Scotts African Union Methodist Protestant Church v. Conference of African Union First Colored Methodist Protestant Church

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
10-16-1996
Scotts African Union v. Conf AUFCMP Church
Precedential or Non-Precedential:
Docket 95-5379
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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 95-5379
SCOTTS AFRICAN UNION METHODIST PROTESTANT CHURCH
v.
CONFERENCE OF AFRICAN UNION FIRST COLORED METHODIST
PROTESTANT CHURCH a/k/a AFRICAN UNION METHODIST PROTESTANT CHURCH
The Conference of AUFCMP Church,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 92-CV-00880)
Argued: February 5, 1996
Before: SLOVITER, Chief Judge, ROTH and McKEE,
Circuit Judges
(Filed October 16, 1996)
K. Kay Shearin (Argued)
Elsmere, DE 19805
Attorney for Appellant
Roland G. Hardy, Jr. (Argued)
Law Offices of Roland G. Hardy, Jr.
Woodbury, NJ 08096
Attorney for Appellee
OPINION OF THE COURT
SLOVITER, Chief Judge.
At issue is the ownership of certain real property in
Camden, New Jersey. The district court held that Plaintiff
Scotts African Union Methodist Protestant Church ("Scotts
Church") was the valid titleholder to the property in dispute,
rejected the counterclaim filed by Defendant Conference of
African Union First Colored Methodist Protestant Church ("the
Conference") to quiet title to the same property, and enjoined
the Conference from claiming any ownership interest therein. The
Conference appeals.
I.
Background
Scotts Church was incorporated in 1915 as a nonprofit
corporation under New Jersey's Act to Incorporate Associations
Not For Pecuniary Profit, ch. 181, 1898 N.J. Laws 422, repealed
by New Jersey Nonprofit Corporation Act, ch. 127, 1983 N.J. Laws
397 (codified at N.J. Stat. Ann. § 15A:2-1). It had acquired
property on Kaighn Avenue in Camden, New Jersey around 1904, and
conducted religious services and other activities there until
1974. In 1974, Scotts Church sold the Kaighn Avenue property and
used the proceeds to purchase property on Baird Boulevard in
Camden, with title in the name of Scotts Church.
At some point in time left unspecified in the record,
see App. at 11; Joint Final Pre-Trial Order at 2-4, Scotts Church
became a member congregation of the Conference. The Conference
is the administrative body of a religious organization known as
the African Union Methodist Protestant ("AUMP") Church. The
AUMP Church is a regional association of several local churches
located in the mid-Atlantic states and tied by their common
adherence to the AUMP denomination and doctrine. The association
was incorporated in Delaware in 1941 and changed its name to "The
Conference of African Union First Colored Methodist Protestant
Church" in 1953. Def. ex. 15. The Conference claims itself the
successor to the Union Church of Africans, which was incorporated
in 1813, although that was an issue of fact determined against
the Conference at trial.
The Conference is defined in the Book of Discipline,
see infra, as an "administrative body in the [structure] of the
AUMP Church," Pl. ex. 5 at 157, although there is some ambiguity
in the record as to whether the Conference and the AUMP Church
are distinct entities. We need not resolve this question for
purposes of this appeal. The Conference and the AUMP Church are
governed by The Book of Discipline of the African Union First
Colored Methodist Protestant Church and Connection in the United
States of America and the World ("Book of Discipline" or
"Discipline"), which contains rules and procedures that serve as
corporate bylaws of the Conference and Scotts Church. Scotts
Church regularly has sent delegates to Conference meetings
involving local church participation. It additionally has
concluded annual "pastoral contracts" with pastors selected for
it by the Conference, whom Scotts Church agreed to compensate and
retain on a yearly basis.
The pastoral contracts concluded for the 1990-91 and
1991-92 years state that the trustees of Scotts Church "will be
responsible as to all mentioned in the Book of Discipline
according to the 1958 AUFCMP Church, Inc., and any/all revisions
made to the Book of Discipline, entitled the Duties of the
Trustees." Def. exs. 3, 4. The contracts also provide that the
pastor of Scotts Church "is responsible to Trustees of the above
said mentioned Church, of the first part, [and] will be
responsible as to all mentioned in the Book of Discipline
according to the 1958 AUFCMP Church, Inc. and any/all revision[s]
made to the Book of Discipline, entitled The Duty of Ministers in
Charge." Id.
On January 19, 1991, the Conference held a meeting at
which the attendees approved a resolution entitled "Church
Property" ("Property Resolution"). The present dispute between
Scotts Church and the Conference implicates three portions of the
Property Resolution's text in particular. The first is a
paragraph entitled "Titles to Properties" and provides in
relevant part:
[T]itles to all properties held . . . by a
local church . . . shall be held in trust for
The African Union Methodist Protestant Church
and subject to the provisions of its
Discipline. Titles are not held by The
African Union Methodist Protestant Church or
by "The General Conference of The African
Union Methodist Protestant Church," but
instead by the incorporated conferences,
agencies, or organizations of the
denomination, or in the case of
unincorporated bod[i]es of the denomination,
by boards of trustees established for the
purpose of holding and administering
property.
Def. ex. 1 at C-1.
The second portion of the 1991 Property Resolution, a
group of paragraphs under the heading "Trust Clauses in Deeds,"
requires in part that "all written instruments of conveyance" by
which church properties are held or acquired for worship purposes
contain the following language:
In trust, that said premises shall be used,
kept, and maintained as a place of divine
worship of the African Union Methodist
Protestant ministry and members of The
African Union Methodist Protestant Church,
subject to the Discipline, usage, and
ministerial appointments of said church as
from time to time auth[or]ized and declared
by the General Conference and by the Annual
Conference within whose bounds the said
premises are situated. This provision is
solely for the benefit of the grantee, and
the grantor reserves no right or interest in
said premises.
Id. This "Trust Clauses in Deeds" portion of the Property
Resolution also provides that where a deed exists without the
required trust clause language, the local church nevertheless
owes a "responsibility and accountability" to the AUMP Church if
it has affirmed its affiliation by accepting a Conference-
appointed pastor. Id. at C-2. For purposes of his decision, the
magistrate judge assumed that this "responsibility and
accountability" language was intended to compel a local church to
hold its property in trust for the Conference even where the
governing deed omitted the required trust clause. App. at 21.
Finally, a paragraph of the Property Resolution
entitled "Incorporated Local Church Property -- Title and
Purchase," provides:
[T]he title to all property, now owned or
hereafter acquired by an incorporated local
church . . . shall be held by and/or conveyed
to the corporate body in its corporate name,
in trust for the use and benefit of such
local church and of The African Union
Methodist Protestant Church.
Def. ex. 1 at C-11. According to an affidavit and testimony from
Bishop Delbert Jackson, Presiding Prelate of the Conference, the
Property Resolution became an amendment to the Book of Disciplineupon
adoption. See Summ. Judg. Op. at 20; Trial Transcript at
41; see also Appellant's Brief at 8.
Some three months later, at a meeting held on
April 6, 1991, the Conference approved a "Signature Resolution"
which provides that "ministers in charge of [the local] churches
shall be empowered to sign official documents pertaining to the
individual local church and The Conference." Def. ex. 2; App. at
21-22. According to Bishop Jackson's affidavit, the Signature
Resolution, like the Property Resolution, constituted an
amendment to the Book of Discipline upon adoption. See Summ.
Judg. Op. at 21.
