Tuesday, February 28, 2012

Does Obamacare Negate Its Own Insurance?

A brief recently filed by the Institute for Justice as a friend of the court (amicus curiae) in the Obamacare case now pending before the United States Supreme Court raises a most interesting point: contracts must be entered into voluntarily to be valid and enforceable. (This is what lawyers call "hornbook law": it is fundamental to the law of contracts, and has been with us since the very beginnings of the legal system.)

A contract entered into under duress, such as threat of sanctions, retaliation or punishment, on the other hand, is unenforceable, and may be set aside in court. That is because to make a valid contract, the law requires a "meeting of the minds" -- two individuals must come freely together, and freely decide and agree on the same terms for their contract. If one of those minds is under duress, it cannot meet the other in the free and voluntary sense which the law requires to make a contract.

The so-called "individual mandate" in Obamacare requires that everyone purchase a healthcare insurance policy, under threat of fines and, eventually, imprisonment for refusal to pay the fine. A more classic case of forcing people into a contract under duress could scarcely be imagined.

For insurance is, of course, a contract. The insurance company agrees with the insured to pay certain costs of the insured's medical care, in accordance with the terms of the insurance policy ("policy" in this usage is synonymous with "contract").

The IJ amicus brief thus poses the interesting question: how can any insurance contract entered into under the threat of Obamacare's sanctions be enforceable? Here is a short video by one of the authors of the brief, Professor of Constitutional Law Elizabeth Price Foley, which explains the huge ramifications of the argument:

And here is the link to download the brief (42-page .pdf file).

What I find most interesting is that I have been following a number of legal blogs which carry arguments pro and con regarding the healthcare mandate (especially The Volokh Conspiracy), but to date I have never seen any other law professor raise this fundamental argument. That they have not done so, and that many of them can entertain even the notion that the mandate is constitutional, speaks volumes about the institutional mentality that has crept over our law schools.

Here, for example, is the link to download the Government's brief in support of Obamacare. Read it through, if you wish, and you will not find a single discussion of the mandate from the point of view of contract law. (The word "contract" itself appears only twice in the brief, on page 42.) Instead, it is all about the commerce power of Congress (and its power to tax), and the reasonableness of requiring people to purchase insurance so that the plan overall will work. In other words, Government sees itself only in terms of extending the powers it has, and of defending the "reasonableness" of each such extension.

The IJ's argument, however, is a killer. If Congress can force people to enter into a contract for insurance, then Congress could force people to contract to purchase a Chevy Volt, in the name of fuel economy.

The Supreme Court has set aside three days in late March -- six hours of argument in all -- to consider the merits of Obamacare. It is sure to be covered heavily (although, alas, the Supreme Court refuses to allow streaming video), and will be well worth following for what it says about the current makeup of the Court, about the forces backing Obamacare, and about the nature of our federal government.

(Aside: if you want your eyes opened about the kinds of forces backing Obamacare --as well as the kind of lawyers there are in training right now who see nothing wrong with demanding free contraception as an economic right -- be sure to head over to Hot Air, and read this piece by Tina Korbe. Be sure, also, to watch the embedded video of a Georgetown Law student pleading her case to Congress to mandate that her school-provided insurance pay for free, unlimited sex while she is a student, so that she doesn't go broke buying contraception on top of having to pay tuition to learn the law.)

Make no mistake -- the stakes with Obamacare are huge. In the balance hangs the future of the liberties on which this country was founded.

Saturday, February 25, 2012

Now I Understand . . .

A Primer: Understanding Derivatives

Heidi is the proprietor of a bar.

She realizes that a good deal of her customers are unemployed alcoholics and, as such, cannot afford to have all the drinks they would like to have at her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She requires them to pay on each visit only for their first drink, but not for any drinks thereafter.

Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in town.

By providing her customers the freedom to have as many as they can consume after paying for just one drink, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Heidi's gross sales volume increases massively, as does her book of customer loans.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets, and increases Heidi's borrowing limit.

He sees no reason for any undue concern because he has had Heidi sign over the debts of the unemployed alcoholics as collateral for the bank's loans to her.

But at the bank's corporate headquarters, expert traders figure a way to make huge commissions on top of the value of Heidi's ever-increasing loans, and transform these "collateralized debt obligations" into securitized packages called DRINKBONDS.

With Heidi's help, they are divided into "tranches", or "layers", according to the time when Heidi knows the customer in question first comes into her bar.

Those who come in the evening are figured to furnish the best collateral, because they are presumed to be able to earn money during the day. (In fact, they are mostly sleeping off their hangovers until three o'clock, and then standing in line to get their welfare checks, but never mind.) The debts secured by their obligations receive an AAA grade.

Those who start their binges early in the morning are graded the lowest, but because of the higher risk, they pay a higher return. (They drink more, and so borrow more, and so Heidi charges them a higher book rate of interest.) And the others fall in between.

(The third-party firms who are paid to provide the ratings have no idea of the quality or value of the collateral securing each tranche, because the packages are too complex for them to say just which loans secure which bundle of securities. But the brokers tell them that if they will just give the top tranche an AAA rating, and grade the rest accordingly, they will be given lots and lots more securities to rate, and make lots and lots more fees for doing so.)

These "securities", as rated by independent and trusted rating agencies, then are bundled and traded on international securities markets.

Naive investors don't really understand that the securities being sold to them as "AAA Secured Bonds" really are secured largely by the obligations of unemployed alcoholics who sleep during most of the day. Nevertheless, because of their novelty, they are pitched as the newest type of investment vehicle with a great potential for appreciation, and demand is created.

As a result, the bond prices continuously climb, justifying the sales pitch for them - and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

The smart folk at the brokerage houses realize that they can sell even more DRINKBONDS to more cautious investors, and make even more commissions, by arranging for insurance on them in case they drop in value. A giant international insurance company agrees to underwrite the value of each new series of bonds, in exchange for annual premiums.

The premiums are included in the price of the repackaged securities. With this added layer of protection, now international banks and investment houses feel secure in acquiring DRINKBONDS backed by the giant insurance company. Other insurers soon get in on the act, and rake in the premiums. (Heidi's prices for her drinks are continually rising, so what can go wrong?)

One evening, one of Heidi's customers, driving home intoxicated from her bar, crosses over the center line and collides with another vehicle. Luckily, the driver of that vehicle is not injured. But he works as a risk manager at the local bank that is managing Heidi's loans.

When he finds out that the other driver had just come from drinking at Heidi's bar, and carried no insurance because "he couldn't afford it, being out of work", he begins to look more closely into Heidi's debtors.

