Sunday, September 18, 2011

New Signs of Trouble for the Dennis Canon

As readers of this blog are aware, your Curmudgeon is no fan of the Dennis Canon, which I like to call the Episcopal Church (USA)'s Trojan Horse. It has spawned a disproportionate amount of Church property litigation, because it operates by stealth, and springs onto the back of a parish just at the time when it is most vulnerable, having decided to take the final step to disaffiliate from ECUSA. All of a sudden, the Bishop of the Diocese swoops down with his attorneys, and orders the congregation to vacate its building, and leave everything behind, from the altar candlesticks to the bank accounts and pew cushions. "Because you no longer are operating within the Episcopal Church," he says, "Canon I.7.4 [the Dennis Canon] declares that all of your property is now forfeit to the Diocese, since it was always held in trust for this Diocese and the Church."

Such a claimed operation for the Canon comes as a surprise to many congregations who thought that their years of paying for the acquisition, construction and maintenance of their building, plus a deed in their name, meant that they owned it. Furthermore, every State in the United States has a law which says that trusts in real property can be created only by a writing signed by the owner of the property. The Dennis Canon operates in reverse: it purports to create a trust in church property without the owner's signature, and just on the authority of ECUSA's General Convention. As I noted elsewhere, it purports to operate as though, upon you and your spouse's joining the Democratic Party, your house and all your worldly goods become forfeit to the Party should you ever decide to become a Republican.

States such as California and New York are lost causes, however. Although they have the same statute regarding how trusts are created as does every other State, they also have statutes which create special exceptions to that rule for national churches like ECUSA. The exception allows such national churches to create trusts in parish properties unilaterally, without the individual parishes' consent, by providing for such trusts in their governing documents. The highest courts in California and New York have accordingly upheld the validity of Dennis Canon trusts against individual parishes who decided to leave the Episcopal Church (USA).

To date, the only State to rebuff clearly and unequivocally the idea of a Dennis Canon "trust" in church property has been South Carolina. In cases decided by their Supreme Courts, the States of Kentucky and New Hampshire have also indicated that they might not ratify the creation of a trust by a trust beneficiary, as opposed to by the property's actual owner, since they have declared that they would apply a strict "neutral principles" approach. For example, in Berthiaume v. McCormack, 153 N.H. 239, 891 A.2d 539 (2006), the New Hampshire Supreme Court wrote that 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 Court went on to decide that as title to the property in question was held solely by the Roman Catholic Bishop of Manchester, he could sell it to another denomination without having to keep it in trust for Catholic parishioners.

The Presbyterian Church (USA) has also been taking a number of property disputes to court, with mixed results. It has a provision in its governing Book of Order which tries to accomplish the same goal as the Dennis Canon -- to ensure that all congregational property is held in trust for the larger presbytery of which the congregation is a part.

Now comes word that an appellate court in Louisiana has rejected that Church's argument that its Book of Order, in and of itself, was adequate to establish a trust, in the Presbytery's favor, in the property of a local congregation. In its opinion, which upheld title in favor of the parish of Carrollton against the claims of the Presbytery of Southern Louisiana, the First Circuit Court of Appeals wrote (beginning on p. 9):
Moreover we agree with both Carrollton and the district court that, even if we were not persuaded that Carrollton is exempt from the Book of Order's express trust provision, Louisiana trust law would apply to this dispute over Louisiana property. In Jones v. Wolf, 443 U.S. at 602, the United States Supreme Court recognized a state's "obvious and legitimate interest in the peaceful resolution of property disputes and in providing a civil forum where the ownership of church can be determined conclusively." The Court went on to note that application of the neutral-principles approach relies exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges." Jones, 443 U.S. at 603. Although the Court opined that a trust in favor of a general church could be created by the constitution of the general church being made to recite an express trust provision in favor of the denominational church, the Court noted "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." Jones, 443 U.S. at 606 (emphasis added). We are not persuaded by the Presbytery's contention that the requirement of a "legally cognizable form" was met simply by the PCUSA's amending its constitution.

The subject property is situated in Louisiana and applying neutral principles of law we find that any purported trust would be subject to the form requirements set forth in Louisiana's Trust Code. It is undisputed that those form requirements have not been met. The public records relating to the subject property reflect that the property is owned by Carrollton. There is no mention of the property being held in trust in the deeds themselves and it is not disputed that no trust instrument relating to the property has been filed of record in Orleans Parish. See La. Rev. Stat. Ann § 9:2092.
This is a straightforward application on the Statute of Frauds to church property disputes, exactly as was done by the Supreme Court of South Carolina. Last week also brought us news of the oral arguments in a church property case which reached the Supreme Court of Indiana. I had already written here about the trial court's decision in the case of Olivet Evangelical Presbyterian Church of Evansville v. Presbytery of Ohio Valley. That decision had been reversed by the Indiana Court of Appeals in 2010, and the congregation's request for review was granted by the Indiana Supreme Court. In its newsletter, the Presbyterian Lay Committee gave the following account of the arguments in the case two weeks ago, before Indiana's highest court:
Representing the Presbytery of Ohio Valley, attorney Judy L. Woods attempted to defend the appellate court’s decision to grant the presbytery’s trust claim on the property.

“The law regarding religious freedom, the law regarding the means and basis for deciding a church property dispute, is well settled,” she said. “Churches in all their forms of polity and government -- they form their own rules … for deciding disputes,” she added. “Courts may not interpret these or interfere with their administration if it involves delving into ecclesiastical or doctrinal matters.”