The Conference promptly used these two resolutions as
ostensible authority to take title to property held by the local
churches, a move that we are told generated a number of
lawsuits. At the April 6, 1991 meeting, the Conference --
invoking its newly adopted Signature Resolution -- instructed
Scotts Church pastor Dr. Eva M. Walters to sign a quitclaim deed
transferring Scotts Church's Baird Boulevard property to the
Conference. Dr. Walters signed the deed, which states that "the
trustees of the SCOTTS AFRICAN UNION METHODIST PROTESTANT CHURCH
have caused its name by Reverend Dr. Eva M. Walters, its Pastor,
to be hereunto set." Pl. ex. 3. The deed was recorded on April
26, 1991.
Scotts Church's certificate of incorporation dated 1915
provides that its trustees "shall not dispose of any real estate
so acquired by them as Trustees, except [as] such act be
authorized by a vote of two thirds of the members of said Church
Body." Pl. ex. 1. Neither the trustees nor the members of
Scotts Church approved the transfer of the Baird Boulevard
property, and on March 26, 1992 -- by a 24-0 vote of its members
-- Scotts Church opted to disaffiliate itself from the
Conference.
Scotts Church filed suit in January 1992 in the
Chancery Division of the Superior Court of New Jersey, Camden
County, seeking a declaratory judgment that the Conference held
no interest in the Baird Boulevard property and that the
quitclaim deed was invalid, as well as injunctive relief
preventing the Conference from asserting any ownership interest
in the property. The Conference, alleging both federal question
and diversity jurisdiction, had the case removed to the United
States District Court of New Jersey. Counterclaiming to have
"its" title to the Baird Boulevard property quieted, the
Conference also moved for dismissal of the action, summary
judgment, and imposition of Rule 11 sanctions. The Conference's
motions were denied.
In ruling on the summary judgment motion, the district
court addressed, inter alia, the Conference's argument that under
First Amendment principles the court must give deference to the
determinations of the Conference, as the highest authority in a
hierarchical church. The court rejected that argument, relying
on the New Jersey Supreme Court's opinion in Elmora Hebrew Center
v. Fishman, 593 A.2d 725 (N.J. 1991), to hold that the courts of
New Jersey would apply "neutral principles of law" to resolve
this dispute rather than deferring to the church hierarchy.
The parties consented to trial by a magistrate judge
(hereafter interchangeably referred to as the "trial court")
pursuant to 28 U.S.C. § 636(c) who, after a one-day bench trial,
determined the quitclaim deed invalid and granted the declaratory
and injunctive relief sought by Scotts Church. Scotts Church had
contended that the deed was invalid because Bishop Jackson had
fraudulently induced Dr. Walters to sign by falsely assuring her
that the Scotts Church trustees had already authorized the
transfer. The magistrate judge found no evidence to support that
assertion or the fact that Dr. Walters had relied upon any
representation regarding the trustees' approval upon signing the
deed. App. at 23.
Instead, the magistrate judge, applying "neutral
principles of law" in accordance with the district court's
summary judgment opinion, evaluated the relevant documents,
provisions, and factual circumstances, and determined that the
quitclaim deed was invalid and that Scotts Church retained title
to the disputed property. The content of that determination can
be described in terms of six distinct issues, though the opinion
itself was not organized accordingly.
(1) Scotts Church Certificate of Incorporation
The first was the text of Scotts Church's certificate
of incorporation, which dates from 1915. That certificate reads,
in relevant part:
AFRICAN UNION FIRST COLORED METHODIST
PROTESTANT CHURCH OF CAMDEN, NEW JERSEY.
THIS IS TO CERTIFY that we, Perry
Gleaves, Leonard S. Smith, John F. Bartee,
Thomas Kenaman, Enoch Grisden, Joseph Pierce,
and Charles Stewart, do hereby associate
ourselves into a corporation under and by
virtue of an act of the Legislature of the
State of New Jersey . . . .
1. The name of the association or
corporation is AFRICAN UNION FIRST COLORED
METHODIST PROTESTANT CHURCH OF CAMDEN, NEW
JERSEY.
2. The purposes for which this association
or corporation is formed are for the worship
of Almighty God in accordance with the
dictates of our consciences and the rules[,]
regulations, doctrines, practices and beliefs
of the African Union Colored Methodist
Protestant Church;
To acquire and possess property, both
real and personal, as Trustees as aforesaid,
by gift, grant or devise and to hold same in
trust for the uses and purposes of said
Church Body; to mortgage and dispose of the
same.
That said Trustees shall not dispose of
any real estate so acquired by them as
Trustees, except [as] such act be authorized
by a vote of two thirds of the members of
said Church Body, who shall have been members
in good standing in said Church Body for at
least one year before the date of the meeting
at which such action shall be proposed.
That the Trustees of said African Union
First Colored Methodist Protestant Church of
Camden, New Jersey shall, at the time of
their election, have been members of said
Church in good standing for at least one year
preceding their election . . . .
The successors to the Trustees
hereinbefore named shall be [e]lected by
ballot . . . at a meeting of the members of
the Church . . . .
. . . .
4. There shall be seven Trustees of this
association or corporation and the names of
those selected for the first year are as
follows. [The same seven names listed at the
beginning of the certificate are here
repeated, with accompanying Camden
addresses.]
Pl. ex. 1 (emphasis added).
The parties disputed, in particular, the meaning of the
second clause of Paragraph 2 ("To acquire and possess property
. . ."). Scotts Church argued that the phrase "said Church Body"
appearing in that clause referred to the same church body
appearing both at the top of the certificate and in Paragraph 1:
the "African Union First Colored Methodist Protestant Church of
Camden, New Jersey," (emphasis added), or Scotts Church. Scotts
Church contended, therefore, that its certificate of
incorporation specifically provided that property acquired by
Scotts Church would be held "in trust for the uses and purposes"
of Scotts Church, and prohibited the disposition of such property
unless authorized by a two-thirds vote of its members.
The Conference, on the other hand, insisted that the
same phrase "said Church Body" more naturally referred to the
denominational entity "African Union Colored Methodist Protestant
Church," the church body mentioned in the clause immediately
preceding it in Paragraph 2. It argued, therefore, that the
certificate of incorporation mandated that property acquired by
Scotts Church be held in trust for the AUMP Church.
The magistrate judge determined that the text of the
certificate supported Scotts Church's interpretation. First, he
observed that although the Paragraph 2 reference to the AUMP
Church specified adherence to the doctrine of that particular
denomination, the Conference itself as an administrative body was
nowhere mentioned in the document. See App. at 16-17.
Second, the magistrate judge interpreted the second
clause of Paragraph 2 in light of the clause immediately
following it, which permitted the disposition of property only
where "authorized by a vote of two thirds of the members of said
Church Body, who shall have been members in good standing in said
Church Body." The magistrate judge relied on the two-thirds vote
and members-in-good-standing references, and the improbability
that either would involve the entire population of the AUMP
organizational hierarchy, as strong indication that the recurring
phrase "said Church Body" referred to the Scotts Church
congregation proper. See App. at 17.
Third, the magistrate judge assumed arguendo, as the
Conference urged, that the Book of Discipline and Invisible
Strands, a historical tract, established that the African Union
Church was incorporated in 1813 and that the African Union Church
merged in 1865 with the First Colored Methodist Protestant Church
to form the African Union First Colored Methodist Protestant
Church. Nevertheless, he found those facts insufficient to
establish that the Conference was the same entity as, or legal
successor to, the African Union Church. The magistrate judge
reasoned that as the Conference had failed to show that it had
existed as a legal entity at any time before its own 1941
incorporation, it could not have been the legal beneficiary of a
1915 trust provision. He thus determined that Scotts Church's
1915 certificate of incorporation could not have directed the
holding of property in trust for the yet unformed Conference.
