"One More Such 'Victory' . . .

. . . and I am utterly undone." Thus King Pyrrhus is reported to have replied when a messenger reported that his army had triumphed over the Romans at Asculum, but with a loss of most of his men. And now the Episcopal Church (USA) and the Diocese of Colorado might want to reflect on the fate of King Pyrrhus as they celebrate the decision which Judge Larry Schwatz handed them yesterday.

The usual blogs are quick to shout "victory" in their headlines, but I will wager not many of their authors have actually taken time to read and digest the opinion. And not that I am blaming them---the reasoning is convoluted and strained, and even contradictory at times. First Judge Schwartz says one thing, then he appears to reconsider several pages later, and say the opposite. He begins, for example, by paying lip service to an earlier decision of the Colorado Supreme Court (Bishop and Diocese of Colorado v. Mote, 716 P.2d 85 [Colo. 1986]) which is binding on him, and which upheld in Colorado the law of implied trusts (i.e., trusts not put into writing as such, but implied to exist from the surrounding circumstances and conduct of the parties):

Relying on Jones v. Wolf, the Mote court indicated that a court should rely on "established concepts of trust and property law" in determining whether a trust in favor of the "general church" exists. 716 P.2d at 100. The inquiry is not restricted to a search for explicit language of express trust. "Colorado recognizes that the intent to create a trust can be inferred from the nature of property transactions, the circumstances surrounding the holding of and transfer of property, the particular documents or language employed, and the conduct of the parties" Id. at page 100.

As the plaintiffs have continually urged, the Mote court further stated that "While such an inference is not to come easily - 'clear, explicit, definite, unequivocal and unambiguous language or conduct', establishing the intent to create a trust is required... There is no need to restrict the inquiry ... other principles from the common and statutory law of property, contract, corporation or voluntary associations might be the basis for a determination that a general church has a right, title or interest in the church property, requiring a more extensive inquiry". Id. at p 100 -101 ...

Embarking on the "extensive inquiry" allowed under Mote, Judge Schwartz examines first the history of the relationship between Grace Church and St. Stephens, on the one hand, and the Diocese and the national Church, on the other. He finds in the evidence of that relationship years and years of subordination of the former to the latter, sufficient to create an implied trust under Mote and general principles of trust law:

Looking to current trust law, the Restatement of Trusts 3d, section 22, indicates that in order to create a trust on real property there must be a writing that a) manifests the trust intention, b) reasonably Identifies the trust property, c) reasonably identifies the beneficiaries and d) reasonably identifies the purpose of the trust. The 1923 articles of incorporation, 1929 Instrument of Donation and the conclusions reached in Mote support the finding that a trust for the benefit of the Diocese had been created. Ignoring in this portion of the analysis the impact of the Episcopal Canons, the trust thus created does not vest title in the Diocese upon the departure of Grace Church and St Stephens from the control of PECUSA. Rather, the trust gives the Diocese the right to first approve any property transfer made by Grace Church and St Stephens.

Next, Judge Schwartz traces the complicated evolution of the corporation that held title to the parish property in trust for the Diocese as established first in 1923, and finds that no change in the trust occurred as a result. Having reached that conclusion, he takes up the thorny issue of what he calls the "affect" of the Church Canons on that trust.  And this is where his reasoning begins to twist and turn on itself. First, he appears to hold that the Dennis Canon alone was insufficient to impose any trust in and of itself on the parish property under current Colorado law. In support of that point, he notes that most parishioners were unaware of its existence, or of its effect on their property, a view that was confirmed by no less a person than Bishop O'Neill himself (I have added the emphasis):

Application of canon law has always been difficult for secular courts. For one thing, it appears to be rare that parish members, induding members of the governing Vestry, know anything about the details of canon law. In fact, Bishop O'Neil testified that no one expects church members to know much about the canons. That testimony is consistent with what was testified to by lay members of the parish; all of whom said they knew little or nothing about the canons. Thus, when the parish executes a document that pledges fidelity to canon law, it does so without members of the parish having actual knowledge or understanding of what it is that is being adopted.

Now, that is a fine way to run a Church. But Judge Schwartz is not done with the evidence on this point. He continues, and discusses the flaws in how canons come to be (emphasis again mine):

For another, canons are essentially created and imposed unilaterally. They appear always to have been adopted at the National Convention. Once they are adopted, they are imposed on all parishes through publication in the Episcopal Book of Canons [sic---His Honor may be forgiven for not getting this right; few Episcopalians would, either]. Even though the board that recommends changes to canons is made up of representatives from individual parishes, the canons are still ultimately imposed upon individual parishes from the hierarchy of bishops. Application of canon law is based more upon membership in the Episcopal Church than it is upon adoption through a democratic process where all individual church members participate.

