A Tale of Two Churches

This is a story of two American churches, each located in the same State.

The first church is somewhat older than the second, and was founded well before the Revolutionary War, on property granted by the Crown, and subsequently confirmed by an act of the colonial legislature, which also gave it a corporate charter. An independent parish for many years, and a major center of the community in which it was located, the church became part of the Protestant Episcopal Church in the United States of America in the early nineteenth century, when it joined that denomination as a constituent member of one of its "dioceses", or regional grouping of parishes.

The second church began its existence as an unincorporated group of worshippers in 1829, and although presbyterian in character, did not affiliate with a national denomination until 1880, when it joined the Presbyterian Church in the United States (PCUS). It did not incorporate, however, until 1984. Meanwhile, PCUS, of which it was a member, had reunited with another branch (the "United Presbyterian Church in the U.S.A.") a year earlier, to form what became the "Presbyterian Church (USA)", or PCUSA. The newly incorporated parish thus became a constituent member of PCUSA (which must carefully be distinguished, in this telling of a Tale of Two Churches, from "PECUSA", or [later] "ECUSA" -- the Episcopal Church in the U.S.A.).

The first church, on joining PECUSA, had declared its accession (agreement) to that Church's constitution and bylaws, or canons. It obtained a new corporate charter from the State in 1981, in which it restated its accession. Two years earlier, in 1979, ECUSA (as it was now called) had adopted a bylaw (the "Dennis Canon") which purported to make all real and personal property held by any parish subject to a trust in favor of the denomination and of the diocese of which the parish was a member.

The earlier denomination PCUS had adopted a similar declaration of trust on all parish property in 1982, shortly before it merged to form PCUSA, as just described, in 1983. Upon the creation of this larger denomination, it adopted a national constitution which contained a trust provision identical in every respect to the one PCUS had passed in 1982, except that the name of the beneficiary of the trust was changed to PCUSA. At the same time, it adopted a new "opt-out" clause, which stated:

The provisions of this chapter shall apply to all particular churches of the Presbyterian Church (U.S.A.) except that any church which was not subject to a similar provision of the Constitution of the church of which it was a part, prior to the reunion of the Presbyterian Church in the United States and The United Presbyterian Church in the United States of America to form the Presbyterian Church (U.S.A.), shall be excused from that provision of this chapter if the congregation shall, within a period of eight years following the establishment of the Presbyterian Church (U.S.A.), vote to be exempt from such provision in a regularly called meeting and shall thereafter notify the presbytery of which it is a constituent church of such vote.   The particular church voting to be so exempt shall hold title to its property and exercise its privileges of incorporation and property ownership under the provisions of the Constitution to which it was subject immediately prior to the establishment of the Presbyterian Church (U.S.A.).   This paragraph may not be amended.

Four years after the enactment of this provision, our second parish elected to "opt out" under its terms, and so notified the higher Presbytery of which it was a member. However, just what provision it thereby opted out of was unclear. Since it had become subject to the almost identical trust language while it was a member of PCUS, before the merger, the opt-out clause would appear to have no application to that provision. However, no clarification was ever sought or obtained, and both the local church and PCUSA proceeded on their respective ways.

Adoption of the Dennis Canon by ECUSA had been subject to similar ambiguities. If it actually did pass both Houses of General Convention 1979, it did so on the next to last day -- when the bylaws prohibited the consideration of any such last-minute measures unless the House voted by a two-thirds majority to suspend the bylaws. The archived records of the Convention do not contain any definitive evidence either that (a) a vote was taken to suspend the rules, or (b) that a final vote was taken on the proposed Dennis Canon.

Unusually, the adopting language provided that the Canon would take immediate effect throughout the Church, upon its passage. Yet the contemporary write-ups of the Convention make no mention of the Canon or its supposed passage. Although the Canon was included in the compilation printed after that Convention, no one in ECUSA seems to have noticed its existence for over twenty years. Then, in 2000, Bishop Salmon of the Diocese of South Carolina recorded a declaration of trust against the property of All Saints Waccamaw -- and a ten-year court battle began, which resulted in a final judgment that the Canon was ineffective to create any trust interest under South Carolina law.