See App. at 12-14, 17.
Under the magistrate judge's interpretation of the
certificate of incorporation, Scotts Church's property was held
in trust for Scotts Church itself and subject to transfer only
upon trustee and congregation approval. It followed that the
April 6, 1991 quitclaim deed was invalid unless the Conference
could provide a basis for overriding the certificate of
incorporation.
(2) Property Resolution
The magistrate judge rejected the Conference's
contention that the Property Resolution could provide a basis for
the quitclaim deed. The magistrate judge observed that while the
language of the Property Resolution requiring local churches to
hold their property in trust for the AUMP Church may have imposed
upon the local churches certain obligations, none of its terms
empowered pastors to transfer property by signing deeds. The
magistrate judge determined that the resolution's text in fact
"required incorporated local churches to hold property in their
own name, in trust for the purposes of that local church and for
the AUMP Church," and therefore did not "legitimize a deed which
purports to transfer property out of the name of Scotts Church
and to [the Conference]." App. at 26.
In addition, the magistrate judge declared the Property
Resolution void because it was adopted at a meeting for which
inadequate notice had been provided. He noted that the Book of
Discipline did not establish notice requirements for Conference
meetings, and held that where a corporation's bylaws prescribe no
such requirements "notice shall be given as provided for in state
or local law." App. at 36. He therefore applied Title 8, § 222
of the Delaware Code requiring written notice of the place, time,
and purpose of a special meeting "not less than 10 nor more than
60 days before the date of the meeting." App. at 36-37 (quoting
Del. Code Ann. tit. 8, § 222(b)). Finding that no such notice
had been given, the magistrate judge declared the Property
Resolution to be the product of a procedurally defective meeting,
and therefore invalid.
(3) Signature Resolution
The magistrate judge also eliminated the Signature
Resolution as a possible basis for the validity of the April 6
quitclaim deed. As with the Property Resolution, the magistrate
judge first examined the language of the Signature Resolution and
noted that while the resolution authorized local pastors to sign
official business documents on behalf of local churches, nothing
in the Signature Resolution eliminated the specific requirement
applicable to Scotts Church that the church members first approve
property transfers. Rather, the Signature Resolution "merely
authorizes Dr. Walters to sign the deed once the vote has been
taken and action authorized." App. at 26.
This interpretation is confirmed by statements made at
the April 6, 1991 meeting by Bishop Jackson, and placed into
evidence by an audiotape of the meeting, which the magistrate
judge discussed as follows:
When asked whether the Signature Resolution
would override the authority of local church
trustees, the Bishop replied that the
resolution "does not take away the power of
the trustees." The Bishop repeatedly
reassured the members that the resolution did
not change existing procedures, that the
pastor and trustees are to work together in
any business action, and that the resolution
only gave the pastor the power to sign alongwith the trustees.
In response to one
member's concern that the pastor could
potentially act without the members'
knowledge and "squeeze" the trustees out of
power, the Bishop replied, "Before the pastor
or the trustees can do anything, they have to
take it back to the people."
The attorney present at the meeting to
present this resolution, K. Kay Shearin,
Esq., also assured the members that "what the
Bishop told you a few minutes ago was
absolutely right." Ms. Shearin explained the
impact of the Signature Resolution as simply
giving the local churches the power of the
Conference behind them when they want to
transact business, particularly when they
want to borrow money for expansion and
development projects. "We're not taking
anything away from the individual churches.
The local trustees still have their
authority."
App. at 26-27 (emphasis added) (citations omitted).
Viewing these assurances as further undercutting any
possibility that the Signature Resolution had displaced either
Scotts Church's two-thirds vote requirement for property
transfers or the autonomy of its trustees, the magistrate judge
held that the Signature Resolution, like the Property Resolution,
"did not provide authority for Dr. Walters to sign a deed
conveying the property in the absence of member and trustee
approval," and therefore could not establish the validity of the
quitclaim deed. App. at 27.
(4) Counterclaim/Secession Clause
The magistrate judge also rejected the Conference's
counterclaim to quiet title. The Conference had contended that
even if the quitclaim deed was invalid, once Scott Church
seceded, the Conference necessarily emerged as titleholder
because Scotts Church was to hold property in trust for the
Conference. The magistrate judge noted that the 1974 deed placed
title to the Baird Boulevard property in Scotts Church's name
without trust language, and thus neither the deed nor the text of
Scotts Church's certificate of incorporation bound Scotts Church
to hold the property in trust for the Conference.
The only remaining argument proffered by the Conference
in support of its counterclaim was based on a clause in the Book
of Discipline that all church property "belonging to the
Connection shall be deeded to the members and Connection, and
should the members disband or secede the property shall remain in
the possession of the Connection." Def. ex. 10; App. at 29. The
provision further states that "each local Church shall be so
incorporated that if the members should disband or secede, the
said Church and property shall remain in the Connection." Id.
This secession clause, which appeared in the seventeenth edition
of the Book of Discipline that was published in 1958, was
apparently omitted from the most recent eighteenth edition of
1986.
The magistrate judge rejected the applicability of the
secession clause on multiple grounds. First, he observed that
the clause appeared only in a section of the 1958 Disciplineentitled "The
Duty of Ministers in Charge." Def. ex. 10; App. at
29. Citing the text of the 1990-91 and 1991-92 pastoral
contracts, the magistrate judge concluded that the provisions of
that section bound only Scotts Church's pastor individually,
rather than the local church collectively.
Second, the magistrate judge determined that the 1958
Discipline's secession clause, omitted from the current 1986 18th
edition, was not effective at the time of Scotts Church's
secession from the Conference in 1992, nor during the pendency of
the 1990-92 pastoral contracts that required adherence to the
Book of Discipline.
Finally, the magistrate judge found that the terms of
the secession clause were so vague as to be inapplicable. The
clause specifies that, upon a local church's secession, the
church property "shall remain in the possession of the
Connection." The magistrate judge noted that the Book of
Discipline defined the "Connection" as "[t]he structural
organization of all AUMP Local Churches having a connected
network of compatible interdependent relationships to achieve the
purpose of the church," but defined the "Conference" in different
terms -- "[a]n administrative body in the struct[ure] of the AUMP
Church such as general, annual, district, quarterly and ch[u]rch
conference." Pl. ex. 5 at 157; App. at 31. Finding those
divergent descriptions enough to prevent the "broad assumption"
that property belonging to the Connection also belonged
"derivatively" to the Conference, and invoking the principle that
ambiguous language be construed against the drafter, the
magistrate judge determined the secession clause ineffective.
App. at 31-32.
(5) Constructive Trust
The magistrate judge declined the Conference's request
to create a constructive trust in its favor, finding that Scotts
Church did not obtain any unjust enrichment nor perform any
wrongful act. See App. at 32-33.
(6) Conflict Rule
Finally, the magistrate judge noted that where a
corporation's certificate of incorporation and bylaws are in
conflict, New Jersey law dictates that "the certificate of
incorporation ordinarily governs." App. at 38. Thus, the
magistrate judge concluded that even if the Conference's claims
regarding its Property Resolution were given full weight, the
Resolution would be ineffective because it conflicted with the
procedures in Scotts Church's certificate of incorporation for
the disposition of property.
