 Hudson Presbyterian Church v. Eastminster Presbytery Ohio attorney general's office joins lawsuit, says 'PCUSA-style church' must be provided By Patrick Jean Staff Writer The Layman Online Wednesday, May 30, 2007 The Ohio attorney general's office has sided with Eastminster Presbytery in a lawsuit brought against it by a church seeking to leave the Presbyterian Church (USA) with its property. The summary judgment, Dann argues, also should declare that Hudson Presbyterian Church "may not apply the corpus of that trust for a purpose that is inconsistent with the purpose of providing the public with a PCUSA-style church." Dann also requests that a court-appointed receiver administer the trust until a new trustee is appointed because Hudson Presbyterian Church "can no longer serve as trustee over that trust property." The attorney general's response filing "lacks any merit" and is "unsupportable and ridiculous," argues the church's attorney, Forrest A. Norman III of Hudson, Ohio, in a reply brief. A constructive charitable trust should not be imposed, Norman argues, because the church's articles of incorporation "clearly state … that its association with a denomination is voluntary, and because the attorney general has offered no evidence demonstrating that HPC's donors believed that its affiliation could never end." Hudson Presbyterian Church and Eastminster Presbytery each have also filed a motion for a summary judgment, as well as a reply brief that supports its motion and opposes the other side's motion. The chief magistrate for Summit County Common Pleas Court, John Shoemaker, will review the filings and recommend a verdict to Judge Mary F. Spicer. The plaintiff or defendants have 14 days to object to the magistrate's report after it's filed, said one of the presbytery's attorneys, Terrence L. Seeberger of Akron. Spicer would rule on any objection, and her options for the magistrate's report include accepting all or part of the recommended verdict, or rejecting the recommendation in favor of her own verdict. There is no timetable for Shoemaker to complete his review. What's next? While there is no time frame for Shoemaker to complete his work and make a recommendation to Spicer, a two- to three-month window from the last filing – in this case, May 14 – is standard, Norman said. Whatever verdict is rendered would become final after 30 days if no appeals are filed during that time. But Norman said he expects to be filing or responding to an appeal. The possibility of a settlement seems slim. Norman said the presbytery's attorneys, Seeberger and T. Christopher O'Connell, both of Akron, have rejected settlement negotiations. Seeberger said it would be up to Norman to initiate any further attempts at a settlement. Hudson Presbyterian Church has a 15-member "future search committee" exploring affiliation options, said Hudson's pastor, the Rev. D. Wayne Bogue. The congregation wanted more study about whether to affiliate with the Evangelical Presbyterian Church, he said. Affiliation options include the EPC; the proposed New Wineskins Presbytery within the EPC; or going independent. The session is scheduled to meet next month to discuss them, Bogue said. "We will stay Reformed," he said. Attendance has actually risen during the disaffiliation battle, with some new members joining, Bogue said. "There's a vitality here," he said, "that's very positive." Months in the making The seeds for disaffiliation may have first been sown Jan. 8, 2006. That's when the Hudson Presbyterian Church session approved three key changes to the church's articles of incorporation:
Bogue said the last straw for his church was both the PUP report and the 217th General Assembly's receiving of a theological paper that proposes both the Biblical tradition for the names of the Trinity - Father, Son and Holy Spirit - as well as a number of alternative names never linked in Scripture as Trinitarian language. On Sept. 17, 2006, the session of Hudson Presbyterian Church voted unanimously to recommend that its congregation leave the PCUSA for the smaller, more conservative Evangelical Presbyterian Church. Eleven days later, the session – concerned that Eastminster Presbytery would attempt to remove the pastor and replace the session with an administrative commission – filed a motion for a temporary restraining order. That request was signed by Judge Spicer. On Oct. 5, Eastminster Presbytery filed its own motion for a temporary restraining order that would have enjoined Hudson Presbyterian Church from taking "unauthorized actions to the detriment of congregation members, Eastminster Presbytery and [the] PCUSA." Specifically, the presbytery expressed concern that the church would "attempt to transfer title of its property despite the fact that all property held by Hudson Presbyterian is held in trust for the use and benefit of the PCUSA." The next day, Magistrate Shoemaker denied the presbytery's claim and upheld the church's temporary restraining order – which eventually became a preliminary injunction. On Nov. 5, the congregation voted 162-61 for disaffiliation. Five months later, Bogue informed the presbytery that he had renounced the jurisdiction of the PCUSA. At their stated meeting May 8, presbytery commissioners voted to give the administrative commission for Hudson Presbyterian Church full powers of the session for the church. The court case, meanwhile, quieted down for months while each side went through the discovery process of obtaining documents and other evidence to prepare their arguments. Things heated up again April 16, when Hudson Presbyterian Church and Eastminster Presbytery each filed a motion for a summary judgment. Hudson's motion for summary judgment Hudson Presbyterian Church's motion for a summary judgment seeks a court declaration that the 25-year-old church:
