The real property dispute between Episcopal Diocese of Georgia and the oldest church in Georgia ended on May 21, 2012.   The real property of Christ Church Savannah is held in trust for the benefit of Episcopal Church.

On May 21st a Rule 46 dismissal of a petition for writ of certiorari was filed in the United States Supreme Court.  As a result, the November 2011 decision by the Georgia Supreme Court will stand.   The Georgia Supreme Court decided that the property of the oldest church in Georgia is held in trust for the benefit of the Episcopal Church.   Rector, Wardens, Vestrymen of Christ Church in Savannah v. Bishop of Episcopal, 290 GA. 95, 718 S.E.2d 237 (Nov. 21, 2011).   

 In March 2006, the majority of the church membership of Christ Church in Savannah voted to sever ties with the Episcopal Church and the Episcopal Diocese of Georgia.   The Georgia Diocese filed suit in November 2007 seeking injunctive relief, damages, and a declaratory judgment that all property of Christ Church is held in trust for the Episcopal Church. The Episcopal Church intervened in the case, as well as “Christ Church Episcopal” (representatives of the local church’s minority faction recognized by the Georgia Diocese after the split).  Control of four parcels of real property owned by the church were at stake in the lawsuit.

The Episcopal Church won a summary judgment at the trial court.  This decision was affirmed by the Georgia Court of Appeals and the Georgia Supreme Court.

The parties to the lawsuit agreed that legal title to the property of Christ Church was held by the corporate entity known as “The Rector, Church Wardens and Vestrymen of Christ Church in Savannah.”  The question before the courts was who should control the property — the majority faction that had severed ties with the Diocese, or the minority faction still loyal to the Diocese and Episcopal Church.

The Georgia Supreme Court stated that it applied the “neutral principles of law” approach to determine whether the local congregation or the parent (general) church in a hierarchical denomination like the Episcopal Church has the right to control local church property.  The use of neutral principles is an attempt to avoid inquiry into religious doctrine and resulting First Amendment problems. The United States Supreme Court, in an earlier case originating in Georgia, described the “neutral principles of law” approach in Jones v. Wolf, 443 U.S. 595, 602–606, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979)  These neutral principles include deeds and other instruments of title, state statutes, and documents regarding local and general church government.

Not all states follow the neutral principles approach.  After Jones, state courts appeared to choose between two methodologies according to a 2008 national survey cited in Episcopal Church in the Diocese of Conn. v. Gauss, 302 Conn. 408, 28 A.3d 302, 313, n. 11:  twenty states and the District of Columbia follow the neutral principles of law approach, nine states follow the hierarchical approach [which simply defers to the decision of the higher authorities within the church], eight follow a hybrid of the two approaches and thirteen are undecided.

The Georgia Supreme Court’s stated goal in its analysis is to determine the intentions of the parties at the local and national level regarding beneficial ownership of the property as expressed before the dispute erupted in a legally cognizable form.

Georgia has generic trust statutes.   The fact that a trust was not created under Georgia’s express or implied trust statutes does not preclude finding an implied trust on church property.

The Georgia Supreme Court distinguishes the South Carolina decision in All Saints Parish Waccamaw v. Protestant Episcopal Church in Diocese of South Carolina, 385 S.C. 428, 685 S.E.2d 163 (2009) and states that the South Carolina precedent has not been followed in a church property case by any court outside of South Carolina.  The South Carolina decision found in favor of the local church – relying on South Carolina statutory and common law relating to the formal conveyance of title.

The Georgia court, in contrast to South Carolina’s, places heavy emphasis on the history of the congregation’s actions and documents indicating their intent to abide by the constitution and canons of the Episcopal Church:

“Christ Church repeatedly pledged its unequivocal adherence to the discipline of the parent church, including when it organized the Georgia Diocese of the Episcopal Church in 1823 and in its formal corporate Articles of Amendment filed with the State of Georgia in 1918 and its Articles of Incorporation filed in 1981—two years after the Dennis Canon was enacted. And the record shows that at all times during the 180 years before this dispute began, Christ Church acted consistently with the Episcopal Church’s canons regarding its property, demonstrating the local church’s understanding that it could not consecrate, alienate, or encumber—much less leave with—its property without the consent of the parent church.”  Jones, 718 S.E.2d 237, at page 247.

A lengthy and vigorous dissenting opinion argues that the majority misinterprets the neutral principles of law set out in the Jones v. Wolf case.  The dissent would look to only four neutral principles to see whether a trust exists: deeds, state statutes, local church charters, and general church constitutions.   The dissent argues that the parties could have modified these documents if they wanted the national church to own the real property.

The dissent is also disturbed by the potential for billions of dollars of enrichment of the national church from implied trusts on parish properties nationwide.

One of the parcels of property owned by Christ Church in Savannah was encumbered with a bank loan of $950,000 for improvements to the property.  The dissenting opinion notes:  “The loss of this church property certainly will impact the personal guarantees of CCS’s members on this $950,000 note as well as the bank.”  That comment alone should be of interest to vestry and church members alike.

Contact Hindson & Melton LLC to consult regarding church real property disputes.   Our firm has offices in  Georgia and South Carolina.
Karen S. Hindson – June 19, 2012