Anatomy of a Church Property Lawsuit (Tennessee) - Part II

In the first post in this series, I provided a link to the complaint filed by the Right Rev. John Bauerschmidt and his Diocese of Tennessee against the corporation of St. Andrew's Parish in Nashville, along with its rector and vestry members, who were named personally. (Since my earlier post, in which I noted that there seemed to be little warrant for including the rector and vestry in the lawsuit, their attorneys have brought a motion asking that they be dismissed. The motion and supporting memorandum, together with the Parish's answer to the complaint, may be downloaded from the Parish's home page.)

[UPDATE 01/19/2010: A reader in Nashville just sent me a link to this story, which reports that the lawsuit against the individual defendants has been dismissed. (The story speaks only of the "vestry members", but I assume it means the rector as well, since it concludes that the only parties left in the suit "are the diocese and the church itself.") See also this later story about the value of the property on which the church is situated.]

The complaint states a now standard claim by a Diocese against a re-aligning parish: that it was at all times "subject and subordinate to" the Constitution and Canons of both the Episcopal Church (USA) and the Diocese of Tennessee; that among those Canons to which it was subject were the Dennis Canon and its diocesan counterpart; that as a result, the Parish's property was subject to an unrecorded and contingent trust in favor of ECUSA and the Diocese; and that once the Parish voted to disaffiliate, it thereby forfeited its right to occupy the property it holds in its name.

These allegations, as I say, are boilerplate for Episcopal church property lawsuits. However, the facts in this particular case do not fit well into the standard mold. Let us take a closer look at how successful the complaint is in trying to make them fit. To do so, the complaint has to lay out two stories: (a) the history of the property now owned by St. Andrew's, and (b) the history of St. Andrew's Parish itself.

The property on which St. Andrew's now sits started out as a lot with a private residence on it. It was purchased for use by another parish in the Diocese, and consecrated as church property in 1958. That parish then moved out of the property to another location, and conveyed the lot and church building by warranty deed to the Diocese of Tennessee, which held it until it conveyed the property to the newly incorporated St. Andrew's in 1966. (Complaint, paragraphs 53-60.)

St. Andrew's had previously been admitted as an unincorporated parish into the Diocese of Tennessee in 1960, after having been a mission operated by the Diocese ever since 1889. The complaint attaches the original Articles of Association signed by members of the parish, and quotes the paragraph numbered (7) from that document:

All real estate now owned or hereafter acquired by this Parish, title to which is vested in any manner as aforesaid, shall be held, sold, transferred, alienated, conveyed, mortgaged or encumbered, in whole or in part, only in conformity with the Constitution, Canons, Doctrine, Discipline, and Worship of the Protestant Episcopal Church in the Diocese of Tennessee.

Although the complaint bases some of the Church's claim to the Parish property on this language, I submit that it does not furnish a valid basis for any such claim, as a matter of law. The reason? These are the articles of association, which were valid only as between the original congregation members signing it in 1960. Neither the Diocese nor ECUSA itself is a party to them, and they express only the terms of a contract between the signing members to hold, sell, transfer, etc. their property in accordance with the standards specified in the canons of the Diocese.

These articles of association were replaced as the operating governing document of the Parish when it incorporated in 1966. Thereafter, they ceased to have any legal effect. Thus it is to the articles of incorporation filed in 1966 that we must look for any language that could bind the legal corporation which currently holds the title to the parish property. Those articles, too, are attached as an exhibit to the complaint. Once again, the complaint provides a selective quote of only a tiny part of their contents: it alleges in paragraph 52 that the parish corporation "acknowledg[ed] and acced[ed] to the constitution, canons, doctrine, discipline, and worship of the Episcopal Church in the Diocese of Tennessee."

Then the complaint admits (as it must; I have added the italics):

62. From the time it moved to the Woodmont Property in 1964 until 2006, St. Andrew's participated in the life and ministry of the Diocese, abided by the Constitutions and Canons of the Diocese and The Episcopal Church, financially contributed to the Diocese and The Episcopal Church, and participated in the annual Diocesan Conventions.

