Monday, May 13, 2013

Confusion (among Amateur Canonists) about California Ruling

Now comes a task I would rather not face, given that I count many non-canon lawyers who are bloggers on Episcopal matters at least as colleagues, if not as personal friends. But in the wake of my commentary on the recent St. James ruling, a host of lay would-be canonists have rushed in to assure everyone that the ruling is not as bad as it is, or that it does not really say what it says. The latest comes from the estimable Father Haller, but he and others have also been contributing to the comments on other blogs. (Note that no one has seen fit to come here and question me directly.)

Let's clear up one simple matter first: the ruling is not yet precedent for California courts, because it is only the decision of a single trial judge in Orange County, California. As I pointed out in my original post, it will become problematic only if it is affirmed upon appeal.  (But as I also pointed out in my post, all of the appeals taken thus far by St. James in this case were decided against them initially by the Court of Appeals.)

Next, let's wade into the legal realities. Forget all talk about "alienating parish property."  That never occurred in the St. James case.  Far from alienating any real property in 1991, St. James acquired it.  Those (like Fr. Haller) who cite Canon I.7.3 about needing the permission of the Standing Committee in addition to the permission of the diocesan bishop to waive the Dennis Canon upon the acquisition of property are barking up the wrong tree here. Unlike the Dennis Canon itself, that Canon simply does not apply to a parish's acquisition of property.

Because no alienation of property was involved, the Orange County judge did not rule upon the application or effect of Canon I.7.3 to the case. So nothing in her ruling bears on that Canon, either.

The narrow issue decided by the judge was that the trust automatically imposed by the Dennis Canon on all newly acquired parish property, from the moment that title is put into the parish's hands, cannot be waived by any diocese, or its bishop, with or without the "consent" of the diocesan standing committee.  She held that the only body competent to waive the application of the Canon to newly acquired property (or indeed, to any parish property whenever acquired) was the body that created the Canon, namely, General Convention itself.

Now, here is the first canonical problem which that ruling creates: if neither the Diocese of Los Angeles nor its bishop could waive the automatic imposition of the trust on the property which the donors acquired for St. James in 1991, then they made a false representation to those donors that they had the authority to do so.  And whether or not that representation was intentionally false (which I do not claim in the slightest, because the real problem here is the later "about face" performed at the instance of Bishop Bruno) does not matter. It was a misrepresentation upon a matter on which the bishop was supposed to be informed and competent, namely, his own Church's canons. And because it was not true (or because the Diocese and its later Bishop chose to make it false), the Diocese of Los Angeles could now very well become liable to the donors for a full return of all moneys they are out of pocket as a result of their reasonable reliance upon the bishop's and the Diocese's misrepresentation.

Next, here is the second canonical problem which the ruling creates: how can we now be certain that the Dennis Canon trust is automatically released when a parish stays in the Church, but sells its property with the advice and consent of the bishop and the diocesan standing commission, as per Canon I.7.3?  (Note that the judge's decision does not discuss this problem; instead, her precise holding raises it.)

Let us get the easy case out of the way first. The Dennis Canon applies by its terms to all parish property, both real property (land) and personal property (everything from candlesticks to old library books and Bibles). Canon I.7.3 applies only to real property.  So if the latter Canon helps us at all, it cannot save the case of how the Dennis Canon trust is automatically released upon the sale or alienation of personal property.

And how could Canon I.7.3 purport to release the Dennis Canon trust, if it does not mention the Dennis Canon? (The reason it does not do so is that Canon I.7.3 came before the enactment of the Dennis Canon.)  So the first real problem for those who tout its efficacy is that the Dennis Canon could be seen as an addition and alteration to Canon I.7.3, since it is later in time.

That is to say, Canon I.7.3 allows a parish to alienate its real property upon the proper consents, but even as so alienated, the property still remains subject to the terms of the national Church's Dennis Canon, i.e., a cloud remains upon the title until the trust is properly released (because the court held it may be so properly released only by General Convention).  A Diocese giving its consent pursuant to Canon I.7.3 would thereafter be estopped to assert its own Dennis Canon interest, to be sure, but no such estoppel doctrine could apply to ECUSA's interest under the Dennis Canon, absent action by General Convention.