The magistrate judge accordingly entered declaratory
judgment for Scotts Church, declaring the quitclaim deed invalid,
and further enjoined the Conference from claiming any ownership
interest in the disputed property. The Conference appeals. We
have jurisdiction pursuant to 28 U.S.C. § 1291. We must accept
the magistrate judge's findings of fact unless they are clearly
erroneous. Fed. R. Civ. P. 52(a); Grupo Protexa v. All American
Marine Slip, 20 F.3d 1224, 1231 (3d Cir.), cert. denied, 115 S.
Ct. 481 (1994); Goodman v. Lukens Steel Co., 777 F.2d 113, 128
(3d Cir. 1985), aff'd, 482 U.S. 656 (1987). Our review of the
legal conclusions, including the assessment of state law, is
plenary. Gruber v. Owens-Illinois Inc., 899 F.2d 1366, 1368 n.1
(3d Cir. 1990).
II.
Discussion
A. Federal Constitutional Law
The Conference argues that the magistrate judge erred
as a matter of law in applying neutral principles instead of the
principle of deference. To understand this contention, we must
travel through the Supreme Court's precedents involving
intrachurch property disputes, in which it has attempted to draw
a line between the constitutional interest in preserving the
autonomy of religious organizations, on the one hand, and the
civil interest in the definitive settlement of property disputes,
on the other. We review each of the applicable Supreme Court
decisions. As viewed seriatim, they provide historical
perspective to the current status of the law.
The first such case, Watson v. Jones, 80 U.S. (13
Wall.) 679 (1871), arose from a post-Civil War dispute between
pro- and anti-slavery factions of a Kentucky church that was a
member of the Presbyterian Church of the United States. The pro-
slavery group, which was the minority faction, claimed title to
the church property based on the fact that its views were more
consistent with the teachings of the Presbyterian Church at the
time of the Kentucky church's founding. The Presbytery of
Louisville, the next highest governing church body after the
church itself, declared the pro-slavery minority the true church
body and, therefore, rightful titleholder. The General Assembly,
however, the highest governing body in the Presbyterian Church,
decided in favor of the majority abolitionist faction instead.
The Watson Court, following the General Assembly's
result, ruled in the abolitionist group's favor, and in the
process established the following principles: federal courts are
competent to enforce express terms contained in trust instruments
governing the use or ownership of property. 80 U.S. at 723-24.
However, courts may not resolve nor inquire into matters of
religious doctrine in order to determine entitlements to
property. Id. at 725, 727-29. Where a dispute arises between
factions of an independent congregation, "the rights of such
bodies to the use of the property must be determined by the
ordinary principles which govern voluntary associations;" if the
church had always governed itself by majority rule, for example,
the majority faction would prevail. Id. at 725. Finally, where
the dispute is between subordinate and superior bodies of a
single hierarchical church organization, and
whenever the questions of discipline or of
faith, or ecclesiastical rule, custom or law
have been decided by the highest of these
church judicatories to which the matter has
been carried, the legal tribunals must accept
such decisions as final, and as binding on
them, in their application to the case before
them.
Id. at 727.
The Watson approach is popularly termed the "deference"
approach, and requires judicial recognition of the decisions of a
hierarchical church's highest body on matters of discipline,
faith or ecclesiastical rule, custom or law. Although Watson was
decided before the Fourteenth Amendment was interpreted to render
the First Amendment applicable to the states, and therefore
cannot strictly be termed a "constitutional" interpretation,
later Supreme Court opinions have recognized its holding as
grounded in concerns of constitutional dimension. See, e.g.,
Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 116 (1952).
The Watson rule of deference was further defined in
Gonzalez v. Roman Catholic Archbishop, 280 U.S. 1 (1929), a case
in which a layman sued the Archbishop, claiming a right to be
appointed to a chaplaincy and to receive a concomitant income
according to the terms of a trust created 100 years earlier by an
ancestor. The Archbishop had refused to appoint the plaintiff on
the ground that he did not meet the qualifications for a chaplain
specified by the 1918 Code of Canon Law. The Supreme Court
rejected the Archbishop's contention that secular courts lacked
any jurisdiction over the case because of the ecclesiastical
nature of the dispute, holding instead that there was subject
matter jurisdiction because the suit involved an attempt to
enforce the terms of a trust. Id. at 16. Nonetheless, the Court
deferred to the Archbishop's decision to deny the petitioner the
chaplaincy, holding:
Because the appointment is a canonical act,
it is the function of the church authorities
to determine what the essential
qualifications of a chaplain are and whether
the candidate possesses them. In the absence
of fraud, collusion, or arbitrariness, the
decisions of the proper church tribunals on
matters purely ecclesiastical, although
affecting civil rights, are accepted in
litigation before the secular courts as
conclusive, because the parties in interest
made them so by contract or otherwise.
Id. at 16 (emphasis added) (footnote omitted). Thus, while
Watson directed blanket judicial deference to determinations of a
church's highest body in ecclesiastical matters, dictum in
Gonzalez suggested there could be some judicial review of church
decisions in those exceptional cases in which "fraud, collusion,
or arbitrariness" was alleged.
The next case, Kedroff v. Saint Nicholas Cathedral, 344
U.S. 94 (1952), involved a dispute over use and occupancy of the
Russian Orthodox cathedral in New York between Archbishop Leonty,
elected to preside over all Russian Orthodox churches in America
by the local churches themselves, and Archbishop Fedchenkoff,
appointed to preside over the same churches by the Supreme Church
Authority in Moscow. The decision as to the rightful occupant
turned on which of the two had been validly selected as ruling
hierarch for the American churches. The Supreme Court ruled in
Fedchenkoff's favor, stating that matters of "ecclesiastical
government" were among those "questions" marked by Watson as out-
of-bounds for civil adjudication, id. at 115, and noting that
"[e]ven in those cases when the property right follows as an
incident from decisions of the church custom or law on
ecclesiastical issues, the church rule controls," id. at 120-21
(footnote omitted).
The Court's subsequent opinion in Presbyterian Church
in the United States v. Mary Elizabeth Blue Hull Memorial
Presbyterian Church, 393 U.S. 440 (1969), is of particular
significance to the issue before us. That case involved the
decision of two Presbyterian churches in Georgia to withdraw from
the national Presbyterian Church in the United States because of
the latter's progressive tendencies (ordination of women, church
pronouncements on political issues, etc.). The general church
acknowledged their withdrawal and attempted to reabsorb the local
church properties. The local churches responded with lawsuits in
state court.
Holding that Georgia law implied a trust of local
church property for the benefit of the general church so long as
the general church adhered to the same "tenets of faith and
practice existing at the time of affiliation by the local
churches," the state trial court presented the case to a jury,
which was instructed to determine whether the general church's
actions constituted a "substantial abandonment" of its "original
tenets and doctrines." Id. at 443. The jury found in favor of
the local churches, and the Supreme Court of Georgia affirmed.
The Supreme Court of the United States overturned the
decision, explaining that
[i]t is obvious . . . that not every civil
court decision as to property claimed by a
religious organization jeopardizes values
protected by the First Amendment. Civil
courts do not inhibit free exercise of
religion merely by opening their doors to
disputes involving church property. And
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. But
First Amendment values are plainly
jeopardized when church property litigation
is made to turn on the resolution by civil
courts of controversies over religious
doctrine and practice.