Not so in the State of Georgia, which is where the two churches this tale is about are situated. As we have seen, the second church (whose name is Timberridge Presbyterian Church) elected to exercise its privilege to opt out of what it assumed was a new trust provision in the new PCUSA Constitution. (Although delegates from Timberridge were present at the 1982 convention of PCUS which had adopted the equivalent trust language for that denomination, the evidence was unclear -- just as was the case with the passage of the Dennis Canon -- whether any church in the denomination, including Timberridge itself, had actually been aware of that adoption.)

In 2006, just five years after the Dennis Canon came to prominence in Church litigation, our first church (whose name, as you have by now guessed, is Christ Church, Savannah) similarly "opted out" of its application, by amending its corporate documents to remove any language of accession to the ECUSA constitution and canons.

So there you have the foundation for the Tale of Two Churches -- two churches with a dissimilar beginning, but with a similar recent history, insofar as they each tried to remove themselves from the effect of an trust imposed on their properties by their respective denominations. In each instance, the dispute went to court, and each national church prevailed at the trial court level. Then, since the Two Churches were in the same State of Georgia, they each appealed those decisions to the same Court of Appeals of Georgia.

And how did they fare? In two different decisions by the Court of Appeals rendered within five months of each other, delivered by two separate panels of three justices each, one church (Christ Church) lost, and the other (Timberridge Presbyterian) won. Christ Church was told that no act by it alone was effective to take itself out from the operation of the Dennis Canon, and that while it could amend its Charter under Georgia law to "deaccede" from the Episcopal Church (USA), it had to leave the property behind, because the trust imposed by the Canon was binding upon it when it decided to leave.

But Timberridge was told that, on the facts of its case, its attempted opt-out, even though ambiguous and uncertain, was effective to remove the trust, because it was not all that clear that a valid trust had been imposed on its property in the first instance.

Huh? you say. And I join you: Huh? How can that be?

Listen to the opinion in the Timberridge decision (November 30, 2010):

Read as a whole in light of the relevant law, the evidence is inadequate to show the existence of a trust in favor of the Presbytery.   The evidence must reveal that “factors other than mere connectional relationship between a local and general church were present.”  Carnes, supra, 236 Ga. at 35(1).   In the absence of some showing of intention and assent on the part of Timberridge, neutral principles of law cannot support the unilateral imposition of a trust provision drafted by the purported beneficiary of the trust and the resulting deprivation of the opposing party's property rights.

And now, here is a passage from the Court's decision in the Christ Church case (July 8, 2010):

Christ Church next contends that even if its 1918 charter accepted the trust obligation, the 2006 charter amendments, removing all accession to the Diocese of Georgia and the National Episcopal Church, effectively negated it.   This argument is flawed.   Although Christ Church is correct that Georgia law which governs non-profit corporations permits such amendments, the amendment did not have the effect desired by Christ Church.   Contrary to its argument, Christ Church cannot amend its way out of an already existing trust. Changes to corporate documents cannot sever the strands of the trust that attached to parish property.

The individual properties of both Timberridge and Christ Church had been made, within three years of each other, the subject of nationally imposed trusts. Timberridge's attempt to opt out of the trust, five years later, was on its face ineffective, and was treated by the national church as such. Yet when Timberridge filed suit for declaratory relief in 2007 -- twenty years later -- it is told that the imposition of the trust in 1982 was not effective without a showing of its assent that would be based on more than just its membership in the national body, and its delegates' attendance at the convention which adopted the trust.

Christ Church moved in 2006 to do the same thing -- yet it was told that the imposition of the trust on its property in 1979 was effective, because theretofore it had been a long-standing member of ECUSA and enjoyed the benefits of that membership, which created an implied trust that was made express by the passage of the Dennis Canon in 1979. And also, it had sent deputies to the Convention which "enacted" the trust!

The amazing thing is that the panel in the Timberridge case showed that it was aware of the Christ Church decision, and nevertheless tried to argue that the earlier decision was different. To the passages from the former which attempt to distinguish the Christ Church decision, and which I quote below, I shall add my own commentary in colored text:

For example, in Christ Church, supra, 305 Ga.App. 87, an express trust was established by the national church in 1979, and the local church re-recorded its charter in 1981, reaffirming its “accession to the doctrine, discipline, worship, constitution and canons” of the national church after adoption of the express trust provision.  Id. at 96(3)(b).