Even though the DRINKBOND prices still are climbing, he  decides that the time has come to call in the collateral on Heidi's loans, to provide the bank with more cushion against default. He so informs Heidi, tells her to collect her customers' debts, and put the cash into CD's at the bank.

Heidi then demands payment from her patrons. But most of them, being unemployed alcoholics, cannot pay back their drinking debts. The bank then calls all of Heidi's loans.

Since Heidi cannot repay her loan obligations, she is forced into bankruptcy. The bar closes and Heidi's 32 employees lose their jobs.

The income stream from DRINKBONDS dries up. Overnight, DRINKBOND prices drop by 90%.

The now worthless asset value of its loans to Heidi destroys the bank's liquidity and prevents it from issuing new loans, thus freezing most credit and economic activity in the community.

The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in DRINKBOND securities.

They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds in their pension funds.

Her wine supplier cannot make up the loss and claims bankruptcy, closing the doors on a family business that had endured for three generations. Her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

The giant insurance company is suddenly on the hook for more losses than it has reserves, because it had reinsured its risks with other insurers who had sold their own policies on the DRINKBONDS to make more money, and who now face losses themselves.

Moreover, rather than use the premium payments they received to increase reserves, the insurers instead paid them out as big bonuses for their oh-so-clever executives, who had boosted their companies' earnings by arranging for insurance which they told each other would never be called upon, since DRINKBONDS simply could not go down in value. (H/T: NW Bob, below.)

Fortunately, though, the bank, the insurance companies, the brokerage houses and their respective executives are saved and bailed out by a multibillion-dollar, no-strings-attached cash infusion from the government -- to whose politicians they had prudently made large campaign contributions, lest the former forget where lay their true loyalty.

The politicians rush the bailout through Congress as an emergency measure, to prevent what they tell the voters and the compliant media will otherwise be "a system-wide collapse." They also claim that the banks, brokerage houses and insurance companies (their loyal contributors, remember) are all "too big to fail."

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, nondrinkers who have never been in Heidi's bar.

Even those new taxes, however, are not enough to fund the complete bailout. So the government borrows the rest of the money required from China, and reckons that the taxpayers' grandchildren can take care of figuring out later how to pay all the money back.

With the bailout moneys, the banks, brokerage houses and insurance companies pay large bonuses to their clever executives who got them out of their mess, and begin looking for the next scheme by which they can make money.

(H/T: A serendipitous email)

Friday, February 24, 2012

Quo vadimus?

One has the greatest difficulty trying to climb into the mind of the bureaucrat(s) who decided to erect this sign. Far from being what they intended, it is a monument, all on its own, to what is bringing down nations that once had more sense.

Examples abound, overwhelmingly, but I need choose just one more:
 It took 10 months, a fat bundle of paperwork, countless certificates, long hours of haggling with bureaucrats and overcoming myriad other inconceivable obstacles for one group of young entrepreneurs to open an online store. 
As e-commerce continues to gain ground apace abroad, and even Greeks seem to be warming to the idea of Internet shopping, opening an online store based in Greece is no job for the fainthearted. 
“An online store is more complicated than a regular store basically because of the way payments are carried out,” explained Fotis Antonopoulos, one of the co-founders of www.oliveshop.com, which sells olive oil-based products such as cosmetics, mostly to foreign markets.
All right, so now you have the picture: some enterprising Greeks want to open an online business which markets Greek-made cosmetics from Greek olive oil to the outside world. To do so, one would think that they needed a Website which was capable of being read by the foreigners to whom they were pitching the products, right? Well, the Greek bank they approached to process their online transactions thought better:
[Now] they faced the quagmire of the bank, where the issue of how to confirm the credit card details of customers ended in the bank demanding that the entire website be in Greek only, including the names of the products. 
“They completely ignored us, however much we explained that our products are aimed at foreign markets and everything has to be written in English as well,” said Antonopoulos. 
Eventually, Antonopoulos and his associates decided to use foreign banking systems like PayPal, and cut the Greek bank, with which they had been negotiating for three months, from the middle. “It’s their loss, not ours. We eventually solved the problem in just one day,” explained Antonopoulos.
But this was not the least of their hurdles. For in Greece, at least, opening an online store requires far more in government clearances and permits than even a physical store. Read and laugh (or weep -- it doesn't change the truth of the absurdities which the entrepreneurs had to overcome):
“Most stores begin operating after receiving only the approval regarding their brand name, as the bureaucracy involved takes such a long time to complete that it is simply impossible to keep up with the operational costs, such as paying rent on obligatory headquarters, without making any sales,” said Antonopoulos. 
Antonopoulos and his partners spent hours collecting papers from tax offices, the Athens Chamber of Commerce and Industry, the municipal service where the company is based, the health inspector’s office, the fire department and banks. At the health department, they were told that all the shareholders of the company would have to provide chest X-rays, and, in the most surreal demand of all, stool samples.
Yes, you read that right -- chest X-rays and stool samples, to open an online Website selling Greek cosmetics.

We have gone far beyond the days of the extortionist Roman tax collectors. That was extortion, pure and simple, in which the sole intent was to enrich oneself by squeezing the victim for more money. But today the burdens are imposed not from any overt greed or intent to do harm, as from stupidity, bull-headedness, ignorance and indifference.

Meanwhile, there are now almost as many people living off money from the Government as there are who pay any money at all to the Government. The former number is increasing; the latter is decreasing (flip the graph upside down). We will soon reach the unsustainable point where the people look to the Government to support them, and there are not enough taxpayers left to support the Government.

(Did I say "soon"? We are already there. All the existing taxpayers cannot support the bloated current Government, which is why it has to borrow at the rate of more than two million dollars every minute of every day.)

One byproduct of this ever-expanding role of the Government providing money to people is that we have spawned a whole new class of faceless bureaucrats. They go to work for the government because no one else would hire them, with their lack of any work ethic, skills, or ability to use common sense rather than be guided solely by what is politically correct. Once ensconced in their positions, they are "accountable" to their superiors in only superficial and meaningless ways (as long as they do not cause terrible publicity).

Faceless bureaucrats decided to put up that "Stay Off the Grass" sign. Faceless bureaucrats demanded stool samples from all stockholders of an online business.

And our lives are increasingly in their hands.  

Tuesday, February 21, 2012

Will General Convention Be Able to Approve Same-Sex Blessings?

At its meeting last October, the General Convention's Standing Commission on Liturgy and Music agreed to present at the 2012 session of General Convention a resolution to authorize the trial use, over a three-year period, of a rite for the blessing in a church ceremony of same-gender relationships. The rite proposed is the result of a three-year study by the Standing Commission of materials which have already been used in local ceremonies authorized by individual bishops in their dioceses, pursuant to the "generous pastoral response" language of Resolution 2009-C056 adopted at Anaheim.

