The South Carolina Supreme Court gave the national Episcopal Church (“TEC’) a good kick in the teeth last week when it ruled that one of the former parishes in the Episcopal Diocese of South Carolina, All Saints Church on Pawley’s Island, is the rightful owner of its church buildings and other real property. All Saints, which left TEC and the Diocese of South Carolina in 2000, is one of dozens of parish churches that has seceded from TEC over the years. TEC, and its constiuent dioceses, claims that it is the rightful owener of the property of such seceding parishes as a consequence of a provision in its canons that purports to establish a trust in favor of TEC over such property.

Numerous parish churches have challenged the validity of the trust provision without success. The South Carolina Supreme Court, however, categorically rejected the trust theory, holding that a party cannot unilaterally declare a trust over property to which it did not hold legal title. As such the TEC property canon, in South Carolina at least, is unenforceable as a matter of law. And so All Saints – and any other parish in the Diocese of South Carolina that wants to leave – is free.

There has been much buzz on the internet – at least in some of the arcane quarters that I frequent – as to what the impact of this decision will be. Specifically, folks are wondering whether the dozen or so parishes involved in litigation in other states now have a better chance of defeating TEC’s claims to their property, and whether the US Supreme Court is now more likely to hear the appeal of St. James Church in Newport Beach, California, which saw a trial court decision in its favor on the question of property ownership overturned by the California appellate courts. Happy as I am for the members of All Saints, I must regrettably conclude that the hope of its supporters that this court decision will have a wide and dramatic impact on future church property litigation are misplaced. I’ll explain why after the jump.As to the first issue, whether this decision will have an impact on cases pending in other states, its important to bear in mind (and I am astonished at how many people commenting on this case have failed to grasp this fact) that this decision was issued by a South Carolina court, applying South Carolina law to a particular set of facts. No court outside of South Carolina is bound by this decision. Courts in other states may – or maynot – find the opinion persuasive. But those courts are bound to decide the cases before them based upon the law of their own states and the facts of the particular case before them. Much as I wish it were otherwise, the South Carolina decision does not necessarily suggest that there will be a sudden wave of decisions favorable to parish churches and unfavorable to TEC any more than TEC’s heretofore perfect record in church property litigation was a harbinger of a pro-TEC ruling in South Carolina.

As for whether the US Supreme Court is now more likely to take up the California case or some other case because there is a split of authority between South Carolina and all of the states in which the appellate courts have upheld TEC’s property canon. The answer to that question, in my view, is even clearer, and is also no. The Supreme Court has no interest in seeing that there is uniformity in state trust or property law. Indeed, there are many areas in which the law varies from state to state, and where the answer to a legal question will depend solely upon which state’s law applies. This is an unavoidable byproduct of our federalist system and, so long as there are no questions of federal law involved, of no interest to the US Supreme Court. The likelihood that the SCOTUS will take one of these cases is, in my view, extremely limited, unless some First Amendment issue is implicated, which to me seems unlikely.

This story has been all over the news. If you missed it, howver, two very large, very well funded Episcopal (or, formerly Episcopal) parish churches in Virginia, Truro Church and The Falls Church, have voted to disaffiliate from the Episcopal Diocese of Virginia and from the national Episcopal Church. Why is this a business litigation related issue? Read more below the fold.

These two parish churches hold property valued in the millions, if not tens of millions, of dollars. Unless a settlement can be reached with the Diocese of Virginia and the Episcopal Church – and I doubt that such a thing will happen, for a variety of reasons – the ownership of the property will be litigated. If such litigation ensues, both sides will be very well funded. The question will be resolved with reference to principles of Virginia property and trust law. It is an open question, I would say, who would prevail in such a scenario. One thing is for certain, though. The established order – the diocese and the national denomination, cannot afford to lose such a case, or the growing tide of departing parishes (which is becoming considerable, the protestations of church leaders notwithstanding) will become a flood. The national church and Episcopal parish churches hold, in the aggregate, something like $7 billion worth of property (including endowment funds and cold hard cash). A brouhaha over the ownership of the property seems likely. I wish Truro and the Fallls Church well.

Source: The Washington Post