393 U.S. at 449 (emphasis added).
Thus, as an alternative to the Watson/Gonzalezdeference approach
where the courts would be "engaging in the
narrowest kind of review of a specific church decision [to
determine] whether [the decision] resulted from fraud, collusion,
or arbitrariness," id. at 451, the Presbyterian Church Court
suggested that the Georgia courts could apply "neutral
principles" of secular property law to resolve intrachurch
disputes.
One year later, in Maryland and Virginia Eldership of
the Churches of God v. Church of God at Sharpsburg, Inc., 396
U.S. 367 (1970), the Supreme Court upheld a state court's
application of this "neutral-principles" approach in a three-
sentence per curiam opinion. The case involved an intrachurch
property dispute between the General Eldership of the church and
two secessionist congregations. Citing the Maryland appeals
court's reliance "upon provisions of state statutory law
governing the holding of property by religious corporations, upon
language in the deeds conveying the properties in question to the
local church corporations, upon the terms of the charters of the
corporations, and upon provisions in the constitution of the
General Eldership pertinent to the ownership and control of
church property," the Court concluded that "resolution of the
dispute involved no inquiry into religious doctrine" and
therefore did not violate the First Amendment. Id. at 367-68.
Justice Brennan, apparently intent on providing state
courts with some explanatory guidance, filed a concurring
opinion, outlining the acceptable approaches to intrachurch
disputes: "[A] State may adopt any one of various approaches for
settling church property disputes so long as it involves no
consideration of doctrinal matters, whether the ritual and
liturgy of worship or the tenets of faith." Id. at 368 (Brennan,
J., concurring) (emphasis in original).
Justice Brennan identified and contrasted the deference
approach and the neutral-principles approach. A state may adopt
the deference approach taken in Watson and "enforce the property
decisions" made within a church of congregational or hierarchical
polity unless "'express' terms in the 'instrument by which the
property is held' condition the property's use or control in a
specified manner." Id. at 368-69 (quoting Watson, 80 U.S. at
722). The latter instance would be appropriate for application
of the neutral-principles approach in intrachurch disputes.
Citing Presbyterian Church, Justice Brennan stated: "'[N]eutral
principles of law, developed for use in all property disputes,'
provide another means for resolving litigation over religious
property. Under the 'formal title' doctrine, civil courts can
determine ownership by studying deeds, reverter clauses, and
general state corporation laws." Id. at 370. He cautioned,
however, that "general principles of property law may not be
relied upon if their application requires civil courts to resolve
doctrinal issues. For example, provisions in deeds or in a
denomination's constitution for the reversion of local church
property to the general church, if conditioned upon a finding of
departure from doctrine, could not be civilly enforced." Id.(emphasis
added) (footnote omitted).
The dispute in Serbian Eastern Orthodox Diocese for the
United States and Canada v. Milivojevich, 426 U.S. 696 (1976),
the next case in the series, was over control of the Serbian
Eastern Orthodox American-Canadian Diocese, its property and its
assets. In response to complaints about the Diocese's Bishop,
Bishop Dionisije, the central church removed him as Bishop and
reorganized the American-Canadian Diocese into three new
dioceses. The Diocesan National Assembly subsequently repudiated
the central church's actions and declared the Diocese completely
autonomous. Bishop Dionisije filed suit in state court seeking
injunctive and declaratory relief.
The Illinois Supreme Court entered judgment that
invalidated Bishop Dionisije's removal as "arbitrary" because the
removal proceedings were not conducted according to the court's
interpretation of the Church's constitution and penal code and
voided the Diocesan reorganization as beyond the scope of the
central church's authority. Id. at 708. The United States
Supreme Court overturned both parts of the judgment, and
explained:
The fallacy fatal to the judgment . . . is
that it rests upon an impermissible rejection
of the decisions of the highest
ecclesiastical tribunals of this hierarchical
church upon the issues in dispute, and
impermissibly substitutes its own inquiry
into church polity and resolutions based
thereon of those disputes.
Id.
The Court declared that "where resolution of the
disputes cannot be made without extensive inquiry . . . into
religious law and polity," courts must accept the applicable
decision of the highest church body in a hierarchical church as
binding. Id. at 709. The Court noted (1) that the First
Amendment's command that civil courts refrain from resolving
controversies over religious doctrine "applie[d] with equal force
to church disputes over church polity and church administration,"
id. at 710, (2) that, Gonzalez notwithstanding, no
"arbitrariness" exception existed "in the sense of an inquiry
whether the decision of the highest ecclesiastical tribunal of a
hierarchical church complied with church laws and regulations,"
id. at 713, (3) that the court's evaluation of conflicting
testimony concerning internal church procedures and rejection of
the highest church body's interpretations were particularly
inappropriate, id. at 718-19, (4) that reliance on "neutral
principles" could not justify a court's substitution of its own
interpretation of church rules for that of the church's highest
body, id. at 721, and (5) that the church constitutional
provisions at issue "were not so express that the civil courts
could enforce them without engaging in a searching and therefore
impermissible inquiry into church polity," id. at 723.
The final case in the series, Jones v. Wolf, 443 U.S.
595 (1979), gives shape to the proper modern judicial approach to
intrachurch disputes. Jones arose from a dispute between two
factions of a Presbyterian church congregation in Macon, Georgia
over possession and use of the church property. The church had
always been a member of the Presbyterian Church in the United
States ("PCUS"), but a majority of the congregation voted to
disassociate the church from the PCUS and join the Presbyterian
Church in America. The Augusta-Macon Presbytery, the next
highest body in the PCUS hierarchy after the congregation itself,
appointed a commission to investigate and it ruled the minority
faction constituted the "true congregation." So armed, the
minority faction sued in state court for exclusive possession and
use of the church property.
Georgia's courts had adopted the neutral-principles
approach to resolve intrachurch property disputes and, purporting
to apply them, the trial court reasoned that because the deed
conveyed the property to the local church, and neither state law,
the corporate charter of the local church, nor the constitution
of the general church created any trust in favor of the general
church, legal title to the property was vested in the local
congregation. Then, without further elaboration, the trial court
declared the majority faction to be the "true congregation"
entitled to possession. The Georgia Supreme Court affirmed.
The United States Supreme Court upheld the Georgia
Supreme Court's reliance on the neutral-principles approach and
reaffirmed the viability of that approach under the Constitution.
The Court stated that "[t]he primary advantages of the neutral-
principles approach are that it is completely secular in
operation, and yet flexible enough to accommodate all forms of
religious organization and polity." Id. at 603. It continued,
"[t]he method relies exclusively on objective, well-established
concepts of trust and property law familiar to lawyers and
judges. It thereby promises to free civil courts completely from
entanglement in questions of religious doctrine, polity, and
practice." Id.
The Court noted that although the Augusta-Macon
Presbytery, the highest church body to decide the question, had
declared the minority faction to be the congregation, the Georgia
Supreme Court had determined just the opposite. Significantly,
notwithstanding Watson's deference approach and the decision in
Milivojevich, the Supreme Court did not hold that the result by
the Georgia courts could not be sustained. Instead, the Court
held that there was no requirement that the Georgia Supreme Court
adopt a rule of compulsory deference. Nonetheless, because the
basis for the Georgia courts' decision that the majority faction
represented the "true congregation" of the local church was
unclear and was made without adequate analysis, the Supreme Court
remanded for determination by the Georgia courts whether that
state had adopted a presumptive rule that a voluntary religious
organization is represented by a majority of its members. If so,
then the Georgia courts' judgment awarding the property to the
majority faction would stand under the neutral-principles
approach. However, the Court cautioned that if Georgia law
provided instead that a congregation's identity should be
determined according to the rules of the hierarchical parent
church, the Georgia courts would owe deference to the
Presbytery's determination in favor of the minority faction. Seeid. at
609.