Given the unilateral imposition of canons from above, a problem arises with how a trust can be created and imposed via the enactment of a canon. For you see, the doctrine of law known since 1677 by the name "Statute of Frauds" requires that a trust in real property be created only in a writing signed by the owner of the land made subject to the trust. This problem becomes more acute under a so-called "neutral principles" approach to resolving church property disputes, because under such an approach, no one aspect of how title is held is supposed to be paramount over another. A court applying "neutral principles of law" to such a dispute is supposed to be evenhanded in looking at the property deeds, the parish articles and bylaws, and the diocesan and national canons to determine whether a valid trust was created:

The perceptual legal problem with this procedure is the one argued by these Plaintiffs and those in other schism cases: that under a "neutral principles" analysis, it is difficult to understand how unilaterally imposed canons can create a legal trust relationship. While the canons form the basis for govemance within the Episcopal religion, they are usually unknown to all but the clergy and they don't create a trust relationship in the manner one normally comes to expect. Unlike the secular "norm", the canons purport to create a trust through a process that is the opposite of most estate situations. That is, the trust is created by the beneficiary of that trust and is imposed unilaterally on the settlor/trustee.

Judge Schwartz actually gets what is wrong with the whole process of creating a trust on individual parish property through a top-down imposition of the Dennis Canon! (But don't get your hopes entirely up. As we shall later see, he comes to the Church's rescue----or rather, in a classic punting of responsibility to those judges higher up on the pay scale, he reads the Supreme Court as having done the rescuing for him.) Can you be proud of a Church that treats all of its contributors in such a cavalier manner? The Church (at the national level, at least) regards you not as someone whom it must inform, or treat with any courtesy or respect, but as just another source of funds for as long as you are ignorant enough to allow it to control local property matters without your knowledge. For it knows that, should you find out about its ultimate control, you might stop giving money to a church over which you really have no say. And why on earth would you ever give any money for its further expansion?

Having done an excellent job of pointing out the faults in the Church's attempt to bypass individual State law by imposing a nationwide series of thousands of individual trusts through the simple device of adopting a canon, Judge Schwartz considers briefly how other states have resolved the problem. Naturally, he takes up the novel solution recently announced by the California Supreme Court: "Who cares about that old Statute of Frauds? It's the Episcopal Church, isn't it? In this State, it gets to do whatever it wants." He notes, with laconic clarity:

Indeed, California has essentially foreclosed most future church property disputes within its state by conduding in In Re the Episcopal Church Cases, 198 P.3d 66 (Ca. 2009) that  "... the general church's canons [referring specifically to the 'Dennis canon'], not instruments of the local church, created the trust." 198 P.3 at 295. In California, adoption by PECUSA of the "Dennis canon" has, for all intents and purposes, ended the inquiry.

So it would seem---at least until the Legislature can get around to resurrecting the Statute of Frauds from its unceremonious burial at the hands of the California Supreme Court. But not so in Colorado---at least for the time being. Judge Schwartz appears to hold, under the prior decisions by which he is bound, that the Dennis Canon is not self-effectuating there, but needs additional support from other documents and conduct of the parties evidencing an intent to impose a trust. 

So the Episcopal Church (USA) would at first blush appear to lose on the Dennis Canon in Colorado. Certainly Judge Schwartz' comprehensive summary of the flaws by which it comes into being and then remains hidden at the local level does nothing to advance ECUSA's prospects elsewhere. That is why I say it is a Pyrrhic victory---every time ECUSA has to go into a different State court to enforce its Dennis Canon, it runs the risk of a different interpretation and application under that State's law. Can such a salmagundi of state-law decisions be worth all the millions currently being spent on it? 

Again, the question is not for those in the pews to decide---ECUSA is a "hierarchical" Church, remember? (But you might want to take a look at this little primer, if you want to stop the hierarchy from walking all over you.)

Judge Schwartz might have concluded his discussion of the Dennis Canon at this point; after all, he found its enactment and promulgation to be wanting under Colorado implied trust theory. But he just could not let the matter rest there; he wanted to be evenhanded, and divide the baby in half, rather than let it survive intact to the benefit of just one side. So he turns to the United States Supreme Court's decision in Jones v. Wolf, 443 U.S. 595 (1979), for a little assist in bootstrapping the Dennis Canon into another role: not so much as creating a trust independently in and of itself, but as (paradoxically) supplying the element of intent required to support a finding of a trust implied in law. 