And likewise, in Timberridge, the local church, after having voted to adopt a national trust provision while a member of PCUS, voted to merge into a new body a year later -- with an identical trust provision. (True, there was adopted at the same time an "opt out" provision, but it applied only to those parts of the new national Book of Order which were different from those to which the given parish had previously been subject.) Thus the vote by Timberridge in 1983 was, just as the Court considered the re-recording of its charter by Christ Church in 1981, a "reaffirmation" of the national trust provision first adopted in 1982. 

Moreover, the local church “failed to take any steps to disavow the canon or attempt[ ] to remove itself from the reach of ․” the express trust provision during a 30-year period after its adoption.   The local church “repeatedly sought the canonically-required consent of the Diocese of Georgia before alienating real property or incurring indebtedness, including two times after adoption of the Dennis Canon in 1979.”  Id.

Likewise, since the measure adopted by Timberridge in 1987 was ambiguous, and did not specify just what provision(s) in the Book of Order it was "opting out" of, and the church did nothing thereafter to clarify the situation for another twenty years, it could be said that Timberridge failed to take any such steps, as well.

. . . Here, in contrast to Crumbley and Christ Church, Timberridge promptly attempted to opt out of the newly created property trust provisions.   While the national church adopted rules “codifying the trust relationship,” Christ Church, supra, 305 Ga.App. at 94(3)(a), the local church has not undisputedly “adopted or adhered to those rules” with respect to the property at issue, id., but rather has “taken steps to disavow” the provision and attempted “to remove itself from the reach of” the trust provision, Id. at 96(3)(b), regardless of whether that attempt was successful under the precise wording of the interlocking church documents.

So an ambiguous and technically ineffective attempt shows an intent “to remove itself from the reach of” the trust provision for which the Church itself had voted, but failure to make any attempt at removal shows an intent to be bound by the provisions of a Canon of which one is completely unaware, along with the entire rest of the Church, for over twenty years?

No intent has been demonstrated on the part of the purported grantor of the trust to place its property in trust.   In fact, the evidence shows that Timberridge took every possible step to express its intention not to create a trust.

"Every possible step"? Such as actually voting for it, in the first place? And then making an express repudiation of it later, citing to section number, instead of referring to a "property exemption" in general?

And that is how Timberridge distinguished the earlier decision in Christ Church. I find the distinction singularly unconvincing, and I hope that the Georgia Supreme Court does, too. Otherwise, churchgoers in Georgia will never know just which decision the Court of Appeals will find controlling in any one instance. For a court that consists of only four divisions, organized into panels of three justices each, it is striking that they could reach two such different results within five months of each other -- and not show the slightest embarrassment.

Church property law is under a cloud once again in Georgia. But when one considers that cases from Georgia have given rise to nearly every major decision by the United States Supreme Court on church property since 1969, then perhaps what we are seeing is another such case (or two) in the gestation phase.

California Shipwreck

The State of California just hit an iceberg, which ripped a gash in her hull, and the ship is taking on water. The crew and most of the passengers are as yet unaware of the damage, or of the probability of sinking. They carry on as though nothing were wrong. Indeed, a captain who was at the helm a number of years ago, and who then ran the ship aground, is returning shortly to the bridge to assume the command.

When he does, he will learn that the giant vessel is barely floating, with twenty-five billion gallons of water in her hold, and more being added by the minute. The ship's pumps are inadequate to the task of keeping her afloat, because the crew keeps opening more portholes and hatches in the vain belief that the water will flow out of them, and not into them. Reality is in short supply, and folly is the watchword of the moment. Those on the watch, actually, are missing another huge iceberg in their path which is 99% submerged.

California operates the largest public pension system in the United States. It is called "CalPERS", for California Public Employees Retirement System, and in 2007 it held $261 billion dollars of invested assets. In fiscal 2007-2008, it paid out nearly $11 billion in pensions to retirees, and half that much again in health benefits. In addition, California has two other public pension systems: one for teachers, called CalSTRS, and a much smaller one for professors in the State university system, called the University of California Retirement System.