The motion also argues that "Eastminster contends that the act of the congregation in voting to disaffiliate automatically entitled Eastminster to replace the board of directors of HPC with a board of its own choosing, and declare that its newly appointed 'true board' is the 'true' title holder to the property." The church says its deeds "convey no interest to Eastminster Presbytery or the PCUSA, or its predecessor denomination, the United Presbyterian Church in the United States of America. There are no restrictions, reservations, reversions and/or trusts identified." The motion states that the church's mortgage and other loans and promissory notes contain "acceleration clauses" that say the debts will become immediately due and payable if the church ceases to be connected to the PCUSA. All debts have been satisfied except for a loan of about $11,000, Norman said. Hudson Presbyterian Church is the sole owner of its bank accounts, endowment fund, annuities and Early Childhood Center, the motion states. Further, the church "has not received any financial support from Eastminster Presbytery, Synod of the Covenant or the PCUSA since 1986" and has given more than $544,000 to the presbytery, synod and denomination since 1983, according to the motion. The presbytery's trustees do not have the power to mortgage or sell the church's property or "to sell the entity known as Hudson Presbyterian Church," the motion argues. The trustees also "cannot encumber in any way the property of Hudson Presbyterian Church," it argues. Eastminster Presbytery's assertion of a trust interest, the motion states, "is based upon an interpretation of the Book of Order." But the motion argues that the Ohio Supreme Court established in a 1970 ruling, Serbian Orthodox Church of St. Demetrius of Akron v. Kelemen, that the preferred application for settling a church property ownership case is using neutral principles of state law. Neither the presbytery nor the PCUSA is referenced in the deeds to the two parcels of property that comprise the Hudson Presbyterian Church land, the motion states. "Neither deed creates a trust nor a beneficial interest in any entity" other than the church and "there is no reverter clause or reserved interest in any third party," it states. The church's articles of incorporation "contain no express or implied trust interests," the motion contends. "Eastminster's argument that HPC was not entitled to change its articles of incorporation is directly contrary to the statutory rights given to a nonprofit corporation such as HPC," it states. The church contends that its withdrawal from the PCUSA and resistance of Eastminster Presbytery is in accordance with "the authority vested in a nonprofit corporation" under Ohio law. "HPC's articles of incorporation, under the neutral-principles doctrine, support the actions of HPC regarding its voluntary associations and, most importantly for this case, do not create or imply a trust," the motion argues. The Book of Order supports the church's "position regarding property ownership, voluntary association, voluntary jurisdiction, self-governance and a democratic process of withdrawal from the denomination," the motion states. It argues that local churches are encouraged to form corporations where permitted by law and that such corporations will have the power, under clause G-7.0402, "to receive, hold, encumber, manage and transfer property, real or personal, for the church; to accept and execute deeds of title to such property; to hold and defend title to such property; to manage any permanent special funds for the furtherance of the purposes of the church, all subject to the authority of the session and under the provisions of the Constitution of the Presbyterian Church (USA)." "'The church' as used here refers to the local church," the motion contends. The motion also counters the presbytery's expected argument that it has the sole authority to determine dismissals. "Such an argument finds no support in the Book of Order, the Articles of Reunion or the presbytery's Manual of Operations, all of which are entirely silent on the issue," it contends. Perhaps most importantly, the motion argues that the PCUSA property trust clause – G-8.0201 in the Book of Order, which states that "All property held by or for a particular church … is held in trust nevertheless for the use and benefit of the Presbyterian Church (USA)" – does not establish a legally recognized trust. The clause is "an assertion by an entity which does not hold title to any of the property at issue," the motion states. "The terms are vague and indefinite as to intent, assent, fiduciary obligations or directives and purport to create, in one fell swoop, a trust over all property even tangentially related to the PCUSA," the motion contends. "At most, G-8.0201 may be said to create some sort of 'ecclesiastical trust,' which would necessarily be voluntary in nature (hence revocable), and unenforceable in a court of law." The motion also takes to task clause G-8.0301, which states that, "Whenever property of, or held for, a particular church of the Presbyterian Church (USA) ceases to be used by the church as a particular church of the Presbyterian Church (USA) in accordance with this Constitution, such property shall be held, used, applied, transferred or sold by the presbytery." The motion says that conflicts with clause G-9.0102, which states that "Governing bodies of the church are distinct from the government of the state and have no civil jurisdiction or power to impose civil penalties." That means clause G-8.0301 "does not amount to a legally cognizable form which should be given any effect in the civil court," the motion states. The motion advises the court that clause G-8.0601, which addresses the property of a church found to be in schism, cannot be considered in