COA rules in favor of national organization in dispute over church property

The Indiana Court of Appeals was faced with an issue between a Vanderburgh County church and its former national organization involving what happens to the local church property once the local church defected to another Presbyterian organization.

Olivet Presbyterian Church joined Presbyterian Church (USA) when the two former branches of the Presbyterian Church reunited in 1983. By joining the PC(USA), it was subject to the national organization’s constitution, which provides that all property held by individual congregations is held in a trust for PC(USA). Olivet had amended its bylaws twice after joining PC(USA) acknowledging it was bound by the constitution.

But when it decided in 2006 to leave PC(USA) and join Evangelical Presbyterian Church of America, it wanted to keep the property on Oak Hill Road it had purchased in 1968. That’s when the national organization and other groups sued Olivet seeking a declaratory judgment that it had no right, title or interest in the Oak Hill property and a constructive trust on that property in favor of the Presbytery, which is the regional level of governance and the primary governing body within PC(USA).

The trial court applied the neutral principles approach to rule on the matter and cited the deed, which belongs to Olivet, when it ruled in favor of Olivet.

The Court of Appeals agreed in Presbytery of Ohio Valley, Inc., et al. v. OPC, Inc., et al., No. 82A02-1003-MF-339, that the neutral principles of law approach was the correct one for this situation, but reversed summary judgment in favor of Olivet. The method requires a court to examine certain religious documents, including a constitution, for language of trust in favor of the general church, according to Jones v. Wolf, 443 U.S. 595 (1979).

The trial court focused nearly solely on the language of the deed on the Oak Hill Property, but the judges also looked to the language of the Property Trust Clause. That clause is plain and unambiguous, and says all property held by entities of PC(USA) is held in trust for the use and benefit of PC(USA), wrote Chief Judge John Baker.

Olivet argued that when it bought the property in 1968, PC(USA), its constitution, and the Property Trust Clause didn’t exist. But Olivet was included in PC(USA) when the two former branches of the Presbyterian Church reunited in 1983, and the local church amended its bylaws twice acknowledging it was bound by PC(USA).

Olivet also claimed that when it reincorporated to become part of EPC, it removed itself from the governance of the PC(USA) constitution and was no longer bound by it. The judges found the instant case to be similar to National Board of Examiners of Osteopathic Physicians & Surgeons v. American Osteopathic Association, 645 N.E.2d 608 (Ind. Ct. App. 1994).

“Olivet argues that NBOME is not analogous to the instant appeal because it involved secular, rather than ecclesiastical, entities. But what we are asked to do herein is resolve a property dispute,” wrote the chief judge. “We have applied the neutral principles of law approach—as advocated for by Olivet—and have, consequently, applied principles of contract, corporate, and property law in interpreting Olivet’s bylaws and the property provisions of the PC(USA) Constitution. Just because a party states that a document or a specific provision of a document is ecclesiastical does not automatically make it so, and here, no ecclesiastical inquiry is necessary to resolve the dispute.”

Olivet followed the procedures of the national organization to break with it until the local church learned it might not be able to keep the Oak Hill property. That’s when Olivet refused to abide by the Presbytery’s decision and forced PC(USA) to turn to the judicial system to resolve the dispute, wrote the chief judge.

The appellate court remanded for judgment to be entered in favor of the appellants together with a declaratory judgment that Olivet has no right, title, or interest in the Oak Hill property, and a constructive trust on that property in favor of the Presbytery.