Each of these retirement systems administers what is known as a "defined benefits" pension program, which tells each retiree, in advance of retirement, exactly how much they will receive each month, based on factors such as years of service, highest wage earned, and the particular contribution factor negotiated by the public-sector unions with their employer, be it the State itself, a county, a school district, a university, or a police or fire department in a city. The plan funds these projected payments by investing the moneys paid in by both the employee and the employer while the employee is working. The problems with defined-benefit plans begin when their investments of the amounts paid in by the employers and employees, in order to fund the specified benefits to be paid out upon retirement, fall short of projections.

And that is just what has happened with California's three public pension plans -- only because together they are so large, the shortfall has happened on a massive scale. One recent study, by Stanford graduate students, estimates that the pension system is currently underfunded by half a trillion dollars, or $500,000,000,000.00. Now let's put that in perspective, shall we?

California's latest annual "budget" (the word is a joke in California), approved almost four months late, was pegged at roughly $86.5 billion dollars (you can download a .pdf summary from this link). (Remember, this so-called "budget" is $25 billion out of balance.) So the first thing to note is that the projected shortfall in California's pension systems is almost six times as great as its current annual "budget" for everything, including pension contributions. California cannot even balance its current budget; so where will it find the money to make up a potential gap which is six times larger than the budget itself?

When the Stanford study came out earlier this year, the heads of CalPERS and CalSTRS claimed that the gap was nowhere near as great as stated. They explained that the plans calculate projections by using their historical long-term rates of return (over a 20- to 30-year time frame), which average around 7.9 % for CalPERS and 8.6 % for CalSTRS. The current market downturns are just a blip on the long-term radar screen, they implied.

The situation is complicated, because CalPERS also invests pension money for many cities and other governmental units around the State, which have collective bargaining agreements with their own employees specifying various rates of payout upon retirement. The contributions by employees are fixed as part of the agreements, but the contributions from the employers vary according to returns earned by the plans. Thus the employing agencies (cities, counties and the State), and not their employees, bear all the risks of investment, and they in turn look to the professional staff at the plans to protect them from catastrophic losses.

This puts enormous pressure on the ways in which the plans calculate the values of their assets, as well as the projected future payouts. And the professional staffs have responded with number manipulations which, as one article notes, are worthy of a Bernie Madoff. They went from using a three-year Average Value of Assets (AVA), for example, to a fifteen-year AVA. The longer term allowed them to inflate asset values with the higher figures during the dot-com boom in the late 1990's, and made the recent huge losses appear much smaller. As the article points out, this accounting gimmick does not eliminate the current losses in the market -- which are very real -- but simply shoves them over to future years, when the piper will have to be paid.

The senior pension actuary for CalPERS openly admitted another such manipulation in a recent talk given to the City Council of Huntington Beach. As this article explains:

Another Madoff-worthy trick then compounded the problem more. After the 2008-2009 losses CalPERS changed their assumptions AGAIN to “smooth” the losses. They then changed the AVA to MVA (market value of assets) ratio to 60% to 140% from [the previous range of 8]0% to 120%. As you can hear the actuar[y] state on the video and it is worth repeating in this story, “that means we will defer most of the loss to future years.” “This means the city will realize another increase in future years. I hate to bring bad news but those are the facts.”

If you watch the five-minute video at the article, you will see that the actuary projects that the coming changes in the projected rate of return (currently 7.75%) to be approved by the Board will result in increased government pension costs starting in 2012. For each 1/4% by which the Board decides to decrease the projected rate, required government contributions on behalf of their employees will go up by 2%, and on behalf of fire, police and safety employees, the required contributions will go up by 4%.

Well, now the bad news is becoming clearer. As this latest piece from the same author reports, the CalPERS Board is projecting an increase of fifty-five percent in required government pension contributions beginning with 2013, and continuing at that level for the next nineteen years. And even if that incredibly higher rate of pay-in could be sustained for that entire period, the actuaries estimate only a 50-50 chance of CalPERS being able to meet its already contracted pension obligations.