It is evident from the above that before we can apply
the instructions learned from the Supreme Court's cases to the
issue at hand, we must determine whether the district court
correctly ruled that New Jersey has adopted the neutral-
principles approach. To do so, we examine the leading cases in
that state.
B. New Jersey Law
Subsumed in the Conference's legal argument is its
understanding that New Jersey has not adopted the neutral-
principles approach. It is certainly true that in Protestant
Episcopal Church v. Graves, 417 A.2d 19 (N.J. 1980), cert.denied, 449 U.S.
1131 (1981), the New Jersey Supreme Court
reviewed the history and workings of both the deference and
neutral-principles approaches and, over a strong dissent that
favored the neutral-principles approach, announced:
In the absence of express trust provisions,
we conclude that the hierarchical (Watson)
approach should be utilized in church
property disputes in this State. Only where
no hierarchical control is involved, should
the neutral principles of law principle be
called into play.
Id. at 24.
In that case, a local Protestant Episcopal church had
voted to disaffiliate from the New Jersey Diocese and the larger
church organization, and the Diocese sued to restrain the
dissenting parishioners from any use of the church property not
sanctioned by the Diocese. Although the Conference argues that
this case is controlling, it is distinguishable from the Scotts
Church dispute in a critical respect. Unlike the present case in
which the deed names the local church itself, title to the
property at issue in Graves was in the Rector, Wardens and
Vestrymen of the local church. Ownership therefore turned on who
held those positions, which was a hotly contested subject of
dispute between the parties. The Rector had been
"ecclesiastically deposed" by the Diocese and the Wardens and
Vestrymen had arguably disqualified themselves from holding those
offices by disaffiliating from the central church.
This dispute was clearly one of church governance. As
the Graves court observed: "The basic dispute herein is
unquestionably doctrinal in nature, the ecclesiastical
determination of which incidentally affects the control over
local church property." Id. (citing Milivojevich, 426 U.S. 696
(1976)). Thus, even under a neutral-principles approach, the
court would have had to defer to the resolution of the
authoritative ecclesiastical body. See Jones v. Wolf, 443 U.S.
at 604 (under neutral principles, where deed incorporates
religious concepts in provisions relating to ownership, and
interpretation would require court to resolve religious
controversy, court must defer to church hierarchy).
The deference rule was summarily applied by the New
Jersey court to resolve another intrachurch property dispute
between a diocese of the Protestant Episcopal Church and local
church officials decided the same day and involving virtually
identical facts. See Diocese of Newark v. Burns, 417 A.2d 31, 33
(N.J. 1980) ("All of these contentions as well as the ancillary
points raised by defendants have been considered and disposed of
in our opinion in Graves. There we approved the hierarchical
church approach utilized in Watson v. Jones."), cert. denied, 449
U.S. 1131 (1981). Three years later, when the New Jersey Supreme
Court was confronted again with an intrachurch dispute, this time
involving employment rather than property in a congregational
(non-hierarchical) church, see Chavis v. Rowe, 459 A.2d 674, 678
(N.J. 1983), the court reaffirmed its declaration in Graves that
the choice between the Watson or the neutral-principles approach,
"depend[s] on the church structure," and held that "New Jersey
courts are to use neutral principles in adjudicating property
disputes within a congregational church." 459 A.2d at 678.
Were these the only applicable cases considering the
issue, we would find problematic the district court's decision
here, followed by the magistrate judge, to apply the neutral-
principles approach inasmuch as it appears that the AUMP Church
is hierarchical. However, the district and magistrate judges
relied on the New Jersey Supreme Court's later decision in Elmora
Hebrew Center, Inc. v. Fishman, 593 A.2d 725 (N.J. 1991), where
the court stated that in resolving intrachurch disputes "a court
may, where appropriate, apply neutral principles of law to
determine disputed questions that do not implicate religious
doctrine." Id. at 730.
The Conference, though conceding that "[it] is not
clear what election New Jersey has made between deference and
neutral principles," Appellant's brief at 21, argues that because
Elmora Hebrew Center involved an employment rather than a
property dispute, it is not controlling here and that Graves is
authoritative evidence of New Jersey's adoption of the deference
rule in church property disputes. It views Graves as the only
strictly "authoritative" declaration of the state supreme court
because it, like this case, involved a property dispute within a
hierarchical church organization whereas the subsequent New
Jersey Supreme Court opinions featuring discussion of the
deference and neutral-principles approaches, including Elmora
Hebrew Center, were rendered in non-property contexts.
However, the Conference offers no principled basis for
treating property disputes differently from other types of civil
disputes in this regard, nor has the New Jersey Supreme Court
suggested that such a distinction is relevant. Rather, that
court has indicated, particularly in its most recent opinions on
this issue, that the appropriate level of review turns not on the
type of civil dispute involved but on the extent to which the
dispute implicates questions of religious doctrine or polity.
As a federal court sitting in diversity, we must
predict how the state supreme court would resolve a given dispute
where the applicable state law is unclear. See Clark v. Modern
Group Ltd., 9 F.3d 321, 326 (3d Cir. 1993). In forming that
prediction, the federal court "must consider relevant state
precedents, analogous decisions, considered dicta, scholarly
works, and any other reliable data tending convincingly to show
how the highest court in the state would decide the issue at
hand." McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657, 663
(3d Cir.), cert. denied, 449 U.S. 976 (1980).
We have recognized, along with respected commentators,
that "[c]onsidered dicta by the state's highest court may provide
a federal court with reliable indicia of how the state tribunal
might rule on a particular question," and be considered
"'conclusive,'" particularly if it is "'a carefully considered
statement by the state court.'" Id. at 662 & n.21 (quoting C.
Wright, Law of Federal Courts, § 58, at 270 (3d ed. 1976)).
We have even stated that "a federal court sitting in
diversity may diverge from existing precedent when there is
sufficient evidence that the highest state court would be willing
to entertain a change in its common law." W.A. Wright, Inc. v.
KDI Sylvan Pools, Inc., 746 F.2d 215, 218 (3d Cir. 1984); seealso Becker
v. Interstate Properties, 569 F.2d 1203, 1206 (3d
Cir. 1977) ("[A] federal court must be sensitive to the doctrinal
trends of the state whose law it applies."). "[R]elevant state
precedents must be scrutinized with an eye toward the broad
policies that informed those adjudications, and to the doctrinal
trends which they evince." McKenna, 622 F.2d at 662 (quoting 1A
Moore's Federal Practice, ¶ 0.307, at 3077 (2d ed. 1979)).
Five recent decisions show the New Jersey courts'
movement towards a rule that calls for application of neutral
principles regardless of church structure, as long as the dispute
does not entangle the court in questions of religious doctrine or
governance. In McElroy v. Guilfoyle, 589 A.2d 1082 (N.J. Super.
