a property dispute pending in more than half of the dioceses in this country.

Attention is focused for the time being on the Diocese of Virginia, where a hearing is scheduled May 28 in the Circuit Court for Fairfax County in the ongoing litigation between that Diocese (with The Episcopal Church as its partner) and the eleven churches that have left it to join the Convocation of Anglicans in North America ("CANA"). The issue to be addressed at that hearing will be the constitutionality of Virginia's "Division Statute" (Va. Code § 57-9[A]), as held by the Court in an earlier ruling to be applicable to the current situation. For reference, the statute provides as follows:

If a division has heretofore occurred or shall hereafter occur in a church or religious society, to which any such congregation whose property is held by trustees is attached, the members of such congregation over 18 years of age may, by a vote of a majority of the whole number, determine to which branch of the church or society such congregation shall thereafter belong. Such determination shall be reported to the circuit court of the county or city, wherein the property held in trust for such congregation or the greater part thereof is; and if the determination be approved by the court, it shall be so entered in the court's civil order book, and shall be conclusive as to the title to and control of any property held in trust for such congregation, and be respected and enforced accordingly in all of the courts of the Commonwealth.

This statute was enacted in 1867, following the Civil War, at a time when Methodists, Baptists and Presbyterians in Virginia were experiencing a considerable amount of structural turmoil that led to the splitting off of a number of congregations from the parent churches. In the years following its passage, there were some twenty-nine orders entered by Virginia courts declaring the ownership of Methodist and Presbyterian properties alone, but the statute had not been applied to an Episcopal church before the present case.

In his earlier decision, Judge Randy Bellows of the Fairfax County Circuit Court found that a "division" had "heretofore occurred" within the Diocese, The Episcopal Church, and the Anglican Communion itself, and that CANA was a "branch" of those entities which the dissident parishes were free to decide to join. This view of the statute then raised certain constitutional issues about the statute in light of the First Amendment (made applicable to States some time after §57-9 was enacted). These issues are to be addressed at the May 28 hearing. (Complete links to all the documents filed to date in this lawsuit may be found here---my thanks to the Diocese for putting this page together.)

The chief constitutional issue concerns the deference, if any, which the State of Virginia must accord to The Episcopal Church as a "hierarchical church." (Such a church is marked by increasing levels of higher and higher authority, beginning with local congregations and rising through regional entities---dioceses, in the case of TEC---to an overall national authority at the top---in the case of TEC again, its General Convention. It is in contrast to a "congregational church," in which the local congregation is itself the highest authority, and makes all the decisions affecting that church. Thus the latter type of church can have disputes only within individual congregations, while disputes in hierarchical churches are between congregations and those entities above them in the hierarchy.) Under a United States Supreme Court decision of 1872, courts are forbidden by the provisions of the First Amendment from scrutinizing religious doctrine or teachings in deciding civil cases (Watson v. Jones, 80 U.S. [13 Wall.] 679). Under Watson, if the highest church body to address the matter has decided a doctrinal or religious question in such a way as to resolve the issue of, say, who owns the church's property, then that decision cannot be questioned or reversed by a civil court. And if there were no such decision, presumably (although the Court did not say) the civil courts would have to refrain from going into the matter until the highest church body had an opportunity to do so.

Such was the law for more than 100 years. Then, in 1979, the Supreme Court decided Jones v. Wolf, a case from Georgia involving a congregation in the Presbyterian Church which split up over doctrinal differences (443 U.S. 595). The majority of the congregation voted to leave for another branch of the Church, and claimed the right to keep the church property; the minority, which wanted to stay, lost its suit for the return of what it claimed was its property. Applying what it called "neutral principles," the Georgia Supreme Court had examined the church's deed, its corporate charter, the governing documents of the Presbyterian Church, and State law concerning implied trusts, and found no facts or language to support a conclusion that the congregation's property was held in trust for the parent church. In doing so, it gave no deference to a decision by the supervising Presbytery (which exercised regional authority over the congregation) that the minority was the only true continuation of the original congregation, and that the majority no longer had authority to speak for the Presbyterian Church.