What this means is that the California pension system, in the space of some fifteen years, has gone from one that was fully funded to one that is instead going resemble the Ponzi scheme of federal Social Security. The money being paid in for current contributions by those still employed will be required to fund the current payouts to those who have retired. As governments lay off more workers in an attempt to balance their budgets, the effect will be to have still more workers drawing on their vested pension benefits -- much sooner than projected. That will throw the actuarial numbers off again, requiring a further upward shift in government contributions, and exacerbate the budget shortfalls even more.

The retirees most affected, of course, will be the last to understand how such a disaster could happen. To be sure, it happened with the best of intentions, but it became as bad as it has because the employees had been protected, by their unions, from assuming the normal risks of investment. This creates an artificial bubble of security around retirement expectations, which is now about to be punctured by the harsh realities of the current depression.

The picture for California is not pleasant to contemplate -- not pleasant at all. But as usual, California is the harbinger of failure for other, smaller pension plans, as well. Both public and private employee unions have negotiated similar "retirement insurance" all across the country. California is simply the biggest laboratory, and so is where the collision between opposing forces occurs on the most notable scale.

The only solution to this predicament is to change pensions from a defined (guaranteed) benefit basis to a defined contribution basis, which would, like current 401k plans, put the risk of investment entirely on the pensioner. That would also eliminate the need for gigantic bureaucracies such as CalPERS, and would shift the responsibility for future financial security to the individual, where it belongs. But there is precious little support for any such change, because people are used to the system they have. As this very pessimistic article assesses the situation, things will have to get a whole lot worse before anything changes:

As of today, there is no indication that anyone in the U.S. government is paying attention to this crisis. This is hardly surprising. The same “leaders” who have managed to ignore their own future, funding-crisis until it has soared to a total which exceeds global GDP can hardly be expected to act on a similar crisis, but less than 1/10th of that size.

Like lemmings racing for a cliff, the vast majority of Americans remain completely oblivious to their pending “financial suicide”. For this, the pseudo-journalists of the U.S. propaganda-machine bear most of the blame.

As with all Ponzi-schemes, the U.S. economy is totally dependent in maintaining “confidence” in this massive con-game. Thus, while a plethora of U.S. financial crises continue to worsen (including the pension-crisis) all we are likely to hear from the propaganda-machine are chorus after chorus of “Don't Worry, Be Happy”.

Bare Ruined Choirs

Two-and-a-half years ago, when I sat down to write what became the first post on this Weblog, I never conceived how far and how fast the Anglican Communion could fall in the ensuing thirty-two months. Its very structures are unraveling before our eyes, and there are calls for it to go into a state of suspended animation for twenty years or so, with still others saying it should be put out of its misery here and now.

There is only one slight problem with recommendations such as these: since the current members of the Communion cannot agree even on as much as a Standing Committee, how could they ever come to agreement on such a weighty matter as suspension, or total dissolution?

Let us frame the inquiry from a slightly different perspective: cui bono? Exactly which groups, and which individuals, would benefit from the continued existence of the Anglican Communion?

We might as well start at the top: surely the Archbishop of Canterbury would so benefit. There is really no other explanation for the extraordinary degree to which he has alienated so many by trying to keep everyone at the table. And he is, after all, the titular head of the body. So he is, if you will pardon the metaphor, the captain who cannot leave the ship, but who must go down with her. That gives him a strongly vested interest in seeing her stay afloat.

And who comes next, in terms of obvious benefit? After last week's vote in General Synod to recommend adoption of the Anglican Covenant, I would submit that the collected bishops of the Church of England are next, with the clergy and laity not far behind. (There was not a single dissenting vote among the bishops, and only a couple of dozen dissenters among the latter two orders.) How do the bishops, clergy and laity of the Church of England benefit from the Anglican Communion? The answer is obvious: they are the ur-Anglicans! The Communion is but a reflection upon the wide world of the heritage which they embody. If the Communion were to pass out of existence, it would be like a man losing his shadow: what does it say about someone who cannot even cast a shadow?

Close behind the Church of England -- and some might argue for their precedence; I would not take issue -- are certainly the very structures of the Communion itself: the Anglican Communion Office, and the much vaunted, yet stillborn, Standing Committee of the Anglican Communion. I traced the history of their coming into existence in this previous post. It is manifest that if the Communion ceases to exist, they will have no further functions to perform.

