Religious Institutions: February 2014

Who owns the "church?" For most, this is an odd question. As children, many of us folded our hands and repeated a rhyme: "Here is the church. Here is the steeple. Open the doors and see the people." Nevertheless, for well over a century now courts have been asked to determine who owns the property of a church in various contexts, including theological controversies; disputes about assets; and disagreements with pastors, deacons and members. In the seminal case on church property disputes, Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871), the U.S. Supreme Court ruled that the lower court lacked subject matter jurisdiction to decide whether the pro-slavery or anti-slavery faction of Walnut Street Presbyterian Church in Louisville, Kentucky "owned" the church. Adopting a "hierarchical deference" approach, the court decided that the highest ecclesiastical judicatory of the church should have the final word in the matter.

Gradually, in some jurisdictions involving particular church disputes, courts have adopted another approach known as the "neutral principles of law" approach when convinced that they will not be required to interpret religious doctrine or practice. Under this approach, courts examine realty records (e.g., warranty deed, mortgage, etc.), church and denominational governance documents, actual policy and practice, and donor intent to determine who should prevail, commonly siding with the denomination. Under the ecclesiastical abstention doctrine, courts typically will not decide cases involving employment disputes with ministers or quasi-ministers, but in some jurisdictions in the event of allegations of fraud, collusion or arbitrary conduct courts may decide other intrachurch controversies relying on "secular" documents.

In the event of serious church or denominational disputes involving property, it is best to consult with church-state counsel at an early stage. For more on this subject and a variety of other risk management subjects, a link to a related webinar follows: https://ajg.adobeconnect.com/_a815130238/p4of03d0uuk/?launcher=false&fcsContent=true&pbMode=normal

Property Dispute Remanded for Application of Neutral Principles of Law Approach

In Windwood Presbyterian Church, Inc. v. Presbyterian Church (U.S.A.), No. 01-10-00861-CV, 2014 WL 47750 (Tex. App.-Hous. Jan. 7, 2014), the court ruled that the "neutral principles of law" approach, rather than the "hierarchical deference" approach, applies in resolving church property disputes. The court reversed summary judgment for the denomination and remanded the case for application of the correct approach to the facts.

When the plaintiff was incorporated, it became a member of the Presbyterian Church of the United States (PCUS), which had no trust provision in its constitution. But in 1983, PCUS merged with another group of Presbyterian churches to form the Presbyterian Church (USA) (PSUSA). As part of the reunification, PCUSA amended its church constitution, the Book of Order, to include a trust provision, as well as a provision allowing a local church to opt out within eight years. The property at issue was donated to the church after it joined the PCUSA and more than eight years after the amendments to the Book of Order. The general warranty deeds did not reference a trust in favor of PCUSA. In 2007, the church amended its articles of incorporation to declare that all of its real property constituted a trust held for the benefit and enjoyment only of the members of the local church, then filed suit in 2008 seeking a declaration that the denomination had no legal interest in its property.

The trial court granted PCUSA's motion for summary judgment under the...