Per-capita and mission funds not enough
GAPJC declares presbyteries must consider
property values when dismissing congregations
By Paula R. Kincaid, The Layman, October 31, 2012
LOUISVILLE, Ky. – The General Assembly Permanent Judicial Commission (GAPJC) has ruled that a presbytery must “fulfill its fiduciary duty under the trust clause,” when it considers dismissing a congregation from the Presbyterian Church (USA) into another Reformed body.
And that fiduciary duty “requires that the presbytery exercise due diligence regarding the value of the property of the congregation seeking dismissal. Due diligence, of necessity, includes not only an evaluation of the spiritual needs of the congregation and its circumstances but also financial analysis of the value of the property at stake. Payments for per capita or mission obligations are not satisfactory substitutes for the separate evaluation of the value of the property held in trust.”
On Oct. 26, the GAPJC heard the case of Wilber Tom, David Hawbecker and Thomas Conrad vs. the Presbytery of San Francisco. The commission’s decision was released on Oct. 30.
The case arose when several members of San Francisco Presbytery filed a remedial complaint with the Synod of the Pacific PJC which protested the presbytery’s decision to dismiss Community Presbyterian Church of Danville, Calif., to the Evangelical Presbyterian Church. The dismissal agreement included the congregation paying the presbytery a one-time lump-sum payment of $108,640; and an annual commitment of $42,500 for targeted PCUSA missionaries, ministries and ministers, paid quarterly for the five years following the congregation’s dismissal.
The dismissal agreement fully satisfied the policy of the presbytery which was unanimously adopted by the Presbytery in September 2009.
The SPJC ruled in favor of the presbytery stating that the Book of Order gives the presbytery the “authority to dismiss a church in consultation with its members to another Reformed body;” and that the property of CPC Danville was required to be held, used, applied, transferred or sold as provided by presbytery. In the exercise of that discretion, presbytery, consistent with its policy, determined to transfer by quit claim deed its interest in the CPC Danville property upon dismissal of the church to the EPC.”
That decision was appealed to the GAPJC, and on May 18, 2012, the congregation and presbytery both fulfilled their obligations described in the dismissal agreement. The congregation paid the per-capita and mission funds to the presbytery and the presbytery executed the quitclaim deeds to Danville which assumed sole responsibility for substantial debt on the properties in question.
Declaratory authority to provide guidance
In its decision the GAPJC acknowledged that the presbytery’s action could not be undone, but stated that the commission would exercise its declaratory authority to provide guidance to lower councils, seeking to prevent future “violations.”
Of the 15 “specifications of error” cited in the case, the GAPJC “sustained” or approved nine, and did not approve six.
The GAPJC said that while the presbytery’s authority to determined property rights are broad, under the trust clause, the presbytery must act as a fiduciary for the benefit of the PCUSA. It clearly stated that “a congregation’s financial and all other assets are also understood to be covered by the trust clause.”
“Under the fiduciary obligations inherent in the trust clause, a presbytery must take into consideration the PCUSA’s use and benefit of the property in every decision concerning its disposition,” the decision read. Most critical is the statement in the decision that “Payments for per capita or mission obligations are not satisfactory substitutes for valuations of the property held in trust.”
The GAPJC declared that the presbytery’s failure to consider the property value and the “PCUSA’s beneficial interest in the property was a fatal omission of the trustee’s duty to the PCUSA.”
The commission stated that the presbytery’s justification for dismissing the congregation with property – the “Great Ends of the Church” and avoidance of litigation – was “erroneously upheld by SPJC. While certainly valid, such considerations alone are not sufficient to satisfy the due diligence requirement imposed by the trust clause. … Due diligence, of necessity, will include not only the spiritual needs of the congregation and its circumstances, but an examination of the congregation’s financial position and the value of the property at stake.”
The Rev. Mary Holder Naegeli, blogger, pastor and moderator of the Presbyterian Coalition wrote that “the ruling does not require presbyteries to exact a payment for property held in trust by a congregation when it departs. It only requires an evaluation, a taking into account the value of property, and ‘fiduciary responsibility’ to act in the best interest of the presbytery (and PCUSA). However, the interpretation of this somewhat vague language, particularly in those presbyteries that do not have dismissal policies at all, is likely to embolden presbyteries to become more aggressive about extracting money or property from departing congregations.”
In their concurring opinion of the GAPJC’s decision, H. Clifford Looney and Terry Epling seemed to agree with Naegeli. “What the presbytery did in securing additional mission and per capita payments may or may not have been sufficient to ‘balance the books’ in this particular scenario, but it was within their discretion once they exercised due diligence and considered all the factors inherently required by the fiduciary duty of a trustee.”
Several presbyteries include in their dismissal policies express language that once a local congregation has satisfied all other requirements for dismissal, a financial settlement will be reached without regard to the value of property. The ruling by the GAPJC would require that those policies and the associated practice of allowing congregations to leave for a financial settlement related to multiple years of per capita and/or mission support be reconsidered.