63. However, unbeknownst to the Diocese at that time, on or about January 24, 1978, the predecessors of the Disaffiliating individuals amended St. Andrew's corporate Charter to delete the language acknowledging and acceding to the Constitution and Canons of the Diocese. . . .

These paragraphs are remarkable in several respects. First and most important, either they are mutually inconsistent, or else the Diocese has made a huge legal admission which may be used against it. Paragraph 63 alleges that the Parish corporation amended its articles to delete the language by which it acceded to and acknowledged the Canons of the Diocese -- in 1978, just twelve years after the corporation was formed (and one year before the national Church adopted the Dennis Canon). But then the preceding paragraph admits that during the entire period from 1964 until 2006, St. Andrew's "abided by the Constitutions and Canons of the Diocese and The Episcopal Church." Thus, the Diocese has admitted that the 1978 amendment to the Articles was not contrary to either the national or diocesan constitution or canons.

In fact, the complaint makes no attempt to allege that the 1978 amendment was illegal or void. Thus the legal effect of the amendment -- to remove the Parish from being subject to the diocesan (or national) governing documents -- goes unchallenged by the complaint, and as I say, this is a huge concession. Instead, the complaint plows entirely different ground upon which it bases its claim of an unwritten trust. It alleges in paragraph 64 (bold added for emphasis):

The amendment to St. Andrew's corporate charter, however, did not change the express trust created by the Constitutions and Canons of the Diocese and The Episcopal Church.

"Express trust"? The complaint filed by the Diocese of Tennessee appears to be saying that before the adoption of the Dennis Canon in 1979, there was an "express trust" imposed on all parish property by either the local or national governing documents. We know that there was no such "express trust" embodied in the national constitution or canons, because otherwise there would have been no need to rush through the passage of the Dennis Canon at GC 1979 and have it take immediate effect. So what express trust was formulated in the diocesan constitution or canons as they existed before January 1978 (the date the articles of incorporation were amended)?

The complaint alleges that Canon 10 (1) of the Diocese, as in effect in 1966 when the parish corporation received a warranty deed to the property, constituted that express trust (italics in the complaint):

34. The Diocesan Canons further provide that all property, real and personal, is held in trust for the Diocese and The Episcopal Church:

All property of every kind and character, whether held by the Convention, or by a Parish or Mission, ... and regardless of the manner in which title is vested, is held in trust to be used for the glory of God ... according to the Constitutions and Canons, and Doctrine, Discipline and Worship of the Protestant Episcopal Church in the United States of America and of this Diocese, and for the purposes and programs of said Church and Diocese.

Diocesan Canon 10(1). Like Canon 17, Canon 10 was a part of the canons of the Diocese of Tennessee when St. Andrew's applied for admission as a Parish . . .

It sounds good on paper, but there is a wrinkle in the plaintiffs' theory which the complaint does not disclose on the surface. Remember that the parish corporation acquired title to the property in 1966 by way of a warranty deed from the Diocese. The complaint attached the deed in question as an exhibit. After describing the property being conveyed, the deed then goes on in this language (italics added for emphasis):

TO HAVE AND TO HOLD the aforesaid real estate . . . unto the said [parish Corporation] its successors or assigns in fee simple forever; and the [Diocese] does hereby covenant with the said [parish Corporation] that it is lawfully seized in fee of the afore described real estate; that it has a good right to sell and convey the same; that the same is unencumbered; and that the title and quiet possession thereto it will warrant and forever defend against the lawful claims of all persons . . .

Thus there is quite an inconsistency here, which the Diocese will have to explain to any judge hearing the case. On the one hand, it contends that its canons in 1966 imposed a trust on all parish property in its favor, regardless of how title was vested. But on the other hand, the Diocese in 1966 warranted and covenanted to St. Andrew's that the property was unencumbered, and that it received the title in fee simple forever -- which are two ways of saying what comes to the same thing: that there was no trust imposed on the property. For if the Diocese had wanted to reserve an express trust in the property in its favor, on condition that the parish remain part of the Diocese, the place to do that was in the warranty deed. But it did nothing of the kind, and instead warranted that there was no trust or any other interest encumbering the property at the time of the conveyance.

