California Appeals Court
reverses trial court decision
By Parker T. Williamson, The Layman, February 5, 2010
Two large California churches that took their property with them when they left the Presbyterian Church (USA) have suffered an appellate court reversal. Trial court judgments in favor of First Presbyterian Church of Roseville and Fair Oaks Presbyterian Church, both in Sacramento, were overturned on an appeal filed by The Presbytery of Sacramento and the Synod of the Pacific.
The Third District Court of Appeals ruled on the basis of California Corporations Code Section 9142 that the two local churches could not revoke a trust imposed on their property by the denomination simply by amending their articles of incorporation. The court said that a trust must be revoked in the same manner in which it was created, namely, by a constitutional amendment enacted by the PCUSA General Assembly and ratified by a majority of its presbyteries.
The court did not rule on the prior question, namely, whether the trust imposed by the PCUSA on its churches is valid, because the California code, not the validity of the PCUSA’s purported trust, was the primary focus of the appeal.
The two churches argued at the trial court level that the PCUSA’s imposition of a trust is unenforceable because a trust can only be created by a property owner, not by the beneficiary, and the PCUSA is not the registered owner of Roseville and Fair Oaks’ property.
But Roseville and Fair Oaks then proceeded to offer a secondary argument, namely that even if the denomination’s trust was deemed valid, the trust was revoked when the two local churches amended their articles of incorporation and bylaws. The Court of Appeals narrowed its focus to this secondary argument.
It said that the California Corporations Code Section 9142 was violated because that code requires that trusts be revoked by the same body that created them and in the same manner in which they were created.
In addition to its use of California Corporations Code section 9142, the Appellate Court cited a 2009 California Supreme Court case that favored the Episcopal Church (USA) over property claims of three Los Angeles area congregations. In that case, the California Supreme Court declared that church property disputes should be determined according to “neutral principles of law” rather than by deference to denominational hierarchies, but then, when considering the case of the three congregations, it based its ruling on deference to the denomination’s hierarchy, citing the Episcopal Church (USA)’s Dennis Canon.
California’s Supreme Court and Third District Appellate Court have generated considerable confusion among California churches. The apparent contradiction between the Supreme Court’s announced “neutral principles” methodology, followed by its “deference to hierarchy” decision gave rise to an attempted appeal to the U.S. Supreme Court, but the high court decided not to hear the case.
Also confusing to the Roseville and Fair Oaks Presbyterian churches is the fact that the Appellate Court made reference in its discussion of their case to the California Supreme Court’s handling of an Episcopal Church (USA) property dispute. There is a distinct difference between the polities of the two denominations.