civil court. The clause states that, "If there is a schism within the membership of a particular church and the presbytery is unable to affect a reconciliation or a division into separate churches within the Presbyterian Church (USA), the presbytery shall determine if one of the factions is entitled to the property because it is identified by the presbytery as the true church within the Presbyterian Church (USA)." "This section impermissibly weaves purported property disposition methodologies with 'true church' determinations," the motion argues. "Civil courts are not allowed to give affect or consideration to 'true church' determinations involving a matter of doctrine, as that would be tantamount to establishing a church." Eastminster Presbytery cannot show any intent by Hudson Presbyterian Church's founders to create a trust in favor of the presbytery, the motion contends. "If it was the intent of HPC's founders to create the corporation as a trustee," it states, "that intent was not reflected in any of the formative documents, nor was it reflected by the ongoing business transactions between the entities. … And even if Eastminster were able to produce evidence of some oral expression of intent, there can be no 'clear and convincing evidence' of the essential terms of such a trust." Eastminster Presbytery cannot successfully argue for an "implied trust" in which "joining a denomination somehow constitutes assent to (or creation of) a trust," the motion argues. It states the Ohio Supreme Court rejected implied trust more than 170 years ago in Keyser v. Stansifer (1834) and that "in Ohio, property ownership is not incident to holding a particular church doctrine." "Hudson Presbyterian Church was expected to enjoy the beneficial interests of the disputed property," the motion states. "The local congregation is the primary beneficiary of the property, serving the local community in carrying out its mission. Therefore, any argument in favor of a resulting trust must fail." Eastminster's motion for summary judgment Eastminster Presbytery's motion for a summary judgment seeks a court decision that:
The motion argues that Hudson Presbyterian Church agreed to be bound by the PCUSA Constitution when it formed a corporation. "At all relevant times, the Book of Order has subjected all of a particular church's property to an express trust in favor of PCUSA," the motion states. "Hudson Presbyterian, by adopting articles of incorporation and bylaws recognizing the primacy of the denomination's Constitution, granted that express trust in its property in favor of PCUSA, to be administered by Eastminster." Eastminster Presbytery declares that Hudson Presbyterian Church is in schism and asks the court to order the plaintiff "to abandon all property of Hudson Presbyterian and relinquish it to Eastminster for its further administration pursuant to the Book of Order." The presbytery argues that the plaintiff – which it refuses to call Hudson Presbyterian Church – "would be unjustly enriched if it were now allowed to take the property and assets of Hudson Presbyterian that Eastminster and the Presbyterian denomination worked so hard to build." The presbytery contends that the court must set aside the plaintiff's:
The church chose to take the matter to court, the presbytery says. "Eastminster believes the dispute herein is an internal PCUSA matter, to be decided by its hierarchy according to its constitution, and is participating herein solely to protect the interests of the denomination and the true church members at Hudson Presbyterian," the motion states. Eastminster Presbytery says Hudson Presbyterian Church agreed at its inception to be bound and adherent to the PCUSA Constitution, which includes the Book of Order. The original articles of incorporation and bylaws "were undoubtedly relied upon by Eastminster and the denomination in forming and financially supporting Hudson Presbyterian," the motion argues. An express property trust was created in favor of the Presbyterian denomination and Eastminster Presbytery by property trust clauses in the UPCUSA Book of Order that were in effect when Hudson Presbyterian Church was formed, the motion argues. It cites two clauses from the former denomination's Book of Order:
The motion argues that the church session's amending of the church's articles of incorporation on Jan. 8, 2006, was illegal because Ohio law "requires that articles … can only be amended by a majority of the voting members. The voting members of Hudson Presbyterian are the church members and not the session." The motion also contends that the church congregation's amending of the church's bylaws on Feb. 9, 2006, was under "false and misleading" pretense. "The true reason for the changes was an attempt to change the relationship with PCUSA set forth in the articles of incorporation and to evade the express property trust of the Book of Order," it argues. Amending the original articles of incorporation and bylaws "is expressly contrary to PCUSA's Book of Order" and violates Ohio law, the presbytery argues. "They are void … and of no legal consequence," its motion states. The presbytery says the Hudson Presbyterian Church session recognized the Book of Order property provisions were applicable Sept. 23, 2006, when it "passed resolutions claiming no property trust had ever been acknowledged or assented by the session and purporting to revoke such trust in the event one existed." The church "remains bound by PCUSA's Constitution, including the express property trust in the Book of Order," despite its disaffiliation vote Nov. 5, 2006, the motion contends. "The vote to 'disaffiliate' did not change any of the existing provisions in the corporation's articles of incorporation and bylaws, that to this day include significant references to PCUSA and its Constitution," it