From this point on, I am afraid the analysis of benefit goes rapidly downhill, and even could become rather cynical. For example, some might perceive that other bishops in the member churches of the Anglican Communion would certainly benefit from its continuance; they would be the ones who came to Lambeth in July 2008, and who thus were invited to take tea with Her Royal Majesty. Others might say that it is the pomp and splendor of Anglican liturgy and ritual which will hold the Communion together. And it used to be the case that the existence of the Communion operated as a validation of Anglican orders. That is to say, a priest or deacon ordained by any church within the Communion could, by virtue of that fact, obtain a license from a bishop with jurisdiction to minister in any other church in the Communion.

Now ECUSA, however, following the lead of its Presiding Bishop, has decided that a priest (or even a bishop) who leaves ECUSA to minister in another province of the Communion thereby abandons the Communion -- of the Episcopal Church. A member of the clergy thus leaving ECUSA thereby renounces his ministry, and the Presiding Bishop pronounces sentence of deposition -- even if the bishop in question came from that other province in the first place! This has brought about a balkanization of the Anglican Communion, and by undermining its orders, has contributed to its demise.

As a result, ECUSA as a Church no longer needs the Anglican Communion -- except as a shield, to defend what it considers to be its exclusive franchise in America. But it cannot benefit from the adoption of a Covenant, because it sees the Covenant (even as currently proposed) as a potentially unacceptable limit on its autonomy. (It is noteworthy that it was ECUSA, and not any other province, which spawned the original anti-Covenant movement.) So if the lack of a Covenant means that the Communion will cease to exist as such, ECUSA will actually find such a result to be of great comfort to it.

Why is that? Think about it: even without the Anglican Communion, there will still be an Archbishop of Canterbury. And even though there appears to have been some recent bad blood between the Archbishop and the Presiding Bishop, and despite its torpedoing of Anglican orders, ECUSA will continue to claim that it is "in communion with" the see of Canterbury. So long as ECUSA has the final word on what that phrase means, it will support the abstraction of an "Anglican Communion." Indeed, if the Communion becomes the metaphorical equivalent of Tintern Abbey -- the picturesque ruins of a grand structure which once resounded in the praise of God -- then so much the better, as far as ECUSA is concerned. It can claim to be "in communion" without having the bother of any actual relations to maintain.

As I said, the analysis of cui bono rapidly descends into cynicism, and there is no benefit to going there. It profits nothing to wring one's hands over that which once was, but no longer is, and never again can be. Shakespeare's seventy-third sonnet, from which the title of this post is borrowed, actually has much to say about the state of the Anglican Communion. As you let its lines sink in, ponder their application to that state:

That time of year thou mayst in me behold
When yellow leaves, or none, or few, do hang
Upon those boughs which shake against the cold,
Bare ruin'd choirs, where late the sweet birds sang.
In me thou seest the twilight of such day
As after sunset fadeth in the west,
Which by and by black night doth take away,
Death's second self, that seals up all in rest.
In me thou see'st the glowing of such fire
That on the ashes of his youth doth lie,
As the death-bed whereon it must expire
Consumed with that which it was nourish'd by.

"Consumed with that which it was nourish'd by" -- there could not be a better description of the Communion's predicament. No doubt there are many (and your curmudgeon is among them) who conclude, with the poet:

This thou perceivest, which makes thy love more strong,
To love that well which thou must leave ere long.

As the sonnet describes, the forces maintaining the Communion have become weaker than those which are hastening its decline. The Church of England alone cannot be the Communion, and pomp, ceremony and tea with Her Majesty are no counterweight to the gratifications of championing inclusivity and social justice. (Never mind that none of those things pertains to the great mission of the church catholic -- for that is just the problem.)

The demise of the Anglican Communion is thus a secondary consequence, not a primary one in and of itself. The structure of the Communion arose and flourished while there were churches bent on performing a common mission. That common mission no longer exists -- and that is the demise we should be ruing, not the Communion's. The question is not: the Anglican Communion -- cui bono? Rather, it is this:

Exactly who benefits if the church catholic fails again in its mission, and fragments even more in the process?

Think about it -- and then pray for your church universal. Ultimately, despite what mortals may do or believe important, her fate is in God's hands.