Think that is far-fetched? Put yourself in the place of a title company attorney who is trying to make sense out of the mishmash of property law made by all the Dennis Canon cases brought by ECUSA and its Dioceses.  The Diocese of South Carolina, for example, issued quitclaim deeds to all of its incorporated parishes while it was still in ECUSA, as were the parishes also, but ECUSA is now challenging the validity and efficacy of those deeds at the time they were made.  In other words, ECUSA agrees with the Orange County judge that no Diocese or bishop may waive the Dennis Canon -- even though those deeds were issued under the consent of the diocesan bishop and the diocesan standing committee.

So please do not put any credence in Canon I.7.3.  ECUSA's current leadership does not think it applies, and that is all, if you are a title company attorney, you have to rely upon in refusing to guarantee that the buyer of church property would hold title free and clear of the Dennis Canon.

But, say others, surely the Dennis Canon itself contains the language guaranteeing its release upon a proper sale (i.e., by a parish still in ECUSA at the time, and with the consents required by I.7.3)?  It says that so long as the parish remains "a part of, and subject to, this Church and its Constitution and Canons," the Canon places no limit upon its power "otherwise existing over such property ..." (emphases added). 

What does that little word "otherwise" accomplish?  It means the power the parish has over its property apart from the Dennis Canon.  But according to stalwart Episcopalians like Fr. Haller and David Booth Beers, the Dennis Canon  was not a "new" trust in 1979, but simply "expressed", or "formalized", a trust relationship that had existed since the very first property Canons in the 1860's (Fr. Haller), or since the Revolutionary War (Beers).

And that means: even apart from the Dennis Canon, the power of a parish over its own property was still subject to a pre-existing trust in favor of ECUSA. And only ECUSA, speaking through its only authorized body (the General Convention), could release that trust -- again, since (in Mr. Beers and 815's current view) no diocese, or diocesan, has the authority to speak on behalf of ECUSA. (Vide the prosecutions of the nine Fort Worth and Quincy bishops for daring to imply otherwise.)

So once again, as the attorney for a title company, you are asked to opine whether any sale of real property made by any Episcopal parish in Orange County since 1980 could have been free and clear of the pre-existing trust "formalized" by the adoption of the Dennis Canon in 1979. You have already concluded that, for the reasons stated above, Canon I.7.3 is of no assistance. And now, for the reasons just given, you have to conclude that the language of the Dennis Canon itself provides no assistance, either.

That is why this decision, if upheld, will place a cloud on the title of all such property in California.  (It is bad enough that it is effective now upon all such property in Orange County.)

And that is also why those who are not trained in law and the canons, and how they interact with each other when the issues are forced upon the civil courts, should forbear from wading into such complex waters.

Post scriptum: As a real property lawyer of more than forty years' experience, the only means of circumvention which I could suggest for a hapless buyer of property from an Episcopal parish subject to this ruling would be to convince the title company attorney that I (as buyer) gave reasonably equivalent value in exchange for the property, so that the Dennis Canon switched from the property sold to me to the funds the parish acquired in exchange for it. Alternatively, I could argue that I (as a secular buyer, again) had no notice of the Dennis Canon trust, and gave reasonably equivalent value for the property, so that I qualify as a bona fide purchaser whose acquisition without notice extinguished the Dennis Canon trust then and there. But either of those is an uphill argument to have to make, and could require either a contemporary appraisal of the property, or a court judgment, or both, to back up such a position. (It does solve the rummage-sale problem, at least: de minimis non curat lex.) And the inquiry would still have to be made (and satisfied) in each and every instance.


  1. Dear Curmudgeon,
    Thanks for the notice. I was not primarily responding to your long essay, but to the less than clear fulminations of cseitz.

    I do not think we are all that far apart, in particular as I agree with you that that the issue isn't about the acquisition of the property, but its removal.

    I also agree that the decision appears to render the dissolution of the trust itself to be a nullity as far as the Bishop and Standing Committee go. But the point I was trying to make, which I think you sum up in your post scriptum above, is that this only becomes an issue when property is sold, or in this case if a parish tries to leave TEC and removing the property in violation of the truts. The point you raise is I think the solution: if value is given in exchange there is no need for troubling about the trust aspects. Perhaps I did not make clear enough that this is how I see it as well.

    Since most property transactions involve value in exchange for property, this is why I do not see this as a major concern. Under such normal circumstances, there will be no need to attempt to "break" the trust. The trust only concerns the property as it is held (one can only have care of what one has) and if it is sold, in accord with I.7.3, then the trust no longer holds and is extinguished with the sale. I think you have well hit the answer in this postscript.