argues. On Nov. 14, 2006, Eastminster's presbyters identified the congregation's minority faction as the "true" Hudson Presbyterian Church, the motion states. The presbyters determined March 13 "that use and possession of the Hudson Presbyterian property should pass to the true church congregation," it says. "Eastminster and the true church congregation have requested use of the church building for church services as a PCUSA congregation, and have been refused," the motion contends. "The schismatic plaintiff is attempting to wrest control of the church's property and assets through this lawsuit." The presbytery cites the same 1970 Ohio Supreme Court ruling cited by the church – Serbian Orthodox Church of St. Demetrius of Akron v. Kelemen – to argue its contention that "Hudson Presbyterian is in a hierarchical relationship with PCUSA." The motion contends that the church's articles still refer to the PCUSA Constitution as authority and that its bylaws still refer to the constitution and Book of Order "as the guiding and governing documents of the denomination." The presbytery argues that it alone can:
"Plaintiff cannot be allowed to take this property away from and out of PCUSA," the motion argues. "This court must defer to Eastminster's determination and permit Eastminster to award use and possession of the church property to the true church in Hudson." The presbytery contends that courts should be bound by its decision that Hudson Presbyterian Church is in schism. "Hudson Presbyterian, having expressly adopted the Book of Order through its articles of incorporation, and having acknowledged therein and in its bylaws that the corporation has submitted to the authority of PCUSA, should also be bound by that decision," the motion states. The presbytery argues that "substantial" funding of real estate and improvement costs at the church by the PCUSA's governing and constituent bodies shows "existence of a constructive trust in favor of PCUSA." The trust "clearly exists in favor of PCUSA (and Eastminster) and is enforceable," the motion contends. The presbytery contends that the plaintiff has slandered the denomination and that Bogue is "disloyal" to the PCUSA. "Plaintiff, and the pastor that was hired more than a decade after the church building was built, now attempt to take that church from the faithful followers," the motion argues. "Such unjust enrichment must not be allowed." Bogue and his congregants who are unhappy with the PCUSA "can walk away as individuals, but not with the particular church and not with the property," the presbytery contends. To do otherwise, it argues, would be a violation "of the Book of Order and Hudson Presbyterian's own governing documents, and in derogation of the rights of the denomination and the true church minority at Hudson Presbyterian who do not wish to leave the denomination." Hudson's reply brief On May 14, Hudson Presbyterian Church filed a reply brief supporting its summary judgment motion and opposing Eastminster Presbytery's summary judgment motion. Its key points include:
"It is inconsistent, if not outright contradictory, for Eastminster to assert that HPC, acting as 'the corporate conscience of the church,' does not have the right of private judgment to withdraw," the reply contends. The church argues that when the facts of the case are applied to the operative definition of "hierarchical" established by the U.S. Supreme Court in the Watson v. Jones ruling of 1871, "it is abundantly clear that the relationship between Hudson Presbyterian Church and the Eastminster Presbytery and the denomination is non-hierarchical." Hudson Presbyterian Church claims the presbytery is misinterpreting Watson v. Jones by "asking this court to abandon Ohio's neutral principles approach, adopt a Watson-based denominational deference approach … and give credence to the 'express terms' which [the] U.S. Supreme Court has held are civilly unenforceable. Thus," it argues, "Eastminster's position is contrary to Ohio law, and unconstitutional under guidance given from the U.S. Supreme Court." The church says the case can be resolved without deciding Presbyterian polity, but since Eastminster Presbytery "asks this court to defer to it because of a claimed hierarchical status, that status should not go unchallenged and must be judged on the facts." The church contends the presbytery is relying on a 1976 U.S. Supreme Court ruling, Serbian Orthodox Diocese v. Milivojevich, in arguing that "property control is an ecclesiastical issue, founded in doctrine, and for which it alone is suitable to resolve." But that case wasn't about primarily about property, the church argues. "You cannot cry 'doctrine' and divest the court of jurisdiction," the reply states. "If that were the case, any ecclesiastical entity could usurp the court's functions by making overarching declarations that civil, secular and temporal matters are part of the providence of that denomination's theology. This is essentially what Eastminster is doing here." The Book of Order should not factor into the case, the church contends, because "Ohio courts follow neutral principles of law, and will consider the normal indicia of property ownership." Hudson Presbyterian Church's amended articles of incorporation are not the basis for the congregation's right to disaffiliate from the PCUSA, the plaintiff contends. "The association between HPC and the denomination, by its very nature, is voluntary and has always been voluntary," the reply states. "A particular member church cannot be bound against its conscience." Eastminster Presbytery was "inflammatory" in questioning the legality of the church amending its articles of incorporation and bylaws, the reply states. "This process was open and deliberative, not deceptive and sloppy," the plaintiff says. "No one can seriously challenge