The United States Supreme Court, in a 5-4 decision, upheld Georgia's "neutral principles" approach to deciding the dispute, but remanded the case for the Georgia Supreme Court to articulate whether "majority rule" was a part of those principles. In doing so, it expressly held that Georgia was not required by the First Amendment to defer to the hierarchical ruling as to which group was the Church's true successor:

 . . . We hold that a State is constitutionally entitled to adopt neutral principles of law as a means of adjudicating a church property dispute.

The dissent would require the States to abandon the neutral-principles method, and instead would insist as a matter of constitutional law that whenever a dispute arises over the [443 U.S. 605] ownership of church property, civil courts must defer to the "authoritative resolution of the dispute within the church itself." Post, at 614. It would require, first, that civil courts review ecclesiastical doctrine and polity to determine where the church has "placed ultimate authority over the use of the church property." Post, at 619. After answering this question, the courts would be required to "determine whether the dispute has been resolved within that structure of government and, if so, what decision has been made." Post, at 619 n. 6. They would then be required to enforce that decision. We cannot agree, however, that the First Amendment requires the States to adopt a rule of compulsory deference to religious authority in resolving church property disputes, even where no issue of doctrinal controversy is involved.

One would think that this language makes the holding of the case fairly clear. Yet here is a quotation taken from the supplemental brief for the Diocese of Virginia submitted for the May 28 hearing: "The Commonwealth [of Virginia] has no legitimate interest, compelling or otherwise, in the outcome of church property disputes. For the Commonwealth to assert an interest in promoting decision-making by congregational majorities---particularly within a hierarchical church, and contrary to that church's rules---itself violates the First Amendment." (Brief at p. 13, citing for a support a case that was decided before the decision in Jones v. Wolf.) Pardon, but as we have just seen, the Supreme Court in Jones v. Wolf sent the case back to Georgia for the courts to do just what the Diocese claims would violate the First Amendment---to decide a church property dispute on neutral principles, including majority rule, without having to defer to a preexisting adjudication in favor of the minority that had been made by the hierarchical church.

It is true that the Presbyterian Church in Jones, unlike TEC in this case, lacked any trust language in its governing document. Could that be a defining difference? Apparently TEC and the Diocese think it is. They derive this notion from the following oft-quoted passage from Jones v. Wolf:

The dissent also argues that a rule of compulsory deference is necessary in order to protect the free exercise rights "of [443 U.S. 606] those who have formed the association and submitted themselves to its authority." Post, at 618. This argument assumes that the neutral-principles method would somehow frustrate the free-exercise rights of the members of a religious association. Nothing could be further from the truth. The neutral-principles approach cannot be said to "inhibit" the free exercise of religion, any more than do other neutral provisions of state law governing the manner in which churches own property, hire employees, or purchase goods. Under the neutral-principles approach, the outcome of a church property dispute is not foreordained. At any time before the dispute erupts, the parties can ensure, if they so desire, that the faction loyal to the hierarchical church will retain the church property. They can modify the deeds or the corporate charter to include a right of reversion or trust in favor of the general church. Alternatively, the constitution of the general church can be made to recite an express trust in favor of the denominational church. The burden involved in taking such steps will be minimal. And the civil courts will be bound to give effect to the result indicated by the parties, provided it is embodied in some legally cognizable form. [Fn. omitted.]

What we have here, however, is not a holding by a majority of the Supreme Court, as in the quote in the previous paragraph, but an answer to an objection to that holding made by the dissent. And in answering that objection, Justice Blackmun stepped out of his normal role as Supreme Court Justice and engaged in the wholly unjudicial role of practicing law: he gave legal advice to those who would want to devise a way around the Court's holding. "Simply change your deeds or charter, or even put an express trust clause in your constitution, and then the courts will be required to honor your intent." Then, however, the justice part of Justice Blackmun takes over, and adds this caveat: "provided it [the trust] is embodied in some legally cognizable form." Which is to say: "I'm not going to draft the language for you. Just make sure it is in a form such that the courts can give legal effect to it."

