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3 things to know about the United Methodist Church trust clause

Written by Daniel P. Dalton on May 7, 2017 Category: Church Property Disputes/Denominational Splits

While many local congregations within the United Methodist Church have reached the decision point that they can no longer be a part of the denomination, the question they are asking is whether they can leave and retain ownership of their real and personal property.  The denomination clearly advocates that local congregations are free to leave, but, they must leave their property to the local annual conference.  The position of the denomination is not necessarily true. You can learn more about this issue in our downloadable Guide to Understanding the United Methodist Church Trust Clause.

  1.  Constitutional issues: no federal claims allowed

Despite the many reservations that you may have about leaving the UM Church, you should know that church property disputes are not something new.  When it came to judicial decisions concerning the ownership of property, the dominant rule for roughly 150 years was the “English rule,” which required courts to award property to whichever faction of the church adhered to “the true standard of faith,” meaning the old established orthodoxy of that particular religious group.[1]  This is no longer the rule.

The U.S. Supreme Court has stated that states have “an obvious and legitimate interest in the peaceful resolution of property disputes.”[2] For that reason civil courts are permitted to address such disputes, but the Religion Clauses in the U.S. Constitution “severely circumscribe the role that civil courts may play in resolving church property disputes.”[3] In other words, courts may only go so far. They must take great care that, as state actors, their approach to resolving these disputes neither impinges on the right to engage in religious exercise nor has the effect of establishing a religion. This circumspection grants churches a degree of autonomy to govern themselves by religious terms.

Thus, resolution of church property disputes is critically influenced by the First Amendment to the United States Constitution, which in relevant part provides that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof[.]”[4] Together, the First Amendment’s Establishment Clause and Free Exercise Clause are known as the Religion Clauses, which directly limit the federal government and restrict the activity of state governments through application of the Fourteenth Amendment’s Due Process Clause.

 

As noted above, for many years courts applied a “departure from doctrine” standard, also known as “the English rule,” borrowed from English courts. Under this framework, courts would determine the rightful owner of church property in the event of a schism by examining which faction was most faithful to original doctrine. In the Supreme Court’s 1872 Watson v. Jones decision, the Court adopted an alternative approach called “hierarchical deference.” This method bound courts to defer to the judgment of the highest ecclesiastical tribunal of the denomination.[6] Such an approach was initially thought to be the best way for courts to steer clear of unconstitutionally meddling in religious affairs and, consequently, “departure from doctrine” began falling out of favor–though not expressly discredited until 1969 in Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Church.[7]

In eschewing the “departure from doctrine” approach, the Supreme Court drew attention to a new alternative. Jones had already given passing endorsement to allowing courts to examine “the deed or will of the donor, or other instrument by which the property is held” to determine ownership.[8]

The Court in Blue Hull Memorial Church gave this approach a label, recognizing that “there are neutral principles of law, developed for use in all property disputes, which can be applied without ‘establishing’ churches to which property is awarded.”[9] With that reminder, the Court remitted the case and the term “neutral principles” within the context of church property law was born. But it was not yet fleshed out. In concurrence the following year, Justice William Brennan noted that this approach is consistent with the First Amendment only if it is applied “without the resolution of doctrinal questions and without extensive inquiry into religious polity.”[10] However, in Jones v. Wolf (1979), the leading church property case to date, the Court specified that neutral principles

require a civil court to examine certain religious documents, such as a church constitution, for language of trust in favor of the general church. In undertaking such an examination, a civil court must take special care to scrutinize the document in purely secular terms, and not to rely on religious precepts in determining whether the document indicates that the parties have intended to create a trust.[11]

In the Court’s view, neutral principles “rel[y] exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges,” thereby producing outcomes reflecting “intentions of the parties.”[12] Though the Court has given states the option to choose between deference and neutral principles, the majority of states have adopted the latter.

2.  General State Law Considerations

Because states regulate property, congregants will encounter different rules in every state. In many cases applicable rules differ only mildly from jurisdiction to jurisdiction. Though differences may be apparent and their impact palpable, subtleties may nonetheless spell the difference between property retention and forfeiture. One must therefore look cautiously to respective state law for guidance. Key starting points include the state’s corporation, contract, and trust law, as well as court decisions within the state that interpret those provisions and reveal how courts might respond to claims in a particular church property dispute.

How state law directs the incorporated management of property, then, can be of critical importance. On a related note, courts will often look to the founding incorporation of a church for property ownership clues. References to the United Methodist Church in a congregation’s articles of incorporation, for instance, can be damaging. For this reason it is important to examine your congregation’s founding documents to assess how closely you may be tied to the general church.

The elephant in the room is the United Methodist trust clause. Is it binding? Can it be revoked? Will courts consider other factors? The answer in all cases is maybe.

3.  The Uniform Trust Act and the  State Trust Code.

Again, these questions turn on state law and the facts of any given case. Trusts are essentially a conditional transfer of property. Like contracts, trusts are dependent on mutual consent.[14] In trust law, the one creating a trust is referred to as the settlor. The settlor transfers property to a trustee under certain agreed conditions, creating a fiduciary duty for the trustee. This means that the trustee has a responsibility to abide by the terms of the trust in fulfilling the prescribed duties to specified beneficiaries

State-to-state there are many similarities in trust law, but it is important to remember that states, whether through jurisprudence or statutory instruction, create their own standards for trust law. Your state’s stance on the revocability of trusts is one of the most important things to consider. In some states, trusts are in fact revocable. In others, they may not be. Most commonly only the settlor will be able to modify or revoke an extant trust. But in any event there tend to be rules and exceptions that must be analyzed closely for alignment with your situation.

If you wish to learn more, please contact us at this link for a state-by-state guide detailing the leading church property cases in each state and the most relevant considerations for congregants therein.  This list was compiled in April 2016.  The law continues to evolve on this topic and it is very important to research and review the law in each particular state prior to taking action on the Trust Clause.

[1]   Watson v. Jones, 80 U.S. 679,  727 (1871)

[2] Jones v. Wolf, 443 U.S. 595, 602 (1979).

[3] Id.

[4] U.S. Const. Am. I.

[5] Bouldin v. Alexander, 82 U.S. 131, 140 (1872).

[6] 80 U.S. 679.

[7] 393 U.S. 440.

[8] Watson, 80 U.S. at 722.

[9] Blue Hull, 393 U.S. at 449 (emphasis added).

[10] Maryland and Virginia Eldership of the Churches of God v. Church of God at Sharpsburg, 396 U.S. 367, 370 (1970) (Brennan, J., concurring).

[11] Wolf, 443 U.S. at 604.

[12] Id. at 603.

[13] Some states have not addressed the question. As noted, most have adopted neutral principles, though some have applied deference while acknowledging that neutral principles may be appropriate in a later cases.

[14] An exception is the remedial “constructive” trust. John H. Langbein, The Contractarian Basis of the Law of Trusts, 105 Yale L. J. 625, 650 (1995).

[15] Wolf, 443 U.S. at 606.

[16] Emberry Community Church v. Bloomington Dist., 482 N.E.2d 288, 293 (Ind. Ct. App. 1985).

[17] Note, Judicial Intervention in Disputes Over the Use of Church Property, 75 Harv. L. Rev. 1142 (1962).

[18] 89 C.J.S. Trusts § 139 (1955).

[19] Bogert, Trusts and Trustees, 2d Ed., § 471.

[20] David A. Thomas, 3 Thompson on Real Property § 27.04(g)(1)(i) (David A. Thomas, ed., 2d ed. 2001 & Supp.2012).

[21] 76 Am.Jur.2d Trusts § 166 (1992).

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