    At least that's how I see it. What am I missing?

  2. Fr. Haller, thank you for partaking here in the dialogue. As honorable Episcopalians, you and I may both agree that a parish may sell its property to a third party, in compliance with Canon I.7.3, receive reasonably equivalent value in exchange, and then both seller and buyer may depart in peace. That is the normal way, and that should be the way most transactions happen.

    Given, however, the tendency of certain bishops in ECUSA to disown the validity of acts by their predecessors, even long after the fact (as happened in the St. James case, and as is happening even now in some of the San Joaquin cases), the problem is that no buyer could ever know for sure that he has clear title absent a court judgment ruling that he does, or a written resolution, waiving its specific D.C. interest, adopted by General Convention. Both of those are highly impractical and expensive solutions to obtain for an individual buyer.

    Also, if the buyer can obtain title insurance in the transaction, he might think himself safe even against future reneging bishops. Again, though, the problem is that ECUSA's trust interest is not a matter of record -- that is, there would be no earlier recorded instrument which would put the title company on notice of that interest -- and it would probably escape coverage under its policy by relying on the latter's blanket exception for unrecorded claims.

    This problem will only get worse as time goes on, if the Orange County decision is not changed. All it will take is one loss for a title company, and then all title companies throughout California will begin to note the cloud on title imposed through the Dennis Canon, and make it an exception to coverage under its policy, recorded or not.

    So while church property transactions may continue for a while as they always have before this decision, watch out if it is affirmed on appeal. Title companies also pay attention to appellate decisions in the area of property law, and they might not wait for a first loss before taking action. And if they do, then all Church properties in California will become unmarketable until General Convention enacts a permanent solution to the problem.

    Finally, if 815 and its dioceses keep pushing these kinds of arguments in other State courts, then the problem may soon begin to crop up elsewhere.

  3. Oh what a tangled web we weave.... and you know the rest of the *story*. This just gets more complicated decision by decision.

  4. Thank you once again for your willingness to engage. As in the past I've always enjoyed our cordial dialogue.

    As I see it, the main issue here, as you note, involves the distinction between the trust itself and the alienation of property.

    I have to agree with the finding of the court that the Bishop exceeded his authority in attempting to waive the trust. There is no suggestion that a bishop acting alone, or even in concert with the Standing Committee, could do that, as the trust is established in the canon (acknowledging that some, such as yourself, feel the canon itself is irregular and overreaching, but it is “on the books” and the courts appear in general to defer to it as consistent with what Jones v. Wolf mused might be an appropriate way to flag the existence of such a trust in explicit language.)

    Let me add that I do not think any duplicity was involved in the action of the bishop or his canon, and it is a matter of some concern that the succeeding bishops, and others, have chosen not to honor that commitment, even if it was inappropriately made. It seems to me that both sides in that agreement were poorly advised as to the state of the law at the time, both ecclesiastical and civil. It would more likely have been advisable for the parish leaders to undertake the establishment of a separate not-for-profit corporation to obtain the property and then to have leased the property to the parish for its use. This would have given the gentleman's agreement some teeth as well as legal protection. Having been a diocesan trustee and standing committee member, I am familiar with ways to address such concerns.

    The issue of the alienation or sale of property is distinct from this. My reason for thinking that the current court decision, even if upheld on appeal, should not concern any parish so long as it remains part of the Episcopal Church. That seems to me to be the plain reading of Canon I.7.4. I acknowledge the interpretation you give to "otherwise" is a possible reading, but I do not think it a necessary reading. I read "otherwise" not in reference to the trust(for the Church and Diocese thereof) but in reference to the normal property rights enjoyed by the parish restricted only by the immediately preceding section of the Canon (I.7.3) which describes the procedure and the requirements for encumbrance or alienation.

    So my point in all this is that the bishop and standing committee cannot waive the trust, but they can permit the sale or long-term lease of property so long as the parish is part of the Episcopal Church. This case arose solely because of the decision made by the people at St. James to separate from the Episcopal Church.

    I do not see how this decision would apply to "normal" property transactions for parishes that remain part of the Episcopal Church -- or, indeed, who would have standing to challenge such a legitimately permitted sale if the Bishop and standing committee, and the vestry of the parish, have approved it – or even who would care to do so.

