World Magazine: Who owns the steeple?

Religion: Litigation looms over church property as conservative congregations and dioceses consider leaving mainline denominations | Edward E. Plowman

As The Episcopal Church (TEC) finds itself cracking apart, the question on everybody's mind is: "Can departing churches keep their property?"

The answer: It depends. Courts differ in how they handle church property disputes. State corporate laws governing property ownership, deeds, and trusts are far from uniform and may be subject to conflicting interpretations. So, as litigation looms, attorneys on all sides are busy researching case law and assembling briefs.

Many denominations have clauses declaring that property owned by congregations is held in trust for the denomination: A church is free to leave, but not with its property. For many years, most courts routinely deferred to denominational law in property disputes—especially in cases involving "hierarchical" denominations with structured top-down government, including TEC, the Presbyterian Church (U.S.A.) (PCUSA), and the United Methodist Church (UMC). All three are strife riven over doctrine and discipline—and ownership of church property.

But times—and the courts—are changing. Because property ownership is in the realm of state corporate law, a few courts years ago began deciding church property disputes according to "neutral principles" while steering clear of doctrinal squabbles. The U.S. Supreme Court in 1979 (Jones v. Wolf) not only approved but also encouraged this approach. TEC hurried to add the Dennis Canon to its constitution, clearly claiming that property owned by churches is held in trust for TEC.

However, a California appeals court in 1981 spelled out a series of neutral principles in deciding The Protestant Episcopal Church v. Barker. It in effect ignored the Dennis law and allowed three departing Episcopal congregations to keep their property while denying another.

Fast forward to 2004: A California appeals court allowed St. Luke's United Methodist Church in Fresno, which had left the UMC, to keep its property. St. Luke's had changed its articles of incorporation, clearly deeding all its property to itself with no mention of a trust. That act, the court ruled unanimously, revoked the UMC trust. In short, trusts are not a dead-end; the party that created a trust can revoke it. The California Supreme Court upheld the decision that same year.

The ruling sent shock waves through denominational offices across the country. Officials and lawyers from several hierarchical denominations huddled: Should the UMC appeal to the federal courts and risk having the U.S. Supreme Court uphold St. Luke's? If that were to happen, the floodgates would open, and there would be an immediate exodus of many congregations in any of the major strife-affected denominations. So far, no appeal. And this year, California courts have issued decisions in favor of several congregations that have exited TEC in Los Angeles and San Diego.

A landmark case is shaping up in Tulsa, where the Kirk of the Hills Presbyterian Church quietly left the PCUSA and joined the Evangelical Presbyterian Church. The 2,700-member congregation is the largest in the PCUSA's Eastern Oklahoma Presbytery. It left by an overwhelming vote after the PCUSA general assembly in June made it possible for ordaining bodies to bypass the church constitution and ordain homosexuals. The presbytery has sued for the property under the PCUSA trust provision. Many other PCUSA churches are poised to walk, and are following the case closely.

An informal survey by WORLD found courts in only about 20 percent of states so far applying neutral principles in church property disputes involving a denominational trust claim. (Many courts still seem inclined to rely mainly on their own precedents, tilted in favor of denominations.) Changes will keep coming, states will amend corporate laws to more clearly define property rights, and the cutting edge will see courts giving greater attention to such issues as revocable trusts, several lawyers told WORLD.

Denominational leaders, alarmed by the judicial trends and fast-moving developments among conservatives intent on leaving TEC with their property, are preparing for court battles. A bishops' Task Force on Property Disputes, led by Bishop Stacy Sauls of Lexington, Ky., was set up last year to monitor "problem" dioceses.

Seven of TEC's 110 dioceses have rejected serving under new liberal Presiding Bishop Katherine Jefferts Schori, and they have appealed to the archbishop of Canterbury for some form of biblically faithful alternate oversight. These seven and three other dioceses that belong to the conservative Anglican Communion Network account for 175,000 Episcopalians in 650 congregations, including many of TEC's largest ones, according to network figures. Another 350 churches in other dioceses also belong to the network.

Ostensibly, most will be part of whatever plans for alternate oversight the Global South steering committee will unveil at the meeting of Anglican primates (chief bishops of the world's 38 Anglican provinces) in February in Africa. Jefferts Schori is scheduled to be there but may be shunned by many of her fellow primates for her theological views. (She approves same-sex blessings, voted to confirm the 2003 consecration of partnered homosexual V. Gene Robinson as a bishop, and believes there are other ways to God besides Jesus.)

TEC's property task force has assembled a package of briefs, court filings, and other research materials, even lists of expert witnesses, to assist loyal dioceses with lawsuits against dissident parishes that want to leave with their property.

David Booth Beers, TEC's top in-house lawyer, said he doesn't foresee many court cases arising from the church split. At a recent briefing on legal issues for a liberal-led group, he said only 10 property cases have been filed since 2000, and TEC "has prevailed" in all except one in Los Angeles that will be appealed. He also predicted unfavorable "preliminary" rulings in San Diego, South Carolina, and Central New York would be overturned.

TEC's gatekeepers also are now resorting to hardball tactics and even preemptive strikes, especially with the "problem" dioceses. Although Beers said he doesn't expect any dioceses to leave, the task force wants to be ready. The 8,000-member Diocese of San Joaquin, led by Bishop John-David Schofield, this month voted overwhelmingly to begin the process of withdrawal, to take effect after a second vote sometime next year. The diocese's corporate documents were amended to omit all links to TEC.

Earlier, several fellow bishops in California filed the equivalent of sedition charges against Schofield, who is disabled and ailing, claiming he had abandoned the communion; a review committee of other bishops dismissed them. Jefferts Schori fired off a letter warning that TEC had the authority to remove him and his leaders, and to take control of the diocese. Schofield served notice that if she moved against him, he and his diocese would resist, and the second vote to withdraw would occur quickly.

Stern letters similar to Jefferts Schori's have started showing up in mailboxes of parishes that want to leave. Under pressure from TEC headquarters, Bishop Peter Lee of Virginia, the largest of TEC's 110 dioceses (90,000 members), abruptly cut off settlement negotiations with Truro Church and The Falls Church. In almost a year's work, the churches and a diocesan committee had agreed upon all but the buyout figures. Lee said any withdrawal arrangement was subject to approval at TEC's highest levels. He warned of takeover if the churches attempted to leave without such approval.

One of the states whose corporate laws should encourage church property owners is Virginia—though court decisions in church disputes have been inconsistent. Both sides would be wary of letting a judge decide their futures. It all may come down to how much money is on the table.