In contrast to those locally approved rites, what is now being proposed is a church-wide standard rite that would have the imprimatur of General Convention itself. To adopt such a rite for trial use by the whole Church, General Convention must follow the requirements of Article X of the Church's Constitution. In relevant part, those requirements are as follows:
But notwithstanding anything herein above contained, the General Convention may at any one meeting, by a majority of the whole number of the Bishops entitled to vote in the House of Bishops, and by a majority of the Clerical and Lay Deputies of all the Dioceses entitled to representation in the House of Deputies, voting by orders as previously set forth in this Article:
. . .
(b) Authorize for trial use throughout this Church, as an alternative at any time or times to the established Book of Common Prayer or to any section or Office thereof, a proposed revision of the whole Book or of any portion thereof, duly undertaken by the General Convention.
Do you see those words " . . . by a majority of the whole number of Bishops entitled to vote in the House of Bishops"? Where have we run into those exact same words before?

-- Oh, yes: it was in connection with the votes taken by the House of Bishops on resolutions to depose various of its members back in 2008, namely, Bishops Cox, Schofield and Duncan, for so-called "abandonment of communion." Those same words appeared in the version of the Abandonment Canon then in effect. It is now Canon IV.16 of the newly revised Title IV, and the words in question were not changed in its 2009 revision:

If the House, by a majority of the whole number of Bishops entitled to vote, shall give its consent, the Presiding Bishop shall depose the Bishop from the ministry . . .

Early in the history of this blog, I wrote a series of posts about the background and history of this Canon, and explained that the language "whole number of Bishops entitled to vote" had always before been read so as to include all Bishops who had resigned (retired from) their diocesan jurisdictions -- whether they were present for the vote or not.

It was Presiding Bishop Jefferts Schori and her chancellor, David Booth Beers, who altered this tradition all of a sudden, in 2008.  No one made objection to the votes to depose Bishops Cox and Schofield by less than the required minimum number of Bishops in March 2008, because a quorum of the House was (barely) present, and that seemed to suffice. Objections to the procedure were raised afterwards, however, and rejected by the Presiding Bishop on the ground that no objection was made before the votes (as though an illegal vote could be legitimized by a failure to object to it).

In anticipation of the same objection being raised in advance of the vote on Bishop Duncan in September 2008, however, the Presiding Bishop and her Chancellor made a preemptive strike. They saw that they could not muster enough votes to constitute a majority of the whole number of bishops in the House of Bishops (about 151 were required, and as matters turned out, there were only 123 Bishops present and voting, of whom only 88 actually consented to deposition). So in preparation for the deposition of Bishop Duncan, she simply ruled in advance, as Presiding Bishop, that the language "entitled to vote" meant not only on account of their membership in the House of Bishops, but also on account of their being present on the floor.

Notice that in her ruling, the Presiding Bishop cited the ambiguity of the language in question (and illegally resolved that ambiguity herself, instead of following Robert's Rules of Order and allowing the House of Bishops to resolve it as a body). Despite her ruling that the language in question was "ambiguous", the comprehensive Title IV revisions approved in 2009 made no proposal to clear it up!

However, in dealing with the language as it appears in Article X of the Constitution, the Presiding Bishop will not have the same opportunity to rule that it is ambiguous. For Article X itself has very clear and unambiguous language immediately before the words quoted above, which leaves no question as to what the drafters could have meant by it. This language concerns the vote required to make an amendment or alteration to the Book of Common Prayer, and says (with my emphasis added):

The Book of Common Prayer, as now established or hereafter amended by the authority of this Church, shall be in use in all the Dioceses of this Church. No alteration thereof or addition thereto shall be made unless the same shall be first proposed in one regular meeting of the General Convention and by a resolve thereof be sent within six months to the Secretary of the Convention of every Diocese, to be made known to the Diocesan Convention at its next meeting, and be adopted by the General Convention at its next succeeding regular meeting by a majority of all Bishops, excluding retired Bishops not present, of the whole number of Bishops entitled to vote in the House of Bishops . . . .

The drafters of Article X knew precisely how to direct that retired Bishops absent from the meeting not be counted in determining the "majority . . . of the whole number of Bishops entitled to vote in the House of Bishops . . ." -- they said so, in just those words.  So when they used the very same language again, in the very next sentence of the Article, and this time omitted the words "excluding retired Bishops not present", they must have intended for all Bishops in the House of Bishops -- diocesan, co-adjutor, suffragan, assisting and resigned, and whether present at the meeting or not -- to be counted in determining the required majority for approval of a trial rite for church-wide use in just one session of General Convention.

And that makes a considerable procedural hurdle for the House of Bishops to approve any trial rite at this upcoming 2012 Convention. If past records are any guide, only a handful of retired Bishops will bother to attend, but their total number is almost double the number of Bishops currently serving and who may be expected to attend. According to ECUSA's official website, "the House of Bishops has nearly 300 active members" -- so it would take an affirmative vote by, say, at least 150 Bishops to allow the trial rite to be put into church-wide use. That number of Bishops has never attended any recorded meeting of the House.

I know there are many who will predict, out of cynicism, that the Presiding Bishop will simply ignore the Constitution's requirements, and declare the measure passed with the requisite number of votes. It is this very lawlessness, however, which is eroding the foundations which have thus far held the Church together. If no one is entitled to ask that the Church's leaders follow their own governing documents, then the Church might as well throw out those documents, and succumb to the Presiding Bishop's rule by fiat. At least then her Bishops would be honest about what they are allowing to happen.

UPDATE 02/23/2012: As you may read from the comments left below, no reader of this blog expects Bishop Jefferts Schori to let a Constitutional requirement get in the way of her agenda.

But she still has to be called out on it. Bishops who voted against Resolution 2009-C056 should raise a point of order before the vote, questioning the lack of a sufficient number of Bishops to approve the trial service. When she and the Parliamentarian overrule the point of order, they should appeal to the full House of Bishops, citing chapter and verse from Article X, and begging their colleagues not to follow the Presiding Bishop into lawlessness. And when that appeal fails, they should walk out of the meeting and refuse to take part in the vote.

Afterward, when she declares that the HoB approved the measure, a complaint should be filed against her with the Disciplinary Board for violating her Constitutional (and not just canonical) responsibilities as Presiding Bishop. And those Dioceses which are still Windsor-compliant should denounce the vote as illegitimate, and refuse to implement any such rites within their boundaries.

If none is to be found willing to undertake these minimum steps, then God save the Episcopal Church (USA).