This is a fairly crucial point, because I believe that the ultimate outcome of the Virginia lawsuits will in some way turn upon it, so let's be very clear here. Justice Blackmun and the majority in Jones v. Wolf first hold that (1) a State is free to decide church property disputes in accordance with "neutral principles" of law---meaning principles that are no different, as far as the law of property is concerned, from those used in all other cases of property disputes. Next, they hold that (2) as a part of those "neutral principles", they are free to incorporate a rule that in the absence of special provisions to the contrary, a vote by the majority controls what happens to the property---and they send the case back to Georgia to have just such a rule clearly articulated. Then, in answer to the dissent's objections that this result does not comport with the deference owed to hierarchical churches in matters of religious governance, Justice Blackmun steps out of his robes for a second to say: "Not at all---here's how you can be hierarchical and still keep your property, even under neutral principles and majority rule: just put an express trust in favor of the hierarchical church into the church deeds or charter, or into the hierarchy's constitution, and the courts will be bound to recognize what you have done---if you put it into legally cognizable form."

Well, TEC took Justice Blackmun's legal advice---or tried to. Immediately after the decision in Jones v. Wolf came out, TEC's General Convention of 1979 adopted what is known as the "Dennis Canon," named after the Bishop who drafted and proposed it (adding sections 4 and 5 to Canon I.7):

Sec. 4. All real and personal property held by or for the benefit of any Parish, Mission or Congregation is held in trust for this Church and the Diocese thereof in which such Parish, Mission or Congregation is located. The existence of this trust, however, shall in no way limit the power and authority of the Parish, Mission or Congregation otherwise existing over such property so long as the particular Parish, Mission or Congregation remains a part of, and subject to, this Church and its Constitution and Canons.

Sec. 5. The several Dioceses may, at their election, further confirm the trust declared under the foregoing Section 4 by appropriate action, but no such action shall be necessary for the existence and validity of the trust.

(For a while, it appeared as though the House of Deputies had never properly consented to the adoption of this Canon after it passed the House of Bishops, but that controversy now appears to have been laid to rest, even if some questions remain.) The problem with the Dennis Canon as drafted is that it purports to create a trust, but it is the trust beneficiary who is doing the creating, and not the owner of the trust property itself. In the law of trusts, the person creating a trust is called the settlor, or trustor; the person holding title to the property placed in trust is called the trustee; and the person for whose benefit the trust is created is called the beneficiary. For obvious reasons, the law does not allow beneficiaries to go around declaring that someone else's property is held in trust for their benefit---yet that is just what TEC did with its Dennis Canon. Does it satisfy Justice Blackmun's criterion of a trust in "legally cognizable form"? In cases where the Canon has been involved, some courts have said yes, and some have said no---but the real story, as so often in the law, is not that simple.

Courts that have recently considered the effect of the Canon in church property disputes have in many cases also applied the "neutral principles" approach. For example, in Berthiaume v. McCormack (153 N.H. 239, 891 A.2d 539 [2006]), the New Hampshire Supreme Court ordered its priorities as follows: first, a court must “consider only secular documents such as trusts, deeds, and statutes. Only if these documents leave it unclear which party should prevail will we consider religious documents, such as church constitutions and by-laws, even when such documents contain provisions governing the use or disposal of church property.” (Id. at 248.) It justified this ranking by holding that such an approach “is consistent with [the] rules governing the resolution of property disputes generally. In resolving such disputes, [courts] consider extrinsic evidence and the circumstances surrounding a conveyance to determine the parties’ intent only if the language of the relevant documents contains either patent or latent ambiguity.” (Ibid. [citations omitted].)

