Property Disputes in the Episcopal Church

For more than 30 years, the Episcopal Church has been fighting in courts to enforce its claim over properties held by breakaway congregations and dioceses. The church has faced litigation in at least 20 states, as dozens of congregations have sought to withdraw from the church over doctrinal differences.

The Episcopal Church is by no means the only U.S. religious denomination facing these kinds of disputes. Other Protestant churches, including a number of Presbyterian and Methodist denominations, also are involved in similar litigation with breakaway congregations (see Internal Property Disputes).

The disputes within the Episcopal Church have become more intense in recent years, especially since the national church approved the election of an openly gay bishop, Gene Robinson of New Hampshire, in 2003. Since then, numerous congregations and four dioceses have broken with the national church. Many of these have sought to join other, more conservative, church bodies within the worldwide Anglican Communion, of which the Episcopal Church is a part.

Judicial decisions in these property cases reflect the diversity of legal approaches endorsed by the U.S. Supreme Court. Some states continue to use the standard set in Watson v. Jones (1871), which requires courts to determine whether the church has a hierarchical structure and, if so, to follow the decision of the highest ecclesiastical body about which faction of the congregation is entitled to the property. This standard heavily favors the national church since courts have determined that the Episcopal Church is indeed hierarchical. In Episcopal Diocese of Massachusetts v. Devine (2003), for example, a state appellate court in Massachusetts applied the Watson standard and upheld the claim of the national church and the Diocese of Massachusetts to the property of a congregation that sought to withdraw from the denomination. When the congregation moved to disaffiliate from the Episcopal Church, the diocese placed the congregation under its direct control and claimed ownership of the congregation’s assets. The court enforced the diocese’s actions, finding that they reflected the legally binding decisions of a hierarchical church body.

A majority of states, however, follow what is known as the “neutral principles” approach, which was approved by the Supreme Court in Jones v. Wolf  (1979). In this ruling, the Supreme Court said courts could apply the same legal principles to church property disputes as they would apply to a similar lawsuit involving a secular group.

In states that follow this approach, litigation over Episcopal Church property has been much more complicated, and the outcome has been less predictable. The key question in these jurisdictions tends to be the legal significance of a rule adopted by the Episcopal Church’s General Convention in 1979, just weeks after the Supreme Court’s decision in Jones v. Wolf.  The 1979 rule states that the property of each local congregation is held in trust for the national church and the congregation’s diocese but that it is under the congregation’s control as long as the congregation remains a part of the national church. In its ruling in Jones, the high court had indicated that lower courts could give weight to such language in church constitutions when resolving property disputes.

But Jones v. Wolf did not address or answer one crucial question: May a national denomination, such as the Episcopal Church, unilaterally impose a trust arrangement on property that it does not own? Ordinarily, restrictions on property may be imposed only with the consent of those who hold legal title to the property. In All Saints Parish Waccamaw v. Episcopal Church (2009), the South Carolina Supreme Court decided that the local congregation did not hold its property in trust for the national Episcopal Church or the diocese. The court traced the ownership of the congregation’s property back to the 18th century and determined that title was held in the name of the congregation alone. The court then held that the rule adopted by the Episcopal General Convention in 1979 did not impose a trust arrangement on the property because the congregation never expressly agreed to be bound by its terms. The withdrawing congregation thus secured clear title to its property.

Most state courts, however, have reached the opposite conclusion, determining that the 1979 rule does impose an enforceable trust on behalf of the national church and its dioceses. These courts have taken somewhat different approaches in addressing the problem of congregational consent to the trust provision adopted by the church in 1979. For example, in Episcopal Diocese of Rochester v. Harnish (2008), the New York Court of Appeals ruled that even though the breakaway congregation joined the Episcopal Church 30 years before the trust provision was adopted, the congregation was bound by the provision because it had consented to be governed by church law and had failed to object to the rule for more than 20 years.

Other state courts, including the supreme courts of California (2009) and Pennsylvania (2005), also have grappled with the question of whether congregations have consented to the trust arrangement adopted in 1979. These courts have validated the provision by ruling that the national denomination’s trust claim is not a recent development but a historically consistent principle of the Episcopal Church. Under church law dating back to the 19th century, congregations are required to obtain diocesan approval before undertaking significant property transactions such as buying, selling, mortgaging or leasing real estate. The approval process, these courts conclude, shows that the national denomination’s claim on congregational property did not arise in 1979. Rather, the 1979 rule reaffirmed a longstanding claim to the property and made it explicit. Using this reasoning, these courts have enforced claims by the Episcopal Church and its dioceses to the property of the breakaway congregations.

Although courts in some states have resolved their Episcopal Church property disputes, the battle continues in other states. Probably the highest profile conflict is in Virginia, where about a dozen congregations have broken away from the national church since 2003. These breakaway churches include some very well-known and historic congregations, including The Falls Church and Truro Church, both of which claim to have provided a spiritual home to George Washington. Currently nine of these churches, including Truro and the Falls Church, are involved in litigation over the fate of church property. If the parties do not settle the claims, trial courts will resolve these cases using “neutral principles of law.” Whatever the lower courts decide, however, these cases ultimately are almost certain to be appealed to the state’s Supreme Court.

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