• Key point 7-03.3. Most courts apply the “neutral principles of law” rule in resolving disputes over the ownership and control of property in “hierarchical” churches. Under this rule, the civil courts apply neutral principles of law, involving no inquiry into church doctrine, in resolving church property disputes. Generally, this means applying neutral legal principles to nondoctrinal language in any one or more of the following documents: (1) deeds to church property; (2) a church’s corporate charter; (3) a state law addressing the resolution of church property disputes; (4) church bylaws; or (5) a parent denomination’s bylaws. State Court Rulings Regarding Church Property Disputes

• Key point 7-04. Churches and denominational agencies can avoid church property disputes by adopting appropriate nondoctrinal language in deeds, trusts, local church bylaws, or denominational bylaws. Internal Property Dispute Resolution Procedures

The Delaware Supreme Court ruled that a local church had no legal authority to block a denominational agency’s efforts to close the church because of dwindling membership. An “Annual Conference” of the United Methodist Church (UMC), acting pursuant to the UMC Book of Discipline, decided to discontinue an historic church because its membership had declined to less than 50 persons. When local church leaders refused to transfer church property to the Conference, the Conference asked a civil court to order it to do so. A court granted such an order, and the local church promptly appealed. The state supreme court began its opinion by noting that the church had been established in 1892 and affiliated with a predecessor of the United Methodist Church (UMC). Deeds by which it took title to property over the years all referred to its status as a Methodist church. Some of the deeds transferred title to the church “in trust” as a Methodist church. The court noted that the Book of Discipline instructs local churches to insert a provision in their articles of incorporation making the church subject to the provisions of the Book of Discipline. Further, the local church never engaged in any acts for more than a century suggesting that it was not affiliated with the Methodist Church.

The court noted that the United States Supreme Court has recognized two approaches to resolving church property disputes without violating the first amendment guarantees of religious freedom and nonestablishment of religion: (1) the compulsory deference approach, and (2) the neutral principles of law approach. Under the compulsory deference approach, civil courts defer to the rulings of hierarchical church tribunals pertaining to the control of local church property. Under the neutral principles of law approach, civil courts apply “neutral,” nondoctrinal language in deeds, bylaws, and other applicable documents in resolving church property disputes. The United States Supreme Court described this second approach as follows:

[t]he neutral-principles method … requires a civil court to examine certain religious documents, such as a church constitution, for language of trust in favor of the general church. In undertaking such an examination, a civil court must take special care to scrutinize the document in purely secular terms, and not to rely on religious precepts in determining whether the document indicates that the parties have intended to create a trust. In addition, there may be cases where the deed, the corporate charter, or the constitution of the general church incorporates religious concepts in the provisions relating to the ownership of property. If in such a case the interpretation of the instruments of ownership would require the civil court to resolve a religious controversy, then the court must defer to the resolution of the doctrinal issue by the authoritative ecclesiastical body. Jones v. Wolf, 443 U.S. 595 (1979).

In the same case, the United States Supreme Court noted that application of neutral principles would permit churches to order their affairs in advance of a schism or property dispute through “appropriate reversionary clauses and trust provisions” that could reflect the intentions of a church and its members. The Delaware Supreme Court observed that the central holding of the Jones case, “that courts may apply neutral principles of law to resolve church property disputes which do not require courts to defer to the decision of that church’s governing body, has found general acceptance in subsequent years at both the state and federal levels.” Today, the neutral principles of law approach is by far the most common means of resolving church property disputes. However, the court acknowledged that the compulsory deference rule remains an option:

In sum, deference and neutral principles of law enjoy a parallel relationship in the resolution of property rights involving churches. Some decisions, particularly those emanating from the highest level of authority in hierarchical churches where church law clearly defines property rights, require deference. Yet, perhaps a majority of property dispute questions in congregational or limited hierarchical church organizations may be decided by civil courts using “any one of various approaches for settling property disputes so long as it involves no consideration of doctrinal matters.”

The court, applying neutral principles of law, concluded that the local church property was subject to an “implied trust” in favor of the Conference, and therefore the local church leaders acted unlawfully in withholding ownership and possession:

To find an implied trust in this case, the court [is] required to ascertain the intention of the parties without resort to determinations of doctrine or faith. The existence of an implied trust may be reached through reliance on neutral principles of law, specifically, evidence found in the deeds, corporate charters, church documents, and state statutes …. An implied trust was correctly found here on the basis of neutral principles of law …. While the present trustees may desire to disassociate themselves and the congregation they purport to represent from the United Methodist Church, as presently constituted and organized, they are not free to nullify the affiliation accomplished by previous generations of … church members over more than 100 years. More importantly, they may not negate the legal relationship established in the form of an implied trust based on the language of the conveyances, the recitals and the acknowledgments in the incorporation documents, and the adherence to the Discipline of the parent church. Those documents, and the conduct of the [church] members over the course of many years, demonstrate a unity of purpose between the local church and the general church that the property held by the local church be dedicated to, and used for, the advancement of the interests of the United Methodist Church as governed by the Conference.

Application. The court correctly noted that most church property disputes are resolved on the basis of neutral principles of law contained in deeds, local church charters and bylaws, and denominational bylaws. So long as a civil court can resolve such a dispute by referring to neutral provisions in these documents, without any inquiry into doctrine or polity, it may do so. It is worth observing that the United States Supreme Court has noted that one of the principal advantages of the neutral principles of law approach to resolving church property disputes is that it permits religious organizations to “order their affairs” in advance of a property dispute through “appropriate reversionary clauses and trust provisions” that could reflect the intentions of a church and its members. Many churches and denominational agencies have done so. Several examples are cited in section 7-04 of Richard Hammar’s book, Pastor, Church & Law (3rd ed. 2000). East Lake Methodist Episcopal Church, Inc. v. Trustees of the Peninsula-Delaware Annual Conference, 731 A.2d 798 (Dela. 1999).

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