In doing so, of course, he unnecessarily creates a hurdle for himself---of which he appears to be entirely oblivious, and so finds no difficulty in surmounting. For the "intent" which the law requires for an implied trust to come into being is the intent of the landowner, not the intent of the beneficiary. And it was the Episcopal Church (USA)---the beneficiary of the trust in question---who enacted the Dennis Canon. So despite the "analysis" which I explain in what follows, Judge Schwartz has not found a satisfactory method by which the intent of the parish, which he admits is wholly ignorant of the existence of the Canon, may be implied out of the latter's enactment by the national Church. That does not stop him, as I say, from pulling a rabbit out of his judicial robes. You will have to watch closely how he accomplishes this feat of legerdemain (all emphasis in his original):

The United States Supreme Court in Jones v. Wolf, 443 U.S. 595 (1979) gave what appears to be a simple prescription under "neutral principles" to avoid protracted property litigation with the following language:

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 deed or corporate charter tv 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 is 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. 443 U.S. at 605

I have commented before, and at length, on this passage from Jones which Judge Schwartz places in bold italics---see this post, and this one. As I shall never tire of pointing out, the passage is nothing but obiter dicta, or "things said [by the court] by the way, or cursorily". It was Justice Blackmun's way of stepping out of his judicial robes for the occasion to give legal advice to the churches on how they could create a trust in their favor. He took this unusual step out of exasperation at the dissent's protest that the "neutral principles" approach which he was expounding would impose a nasty, horrible burden on the poor, defenseless little (hierarchical) churches by making them (horror of horrors) actually go to the trouble of getting their parishes' signatures and consents to the thousands of trusts they wanted to create. But even in stepping out of his robes, Justice Blackmun could not abandon a lawyer's caution and prudence in giving out legal advice. He hedged what he asserted by saying that the trust would still have to be "in legally cognizable form"---that is, it would still have to be in a form to which the courts could give legal effect. (If that sounds like circular reasoning to you, it is because that it is circular.)  So in the final analysis, Justice Blackmun's "advice" amounts to a piece of legal nonsense: courts will be bound to recognize a trust you create so long as you put it into a form which they can legally recognize. 

But the language in which Justice Blackmun expressed this bit of vacuous fluff is so seductive---after all, even he regarded it as a sufficient response to the dissenters' objection---that it has ended up luring judges all over the country into its little trap. Time and again, they have resorted to it to justify giving "hierarchical churches" a pass on complying with local requirements imposed by the Statute of Frauds. (In doing so, they create a new difficulty by giving preference in the law to a particular type of church, in violation of the First Amendment's prohibition against the government's "establishing" any church.) And unfortunately, Judge Schwartz, aided by the worst kind of self-serving "expert" (i.e., bought and paid for) testimony, proves himself unable to resist the temptation:  

The Wolf court did not require that the change to the constitution of the general church be supported by a statute. Nor did they preclude the possibility that such a change to the constitution could stand alone and create a trust. In fact, I found convincing the opinion testimony of the defendants' expert Mr. Chopko that the above language from Wolf was added as a response to criticism by the Court's dissenters. The dissenters argued that any change from the traditional "compulsory deference" approach taken by courts following Watson v. Jones would impose a considerable burden on existing churches to change their constitution, charter and deeds. The dissent maintained that churches would be required to add language of polity to foundational documents or instruments of conveyance and further force the trial courts to decide matters of polity. On the contrary, Mr. Chopko testified that the Wolf majority was emphasizing how minimal the intrusion on church business the "neutral principles" approach would be.

Not the Wolf majority, Mr. Chopko---you are confusing the Court's holding in the case with Justice Blackmun's obiter dicta. No matter how many Justices sign on to it, the character of the passage remains as a judicial aside, unnecessary to the resolution of the case itself, and so not usable as a precedent in any subsequent case. ("Tell it to the judge!" Mr. Chopko replies---"I did, and I persuaded him, so you lose." And thus the law is sold down the river, bit by precious bit, by those who practice it. It is not I who lose, Mr. Chopko, but the law itself---which is to say, you and I together lose the integrity of that which we profess to serve, as a result of your hired flimflamming. And just what is one to think of a judge who allows a hired gun to instruct him in the meaning and interpretation of a Supreme Court decision?) 