Saturday, February 18, 2012

General Convention, Same-Sex Blessings, and +Bennison

At its national level, the Episcopal Church (USA) becomes more and more absurd each day. Consider just the following stories:

1. Last August, two leaders of the Church's Standing Commission on Liturgy and Music (SCLM), who were involved in developing materials for same-sex blessings, presented their case in Canterbury, England for a meeting of the International Anglican Liturgical Consultation. Their presentation was not well received.

2. The SCLM went on to approve a report to and proposed resolution for General Convention 2012 on same-sex blessings. The resolution proposes a trial rite for use over the three following years, and calls for a further report to be made to General Convention 2015.

3. That paragon of episcopal virtue, the Rt. Rev. Charles E. Bennison, Jr. of Pennsylvania, immediately jumped on the bandwagon and told his clergy that approval of a rite for blessing same-sex unions at the upcoming General Convention is a certainty, and any priest in his diocese who thereafter fails to perform them on demand could face disciplinary proceedings.

Isn't that remarkable? To go from polite rejection to mandatory usage within the space of six months? As they say, it could happen only in the Episcopal Church (USA) - where the Canons mean nothing and the Constitution is play.

Far be it from this Curmudgeon to throw cold water onto Bishop Bennison's ambitions for power and glory, but with his letter to his clergy I'm afraid he has provided another exemplar for my Collection of Canonical Absurdities. When he threatens his clergy with discipline if they do not perform same-sex blessings on demand, he presumably is relying upon this Canon (I.17.5), which deals with the rights of laity:

No one shall be denied rights, status or access to an equal place in the life, worship, and governance of this Church because of race, color, ethnic origin, national origin, marital status, sex, sexual orientation, disabilities or age, except as otherwise specified by Canons.
His reasoning must, therefore, run something like this: "Once General Convention approves a rite for same-sex blessings, it then becomes part of the 'life, worship and governance of this Church,' and so cannot be denied to anyone on account of their sexual orientation."

Except that it proves too much. The rite for same-sex blessings, if approved, would have to be denied to me on account of my already being married to someone of the opposite sex, for example. Indeed, to have any rite geared solely to LGBTs in this Church smacks of the very kind of discrimination which makes LGBTs demand the Church approve them in the first place.

This is the irresolvable paradox at the heart of every demand by LGBTs to be given equal treatment in the life of the Church -- on account solely of their orientation, which they do not share with others of the same age and gender, and not on account of any of the characteristics which they do share with other Church members. "Marriage" may, for civil purposes, be defined any way the civil authorities want to try it, but marriage as a sacrament has been universally and at all times, throughout the whole church catholic, no matter what the time or denomination, regarded as a sacred rite between a man and a woman. Our Book of Common Prayer so defines it, and so do the Canons (Canon I.18) -- to say nothing of Scripture itself (e.g., Gen. 2:24).

To regard marriage as such is not to discriminate against anyone on account of their sexual orientation. Gay men may marry gay women; that they choose not to, and prefer some other kind of union, is not marriage's fault.

Defining a sacrament by the person(s) for whom it is intended happens all of the time in the Church. Indeed, if we allow that there are seven sacraments recognized in Church liturgy (baptism, confirmation, holy eucharist, marriage, extreme unction, confession, and ordination), we see that most of them are capable of being received by a limited class of persons -- confirmation is excluded to all who have not been baptized, for example, and confession is only for the genuinely penitent who have sinned.

Can the Church really be said to "discriminate" in all such cases? If not, then why is the sacrament of marriage, as it has been universally recognized throughout the whole of church history, all of a sudden to be viewed as "discrimination based on sexual orientation"?

The very fact that the marriage rite has to be changed to accommodate same-sex unions, as well as the very fact that a rite for same-sex blessings has to be concocted from scratch, should tell people a little about what is going on here. Those changes will, by definition, discriminate against heterosexual couples. So for the sake of eliminating one perceived form of "discrimination", we introduce another.

People like Bishop Bennison think that the Church is on a one-way track that will eventually result in the solemnization of same-sex unions, and want to jump on the bandwagon before it has even left the barn. But in taking up the subject of same-sex blessings as a stepping-stone to the redefinition of marriage, the wagon is being placed in front of the horse (to continue with my metaphor).

The process itself reveals what is backwards about it. As I noted, the SCLM (and General Convention) view their task as one of developing a rite for such a blessing. Well, we already have such a rite -- it begins on page 433 of the Book of Common Prayer ("The Blessing of a Civil Marriage"). The trouble for LGBTs is that it uses outmoded terms such as "husband" and "wife", and "him" and "her."

Obviously, since "civil marriage" is not a term defined by the Church, any proposed changes to that rite on account of changes in the civil-law definition of "marriage" should begin there: what does the Church accept as a "civil marriage" which is worthy of God's blessing? In taking up that issue, the Church would at least be approaching the subject in a manner which is logical. But no: the SCLM is dealing with the matter of developing a new rite first, and will propose a study of just what the church regards as "marriage" after it has first adopted the rite.

It's as though a legislature were to pass a law regulating the care and feeding of unicorns, and then designated a committee to study just what unicorns are, in order to make the law more effective. The proper order in which to do it would have been to take up the study of unicorns first, before passing any laws on the subject.

There is, however, an even greater Constitutional problem that will face General Convention should it try to authorize a trial rite for the blessing of same-sex unions. That is a subject, however, which requires a post of its own, so please watch this space.

Sunday, February 12, 2012

Various and Sundry Disruptions to Peace of Mind

Events now seem to be moving so fast that there is no space for orderly blogging. I had been working on a post about the Presiding Bishop and Bishop Sauls, and their recently announced plans to revamp the structure of the Church. No sooner was their video released, however, than the sites catalogued over in the column to the right as "AngliCannon to the Left" added a good deal that was also worthy of comment, and so I shall wait until their dust settles, in order to present the widest picture.

Meanwhile, Bill Whittle posted an outstanding video about why conservatives, such as yours truly, really and veritably "suck." (Turns out it has to do with speaking the truth, heedless of fortune or favor.)  I have had no time to write the essay to accompany it.  Since the unvarnished truth never needs dressing up, here is the plain, unadorned video:

Next, President Obama stepped off the deep end and foolishly (should I say hubristically?) pitted the superiority of his Obamacare against the entire leadership of the Christian Church in the western world. (Those words, of course, exclude from their embrace certain socially- and politically-correct-dominated associations like ECUSA, who preach the gospels of global warming, overpopulation, and birth control [including abortion] as superior to the Gospel of Eternal Life.)

Aside: One day soon, I promise, I shall address a separate post to ECUSA's left, and especially to the Very Rev. Katherine Ragsdale of EDS in Cambridge, as to how they possibly, given traditional views of Christianity, could conceive that the Church-sanctioned killing of foeti in this world would allow them, in the next, to evade confronting -- let alone  begging the forgiveness of -- those most innocent of all of God's creation: the unborn, whose elimination they have offered up on the altar of "personal choice".