“That is not so,” Justice Brent E. Dickson pointed out, citing a 1979 U.S. Supreme Court decision in Jones v. Wolf in which the court stated that “courts may use neutral principles of law to adjudicate these property rights and they don’t have to look at the hierarchical documents.”

Woods admitted the court does not have to use the hierarchical deference standard under which courts defer to the decisions or precedents of a denomination’s highest governing body. However, Woods said that states may use it and that Indiana has in the past.

Indiana courts have also applied, however, the neutral principles standard under which courts evaluate property disputes using secular legal documents such as deeds and trust documents that have been executed according to state law without regard for denominational policies.

“States may use a number of approaches to decide church property disputes,” Woods said, admitting that neutral principles had become a preferred method.
Ms. Woods did not fare any better with another of the justices, either:
Justice Robert R. Rucker told [Woods]: “The problem I’m having with this is that, in our property law arena, there are ways you establish who owns what property and there are ways in which you establish [a] trust – that’s a matter of state trust law.”

“It doesn’t appear to me that the court of appeals applied those rules in this case and that’s bothersome,” he added, asking Woods if principles of trust law had been abandoned.

Woods countered that the court appeals looked at the “bylaws and other documents under neutral principles applicable to standard corporate documents.”

Woods claimed that the documents and bylaws established under PCUSA polity should be reviewed in the sense of a state-sanctioned legal document.

“[The appellate decision] did not get into whether these particular documents formed a trust,” she said.

“That’s my problem right there,” Dickson said. “Jones instructs us that the neutral principles approach relies exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges,” he said, adding, “You’re saying the court of appeals didn’t look to those familiar principles of trust and property law.”

Woods disagreed and said the court looked at trust law as it applied to Olivet’s bylaws.

“Where did Olivet ever expressly create a trust on its own property?” Dickson said.
The attorneys for Olivet and for the Presbyterian Lay Committee (as a friend of the court, or amicus curiae) were not questioned as severely as Ms. Woods, as you can read in the link referenced. In her rebuttal, Ms. Woods once again ran into hostile questioning about how a church's governance rules can override state statutes:
During rebuttal, Woods reiterated her earlier argument that trusts can be created under Indiana law without specific documents expressly stating such, claiming that Olivet created a trust simply by belonging to the PCUSA from 1983 to 2006.

“In 1983, it said it wanted to adopt the new Book of Order, including the property trust clause. In 1994, it incorporated … and said it was subject to the entire [PCUSA] constitution,” Woods said.

“If the [PCUSA] General Assembly were to amend the Book of Order and say ‘Divorces in this congregation will be governed by sharia law,’ would the members of all the member churches getting divorced have to follow those property divisions and divide their property according to that or not?” Dickson asked.

Sharia is a form of religious law in Islam that can be binding as authoritative civil law in some countries. Under some forms of sharia, men may unilaterally divorce their wives simply by telling them, without regards to her wishes.

Woods admitted that such a law could only be governed by ecclesiastical rules and would have no standing under secular authority.

“Churches do have to adhere to civil law,” she said.

“You just don’t have to abide by property law, huh?” Dickson asked.
Those who have the interest in these issues, and who have an appropriate media player, will enjoy being able to view and listen to the full oral arguments by going to this link. It is always tricky to guess the outcome of a case from how the questions at argument go, but in this particular case, I will hazard a prediction that PCUSA's Book of Order will not be regarded as establishing a self-actuating trust in Indiana. And if that is the result, then the Dennis Canon will be dead in that State, as well.


  1. The Louisiana court quoted the Supreme Court as ruling 'that a trust in favor of a general church could be created by the constitution of the general church being made to recite an express trust provision in favor of the denominational church [and] the
    Court noted 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.' This seems to be saying that something like a Dennis Canon could be approved under certain conditions. What do you think is meant by 'legally cognizable form'?

  2. Philip Wainwright, I offered my interpretation of Justice Blackmun's dictum in this earlier post.

    To me, it is clear as a bell that the Supreme Court could not have been saying that hierarchical national churches could override State laws by enacting trust provisions in their governing documents. After all, in Jones v. Wolf itself, the Court sent the case back to the Georgia Supreme Court to determine whether the standard of allowing a majority vote to determine ownership of church property passed muster under neutral principles of Georgia law. And in New York and California, the courts have had to rely on State enabling statutes to give effect to the trusts.

    "In some legally cognizable form" means exactly what it says: a form of trust that is cognizable under the law of the jurisdiction in which the court looking at the trust sits.

    That has not stopped other courts from reading the words out of the decision, however, and allowing a church to "create" trusts with their governing documents in plain violation of the local Statute of Frauds. ECUSA, indeed, has come to rely so much on that reading of Jones that it now urges it as a matter of routine in every property case. Which is why, after their argument lost in South Carolina, I wrote this spoof of their position.

  3. Good for Carrollton Presbyterian.

    I used to go there for scout meetings back in the day.

  4. Seems like the fact that the Supreme Court's comment 'has not stopped other courts from reading the words out of the decision, however, and allowing a church to "create" trusts with their governing documents' means that it will have to come back to them in the end. Hopefully they will then make it clear as a bell to everyone else.

    Personally, I can see arguments on both sides of the issue, although I think a ruling in favor of the local congregation less open to abuse than a ruling in favor of the denomination.