Church Property

The Pennsylvania Supreme Court upheld the validity of imposing a trust upon the properties of affiliated churches in favor of the national church.

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.

The Pennsylvania Supreme Court upheld the validity of a canon adopted by the national Episcopal Church in 1979 imposing a trust upon the properties of affiliated churches in favor of the national church.

An Episcopal church was founded in 1846. Its charter stated that its purpose was to 'worship Almighty God according to the faith and discipline of the [National Episcopal Church].' The charter further established the church's allegiance to the national Episcopal Church ('national church'), stating that the church was a member of the local diocese and the national church, that the church was subject to the national church's constitution and canons, and that church members had to accept the authority of the diocese and national church. In addition, the charter stated that the church could not sell any of its property without the diocese's consent.

In 1846 the church acquired its first parcel of land, upon which it erected a church structure four years later. Between 1850 and 1923 the church obtained four more plots of land in the area surrounding the church, which it used for a churchyard, burial ground, rectory, school house, a sexton's house, a parish house, and a bell tower.

In 1995 the church informed the diocese in writing that it did not agree 'either explicitly or implicitly, with any of the policies, practices, positions or changes that were adopted by [the national church] or the diocese in 1976 or thereafter.' The church vestry (board) began considering whether it was necessary to separate from the diocese and national church. However, the vestry knew that it would be difficult to separate while retaining its property because of the national church's canons which placed the church's property in trust for the national church. In particular, the national church adopted the so-called 'Dennis Canon' in 1979, that states that the property of churches affiliated with the national church is held in trust for the benefit of the national church and the local diocese. This canon provides:

All real and personal property held by or for the benefit of any Parish, Mission or Congregation is held in trust for this [national church] and the diocese thereof in which such Parish, Mission or Congregation is located. The existence of this trust, however, shall in no way limit the power and authority of the Parish, Mission, or Congregation otherwise existing over such property as long as the particular Parish, Mission or Congregation remains a part of, and subject to, this Church and its constitution and Canons.

Attempting to avoid this problem, the church formed a new corporation having no ties to the national church and then 'merged' the church into the new corporation. The diocese ignored this action, and asserted that the property remained subject to a trust in favor of the national church. It sought a court order confirming the existence of a trust in favor of the national church. A trial court granted the requested order, and the church appealed. A state appeals court ruled that the church was bound by the trust language in the Dennis Canon since it had remained a member of the diocese and national church for twenty years following the adoption of the canon and it had 'failed to establish through its articles of incorporation or otherwise an intent to retain possession and control of church property.' The church appealed to the state supreme court. The church conceded that the Dennis Canon purported to impose a trust upon church properties in favor of the national church, but it insisted that it never agreed to be bound by the canon. In addition, the church argued that it was not subject to the Dennis Canon simply by virtue of its membership in the national church, because a member of a voluntary association cannot be bound by amendments to the association's rules that deprive the member of a vested property right.

The Pennsylvania Supreme Court noted that a member of a voluntary association is bound by amendments to the association's rules so long as the amendments (1) are duly enacted, and (2) do not deprive the member of vested property rights without the member's explicit consent. It concluded that the church was bound by the Dennis Canon even if it did not expressly agree to it as long as these two requirements were met. The court ruled that the first requirement was met (the canon was duly enacted), and the second requirement was met since the Dennis Canon did not deprive the church of any vested property right. The court pointed out that the church's charter reflected a desire that its property be held in trust for the national church long before the Dennis Canon was enacted. For example, the charter (1) states that the church's purpose was to serve as a place to worship God 'according to the faith and discipline of the [national church]'; (2) states that any person who denies the authority of the national church can no longer be a member; (3) requires the consent of the diocese for amendments to the charter; (4) required the church to obtain the consent of the diocese before selling property; and (5) included a dissolution clause specifying that all church property would become the property of the diocese in the event of the church's dissolution.

The court concluded: 'On the basis of the above provisions, we find that the church clearly intended to place its property in trust for the diocese prior to the enactment of the Dennis Canon and consequently, the Dennis Canon does not deprive the church of any vested property rights. Rather, the Dennis Canon merely codified in explicit terms a trust relationship that was implicit in the church's charter ….Given these circumstances, we hold that the church is bound by the express trust language in the Dennis Canon and therefore, its vestry and members are required to use its property for the benefit of the Diocese.' In re Church of St. James the Less, 888 A.2d 795 (Pa. 2005).

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