Of course, President Obama thinks, à la Henry VIII, that he has brilliantly "accommodated" (NB: not "compromised with" -- maximum leaders never compromise; instead they graciously deign to accommodate) the desires of those Catholics who would otherwise be inclined to disagree with him. Yesterday's announcement of that "accommodation" was simply his latest dodge in the shell game he is playing with everyone's (and not just Catholics') First Amendment rights. He has just moved his shells around again -- right in front of our very eyes -- and has the effrontery to presume that we who are religious must be both stupid and hopelessly divided, and are therefore politically impotent.  He thinks we will not perceive how what he deceptively terms "free" insurance coverage for contraceptives and abortifacients simply passes the cost of that coverage on to the employers -- who are required, ultimately as he has drafted and enacted Obamacare, to pay for what he is dictating the employees must have.

How reassuring it is to discover that we have a genuine Chicago huckster making wrong decisions for us, and then telling us that, no, really, it was our decision (to oppose him, or not to do what he directed) that was wrong. But again, there is no time to blog about this issue in depth just now, either.  It will have to wait until the religious freedom vs. healthcare debate heats up big-time, as it surely will before the elections this fall.

Paralleling the Chicago-style hucksterism, we have Senate Majority Leader Harry Reid confirming that no, the Senate will not take up President Obama's -- or any other politician's -- budget, thank you, since our country has gotten along just fine the past three years without any budget being approved by the Senate, thank you very much indeed. "What did you elect us for?" he seems to be challenging us. "To pass a budget which will then immediately become so much waste paper, under our ability to adopt continuing resolutions?" In Michael Ramirez's immortalization of this hubristic stance:

A country which cannot even adopt, after three full years, a budget on which to operate is a country out of control. Indeed, a country which continues to pay its elected representatives to shirk their constitutional duty for more than three years running is a country interested only in "me first", rather than in "we first".

The resulting scenario allows disgraceful and crazy terms of "settlement" between the governing class and the special interests which support their campaigns, even though the former has no right to insulate their beloved (and beholden) banksters from the consequences of their crimes. Again, however, there is no time to blog about all the sickening details, so be sure to read the links, and to follow all their links in turn, as soon as you have time to concern yourself about what is happening right in front of your nose. (That, by the way, is not an accusation against those who might properly feel concern, but a challenge to them to do what they know has to be done.  This republic may be foundering because we who care about it do not think we have sufficient time or energy to unite against the forces that are undermining it.)

The overall picture presented by this sad chronicle of malfeasance and cronyism is not attractive. What it says is that no one is in charge of their own branch of government. The President is doing from moment to moment whatever he and his advisers calculate is needed to get him reelected, even if it means trampling on the prerogatives of Congress, the Supreme Court, or the religious freedom of the Catholic Church.

For its part, Congress is naïvely passing continuing resolutions and raising the debt ceiling to allow the President's game to continue, because they foolishly calculate that they can ride on his coattails, so long as the government spending game continues.

As for the Supreme Court, it has everything to say about the ongoing right to murder fetuses, but absolutely nothing to say about the hijacking of the government's machinery, or about the hubristic excesses committed, by the hucksters and shills who purport to be in charge. Our government of checks and balances is way out of balance, with no (political) checks to counter the unlimited checks which everyone dependent on Washington, from Congressperson to Supreme Court Justice to unemployed worker to SSI recipient and to undocumented immigrant, sees fit to grab for themselves while they can get away with it.

The members of Congress act, for all the world to see, like the simple-minded oysters who, in Lewis Carroll's "The Walrus and the Carpenter," are doomed to succumb to their own laughable view of what is going on around them.

The august and remote justices of the Supreme Court in Washington may think for the moment that they are above such a transparent stratagem, but will find, after all is said and done, that the magnificent edifice of their solemn Court has been built upon sand. Even then, their awareness of that fact is not the real problem.

For the truth is that this sandy foundation once had the protection of a solid coral reef, in the form of the Constitution, which was built to withstand the waves of time. Notwithstanding that truth, the justices, along with a spineless Congress, have managed so to erode the protective reef in recent years as to leave themselves now vulnerable to new onslaughts by those like Obama, who are determined to take charge. Amazingly, these traditionalists are incapable of seeing the threat just yet, because they are traditional in wanting to do what they and their predecessors have always done to date -- play the game. In that aspect, they are like the termites who for generations will gnaw steadily away at a great edifice, without any awareness of the collapse which their continuing and cumulative activity will bring upon them.

Every day on which the Supreme Court meets, their marshal (the "Court Crier") prays on their behalf:

"God save the United States and this honorable Court."

The collective justices, their employees, and the members and staff of both Houses of Congress should realize that "God helps those who help themselves" is not a statement of fact rooted in the Bible (Old or New Testament). It reflects rather the virtues of hard work and dedication upon which this country was founded. What is essential to grasp is that the saying does not mean that "God helps those who help themselves -- to what is in the till."

The first task of everyone in government should be to set a right path based on the needs of the whole country, and not just on their own selfish desires. To do so, they must set aside all naked ambition and plans for personal gain, because to strive for those things is to put self before God.

Were Obama to demonstrate his true belief in Christianity, by putting himself last rather than first, this country might still be transformed for the better. In the place of such humility, he gives us his ham-handed attempt to appear as Supreme Leader, and to portray all Christians opposing him as bigots and idiots.  For any rational person, his overweening arrogance on this one topic should suffice to prevent any voter from ever trusting his words on any subject ever again.