Now Judge Schwartz is ready to pull the rabbit out. I give an annotated version, so that you can follow the sleight-of-hand:

Taken in the context in which the above quote was made, it is clear 

[Ed. note: always watch out when a legal conclusion is preceded by the words "it is clear" or "it is obvious"---they are the verbal equivalent of a magician's attractive assistant, designed to distract you from the trick the magician himself is pulling] 

the language must be taken to mean just what it says: 

[Ed. note: no it mustn't, because the language itself is circular and meaningless, besides being obiter dicta]

that by merely changing the general churches' constitution, an express trust in favor of the general church can thereby be created. 

[Ed. note: Not "merely", Judge Schwartz---what about the requirement that the trust be "in legally cognizable form"? Oh, I see---you're coming to that.]

The Wolf court did not define what it meant when they indicated that the trust language must be "embodied in some legally cognizable form". 

[Ed. note: They certainly did not, did they? Shouldn't that be a sign to you that the language was not central to the holding in the case, that it was a mere bagatelle, tossed off to placate the dissent? No? You're actually going to supply the missing definition?]

I conclude that what they meant was that the language cannot be hidden from church members or so intertwined with ecclesiastical matters as to force a court to be making doctrinal decisions. 

[Ed. note: Really, Judge Schwartz? Didn't you just conclude a few paragraphs earlier that the language was "hidden from church members"---at least, the ones belonging to the parish? You know, the ones who actually own the land in question?]

With that understanding of the definition I conclude that the canons of the Diocese and ECUSA are "legally cognizable". 

[Ed. note: You "conclude"??  You conclude the canons are "legally cognizable" based on the fact that they were not known to the parish itself, and based on your "understanding" that "legally cognizable" means that they were not so hidden, i.e., were out in the open? How do you reconcile those opposites, Judge Schwartz?]

I further conclude that there is no condition precedent to enforcement that the trust created by a change to the constitution be supported by an enabling statute or otherwise contained in foundational documents.

[Ed. note: But, but, but---Judge Schwartz, you just said that the canon was insufficient under Colorado law to establish a trust all on its own. So now you say it doesn't need anything else to be enforceable? I'm afraid I am rather confused by your statements at this point, Your Honor.]

The Mote court did not go so far as to say that the Dennis canon, standing alone, would create a trust, but merely indicated that the canon "did nothing but confirm the relationships existing among PECUSA, the diocese and the parish of St Mary's" 716 P.2d at 105.

[Ed. note: That's what I thought you said earlier.]

While the Mote court did no go so far as to say that adoption of the Dennis Canon would end the inquiry, it is clear 

[Ed. note: There he goes again! Watch the magician, not his pretty assistant!]

that the Dennis canon would add additional and considerable weight to the conclusion that a trust for the benefit of PECUSA and the Colorado Diocese had been established. Accordingly, I conclude that the canons impose a much broader trust in favor of the general Episcopal Church, and further they expand the one put in place by the 1923 corporation articles of incorporation and Instrument of Donation.

[Ed. note: They "impose a much broader trust," Judge Schwartz? Are you now saying again that the canons are sufficient in and of themselves to create a trust?---and not just any trust, but a much broader one than the parish itself created when it signed its written donation irrevocably dedicating its property to the purposes of PECUSA in 1929? Pray tell, just what are the terms of that "much broader" trust, and how do you derive them from just the language of the Canons themselves?]

The canons prohibit Grace and St Stephens from disposing of any real or personal property belonging to it without the consent of the Diocese. The canons further impose an obligation on the parish to first obtain consent of the Diocese before "alienating or encumbering" any parish property. The fact that members of the parish Grace Church and St Stephens had no knowledge of the contents of the canons would apparently be of no import to either the Wolf court or the court in Mote. 

[Ed. note: "Apparently", Judge Schwartz? What about the protections ensured by the Statute of Frauds, which requires that the knowledge of the parish be evidenced by its signature on the trust? Are you really going to conclude that Wolf and Mote abolished the Statute of Frauds?]

Accordingly, I further conclude that it is of no consequence in this case. One must assume 

[Ed. note: "one must assume"---that is another form of linguistic prestidigitation employed by courts to conceal from the audience just who is performing the magic here]

that by becoming a member of a corporate nonprofit that has acceded to Episcopal canons, the member is subject to them all, whether they are known to the member or not. The law of "voluntary associations" would support such a conclusion. See eg. Jorgensen Realty, Inc., v. Box, 701 P.2d 1256, 1257 (Colo. App. 1985).