    Even as I say that, I am aware that noises from 815 have attempted to forbid amicable settlements to departing congregations, but I imagine that the urge to move on that will depend on the depths of pockets, and would hope that greater good sense would prevail. On that matter I can only hope.

    Thanks again for your patience and thoughtful review of the situation.

  5. Fr. Haller, again I thank you for coming here to represent the views of those who have largely stopped coming here, for whatever reason (with which I do not quarrel; I also have lessened my occasions of commenting on sites with whose authors I do not agree).

    In regard to your latest views, I will note only the tension (no doubt unintentional) between these two claims of yours: "So my point in all this is that the bishop and standing committee cannot waive the trust, but they can permit the sale or long-term lease of property so long as the parish is part of the Episcopal Church."

    And the tension is precisely this: if the diocesan and the standing committee have no power to waive the Dennis Canon in the acquisition by a parish of real property, then what gives them the same power to release the Dennis Canon trust upon a disposition of parish real property?

    For the law holds that, unless the powers of an agent are especially and specifically described in some written instrument, then the power to waive in the one instance includes the power to waive in the other.

    In short, if you claim that General Convention authorized the bishop and the standing committee to release all Dennis Canon claims in consenting to a disposition of parish property, then you must show how General Convention did not authorize any such action upon the parish's acquisition of such property.

    And here we come to the nub of my difficulty in reconciling your contentions with the decision by the Orange County court. You would read into Canon I.7.3 an authority, in the name of General Convention, to waive the Dennis Canon in any specific instance (without the Dennis Canon even being referenced in Canon I.7.3) covered by the Canon. But at the same time, you support the court's holding that the same authorities are not authorized to waive on behalf of General Convention the imposition of a Dennis Canon trust in the first instance.

    This seems to me to be a classic example of special pleading: the law should work in your favor in the cases where you want it to, but not in those similar cases where its application would lead to a result that you would regard as undesirable, or unacceptable.

    And that is my problem with the reactions I have read objecting to my commentary upon the court's decision. That is, the decision is fine so long as it prevents bishops (and standing committees) from waiving the Dennis Canon; but it would not be fine if the decision also meant that bishops and standing committees could not waive the Dennis Canon when we want parishes to be able to deal freely with their properties, so long as they remain in the Episcopal Church (USA).

  6. Thanks once again, A.S., and I think this is very helpful and directs me to what I think is the difficulty I have with your position. This devolves to two points.

    The attempted waiver on the acquisition of the property was really an attempt to waive de futuro (if you will pardon my mixing marriage law with real estate... just that my head is rather involved in work on the former at present). In other words, to proactively hold property free from the trust in the case of some future alienation. The court found that the trust relationship cannot be so dissolved, either in the future or the present. As I suggest, there were other possible ways to structure this, but a bishop cannot essentially authorize a sale of property (a parish doesn't yet own) in the future, or apply the dead hand to require a successor so to do -- and the St Com approval is also needed in any case. In the present, however, a Bp and SC can authorize an encumbrance -- not "waive the trust." Which brings me to my second point.

    You are interpreting the encumbrance of property in I.7.3 as a waiver of the trust in I.7.4. But it is not a waiver of the trust, since the value of the property will remain for the use of the church. It is a transaction within the trust, not an escape from or waiver of it. It was the attempted waiver de futuro -- essentially to allow a parish allodial title to their property -- that the court found to be a nullity.

    I.7.3 was on the books long before I.7.4 was a glint in Walter's (of Blackmun's) eye. The trust element was, as various courts have stated it, implicit, in part because of the long-standing limitations on the encumbrance of property to the extent that a higher authority (Bp and SC) had to approve sales or long-term leases.

    I do not see this as a case of special pleading, but an across the board requirement. Parishes are not able "to deal freely with their properties" even within TECUSA. They must have Bp and SC approval for any encumbrance. In NY this is written into the Not-or-Profit Religious Corporations statute as well (predating Dennis), so we need approval of the Supreme Court as well!

    Hope this makes some sense of whence I come on the matter. Whither this all will go, I do not know. I can only join you (I presume) in the hope for amicable settlements and fewer lawsuits.

  7. Messers. Haley and Haller--I wholeheartedly appreciate your thorough analyses of the California court's recent decision as well as the manner in which your analyses are presented and hope that more discussions of this nature could and would be forthcoming in matters relating to TECUSA and certainly with regard to matters in litigation. I'd like to present what I hope isn't an overly simplistic view of the major defect I find in the court's decision.