Thursday, February 9, 2012

Fort Worth Files Its Opening Brief

The Episcopal Diocese of Fort Worth, along with Bishop Jack L. Iker, his Diocesan corporation and its trustees, and forty-three congregations have filed their opening brief in the Texas Supreme Court (the brief and the appendices may be downloaded at the link). The brief is very well written, and extremely readable; I commend it both to legal and lay minds alike.  The statement of facts begins as follows (footnotes omitted):
This is the largest church property dispute in the history of Texas. The suit involves control of property rather than title: all parties agree the Corporation holds legal title, but they disagree whose representatives are entitled to sit on its Board of Trustees. The facts are undisputed; the only question is whether the case is governed by: (A) the Corporation’s articles of incorporation, by-laws, and applicable state laws, or (B) documents and opinions about the structure, practices, and beliefs of the churches involved.
The description of the controversy and how it came to its present posture is clear and succinct (again, all footnote references to the record are omitted):
The Controversy. In recent years, many in the Diocese believed that TEC’s actions reflected “a substantial departure from the biblical and historic faith.” Accordingly, in 2007 an amendment was offered to remove references to TEC from the Diocese’s Constitution. At that year’s Diocesan Convention, a huge majority (83% of clergy, 77% of lay delegates) voted to adopt the changes. At a second convention in 2008 (as required to amend the Diocese’s Constitution),the changes were approved by similar majorities (79% of clergy, 80% of lay delegates) and went into effect.  
The Diocese Attempts Conciliation. Recognizing that a handful of churches dissented, the Diocese adopted procedures for an amicable separation. In February 2009, the Corporation transferred property to three parishes who withdrew from affiliation with the Diocese. These transfers were granted not as a matter of right, but to avoid litigation and reach a peaceful settlement.  
TEC Files Suit. TEC soon put an end to conciliation. On April 14, 2009, this suit was filed by TEC and 36 individuals drawn from the minority who lost the 2007 and 2008 Convention votes and had withdrawn from the Diocese. The Plaintiffs demanded turnover of more than 60 churches in the Diocese, including 49 churches in which not a single member was willing to appear as a representative Plaintiff. All told, the contested properties have an insured value in excess of $100 million dollars.
And here is the summary of the argument, in its entirety:
If Texas follows the Neutral Principles approach in church property disputes (like almost every other state), the trial court granted the wrong motion. Neutral Principles have been used by Texas appellate courts for some years with no problem. The approach has numerous advantages over the Deference approach urged by the Plaintiffs, including disentanglement from issues about church government in favor of the same laws that apply to all other cases. The Deference approach may also create problems with the Texas Constitution, which bars any preferences in the treatment of one form of religion over another. 
All the property at issue here is owned by the Corporation. Texas corporate law provides that the election and removal of corporate officers must be governed by the entity’s articles of incorporation and by-laws. The Defendant Trustees were elected according to the Corporation’s charter provisions; the Plaintiffs’ ersatz replacements were not. 
Similarly, Texas law provides that the election and removal of officers in unincorporated associations must be governed by the association’s own rules. The Diocese elected Bishop Iker according to diocese rules; the Plaintiffs did not. Under Jones v. Maples, Texas courts cannot decide which bishop can baptize or preach, but must decide which one sits on the Corporation’s board that controls its property. 
Texas law requires that any trust concerning realty must be written and signed by the settlor. TEC has no trust interest in this property because it contributed nothing to create it, and has no trust instrument signed by anyone who did. Texas law also makes all trusts revocable unless they expressly state otherwise, which no trust alleged by the Plaintiffs does. So even assuming a trust for TEC ever existed, it was revoked in 1989 by express act of the Diocese. 
Finally, the corporate amendments of which the Plaintiffs complain are irrelevant to the property issues involved here. The Corporation had the right to amend its charters under Texas law, and none of the amendments challenged by the Plaintiffs deprived the Plaintiffs of anything. 
The trial court disregarded all these statutes on the ground that this Court’s 1909 opinion in Brown v. Clark required that Texas courts must enforce whatever TEC commands. This Court should correct that error.
The brief thus frames a classic case under State law, and asks the Court to apply that law under the doctrine of "neutral principles" to reverse the summary judgment granted by Judge Chupp to the Episcopal Church (USA) and its rump diocese, and to enter judgment instead in favor of the Iker parties.

The ECUSA parties are due to file their respondents' brief by February 27. What will they argue? They first will contend that the Texas Supreme Court should follow its 1909 holding in Brown v. Clark, and defer to its demands because it is "hierarchical." The only problem is that the national Church is no more hierarchical with respect to its member dioceses than the United Nations is "hierarchical" with respect to its member nations. All of the case law thus far about the "hierarchical" character of the Episcopal Church (USA) developed out of disputes between dioceses and their parishes, or between bishops and their clergy. What is characteristic of those relationships is not characteristic of the relations among dioceses themselves.

If, instead, ECUSA tries to argue "neutral principles," it will be a non-starter. Long ago, in oral argument before Judge Chupp at the outset of the case, ECUSA's attorney made (as he had to) a huge concession (bold emphasis added):
THE COURT [Judge Chupp]: Yeah, but, I mean, you're still talking about a body that voted to do something, and they voted something that you didn't like. And what I've got to figure out is, I guess, did they have the -- obviously, they have the authority to do that. They can vote and do what they want to do, that group of people. I -- well, I say that, I don't see where it says they can't.  
MR. NELSON: . . . And you're absolutely right, there isn't anything in there that says that specifically, nevertheless, the Courts have held that they cannot leave.
That last bit about the courts' rulings "that they cannot leave" was referring, as noted, to parishes, not dioceses. There is not a single adjudicated case on the books yet which reads ECUSA's Constitution to provide that member Dioceses may not withdraw from the Church -- just as the southern Dioceses did after the start of the Civil War. ECUSA's Constitution is utterly silent on the point, and it would contradict the nature of a voluntary association to read it otherwise.

Once ECUSA files its brief, Bishop Iker's diocese will file its reply by March 13, and then -- probably in the fall, but perhaps earlier, the Court will hear oral arguments from the parties. Look for a final and definitive decision from the Court by the end of this year.

Tuesday, February 7, 2012

Ninth Circuit Rules Prop. 8 Unconstitutional

The opinion of the Court may be downloaded here (it's 133 pages). Judge Reinhardt (one of the Ninth Circuit's most liberal judges) wrote the majority opinion that holds California's people could not constitutionally take away the designation of "marriage" for same-sex unions once the California Supreme Court had declared that the State could not constitutionally ban them. Judge N. R. Smith dissented from that holding (his opinion begins at page 90 of the download), but concurred with the majority in finding that the proponents of Prop. 8 had standing to appeal, and in holding that Chief District Judge Vaughan Walker did not have to withdraw from the case because he himself is in a same-sex relationship.

It is difficult to stay detached when reading Judge Reinhardt's opinion, because he constantly claims he is sticking to a very narrow ground of decision, while he goes out of his way to make sweeping pronouncements:
By emphasizing Proposition 8's limited effect, we do not mean to minimize the harm that this change in the law caused to same-sex couples and their families. To the contrary, we emphasize the extraordinary significance of the official designation of 'marriage.' That designation is important because 'marriage' is the name that society gives to the relationship that matters most between two adults. A rose by any other name may smell as sweet, but to the couple desiring to enter into a committed lifelong relationship, a marriage by the name of 'registered domestic partnership' does not. . . .
There is nothing like assuming the very proposition that is to be decided, eh, Judge Reinhardt? ("'[M]arriage' is the name that society gives to the relationship that matters most between two adults -- sure.) Why not write: "'[M]arriage' is the name that society gives to the relationship that matters most between a man and a woman"? Is that because you could not then so easily jump to the conclusion which you assumed in your reasoning?