the authority of [the] session to act on behalf of the church with respect to corporate matters." The presbytery also was contrary to Ohio law in such questioning, the church says. "HPC proceeded in compliance with Ohio laws and procedures in amending its articles of incorporation, and therefore the amended articles are not improper, let alone 'illegal,' " the reply states. The church says its relationship with the PCUSA was not "fundamentally altered" by amending its articles of incorporation, as Eastminster Presbytery contends. "The voluntary association and voluntary submitting of HPC to the PCUSA was found in the original articles of incorporation as well," the reply states. "This was, therefore, not a change in the fundamental relationship between the parties. It was voluntary at its commencement, and it was voluntary at its termination." Hudson Presbyterian Church says its bylaws were not amended so as to not follow the Book of Order or to alter the property trust relationship with the denomination, as the presbytery alleges. "The PCUSA does not prescribe, nor has it ever prescribed, the form of bylaws for an individual church congregation," the reply states. "For Eastminster now to engage in the editing business is overreaching." The original articles of incorporation and bylaws are "silent on property ownership," the church says. "The amended articles and amended bylaws are consistent with Ohio law on nonprofit and religious entity property ownership. … It is beyond understanding how Eastminster can argue against the inclusion of these express powers in HPC's articles and bylaws." The presbytery misstates express trust law in arguing that the PCUSA Book of Order imposes an express trust on the church's property, the plaintiff says. "A self-declaration of trust relating to property which the declarant does not own, and which designates the 'settlor' as the beneficiary, is not a 'legally cognizable form,'" the reply states. The PCUSA Constitution entangles the courts with ecclesiastical determinations, the plaintiff argues, by creating a trust that is "dependent upon a vague principle of ecclesiastical compliance and connectionalism. That does not avoid problems, but rather invites them." Hudson Presbyterian Church says its property was "first procured by the local church, in its own name, and was never transferred to the PCUSA or any other trustee. One sentence in the Book of Order is not sufficiently clear to create an express trust under Ohio law." The plaintiff contends that the presbytery overstates its financial contributions to the church's building construction and historical operations. "The mere allegation of a substantial contribution, without more, is legally insufficient to impose a constructive trust," the reply states. "If Eastminster's argument were adopted and made Ohio law, anyone who supports a cause or project by way of financial contribution would be entitled to a constructive trust once they became displeased with the cause." The church says "a significant number of people have informed HPC's treasurer that they are holding back a portion of, and in some cases their entire tithes, pending the outcome of this litigation. They have specifically stated that they desire to donate to the local 'HPC' church only, and not forfeit it to the PCUSA." A "significant number" of church members who voted against disaffiliation "still worship and contribute to HPC since disaffiliation," the church says. "A notable portion of those persons have indicated that they will stay with the congregation, regardless of affiliation, even though they voted against disaffiliation last November." Neither the presbytery's allegations nor the evidence in the case "demonstrates fraud, duress or other wrongful conduct" by Hudson Presbyterian Church, the plaintiff says. "Ohio law is clear that a constructive trust can only be imposed where property is acquired by fraud or wrongful conduct." Even if the court imposed a constructive trust on the church, "any such trust is limited to the actual property that was 'wrongfully' obtained by HPC," the reply states. "A constructive trust cannot be imposed after a change in form of the wrongfully obtained property." Eastminster's reply brief On May 14, Eastminster Presbytery filed a reply brief supporting its summary judgment motion and opposing Hudson Presbyterian Church's summary judgment motion. Its key points include:
There is proof of a constructive trust in that "Eastminster Presbytery and its related entities formed Hudson Presbyterian Church, provided its initial working capital and funded the majority of the cost of the initial church building," the defendant says. The reply repeats a claim made in the presbytery's summary judgment motion that the church acted illegally in amending its articles of incorporation and bylaws and voting for disaffiliation. In attempting to separate from the PCUSA, the church is no longer using its property for the benefit of the denomination, the reply states. "Then under the Book of Order, Eastminster Presbytery is authorized to take control of the property," the defendant says. "The court should enforce the express property trust from the Book of Order in favor of Eastminster Presbytery, and give Eastminster the Hudson Presbyterian assets." This will be the first case in Ohio to directly apply the property trust clause of the Book of Order, the reply states. The presbytery says rulings from two other cases – in which the clause was recognized – should apply here:
