Pa. Supreme Court issues mixed ruling in Episcopal case
The Layman Online, January 3, 2006
In a decision handed down on Dec. 29, the Pennsylvania Supreme Court overruled a lower court that held that the Church of St. James the Less, an former Episcopal congregation whose members voted to leave the denomination, was required to transfer its property title to the diocese.
The state’s highest court concluded that the congregation still owns its property but that its vestry is obligated by church law and the congregation’s Charter of Corporation to use that property for the benefit of the diocese. Diocese leaders had hoped that the court would affirm what they contended was their right to claim the property and banish the vestry from governing the congregation.
The ruling left in limbo exactly how that the court’s decision might be worked out. The congregation of St. James, in strong disagreement with the policies and actions of the Episcopal Church (USA), voted to disaffiliate from the denomination and become a part of an Orthodox Anglican communion.
But the Pennsylvania Supreme Court focused on the congregation’s 1846 Charter of Incorporation, Section II, which states,
- “This Church acknowledges itself to be a member of, and to belong to, the [Diocese and the National Episcopal Church]. As such, it accedes to, recognizes, and adopts the constitution, canons, doctrine, discipline, and worship of the [Diocese and the National Episcopal Church], and acknowledges their authority accordingly.
- Any member of this Church or Corporation, who shall disclaim, or refuse conformity to, the said authority, shall cease to be a member of this Corporation, and shall not be elected, or vote in the election of Vestrymen, or exercise any office or function in, concerning, or connected with the said Church or Corporation.”
The decision also cited another provision in the charter:
- “The said Corporation shall not, by deed, fine, or recovery, or by any other means, without the assent of the [Diocese], previously had and obtained, grant, sell, alien, or otherwise dispose of any lands, messuages, tenements, or hereditaments in them vested, nor charge nor encumber the same to any person or persons whomsoever.”
The ruling noted that St. James had made minor amendments to its charter in 1919 and 1967, but that they were submitted to the diocese for approval and, “Significantly, the amendments did not change St. James’ allegiance to the Diocese or the National Episcopal Church.”
Beginning around 1977, St. James’ representatives to the annual Diocesan Convention were not permitted to vote because the congregation failed to pay its assessment to support the work of the diocese and the Episcopal Church (USA). That set the stage for a long-simmering dispute between the congregation and the diocese.
Contrary to the advice of an attorney working with the congregation, the court said, the vestry of St. James voted to form a nonprofit body, the CSJL Foundation. In 1999, the vestry of St. James voted to merge the church into the CSJL Foundation, whose purpose was “to provide and maintain a place for worship and religious instruction in Traditional Biblical and Anglican Principles.”
“Once the merger was complete, the vestry changed the name of the CSJL Foundation to the Church of St. James the Less so that the only difference between the new and old churches was that the new church’s corporate charter did not recognize a relationship with the Diocese or the National Episcopal Church,” the Pennsylvania Supreme Court said.
Soon after the merger, diocese leaders intervened, declaring that the church had legally dissolved and was no longer capable of corporation actions. The bishop of the diocese declared himself the trustee of the property.
A Pennsylvania trial court backed the diocese, ruling that St. James’ vestry be removed from their offices, that the vestry had violated “its fiduciary responsibilities to the church by adopting a merger plan,” and that the vestry was “liable for the damages incurred as a result of the merger and subsequent lawsuit.” Members of the vestry were named individually in the suit, which made them financially liable for sharing the costs of court.
The trial court pointed out that section 81 of the Pennsylvania Charities and Welfare Act, 10 P.S. § 81 (the “Act of 1935”), “requires local churches affiliated with a national church to hold their property in accordance with the rules of the national church with which they are associated.”
On appeal, the Commonwealth Court of Pennsylvania affirmed the trial court’s order, and the case went to the Pennsylvania Supreme Court, which said, “While we agree with the Commonwealth Court that the Diocese has a trust interest in St. James’ property, we nevertheless disagree with its affirmance of the trial court’s order declaring the Diocesan Bishop and Standing Committee the title holders and trustees of St. James’ property.”
The trial court’s order that that the bishop and the diocese committee owned the St. James’ property “is plain error because, as even appellees acknowledge, St. James’ property was deeded solely to St. James and St. James’ retained ownership of its property,” the Pennsylvania Supreme Court said.