The decision hangs heavily on Romer v. Evans, 517 U.S. 620 (1996), the Supreme Court case which found Colorado's Proposition 2 (repealing all laws forbidding private discrimination on the basis of sexual orientation) unconstitutional. But as the dissent points out, far more relevant is the Supreme Court's summary dismissal of the appeal in Baker v. Nelson, 409 U.S. 810 (1972) for want of a substantial federal question.

Baker was an appeal from a decision by the Minnesota Supreme Court upholding a statute which prohibited marriage between two people of the same sex. If the Supreme Court could not find that that case presented a substantial federal question, what business do the federal courts have adjudicating the constitutionality of California's Proposition 8?

Judge Reinhardt attempts to distinguish Baker (opinion, p. 47) on the ground that his opinion has to do not with the constitutionally of banning same-sex marriage per se, but rather the constitutionality of taking away from a disadvantaged group a right which they had been given to enjoy by the State's highest court. Just to state the proposition the way he views it is to show how contorted and strained is his decision.

For Judge Reinhardt, gay rights are a one-way ratchet. You might not constitutionally have to grant them in the first place, but once you do, you cannot take them away without singling out gays by definition. And to do so in legislation is simply unconstitutional.

Let us apply this reasoning to a hypothetical case in which a State's highest court, on the basis of the California Supreme Court's decision before Prop. 8, declared that the State could not deny marriage to more than two people. If the people of that State were subsequently to adopt an initiative overruling that decision, then according to Judge Reinhardt, the initiative would be unconstitutional because it singled out polygamists for discrimination. Or again, if a State passed legislation granting sixteen-year-olds the right to vote, Judge Reinhardt would forbid them from ever raising the age to 18 again.

In other words, Judge Reinhardt's rationale for striking down Prop. 8 proves too much. If federal courts have no constitutional interest in the traditional state domain of marriage, how can they presume to control a State's definition of that term? The issue is not whether Prop. 8 discriminates against gays, if marriage is defined traditionally. The term "adult", by definition, discriminates against minors. And the term "offspring" must likewise discriminate against gay couples. If "discrimination" is necessary to define the outlines of a concept, then that kind of "discrimination" cannot be unconstitutional.

The Ninth Circuit is the court whose decisions are most frequently reversed by the United States Supreme Court, and Judge Reinhardt is its most frequently reversed judge. But that does not stop him from continuing to try to enact his liberal views into rules that all must observe. This decision surely marks the height of his hubris.

Sunday, February 5, 2012

The Superbowl Commercial No One Saw Today

This commercial (H/T: Powerline) was originally made by George Soros' lapdog, MoveOn, to run during the Superbowl in 2004, but for various reasons (including its then very political slant), it did not make the cut.

My, my -- how times change. For some unfathomable reason, George Soros and MoveOn did not even consider submitting this commercial for the Superbowl ad competition this year. Please watch it, and along with me, wonder why -- are their particular bones of contention becoming increasingly irrelevant to what the rest of us can see is happening?

Here is the 30-second commercial that -- despite Soros' billions -- did not run in either 2004 or in 2012:

Meanwhile, here is a commercial (with Clint Eastwood) that did run this year. It implies that, under the Obama administration, Detroit and its automobile industry are about to launch a new "second half" initiative that will put the (Democratic) team on the scoreboard once again:

Who else but the Democrats under President Obama can claim to have turned GM and Chrysler around in these trying times? (Of course, the commercial does not mention Ford, which managed to survive the recession with its own capital and negotiated union contracts, no thanks to the President.)

And who else but the Democrats under Obama would choose to make this commercial the one they decided was best to run, instead of the one George Soros handed them in 2004?

I tell you Republicans out there : you've got to get up early to gain a march on these Democrats.

Thursday, February 2, 2012

The State of the Dennis Canon - an Introduction to Current Law

Two recent decisions by the courts in Missouri provide some of the best arguments and analysis to date for rejecting attempts by national churches, such as PCUSA and ECUSA, to impose trusts unilaterally on their respective parishes by following Justice Blackmun's gratuitous advice in Jones v. Wolf, 443 U.S. 595 (1979). I shall use these decisions as the basis for a series of posts on the current state of the law concerning ECUSA's Dennis Canon, since there have been a number of new decisions in recent years, and no opportunity thus far to survey them as a whole. (This post will constitute Part III of the series which I began here; Part II is at this link.)

Let us begin with some background. In his opinion for the majority in Jones v. Wolf, Justice Blackmun famously wrote (443 U.S. at 605-606; footnote omitted, emphasis added):
The dissent also argues that a rule of compulsory deference is necessary in order to protect the free exercise rights "of [443 U.S. 606] those who have formed the association and submitted themselves to its authority." Post, at 618. This argument assumes that the neutral-principles method would somehow frustrate the free-exercise rights of the members of a religious association. Nothing could be further from the truth. The neutral-principles approach cannot be said to "inhibit" the free exercise of religion, any more than do other neutral provisions of state law governing the manner in which churches own property, hire employees, or purchase goods. Under the neutral-principles approach, the outcome of a church property dispute is not foreordained. At any time before the dispute erupts, the parties can ensure, if they so desire, that the faction loyal to the hierarchical church will retain the church property. They can modify the deeds or the corporate charter to include a right of reversion or trust in favor of the general church. Alternatively, the constitution of the general church can be made to recite an express trust in favor of the denominational church. The burden involved in taking such steps will be minimal. And the civil courts will be bound to give effect to the result indicated by the parties, provided it is embodied in some legally cognizable form
In response to this judicial aside, or obiter dictum (something said in a judicial decision that is not part of the actual holding of the court in the given case), both the Episcopal Church (USA) and the Presbyterian Church made quick to adopt national rules which purported "to recite an express trust in favor of the denominational church" in all property held "by or for any parish" in that denomination.