But we are not yet done with the difficulties for the Diocese in proving its claim. For the answer filed by the Parish adds some further inconvenient facts which the complaint chose not to mention:

The fact that the Warranty Deed did not contain any trust-based obligations from St. Andrew's whatsoever in favor of The Diocese was intentional. This result was obtained through the efforts of Judge W.R. "Bill" Baker ("Judge Baker"), who at the time was a member of St. Andrew's Vestry. Judge Baker's efforts in this regard are detailed in a deposition taken on January 31, 2007, for purposes of preserving his testimony under Tennessee Rule of Civil Procedure 27. (A copy of Judge Baker's deposition transcript is being filed contemporaneously herewith.) In addition to Judge Baker's deposition, a deposition for the same purposes was taken of Dr. Hal Weatherby on June 13, 2007, describing St. Andrew's uniqueness as an Anglo-Catholic parish. (A copy of Dr. Weatherby's deposition transcript is also being filed contemporaneously herewith.)

The Answer goes on to allege that the Diocese's Vice-Chancellor specifically objected to the lack of any permanent or perpetual pledge of subordination to the Diocese in the parish's articles of incorporation, but that they were sent to the Secretary of State over those objections with the express consent of the Diocese's then Bishop, the Rt. Rev. John Vander Horst. It then continues:

Through the efforts of Father Conly, Judge Baker, Bishop Vander Horst and others, a conditional relationship between St. Andrew's and The Diocese was established. St. Andrew's owned the Property outright and continued to participate as a special Anglo-Catholic parish with The Diocese. This participation continued until doctrinal disputes forced it to sever ties with The Diocese and associate with the Diocese of Quincy in 2006. The fact of this conditional relationship was fully known to The Diocese, indeed Bishop Vander Horst participated in its very formation. As a part of the conditional relationship, Bishop Vander Horst and others acknowledged and acceded to St. Andrew's unwillingness to provide a perpetual pledge to the The Diocese, whether in its then-state or as reconstituted in 1982 and, again, in 1985.

The specificity of the claims made in these allegations are in stark contrast to the broad-brush approach of the complaint, which relies on the general language of a diocesan canon to contradict the express warranties of a recorded deed. And there is one more telling detail which should be noticed. The present version of diocesan Canon 10(3) reads as follows:

(a) After the adoption of this Canon, title to all real property thereafter acquired shall be taken and vested as follows:
. . .
(2) If title is to be held by any Parish, or by any Organization or Institution, which is incorporated under the laws of this state, then title shall be conveyed to it in its corporate capacity, but with these words added, “to be held subject to the Charter, Constitution and Canons of The Convention of The Protestant Episcopal Church in the Diocese of Tennessee, a corporation.”

Note that the words I have italicized were expressly left out of the Diocese's warranty deed to the parish corporation. Either the provision in question was added to the canons after the Diocese's transaction with St. Andrew's in 1966, or it was in the canons already in 1966, and was simply not followed. Either way, however, the language works to support the parish's claim in its answer that there were special negotiations which accompanied its purchase of its property from the Diocese in 1966, to ensure that there would be no trust interest hanging over the property which could give rise to the kind of claim which the Diocese is attempting to make now.

Thus the Diocese's case would not appear to depend on the Dennis Canon at all at this stage. It is making a claim based purely on the language of a local canon which it alleges was in effect at the time it conveyed the property to the parish corporation in 1966. And as we have seen, the Diocese's actions in signing a deed and warranting that title to the property was unencumbered should, if neutral principles of law are applied, take precedence over an unrecorded canon.

And that will be the subject of the next post, when I am able to complete it: the complaint alleges (in paragraph 31) that Tennessee courts observe "a general rule that property of a hierarchical church is not owned by a local congregation or the individuals thereof, but is held in trust for the general church, even when there is no express trust language in the deed" (citing a 1968 case from the Tennessee Court of Appeals). Is that still the case? We shall see.