The highest courts of Alabama, Georgia, Kentucky and other states have likewise applied a “neutral principles” approach to church property disputes. (Trinity Presbyterian Church v. Tankersley, 374 So.2d 861, 865-66 (Ala. 1979) ("in this litigation . . . the composition of the church’s corporate structure was the principal issue to be determined”); First Evangelical Methodist Church v. Clinton, 257 Ga. 459, 360 S.E.2d 584 (Ga. 1987) (“[Applying] neutral principles of property law . . . . we look to the provisions of the deeds that conveyed the two properties involved to the local church”); Bjorkman v. Protestant Episcopal Church (Ky. 1988) 759 S.W.2d 583, 586 (“[T]he application of neutral principles appears to be preferable to compulsory deference since in every case, regardless of the facts, compulsory deference would result in the triumph of the hierarchical organization”). (For more references, see the Research Note below.)

Older cases in other states have given lip service to "neutral principles" while deferring nevertheless to the church's canons. (E.g., Bishop & Diocese of Colorado v. Mote, 716 P.2d 85 (Colo. 1986).) Where a denomination's rules trump neutral laws, it is specious to speak of "neutral principles"; this approach simply pours the new wine into the old bottles. In the words of one California case: “Although the hierarchical theory has supposedly been rejected in California, it will nevertheless live on under the label of ‘neutral principles of law,’ if a church’s own rules are viewed as trumping state statutes.” (California-Nevada Annual Conf. v. St. Luke’s United Methodist Church, 121 Cal.App.4th 757, 771 (2004).)

The one principle that can be derived from the decisions on the Dennis Canon thus far is that if a court is correctly applying the "neutral principles" approach, the Dennis Canon is just one more factor in the mix of those considered when the court examines the original and any subsequent deeds, the church's charter, and so forth. And in some states, a statutory factor dominates. For example, New York courts have professed to follow "neutral principles," but thus far most of that State's decisions have been against the departing parish, and in favor of the diocese. But note: in New York, there is an express statute (Religious Corporations Law § 42-a) which recognizes the validity of the "trust" established by the Dennis Canon. (No one appears yet to have successfully challenged the statute on the ground that it violates the First Amendment by "establishing" a particular Church---The Episcopal Church---by giving its canons statutory effect, in preference to those of any other church. The same problem exists in Connecticut.) But in California, which has no such statute, the Courts of Appeal which have followed "neutral principles of law" in church property disputes have thus far declined to give any effect to the Dennis Canon, on the grounds that in California, at least, a valid trust requires the consent of the property owner as settlor, or alternatively, that if any trust was created by the enactment of the Canon, it is revocable by the property owner at any time. (The decision that is currently on appeal to the California Supreme Court rejected that "neutral principles" approach in favor of the older hierarchical doctrine.) 

[RESEARCH NOTE: For a further discussion of the current status and applicability of the neutral principles approach, see the reply brief filed on behalf of the breakaway churches in the California Supreme Court here. That brief also references some helpful annotations covering the subject, e.g., Determination of Property Rights Between Local Church and Present Church Body: the Modern View, 52 A.L.R. 3d 324 (2008); and Jeffrey B. Hassler, Note: "A Multitude of Sins? Constitutional Standards for Legal Resolution of Church Property Disputes in a Time of Escalating Intradenominational Strife" (2008) 35 Pepp.L.Rev. 399, 457-63 (Alabama, Georgia, Kentucky, Minnesota, New Hampshire, New York, Ohio, and South Dakota all follow a pure neutral principles approach; at least eleven other states have generally adopted a neutral principles approach; and thirteen others have not addressed the question). Those with a subscription to Westlaw or Lexis can also download this very interesting survey of the question.]