Ct. Law Div. 1990), a Roman Catholic priest sued the Camden
Diocese and two of its bishops, claiming they had breached a
promise to pay legal fees the priest incurred in defending
against criminal charges. Despite the clearly hierarchical
structure of the Roman Catholic Church, the court applied neutral
principles, declaring that
secular courts may decide civil disputes
between a religious body and its members or
its clergy if those disputes involve purely
secular issues and can be resolved without
entanglement with matters of faith,
discipline or doctrine. In such cases,
courts are to apply neutral principles of law
to the facts presented.
Id. at 1083-84 (citation omitted). As this was not the state's
supreme court, the impact of the court's recommendation of
neutral-principles analysis would be limited, but for the state
supreme court's later acceptance of precisely the same analysis.
A year later in Elmora Hebrew Center, a case involving
a suit by a synagogue seeking enforcement of its discharge of a
rabbi, the New Jersey Supreme Court signalled a realignment in
support of the neutral-principles approach in property disputes:
[C]ourts have arrived at several acceptable
means for confining their adjudications to
the proper civil sphere. Civil courts can
accept the authority of a recognized
religious body in resolving a particular
doctrinal question. In disputes involving a
church governed by a hierarchical structure,
courts should defer to the result reached by
the highest church authority to have
considered the religious question at issue.
Similarly, in disputes involving a church
with a congregational structure, courts
should defer to resolutions by a majority (or
other appropriate subgroup) of the church's
governing body.
Without regard to the governing
structure of a particular church, a court
may, where appropriate, apply neutral
principles of law to determine disputed
questions that do not implicate religious
doctrine. "Neutral principles" are wholly
secular legal rules whose application to
religious parties or disputes does not entail
theological or doctrinal evaluations.
593 A.2d at 729-30 (emphasis added) (citations omitted).
Thus, in Elmora Hebrew Center the New Jersey Supreme
Court appears to have abandoned the bright-line rule formed in
Graves and Chavis that the deference approach be applied to
disputes in hierarchical churches and the neutral-principles
doctrine be applied to disputes in congregational churches.
Particularly significant is the New Jersey Supreme Court's
statement in Elmora Hebrew Center that "[t]his 'neutral
principles' approach is particularly suited to adjudications of
property disputes," id. at 730, and that "[t]he application of
the 'neutral principles' doctrine presents the potential
advantage of permitting parties to assure a consistent approach
to questions of property ownership or church membership by
inclusion of appropriate terms in deeds, contracts, or by-laws,"
id. The court's glowing, and certainly gratuitous, commendation
of neutral-principles analysis in intrachurch property disputes
strongly suggests a willingness to shift accordingly in an
appropriate case.
The same indication was given by the state supreme
court a year later in a pair of cases decided the same day. In
Welter v. Seton Hall University, 608 A.2d 206 (N.J. 1992), former
nuns who had been discharged by Seton Hall, a Catholic
university, sued, alleging that the University had breached their
employment contracts. A court of the state's appellate division
had concluded that the dispute was not one for civil
adjudication, but the New Jersey Supreme Court reversed. Citing
"Justice Handler's comprehensive opinion" in Elmora Hebrew
Center, the New Jersey Supreme Court stated categorically that
"[i]n appropriate circumstances a court may apply neutral
principles of law to determine disputed questions that do not
implicate religious doctrine." Id. at 212.
The court emphasized that a court's choice between the
deference and neutral-principles approaches should turn on
whether the dispute implicates questions of religious doctrine or
polity. "Only when the underlying dispute turns on doctrine or
polity should courts abdicate their duty to enforce secular
rights. Judicial deference beyond that demarcation would
transform our courts into rubber stamps invariably favoring a
religious institution's decision regarding even primarily secular
disputes." Id. at 213.
Perhaps alluding to Graves, it further explained:
This case differs markedly from the vast
majority of previous intra-religion cases,
which challenged deprivations of a party's
status within a religion and which concerned
only incidental deprivations of the secular
trappings of that former status within the
faith. Just as the existence of a tangential
secular issue does not authorize civil courts
to override primarily doctrinal
determinations by authorities in hierarchial
[sic] religions, inconsequential doctrinal
issues that were irrelevant to the employment
relationship do not preclude doctrinally-
objective enforcement of a secular interest
pursuant to a secular agreement.
Id. at 217 (emphasis added) (citation omitted).
The other case decided by the New Jersey Supreme Court
that day, Alicea v. New Brunswick Theological Seminary, 608 A.2d
218 (N.J. 1992), provided an example of a case in which judicial
application of neutral principles was not appropriate. There a
professor brought suit against a seminary alleging breach of an
employment promise. Determining that the professor performed a
"ministerial function" and held "doctrinally-sensitive"
responsibilities, the court concluded that to interfere in the
church's employment decisions regarding such a position would
necessarily involve impermissible entanglement in matters of
church polity. Id. at 223-24. The court cited extensively to
its opinions in Elmora Hebrew Center and Welter but made no
reference to Graves.
Finally, in Ran-Dav's County Kosher, Inc. v. State, 608
A.2d 1353 (N.J. 1992), cert. denied, 507 U.S. 952 (1993), the New
Jersey Supreme Court's opinion reinforced limitation of the
Watson approach to only those property disputes that are
doctrinally charged, and affirmatively endorsed the use of
neutral-principles analysis in property disputes:
We recognized in Elmora Hebrew Center that
civil courts may resolve controversies
involving religious groups if resolution can
be achieved by reference to neutral
principles of law, but that they may not
resolve such controversies if resolution
requires the interpretation of religious
doctrine. Neutral principles may be
particularly suited for adjudications of
property disputes, or civil contract actions,
but not where disputes involve
interpretations of religious doctrine itself.
Id. at 1363 (citations omitted).
The New Jersey cases we have examined show a decided
progression of New Jersey court decisions toward adoption of a
neutral-principles approach in resolving intrachurch property
disputes like the one before us. We thus conclude that the
magistrate judge's application of that approach was not
inconsistent with the law of New Jersey, and therefore not legal
error. We turn then to examine the Conference's contentions in
light of this legal background.
C. Analysis in Light of "Neutral Principles"
The Conference contends that its dispute with Scotts
Church is an intrachurch governance dispute, one over church
organization or administration, and not simply one over ownership
of property. It argues that, therefore, whether the forum state
has adopted the approach requiring deference or neutral
principles, a court is obligated to defer to superior church
authority.
We reject that argument, as did the trial court,
because it is clear that this dispute is hardly one of
"governance." Unlike the issue in Kedroff, which entailed a
decision whether the Russian Orthodox Archbishop in America had
been properly selected, or in Milivojevich, which centered on
whether the Serbian Orthodox Bishop in North America had been
properly removed, this case is only incidentally ecclesiastical.
Instead, it consists almost entirely of a raw dispute over
property rights. In Milivojevich the Supreme Court distinguished
between the two, stating, "this case essentially involves not a
church property dispute, but a religious dispute the resolution
of which under our cases is for ecclesiastical and not civil
tribunals." 426 U.S. at 709.
The Conference suggests that its decision in April 1991
to require all the congregations to quitclaim their real property
interests was one of governance, but that action was not nearly
as doctrinally charged as that in Jones v. Wolf, 443 U.S. 595
(1975), where the Presbyterian Church declared one faction of a
divided congregation to be the "true" congregation. Yet even in
Jones, the United States Supreme Court authorized the Georgia
courts to use neutral principles to override the hierarchical
church's determination.