(Last emphasis added.) So what Judge Schwartz's tortured reasoning comes down to is this:

1. We cannot have trusts created by documents or provisions of which owners are not aware.

2. The owners in this case were definitely not aware of the Dennis Canon.

3. The owners, however, did consent to the imposition of a trust in favor of the Church when they signed an Instrument of Donation dedicating the property to the Church in 1929.

4. Since the property was already subject to a trust when the national Church adopted the Dennis Canon in 1979, I can use that Canon to enhance and expand the effect of the trust that was already in place.

5. As established in 1929, the original trust prevented the parish from alienating the property without the consent of the Bishop of Colorado.

6. As expanded and enhanced by the Episcopal Church (USA) Canons, including the Dennis Canon, the trust from 1979 onward prevented the parish from alienating or encumbering the property without the consent of the Diocese, and required that the property remain in trust for the benefit of both the Diocese and the national Church.

7. Such an expansion of the trust terms occurred despite the ignorance of the parish and vestry of Grace and St. Stephens of the canons which had that effect. Even though Colorado requires a strong and clear showing of intent by the owner of the trust property, the canons certainly show an intent by the trust beneficiary, and that intent, plus the parish's subordination of itself to whatever canons the national Church decided to enact, with or without its knowledge or specific consent, are sufficient to make the expanded trust "legally cognizable" in Colorado courts. 

8. Why? Because the United States Supreme Court says so---that's why.

And that is the sum and total of the legal reasoning of Judge Schwartz' decision, as best I can discern after quite a few hours devoted to tearing it apart. Is it, then, a Pyrrhic victory for ECUSA? I would maintain that it is, because despite all the money and effort that went into it, the decision stops short of finding that the Dennis Canon is self-executing in the absence of a prior implied trust established by other means. 

Yes, it is true that once you have allowed a trust to come into being on your property, by the words in your parish corporate articles, and in any irrevocable dedication of it you make to church use, then you have no grounds to complain when the national church decides to burden your property further with another canon or two. After all, you signed on in the first place, and so in for a penny, in for a pound. (Besides, I can punt any injustice in so holding up to the Supreme Court---its language allows me so to rule, and hence it will have to be the one to say that it did not mean to void the Statute of Frauds.) Having divided that baby in two, and given both sides something to be grateful for, Judge Schwartz suggests that the parties might want to settle the rest of their claims rather than give him any more infants to carve up: 

There remain counter claims against individuals who formerly served as vestry, wardens and rectors of the parlsh. This quiet title order means that trial of those matters can conceivably go forward. However, in an effort to streamline the process before it becomes too involved, I suggest the parties discuss disposition of the remaining claims.

My concerns regarding the remaining claims are as follows: Claims of trespass, theft, conspiracy and the like all revolve around the notion that the offending party had no authority to use the property of another. For instance, to prove civil trespass, the Bishop would have to prove 1. property ownership by the Bishop and 2. intentional trespass. Permission or consent is an affirmative defense. Havlng now heard five weeks of testimony and reviewed in excess of 3,000 documents I am at somewhat of a loss to understand how those claims can be maintained. The parish held legal title to all of the property subject to the Bishop's "equitable" claim of trust. The counterclaim defendants represented the majority of the parish and had a reasonable basis to conclude that they had the absolute right to use the property. That reasonable belief extended up until I entered this order to the contrary.

It is clear that most of the documents relied upon by the defendants in their successful bid for quiet title were discovered only during the course of this litigation. The Instrument of Donation was apparently discovered well after the case was filed. The Bishop admitted that parish members are not expected to know what the canons say. In other words, members of the parish would have little or no reason to know that they didn't have legal authority to remain on the parish property.

I suggest the parties have serious discussion about resolution of the remaining claims. If they cannot be resolved they may file such motions as they deem necessary.

Whether the parties will act on the judge's suggestion may depend on how smoothly the transfer occurs. As of late yesterday, the judge had apparently modified his initial order giving the Diocese the immediate occupancy of the property, which had caused the police to be summoned when the Diocese hired guards to prevent the removal of Church property. Recognizing that the rector and his staff need time to vacate the premises, Judge Schwartz initially extended the move-out date to April 1. The attorney for the defendants asked for yet more time, and both sides were to appear in court to resolve the dispute.

[UPDATE 03/25/2009: Judge Schwartz has now entered an order requiring the current congregation to vacate the church buildings by April 3, and requiring Father Armstrong to vacate the Church rectory by May 8.]