    Although the Dennis Canon would be recognized as sufficient to apply a trust to TECUSA parishes in California in accordance with a decision of California's Supreme Court, the recent lower court's decision still seems to me to be flawed. Even assuming TECUSA is an hierarchical church--and I believe it actually isn't beyond the diocesan level since it doesn't really fit the definition of "hierchical" at the national level--the key issue is the power of a TECUSA bishop. Jones v. Wolf clearly had NO intention to allow a court to interpret canon law with regard to the actions of any denomination, and I submit that is what the recent decision inadequately attempts to do.

    What do we really have in this case? First, it appears that a TECUSA bishop apparently acts in a hierarchial capacity with powers that he knows he has or has reason to know that he has--powers that are apparently consistent with that apparent authority, by purporting to release/waive an existing trust for the benefit of TECSUA with regard to a specific parish ("church") under the bishop's jurisdiction (side comment: no statute re church corporations as in NY may be pertinent here, and there appears to be no intent to do anything more than to release/waive a trust imposed for the benefit of TECUSA that had been imposed simply for as long as a church continues to HOLD property, both real and other than real). Years later, regardless of multitudes of donations having been made to this church with the view that the church was not subject to any trust for the benefit of TECUSA, and with an apparent dramatic rise in the market value of the real estate associated with the church, a court determines the release/waiver of the trust years ago was ineffectual "ab initio".

    The case appears to need to convincingly deal with establishing how and why the trust that the original TECUSA bishop purported to release/waive in this case could now be held to have remained in effect. Thus, TECUSA, a denomination that is hierarchical at least at the diocesan level, now appears to assert that a trust purportedly released/waived by a TECUSA bishop may now be held never to have been released or waived, and this position appears at odds with the denomination's actions with regard to numerous canonical matters.

  8. Williamp, you raise a number of interesting questions. Let me attempt a short answer to at least part of what you appear to me to be asking.

    As I see it, part of what the court decided is based on the premise that the bishop of a diocese is not in fact the high-point in the hierarchy of the church. Among other things (including their own election!), bishops are under the authority of, and are pledged to conform to, the canons enacted by the "general church" -- and I note that the word "general," as used in the title of the General Convention, is precisely chosen to convey an hierarchical standing to that body. (I know that one of the attorneys writing for the ACI asserts that there is an absence of hierarchical language in the canons -- but this fails to take account of the explicit use of the term "general" to indicate the overarching authority of the that body in all matters it chooses to address. That it leaves a number of matters open to local direction does not undercut the binding nature of the general canons.)

    On that account, no bishop has the right or power to set aside a requirement of those canons. (That some have done so motu proprio in other cases, such as in allowing communion prior to baptism, is not at issue, though it is deplorable. No civil court will enter into that particular patch of underbrush, though an eccelesiastical court could, and likely should.)

    So the issue seems to be that, as you say, the bishop erred ab initio in waiving the trust that would be in place on any property acquired by an Episcopal parish. This effort was both proleptic and extravagant, as I noted above. The trust itself cannot be waived even in the present, let alone on some future property yet to be obtained. So it is not a case that a waived trust has suddenly been put back into effect, but that an act purporting to waive a trust was never effective -- it only became an issue when the congregation sought to make use of the misguided and null promise, and to alienate the property from the beneficial use of the Episcopal Church and diocese.

    As I noted above, there were other ways in which this could have been handled. The way the bishop and congregation chose was faulty.

  9. Fr. Heller makes a fine argument that the trial court did not say what in fact it said. And at the end of the day that's all his opinion is, an argument.

    As we lawyers know a legal matter is never settled until it is settled by either a legislative or judicial determination. So the question is what did the trial court say and, if it goes up on appeal, what do the appellate courts say.

    In this matter, Mr. Haley, has the more accurate summation of what the court said, and that is that the Dennis cannon created a trust that can only be released by General Convention.

    As I see it the trial court opinion does create a cloud on the title. A claim to property need not be valid to create such a cloud. No one wants to buy a lawsuit and no one in their right mind wants to purchase realty where the seller cannot deliver a clean title.

    Fr, Heller can argue that no such cloud on title is created, but he is under no legal obligation to defend such title or to pay damages should his opinion be wrong. It is just that, a non-binding opinion as to what he thinks the law should be.