The defendant refutes the plaintiff's claim that the " 'burden of proof for establishing the existence of an express trust is by clear and convincing evidence,' citing the Ohio Trust Code generally. This is misleading because that requirement has been applied only to oral trusts, and not to our trust that is written in the Book of Order. … There exists clear and convincing evidence as to the existence of an express property trust here." Also taken to task is Hudson Presbyterian Church's claim "that the deeds, mortgages, insurance and bank accounts all reflect ownership in Hudson Presbyterian without any trust language, thus apparently negating the existence of a trust." The presbytery says the church "had already in writing conveyed a trust interest in all its property in favor of the denomination." "The deeds, bank accounts and other instruments do not have to contain trust language for a property trust to arise therein," the reply states. "To rule otherwise would mean the overruling of Jones v. Wolf." Eastminster Presbytery says the church's "acceleration clauses" in its mortgages, loans and promissory notes, which say the debts will become immediately due and payable if the church ceases to be connected to the PCUSA, "do not amend the Book of Order." To claim this is evidence "that 'the parties contemplated the right of Hudson Presbyterian Church to cease being associated with the PCUSA' … is ridiculous," the reply states. The presbytery finds proof for a constructive trust in the fact that "a substantial portion of the cost of the real estate and improvements were funded by PCUSA bodies, in addition to financing the church's operations in its early years. Also," the reply states, "the church congregation and individual donors gave money to Hudson Presbyterian because it was a PCUSA church, as evidenced by the purpose clause in the articles of incorporation." The presbytery argues that it "formed Hudson Presbyterian Church, installed a pastor, funded its early years of operation and provided the majority of funds for its land and church building. It is safe to say that without Eastminster and PCUSA, there would be no Hudson Presbyterian Church." The reply dismisses as "absurd" the church's claim that its relationship with the denomination is voluntary and severable. "If Hudson Presbyterian had meant to reserve the right to disassociate, then Hudson Presbyterian should have expressly said so in its articles of incorporation," the presbytery says. The presbytery says the church agreed to submit to the PCUSA "and under the further authority of Eastminster Presbytery" in its articles of incorporation. "If Hudson Presbyterian submitted to the authority of a constitution that provides that only a presbytery has the power to sever the tie between a particular church and the denomination, then the court should enforce that commitment," the reply contends. Eastminster Presbytery also disagrees with the church's claim that it has the right to withdraw from the PCUSA under Ohio law. "Once Hudson Presbyterian joined the denomination and took on the corporate purpose of being subordinate to the denomination's constitution that gives the right of dismissal of a church from the denomination only to a presbytery (here, Eastminster Presbytery), Hudson Presbyterian waived a unilateral right of withdrawal," the reply states. By amending its articles of incorporations and bylaws last year, the presbytery claims, Hudson Presbyterian Church recognized that both sets of original documents bound the church to the PCUSA Constitution and the property trust clause in the Book of Order. The reply cites three reasons why the amendments were "illegal and ineffective:"
Any actions taken by the church or its session "that are contrary to the purpose clause" of the original articles of incorporation "are outside of the corporation's legal authority," the presbytery says. "Any corporate actions that do not submit to either the authority or form of government of PCUSA or the authority of Eastminster should fail." Hudson Presbyterian Church's illegal actions, according to the presbytery, are:
The church's original articles of incorporation and bylaws acknowledge its hierarchical relationship with the presbytery and the denomination, the presbytery says. "Case law, the Book of Order, the conduct of the parties and common sense all prove the hierarchical relationship, despite plaintiff's claims to the contrary," the reply states. Because of that relationship, Hudson Presbyterian Church is subordinate to the PCUSA Constitution, the presbytery says. The constitution "contains (a) the express trust provisions; (b) the provisions covering what happens when a property is no longer being used as a PCUSA church; (c) the rules on schism; and (d) the rules on how, and if, a particular church can be dismissed from PCUSA," the reply states. As part of that constitution, the Book of Order is "precisely the type of document that, according to the United States Supreme Court and Ohio courts, may be referred to in order to answer church property disputes," the presbytery says. "To rule otherwise, this court would have to overrule Jones v. Wolf, as well as ignore Ohio decisions." Because Hudson Presbyterian Church adopted the PCUSA Constitution and Book of Order in its articles of incorporation and bylaws, "all provisions of said Book of Order that relate to a particular church's property are relevant and must be applied by the court," the reply states. Eastminster Presbytery says the church cannot deny a schism exists because "plaintiff's own action by initiating the vote to disaffiliate caused the schism. … No analysis of church doctrine is required to determine the existence of a schism at Hudson Presbyterian." The presbytery cites Jones v. Wolf and Serbian Orthodox Diocese v. Milivojevich in arguing that the court must defer to "Eastminster's … determination that those Hudson Presbyterian congregants that are loyal to PCUSA are the true church at Hudson Presbyterian entitled to the church assets." It questions the plaintiff's "fairness" in "seeking to take a church from the group loyal to PCUSA, the denomination