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.
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.
A New York court ruled that the property of a church that seceded from the Presbyterian Church U.S.A. was held in trust for the benefit of the national church, and therefore the seceding church had no further legal right of ownership or possession. In 1979, the United States Supreme Court issued a ruling pertaining to church property disputes, in which it ruled that a state is "constitutionally entitled to adopt neutral principles of law as a means of adjudicating a church property dispute." Jones v. Wolf, 443 U.S. 595 (1979). In discussing the benefits of a "neutral principles of law" approach, the Supreme Court observed that "through appropriate reversionary clauses and trust provisions, religious societies can specify what is to happen to church property in the event of a particular contingency, or what religious body will determine the ownership in the event of a schism or doctrinal controversy. In this manner, a religious organization can ensure that a dispute over the ownership of church property will be resolved in accord with the desires of the members."
In response to the Jones ruling, the predecessor to the Presbyterian Church (U.S.A.) ("PCUSA") adopted the following provisions in its Book of Order:
G-8.0201 Property Is Held in Trust. All property held by or for a particular church, a presbytery, a synod, the General Assembly, or the Presbyterian Church (U.S.A.), whether legal title is lodged in a corporation, a trustee or trustees, or an unincorporated association, and whether the property is used in programs of a particular church or of a more inclusive governing body or retained for the production of income, is held in trust nevertheless for the use and benefit of the Presbyterian Church (U.S.A.).
G-8.0301 Property Used Contrary to Constitution. Whenever property of, or held for, a particular church of the Presbyterian Church (U.S.A.) ceases to be used by that church as a particular church of the Presbyterian Church (U.S.A.) in accordance with the Constitution, such property shall be held, used, applied, transferred, or sold as provided by the presbytery.
A church was established in 1792 and affiliated with a predecessor to the PCUSA in 1815. In or about 2005, the church informed its local presbytery that it was disassociating itself from PCUSA "for reasons too numerous to be listed." The letter further stated that:
We leave with only that which is ours—what we have bought and paid for without your help. We do not ask for an accounting or that you return to us what we have given in support of the denomination, but rather will rely on our Lord to supply all our needs according to His riches in Christ Jesus. We have determined that our property, real and personal, belongs to [our local congregation] and will continue to be used for the work which Christ Jesus has appointed for us. All sources that we have reviewed indicates that all right, title and interest belongs to us—the Scriptures, which are the only rule for faith and practice, the Confessions, our Certificate of Incorporation, and the Laws of the State of New York. We find no trust, express or implied. Such a trust would be contrary to the Scriptures and Confessions. We have reviewed reports of title and have obtained a legal opinion that we are vested with title. We have arranged for the defense of our title and a counterclaim for damages should that prove necessary, though we pray that such will not be necessary, reminding you of the injunction in 1 Corinthians 6.
The local presbytery responded to this secession letter by informing the church that "the Book of Order of our denomination is very clear about the property of a particular church that ceases to be part of the Presbyterian Church (U.S.A.), stating 'such property shall be held, used, applied, transferred, or sold by the presbytery.' That being the case, I remind you that the session of your church, individually and collectively, is responsible for preserving the church's assets, making no unusual transfers or expenditures, until the presbytery's control of the assets is actualized either by the session's agreement or by court decision."
The presbytery filed a request for a declaratory judgment with a local court in which it asked the court to declare that all of the secessionist church's assets were held in trust for the presbytery pursuant to the trust provisions contained in the Book of Order. The court denied the requested relief, concluding that local Presbyterian churches owned their property free and clear of any provisions in the Book of Order. The presbytery appealed.
A state appellate court noted that the PCUSA, by adopting the canons in its Book of Order addressing local church property, "employed the means discussed by the United States Supreme Court in Jones v. Wolf [quoted above] to ensure that church property was held in trust on its behalf by adding an express trust provision to its constitution." The court added that "contrary to the church's suggestion, nowhere does the United States Supreme Court indicate that the deeds to the property were required to be amended in order to reflect a trust provision. On the contrary, the Court specifically stated that adding a trust provision to the denomination's constitution was an alternative to amending deeds or corporate charters." The court explained:
The presbytery presented several additional provisions of the Book of Order that indicated that local churches were not authorized to act with respect to the property in their possession in whatever manner they saw fit. Sections G-8.0501 and G-8.0502 required local churches to obtain the permission of the presbytery prior to selling, encumbering or leasing any church property. Furthermore, section G-8.0601 placed the power to determine which faction would retain church property in the event of a schism in the membership of a particular church in the hands of the presbytery. These additional provisions are further proof that the PCUSA's constitution expressly provided that all church property in the possession of local churches remained under the ultimate care and control of the presbytery.
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.
The court found it relevant that throughout the church's existence it "conducted its affairs in accordance with the PCUSA's constitution and was an integral member of its polity," thereby "lending additional support to the finding that an implied trust was created."
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 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 four-volume treatise, Pastor, Church & Law (4th ed. 2008). Presbytery v. Trustees, 895 N.Y.S.2d 417 (N.Y.A.D. 2010).
This Recent Development first appeared in Church Law & Tax Report, May/June 2011.