Thus for the case in Virginia, much will depend at the trial level on how Judge Bellows reads Jones v. Wolf, and how he decides to apply its "neutral principles of law" approach. Under the reading followed by the New Hampshire and other recent courts, the Virginia Division Statute will supply the express neutral "majoritarian rule" that the Supreme Court missed in the Georgia case. It can be followed and applied without violating the First Amendment so long as its application does not require the court to resolve any doctrinal or hierarchical disputes within TEC or the Diocese. And indeed, much of Judge Bellows' April 3 decision already points the way to such a neutral application that avoids deciding religious questions.

[UPDATE 06/27/2008: Judge Bellows has issued his opinion upholding the constitutionality of the Division Statute. The ruling leaves only for decision whether the Statute "impairs the obligation of contracts" in violation of the Contracts Clause in the United States Constitution. (The particular question to resolve will be whether any of the contractual relationships between TEC or the Diocese and its parishes, as established by church deeds, trust documents, charters, etc. and their respective constitutions and canons, were impermissibly "impaired" by the application of the Division Statute to the property ownership question---that is, whether the Statute unfairly alters such relationships in a way that is different from the effect that statutes of general application on a subject of important public interest have as a matter of course. See a discussion of the three-part test that the courts apply here. Of course, TEC and the Diocese will first have to prove that such binding trust relationships exist, i.e., that they were "embodied in some legally cognizable form", before they can proceed to claim that they are impermissibly "impaired" by the Statute.) In a separate letter ruling on five questions addressed to the litigants by the court, Judge Bellows spells out that if he finds no impairment of contracts, and if his review of the petitions filed by the eleven Virginia parishes finds that the votes conducted under the terms of the Division Statute were proper, then the actions brought by the Diocese of Virginia and The Episcopal Church to have the properties declared as held in trust for them will be moot---i.e., the case will be over (at the trial level). Judge Bellows' decision tracks the constitutional analysis of Jones v. Wolf as indicated above, and is remarkable for the patience and restraint it evinces in the face of what can only be termed outlandish arguments (bordering sometimes on sarcasm) put forward by the attorneys for TEC and the Diocese (a sample of which I quoted earlier). It would appear that TEC's strategy is simply to play out the lawsuits until the final judgments can be appealed---through the courts of Virginia and all the way to the United States Supreme Court, if it will agree to grant certiorari). By the time of any such appeal, TEC will hope to plug some of the leaks in the dike by means of canonical changes at GC 2009; the remaining leaks will not be stopped until constitutional changes adopted at GC 2009 can be ratified at GC 2012.  By that time, TEC will be a significantly reduced church, and the Diocese of Virginia, if it tags blindly along under TEC's leadership, will be a much reduced Diocese, as fewer and fewer parishes decide to support the litigation.]

Even if Judge Bellows decides that the Virginia Division Statute can be constitutionally applied to the facts of the case, he will still have to look at all of the evidence concerning the various churches' deeds, corporate charters, bylaws, canons and transactions that have occurred over the years in order to arrive at a final determination of who owns the property. No doubt, too, the loser of that decision will appeal it. We thus are in for a long haul yet, in both Virginia and California (where oral argument in the Supreme Court is yet to be scheduled). And then that will be just two out of the 100 Episcopal dioceses in America . . . .

As I noted in an earlier post, "plus ça change, plus c'est la même chose" ("The more things change, the more they stay the same"). Here, taken from another article about Church property disputes, is an apt illustration of that maxim by an anonymous Episcopal wit:

. . . The Church of England was established when the unhappily married Henry VIII wanted to marry a nubile minx named Anne Boleyn. With the advice of Archbishop Thomas Cranmer, Henry realized that starting his own church would give him the power to end his marriage—and would simultaneously make him the owner of the Roman church's wealthy abbeys and monasteries and the land they sat on in England.

"The church got started on a sexual issue, a property issue, and an authority issue," commented one weary rector. "Five hundred years later, we're arguing about sex, we're arguing about property, and we're arguing about who's in control."