that formed and funded that church." The defendant says further incentive for it taking control of the property is because it is no longer being used "as property of a particular church within PCUSA. … Irrespective of whether a schism exists (and it surely does), there is an independent basis on which to grant judgment to Eastminster." Ohio attorney general's response On May 7, the Ohio attorney general's office entered the lawsuit as a second defendant. Such participation is required by statute because the lawsuit involves a charitable trust, said Alex Goepfert, spokesman for the attorney general. Any verdict in such a case could be voided without the attorney general's involvement, said Norman, the church's attorney. But the opinion co-signed by Attorney General Marc Dann and Daniel W. Fausey, assistant attorney general for charitable law, had to come as a disappointment for Norman because it sides with Eastminster Presbytery. "The disputed property and assets are held by Hudson Presbyterian Church as a charitable trust for the benefit of the public," the attorney general's response states. "All assets held by HPC must be used to serve the purposes for which HPC was organized at the time such donations were made." The purpose of the charitable trust, the response states, is to "provide, maintain and support a congregation of the Presbyterian Church (USA) which would answer to Eastminster Presbytery." When the presbytery, denomination, congregants and other donors gave property to Hudson Presbyterian Church, "they did so with the intent that HPC use the property for its then-existing corporate purposes," the attorney general argues. "Although the mandates of conscience may lead some congregants of HPC to the conclusion that they are morally unable to continue to belong to a PCUSA church, they may not apply property held in trust for purposes other than those upon which the charitable trust was founded." While Eastminster Presbytery, the PCUSA, congregants and others provided financial support for the church, "HPC itself may also have generated income through activity or investment," the response states. "Such property must also be applied toward the stated purposes of HPC." In addition to financial support, all of the church's deeds, bank accounts, endowments, annuities and insurance policies are held in the charitable trust, the response states. "Regardless of amount or source, all assets provided to HPC were held as a charitable trust under the purposes for which HPC was organized," the attorney general says. The response states that while the church's property came from many sources such as Eastminster Presbytery, the PCUSA and private people, "Ohio law regards such donations to charitable corporations as evidence of intent to create a charitable trust, and subjects the corporation receiving the donation to the duty to deal with the property for the charitable purposes for which it was formed." The attorney general's primary concern is about Hudson Presbyterian Church's attempt to disaffiliate from the presbytery and the PCUSA. It "ultimately results in changes to the terms of the charitable trust," the response states. "HPC seeks to change the terms of the trust by changing the denomination of the church that it supports, provides and maintains," the attorney general says. "Also, conspicuously added to the new bylaws was language stating that the corporation held any trusts, if any, in revocable capacity, and that the corporation would have all the powers of a corporation of its class under state law." But these amendments, in the attorney general's opinion, "are ineffective to change the charitable purposes for assets in the possession owned prior to such amendments. These amendments allow for actions beyond the scope of the charitable purposes of HPC." Charitable corporations can change the purposes for which they were created, but cannot change the trust they are duty-bound to uphold by amending their corporate purposes, the response states. "What HPC seeks," the attorney general says, "is a change in its charitable purpose from providing a PCUSA church to some other type of church." "There are several devices in Ohio law that a court in equity may apply to alter the purpose or the administration of a charitable trust," the response states. "However, no such relief was sought by HPC, nor is any such relief appropriate under the facts of this case. … Here, there has been no showing that it is no longer possible to provide a PCUSA church for the community, or that such a purpose is impossible, unlawful or impracticable." The attorney general requests that the court declare all of HPC's property and assets are held in a charitable trust and appoint a receiver to administer that trust until a new trustee is appointed because "HPC can no longer serve as trustee over that trust property." A summary judgment also is sought "declaring that assets of HPC, accrued in the period from its inception up to the 2006 changes to the articles [of incorporation], are held by HPC in charitable trust to be applied to the purposes stated in HPC's original articles." That purpose, according to the attorney general, is to "provide the public with a Presbyterian Church (USA) congregational church with the attendant community benefits of such a church." Hudson's reply brief to attorney general On May 14, Hudson Presbyterian Church filed a reply brief to the Ohio attorney general's response. Its key point is that the attorney general is "arguing a different case than the one presently before the court." "This is … a declaratory judgment case to determine property rights," the reply states. "The attorney general argues that people (whether congregants or community members) who donated funds to HPC for the specific purpose of supporting a local branch of the PCUSA