Case remanded to trial court
Indiana Supreme Court rules no ‘express’ trust in church property case
By Paula R. Kincaid, The Layman, August 3, 2012
Although the Indiana Supreme Court remanded the case of a Presbyterian Church (USA) congregation against its presbytery and synod back to a trial court and established Indiana as a “neutral principles of law” state.
In the case of the Presbytery of Ohio Valley and the Synod of Lincoln Trails of the Presbyterian Church (USA) vs. Olivet Presbyterian Church of Evansville, Inc., the court ruled 3-2 that neither party was entitled to a summary judgment in the case, because “Genuine issues of disputed fact, resulting from varying inferences possible from the designated evidence, must be resolved at trial rather than on summary judgment.”
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Indiana court rejects PCUSA property claim Those issues include the presbytery’s claim to an implied trust, since “reasonable inferences are possible and thus produce a genuine issue of material fact regarding the requisite unequivocal intent of Olivet to create a trust.” The ruling affirmed that the congregation did not create an express trust in favor of the PCUSA.
Forrest Norman, chair of the Presbyterian Lay Committee and one of the attorneys who filed an amicus brief for the Lay Committee on behalf of the congregation said that he was “very pleased with the well-reasoned nature of the opinion.”
The court noted several “relevant” facts:
- “The Olivet congregation first joined the Cumberland Presbyterian Church in 1900.
- “In 1906, Olivet became a member of the United Presbyterian Church in the U.S.A. (UPCUSA) when it merged with the Cumberland Presbyterian Church.
- “In 1968, Olivet purchased the property and built the church building that is the subject of dispute in this case.
- “The property was conveyed by warranty deed to ‘Olivet Presbyterian Church of Evansville, Indiana,’ and has at all relevant times been titled and recorded as the property of Olivet.
- “The real estate and church building were acquired entirely with monies donated to or borrowed by Olivet.
- “The presbytery, and its associated plaintiff, contributed no monies to the purchase of the real estate.”
Neutral principles of law
The court’s decision established Indiana as a “neutral principles of law” state. “Because the neutral-principles-of-law approach permits greater fairness, consistency, and equality of application to all church property disputes regard-less of the structure of the denominational church organization, we adopt the neutral-principles-of-law approach for settling property disputes between religious organizations in Indiana,” the decision read.
According to A Guide to Church Property Law: Second Edition, by general editor Lloyd Lunceford, “states that choose to follow the neutral principles of law method for resolving church property disputes are to look not only to the denominational constitution and other governing rules of the general church (including any express trusts clauses), but also are to look to the text of local property deeds, articles of incorporation of the local church, relevant state statutes or code provisions affecting property matters, and other actions of the parties that may reflect intent.”
The court’s decision stated that in neutral-principles, the approach is “completely secular in operation, and yet flexible enough to accommodate all forms of religious organization and polity. The method relies exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges.”
“In the application of this approach, Indiana courts may consider Indiana statutes, the language of the deeds and conveyances, the local church charters or articles of incorporation, the constitution of the denominational church organization, and any other relevant and admissible evidence provided they ‘scrutinize the[se] document[s] in purely secular terms’ consistent with Indiana law,” the decision read. “In this respect, Indiana courts should apply neutral principles of Indiana trust and property law without regard to the organizational structure of the religious denomination … whether interpreting the language of a deed or conveyance or determining whether there exists an express or implied (constructive or resulting) trust.”
Indiana now joins many other states as following the neutral principles approach to church property cases.
Implied trust
In the case, Ohio Valley Presbytery contended that the “lengthy history and a deep relationship” between PCUSA and Olivet should result in an “imposition of a trust on the property as a matter of equity.”
The court stated that Olivet must “demonstrate that the designated evidence and its reasonable inferences undisputedly establish the absence of a mutual intent on the part of Olivet and the presbytery to create the claimed trust. With respect to the PCUSA, its intention to create the trust is supported by the 1981 trust provisions of the Book of Order. … With respect to Olivet, however, the issue is less clear.”
“We must consider Olivet’s recognition of the PCUSA Constitution ‘as the authority for the governance of the church and its congregations,’ and Olivet’s continuance as a member of the PCUSA from 1983 until 2006. Viewing the designated evidence in favor of the non-moving party, as required on summary judgment, while Olivet’s 1998 and 2000 bylaws do not discuss property ownership, a finder of fact could find conflicting inferences from the fact that Olivet remained a member of the PCUSA for nearly 25 years after insertion of the trust provisions.,” the decision read.
“It is possible that inferences from the designated evidence may be drawn to support either of two opposite conclusions: that Olivet did or did not intend to create a trust on its property. The result is a disputed issue of material fact, and thus there remains a genuine issue of fact for trial.”
Express trust
The decision stated that an express trust must be “evidenced by a writing signed by the owner of the property,” and that the “burden of proof rests on the party seeking to impose the trust.”
It continued that “Certain terms are essential to the crea
tion of a trust and must be ‘sufficiently definite’ and ‘ascertained with reasonable certainty’ from the writing(s), otherwise the trust must fail: (1) the trust property; (2) the settlor; (3) the identity of the trustee; (4) the identity of the beneficiary; and (5) the purpose of the trust.”
“We find from the designated evidence and its resulting inferences, … that neither Olivet’s 1983 session minutes nor its bylaws from 1998 or 2000, whether considered separately or together, are sufficient acts by Olivet to declare its intention to create an express trust on its property in favor of the PCUSA.”