September 27, 2009

A Perspective on the Pawleys Island Case

It was with considerable dismay that I learned about the South Carolina Supreme Court decision in All Saints v. Campbell, the property dispute between the Episcopal Diocese of South Carolina and All Saints, Pawleys Island. In preparation for the weekly post on the news blog Pittsburgh Update last week, I asked attorney and Progressive Episcopalians of Pittsburgh vice president Ken Stiles to read the opinion and provide some perspective on it. As it happened, Ken provided more perspective than Pittsburgh Update could use, so I asked him if I could post his thoughts on my own blog. He graciously agreed, and I hope that his remarks, now somewhat expanded, will help put the decision into perspective. (Readers who have not seen it should also see Nick Knisely’s post on The Lead concerning the decision.)
On September 18, 2009, the South Carolina Supreme Court ruled against the Diocese of South Carolina and The Episcopal Church to allow the All Saints, Waccamaw (Pawleys Island), to disaffiliate from The Episcopal Church and join Rwanda’s Anglican Mission in America (AMiA, now Anglican Mission in the Americas) with its property. The Supreme Court overturned a lower court ruling. This matter had been it litigation since 2000, when the diocese filled court papers claiming a trust interest in the parish’s property. In 2004, the parish vestry voted 9 to 1 to leave The Episcopal Church and join the AMiA.

The Supreme Court decision is a rare loss for The Episcopal Church in property litigation, but one has to look behind the immediate outcome to get a better sense of what this decision is and is not. The two issues of interest here are the Court’s treatment of the Dennis Canon and the cavalier way it approved the disassociation with The Episcopal Church.

The negation of the Dennis Canon is not as shocking as it seems. While all Episcopal Church parishes are assumed to have a trust relationship with their dioceses (and The Episcopal Church), the diocesan trust here was rendered null and void in 1903, when the Diocese of South Carolina signed a quitclaim deed giving any property interest the diocese had to the parish. (At issue was a question about the validity of the parish’s incorporation.) It is sometimes overlooked that the Dennis Canon did not and could not create a trust where none had existed before. The underlying assumption of the Dennis Canon is that there is always a trust relationship between a parish and the diocese dating from the establishment of the parish. To date, state courts have agreed with this. In this case, the diocese had given up its trust rights, so that there was nothing for the Dennis Canon to attach to.

The more troublesome aspect of this case is the Court’s holding that the parish had legally terminated its relationship with the diocese and The Episcopal Church:
Turning to the 2005 Action [in which a vestry loyal to The Episcopal Church sued for control of the parish], we find that the trial court applied the deference approach, determined that the congregation was part of a hierarchical organization, and deferred to the Diocese’s ecclesiastical authority’s determination that members of the minority vestry were the true officers of All Saints Parish, Waccamaw, Inc. We disagree.
First, the Court held that the deference approach was no longer allowed in South Carolina. Instead, it applied the “neutral principles of law” test. Both approaches are allowed by the United States Supreme Court.
Church disputes that are resolved under the neutral principles of law approach do not turn on the single question of whether a church is congregational or hierarchical. Rather, the neutral principles of law approach permits the application of property, corporate, and other forms of law to church disputes. …

The 2005 case turns on a determination of whether the Articles of Amendment approved by the members of All Saints Waccamaw, Inc. on January 8, 2004 were adopted in compliance with the South Carolina Non-Profit Act. See S.C. Code Ann. § 33-31-1001, et. seq. We find that the Articles of Amendment were lawfully adopted and effectively severed the corporation’s legal ties to the ECUSA and the Diocese. Therefore, we find that the members of the majority vestry are the true officers of All Saints Parish, Waccamaw, Inc. …

Pursuant to the South Carolina Non-Profit Act, a religious corporation may amend its Articles of Incorporation to add or change a provision permitted in the articles or delete a provision not required in the articles. … Amendment to a corporation’s articles, to be adopted, must be approved by (1) the board of directors, (2) the members “by two-thirds of the votes cast or a majority of the voting power, whichever is less,” and (3) any person whose approval is required by the Articles of Incorporation. … The passage of the Articles of Amendment approved by the congregation on January 8, 2004 complied with all three of these requirements. …

Finally, nothing in the All Saints Parish, Waccamaw, Inc. by-laws or the Constitutions and Canons of the ECUSA or Diocese requires third-party approval for amendments to the congregation’s corporate charter, therefore the congregation’s adoption of the Articles of Amendment complied with the requirements of S.C. Code Ann. § 33-31-1003(a)(3). The statutory provisions pertaining to a religious corporation’s amendment of its corporate charter were amended in 1994 so as to add the option of third-party approval. See 1994 S.C. Acts 384. There is no evidence in the record that, since that time, the Diocese has ever attempted to gain approval power over amendments to the All Saints Parish, Waccamaw, Inc. corporate charter.
S.C. Code Ann. § 33-31-1003(a)(3) refers to S.C. Code Ann. § 33-31-1030, “Approval of the articles of incorporation and bylaws by third persons”:
The articles of only a religious corporation or public benefit corporation may require an amendment to the articles or bylaws to be approved in writing by a specified person or persons other than the board. The article provision may be amended only with the approval in writing of such person.
The Court is saying here that, since the diocese did not require the parish to add the “third-party approval” language to the parish charter after 1994, the parish was free to change its charter in any way it wanted.

This conclusion of the Court is troublesome because nowhere in the opinion was the accession clause of the diocesan constitution (see Article I) mentioned or explanation given as to why it did not apply to this case. If an accession clause had been found present and effective, the actions of the parish, even if they had been unanimous, would have been beyond their authority and therefore of no effect. Moreover, although it is difficult to do a complete analysis of the case in the absence of the corporate charter of All Saints—the charter does not seem to be on the Web—the Diocese of South Carolina’s Canon XXX, Section 1 (see canons here), would seem to prohibit what the Supreme Court of South Carolina has allowed:
It shall not be lawful for any Vestry, Trustees or other body authorized by laws of any State or Territory to hold property for any Diocese, Parish or Congregation, to encumber or alienate any dedicated and consecrated Church or Chapel, or any Church or Chapel which has been used solely for Divine Service, belonging to the Parish, Mission or Congregation which they represent, without the previous consent of the Bishop, acting with the advice and consent of the Standing Committee of the Diocese.
It would seem that the court is saying that the only document that need be considered is the parish charter; the diocesan constitution and canons count for naught. The failure of the South Carolina Supreme Court to address this issue is both surprising and distressing.

Note: Readers who want more insight into the case, may wish to read the trial court opinion. (Warning: this is a large file. It is, however, searchable.)

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