More importantly, the extent to which a court may
permissibly inquire into disputes of this kind turns on the
specific elements of the inquiry itself and the degree to which
it might trench upon doctrinally sensitive matters, rather than
on conclusory labelling of the whole dispute as either "secular"
or "ecclesiastical." Examination of the trial court's
determinations here shows that most of them were unquestionably
free of doctrinal relevance. The trial court's finding that the
phrase in Scotts Church's certificate of incorporation, "to hold
same in trust for the uses and purposes of said Church Body,"
referred to Scotts Church was based principally on the absence of
any mention of the Conference in the certificate's text, and the
reappearance of the phrase "said Church Body" in the same
certificate's two-thirds vote and members-in-good-standing
provisions. Neither consideration implicates "questions of
religious doctrine, polity, [or] practice." Jones, 443 U.S. at
603.
The trial court used similar legal analysis of language
in rejecting the Signature Resolution as a basis for the
quitclaim deed's validity, noting that its text had nothing to
say about property transfers. In doing so, the court accepted
the representations of Conference officials regarding the
Resolution's limited effect. Neither of these passive inferences
was anything more than the neutral, fact-driven conclusion that
every conventional property or contract suit demands.
Although some aspects of the trial court's opinion --
interpreting provisions of the Book of Discipline, for example --
may have touched on the church-governance sphere, they were
irrelevant to the ultimate determination. The trial court's
alternative ground for decision, its application of the state-law
conflict rule, was free of doctrinal implications and provides an
adequate basis for affirmance.
The trial court determined that even if the terms of
the Book of Discipline, including the Property Resolution, were
assumed effective and binding on Scotts Church, they simply
functioned as Scotts Church's corporate bylaws. See N.J. Stat.
Ann. § 15A:1-2(c) ("'Bylaws' means the code of rules adopted for
the regulation or management of the affairs of the corporation
irrespective of the name by which these rules are
designated[.]"). Indeed, the Conference itself described the
Book of Discipline as "bylaws" at oral argument. Because those
terms conflicted with Scotts Church's certificate of
incorporation, which requires a two-thirds vote by church members
before any property is transferred, and because New Jersey law
states that in such conflicts the certificate prevails, it
followed that the two-thirds vote requirement had not been
overridden, and no property transfer had been effected. See App.
at 38-39. Since the Signature Resolution was an amendment to the
Book of Discipline and the secession clause was one of its
original provisions, they are also by-laws which under New Jersey
law cannot override Scotts Church's certificate of incorporation.
The trial court's application of the conflict rule was
consistent with the well-established rule in New Jersey that
provisions of a corporation's charter or articles of
incorporation enjoy priority over contradictory or inconsistent
by-laws. See Leeds v. Harrison, 87 A.2d 713, 717-18, 720 (N.J.
1952) (religious nonprofit corporation may adopt by-laws only "if
conformable and subordinate to" corporation's charter);
L.L. Constantin & Co. v. R.P. Holding Corp., 153 A.2d 378, 383
(N.J. Super. Ct. Ch. Div. 1959) ("[W]here inconsistency exists
between by-laws and certificate of incorporation, the latter
ordinarily governs . . . ."); see also Elkins v. Camden &
Atlantic Railroad Co., 36 N.J. Eq. 467, 468-69 (N.J. Ch. 1883);
Kearney v. Andrews, 10 N.J. Eq. 70, 72-74 (N.J. Ch. 1854); Model
Business Corporation Act Annotated § 2.06(c) (3d ed. 1993); 18
C.J.S. Corporations §§ 112(a), 114(a), 115(d) (1990); 18A Am.
Jur. 2d Corporations §§ 313, 314 (1985 & Supp. 1996).
The trial court's holding was also consistent with the
Delaware Court of Chancery's resolution of a case nearly
identical to this one filed against the Conference by a local
Delaware AUFCMP church that involved a quitclaim deed signed at
the same April 6, 1991 meeting at issue here. See Mother AUFCMP
Church v. Conference of AUFCMP Church, No. 12055, 1991 WL 85846
(Del. Ch. May 16, 1991). As in this case the Conference defended
the validity of the quitclaim deed by reference to the Property
and Signature Resolutions and, as in this case, the local
church's certificate of incorporation pre-dated the incorporation
of the Conference in 1941 and specified that property could not
be transferred without the consent of two-thirds of the members
of the local church. The court's language in that decision could
apply equally to Scotts Church:
[B]y the defendants' own characterization,
those documents [the Property and Signature
Resolutions] occupy, at best, the status of
by-laws of the [local church]. Assuming
without deciding the validity of that
characterization, the January 12th "by-law"
placing local church properties "in trust"
for the Conference runs afoul of the
principle that where a by-law conflicts with
the provisions of the charter, the by-law is
a nullity.
Id. at *8; see also St. Thomas AUMP Church v. Conference of
AUFCMP Church, No. 13006-NC, 1995 WL 694390 (Del. Ch. Nov. 6,
1995) (applying collateral estoppel to the Conference's claims
based on the adverse decision Mother AUFCMP Church).
Thus, even if the Conference's claims regarding its
Property Resolution, Signature Resolution, and secession clause
are given full weight, under basic, well-established principles
of state law, they cannot override the certificate of
incorporation's two-thirds vote requirement. Application of this
neutral rule of priority effectively disposes of the Conference's
principal contentions without engagement of any ecclesiastically
sensitive issues. Significantly, the Conference has not
mentioned -- let alone challenged -- this independent basis for
the trial court's decision.
The Conference's remaining arguments are decidedly less
compelling, and we discuss each of them only briefly.
The Conference devotes much of its briefs to its
contention that the magistrate judge erred in rejecting its claim
that it is the legal successor to the 1813 "Union Church of
Africans," arguing that the judge erroneously failed to admit
evidence proving that fact and that these errors "caused most of
its other errors." See Brief of Appellant at 14-16.
Paradoxically, at oral argument, it conceded that this issue is
"not important." In any event, the argument is inconsequential.
Even if the Conference were assumed to be successor to the Union
Church, that at most suggests that the term "said Church Body" in
Scotts Church's 1915 certificate of incorporation could have
referred to a denominational church already extant at that time.
The magistrate judge, however, concluded that "said Church Body"
referred to Scotts Church itself, and did so on the independent
ground that the portion of the certificate of incorporation
requiring "a vote of two thirds of the members of said Church
Body, who shall have been members in good standing in said Church
Body" was a clear indication that "said Church Body" was the
Scotts Church congregation proper, not the entire AUMP hierarchy.
See App. at 16-17.
The Conference also argues that the trial court erred
in determining that the Conference had not contributed any of the
money paid for the Baird Boulevard property. That is a factual
finding that is not clearly erroneous. In any event, absent
either an indication that any controlling terms in the relevant
instruments tied property entitlement to actual expenditure or
some request for equitable intervention, the source of the
purchase price is irrelevant. To the extent the decision by the
trial court turned on its findings of fact, we conclude that none
of the dispositive findings is clearly erroneous. See Fed. R.
Civ. P. 52(a).
III.
Conclusion
To summarize, we view as correct the district court's
determination that a neutral-principles approach may be applied
in New Jersey to resolve hierarchical intrachurch property
disputes. We additionally find no error in the magistrate
judge's application of neutral-principles analysis and resulting
substantive determinations that the April 6, 1991 quitclaim deed
is invalid and that Scotts Church remains the valid titleholder
to its Baird Boulevard property. We will therefore affirm the
judgment of the district court.
TO THE CLERK:
Please file the foregoing opinion.
Chief Judge