should be declared the beneficiaries of a constructive charitable trust. "Thus the whole approach of the attorney general to this dispute is incorrect," the church argues, "and has no bearing on the issues before the court." The reply disagrees with the attorney general's finding of the purpose of the church's original articles of incorporation. "There is no question that HPC is a nonprofit corporation that was formed for religious purposes, and that it has a duty to spend any donations it receives for religious purposes," the church says. "But the articles of incorporation of a nonprofit organization do not, standing alone, create an express charitable trust. Instead, they create a nonprofit corporation." The church says it is defending its property against the imposition of a trust. "Nothing in the articles of incorporation states that the purpose of HPC is to benefit Eastminster or the PCUSA," the reply states. The attorney general's allegation that "everyone who has given money to HPC intended that such money would be used for a local church of the PCUSA" is disputed by the church. "There is no dispute that HPC is using all of its donated funds, whether from churchgoers or any other source, for religious and charitable purposes," the reply states. "However, there is no evidence for this allegation. Without any such evidence, a constructive trust cannot be imposed." The attorney general's opinion also is "inconsistent with common sense," the church argues. "Charitable donors simply do not have the right to micromanage the expenditure of their donation, or impose additional conditions on their donation after the gift is complete," the reply states. The church says the attorney general is "narrow-minded" in arguing that Hudson Presbyterian Church must use its property for the Presbyterian Church (USA) because voluntary association with the denomination was among the stated purposes of the church's original articles of incorporation. He restricts his analysis "to only that portion of the original articles which referenced the PCUSA, and ignores all of the other purposes," the reply states. "Not even Eastminster Presbytery claims that Hudson Presbyterian Church has ceased to operate as a Christian house of worship," the church says. "Therefore, it is beyond question that HPC continues to function as a charitable nonprofit corporation that fulfills both its original purposes and 'amended' purposes. … For the attorney general to argue that Hudson Presbyterian Church is not fulfilling its purposes as stated in its original articles of incorporation is unsupportable and ridiculous. … There is no allegation or evidence in this case that HPC is using its resources for any non-religious or non-charitable purposes." The church even disagrees with the attorney general on word interpretation. "In a rather Orwellian twist, the OAG [office of the attorney general] asserts that the inclusion of the word 'voluntary' [in the original articles of incorporation] means that HPC 'must voluntarily assent to the governance of the PCUSA,' " the reply states. "That interpretation negates the meaning of the word 'voluntary.'" The church credits the attorney general with recognizing something that Eastminster Presbytery refuses to concede: Hudson Presbyterian Church's right to amend its articles of incorporation. However, the reply states, the attorney general "should not be heard to complain that the 'charitable trust' was somehow modified. … HPC's amendments to its own articles of incorporation simply clarified its intentions, and did not modify them." Applying certain Ohio laws in this case violates the constitutional separation of church and state, the church contends. The attorney general would have "oversight of the 'fiduciary obligations' of the local church, which involve ecclesiastical functions," the reply states. "That would give the attorney general the power to assess the performance of the fiduciaries' ecclesiastical functions. … Where a church has multiple religious purposes and is unquestionably using its resources for charitable purposes, the state's intervention becomes constitutionally inappropriate." The church says it "still functions as a Presbyterian church, still preaches the Gospel, still uses the same pastor, still has worship services attended by the same people (including those who voted against disaffiliation) and still serves and financially supports the same missions it supported before disaffiliation." Therefore, the reply contends, "it would be gravely wrong to say that HPC has abandoned its charitable purposes and obligations such that a receiver should be appointed." "Permitting the attorney general to opine on whether HPC's directors are complying with its articles of incorporation could quite easily lead down the slippery slope to supervision of whether HPC is adequately advancing its ecclesiastical purposes," the church says. "Permitting the attorney general to divest HPC of its property, based on an allegation that HPC is not sufficiently advancing one of its many charitable purposes, would be a clear governmental endorsement of a particular denomination, and would be a clear violation of the First Amendment." The reply concludes that "HPC's articles of incorporation clearly state, at all times and in all versions, that its association with a denomination is voluntary" and that the attorney general "has offered no evidence demonstrating that HPC's donors believed that its affiliation [with the PCUSA] could never end." Therefore, the church says, "this court cannot conclude that a constructive charitable trust should be imposed. The attorney general's position lacks any merit." Patrick Jean is a staff writer for The Layman and The Layman Online. He can be reached at pjean@layman.org. |
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