The former church enacted its Dennis Canon as an "emergency measure" just a bare two months after the Jones decision was announced. (There are substantial questions as to whether proper procedures were followed in its enactment, but the secular courts have tended to brush those concerns aside.) General Convention happened handily to be scheduled to begin in Denver on September 11, 1979. The Rev. Canon Walter D. Dennis of New York was a former attorney who kept up with the legal news, read the Supreme Court's opinion, and decided that it would be a good idea for the Episcopal Church (USA) to follow Justice Blackmun's advice. So he had introduced through the House of Bishops (he was elected suffragan bishop of New York just three weeks after General Convention) the measure which eventually (after it became notorious) took his name. The language of this Canon (Sections 7.4 and 7.5 of Title I) states, in its entirety:
Sec. 4. All real and personal property held by or for the benefit of any Parish, Mission or Congregation is held in trust for this Church and the Diocese thereof in which such Parish, Mission or Congregation is located. The existence of this trust, however, shall in no way limit the power and authority of the Parish, Mission or Congregation otherwise existing over such property so long as the particular Parish, Mission or Congregation remains a part of, and subject to, this Church and its Constitution and Canons. 
Sec. 5. The several Dioceses may, at their election, further confirm the trust declared under the foregoing Section 4 by appropriate action, but no such action shall be necessary for the existence and validity of the trust.
The Presbyterian Church (USA) had formed from the union in 1983 of its northern and southern branches. The latter, which had been known as the Presbyterian Church in the United States ("PCUS"), had added a Dennis-Canon-like provision to its governing Book of Order in 1982. The northern branch ("UPCUSA"), however, did not have any such provision in its Book of Order. When the combined churches promulgated a new Book of Order following their union, they kept the trust provision of the southern branch, but they adopted an "opt-out" clause which allowed any presbytery not previously subject to the trust clause (i.e., the presbyteries who had previously belonged to UPCUSA) to send notice to PCUSA (within eight years of the union) that it elected not to be subject to the new Section G-8.0201, which provided:
All property held by or for a particular church, a presbytery, a synod, the General Assembly, or the Presbyterian Church (U.S.A.), whether legal title is lodged in a corporation, a trustee or trustees, or an unincorporated association, and whether the property is used in programs of a particular church or of a more inclusive governing body or retained for the production of income, is held in trust nevertheless for the use and benefit of the Presbyterian Church (U.S.A.).
Note the slight differences in the wording of the respective trust clauses. The ECUSA version declares simply that all property is "held in trust" for the national church and the parish's governing diocese, while the PCUSA provision adds that the property is "held in trust . . . for the use and benefit" of just the national church, and not of the governing presbytery or synod. (Local congregations, or "sessions", in PCUSA are grouped into regional presbyteries, which in turn form synods, which then come together in the General Assembly of the national Church.) And the Dennis Canon adds a qualification which is only implied in the PCUSA version: "The existence of this trust, however, shall in no way limit the power and authority of the Parish, Mission or Congregation otherwise existing over such property so long as the particular Parish, Mission or Congregation remains a part of, and subject to, this Church and its Constitution and Canons." These differences will come to the fore in some of the cases to be discussed in this series of posts.

Perhaps the most unusual feature of both trust provisions is their attempt to engraft their trust on top of any already existing trust arrangements. Thus, the Dennis Canon claims to impose a trust on "[a]ll real and personal property held by or for the benefit of any Parish . . ." (emphasis added). And the Presbyterian version expressly asserts that its trust applies "whether legal title is lodged in . . . a trust or trustees . . ." (emphasis added).

One can only wonder how the trustees of a pre-existing trust are supposed to be (or become) subject to the authority of the national churches as well, so that in addition to holding the legal title in trust for the local congregation, they now have another trust beneficiary added to their responsibilities. As we shall see in our upcoming survey, this attempt at over-reaching has led to considerable confusion and unclear reasoning in the courts which try to reconcile the language with the law of trusts (and the ancient Statute of Uses -- a heritage from English law which, however, has not been adopted in every State).

For those who would like more background into the development of church trust law prior to Jones v. Wolf, I refer you to the two preceding posts here and here. They will give you a solid understanding for the survey of case law that will follow in the succeeding posts in this series. In brief, the Jones case legitimized an approach to resolving church property disputes in accordance with "neutral principles of [state] law", which gave the several States the freedom to apply their own principles of property law to cases involving churches and their denominations.

Nearly all such disputes revolve around a parish or congregation which, generally out of differences over doctrine, discipline or worship, decides to split off from one denomination to join another. For historical reasons explained in the earlier posts in this series, the courts tended to approach such disputes from a trust law point of view: most church property had been donated to the church, and so the question of which faction could continue to own the property following a dispute depended on the terms of the original donation -- if there were any such terms ascertainable.

Where there were no express terms, the courts (following English precedent) tried to imply them, and generally tried to discern which of the two factions was closer in doctrine and worship to the denomination as it was when the donor made his gift. But the U. S. Supreme Court in 1969 ruled out this approach, as tending to entangle the civil courts in questions of religious doctrine, which cannot be adjudicated by such courts consistently with the First Amendment of the United States Constitution.

In an effort to avoid such entanglement, earlier courts had declared that if a church was "hierarchical", meaning that it had a supreme adjudicatory which could decide all questions of doctrine, discipline, or worship in a manner binding on every congregation in the church, they would simply defer to the decisions of that highest adjudicatory body, and be guided and bound by it as well. Note, however, that this doctrine of "deference" had application only when principles of church doctrine, discipline, or worship were at stake -- that is, only in cases where the courts were conducting their inquiries into the differences between the tenets of the disputing groups based on the terms of an implied or express trust.

In matters involving the legal and equitable title to church property, however, principles of state law had broad application to all entities in a given State, whether secular or religious. Every such entity was bound to follow the same rules of law in creating, conveying and extinguishing interests in real and personal property. These were what the Supreme Court in Jones called the "neutral principles of law" which the civil courts were as free to apply in disputes between religious groups as they were in any other civil disputes.

In other words, under the "neutral principles" approach, the religious differences which may have brought about the dispute were irrelevant to the secular courts. They looked solely at the legal steps by which title had originally been acquired and subsequently held up until the time of the dispute. Then they made their decision based upon which party held the enforceable interest in the property, in accordance with standard principles of property and trust law.

Under these general principles of state law, there was one such uniform principle, adopted in every single State and stemming from the original version first enacted by the British Parliament in 1677, called the "Statute of Frauds", which required any interest in real property to be created only by a writing signed by the person(s) who owned the property at the time of the creation of the interest. Thus, one acquires title to one's house only by a written deed, signed by the previous owner(s) (and duly notarized and recorded, under other state law requirements). Land cannot be transfered validly by verbal agreement, or by words alone; there has to be a conveyance in writing. And to be other than a fraud or forgery, the writing has to bear the genuine signature of the person who owns the interest being conveyed, or the land out of which the interest is being created. 

Similarly, a trust in real property arises, under the Statute of Frauds, only when there is a writing duly signed by the owner of the property being placed into trust. By that instrument, the title to the real property is divided into two parts: the "legal" title is given to the person(s) named as trustee, and what is called the "equitable" title is given to the beneficiary(ies) -- the persons for whose benefit the property is held by the trustees. Under the civil law, the beneficiaries have the legal right to come into court to enforce the terms of the trust, and to obtain an order directing the trustee(s) to perform in accordance with what those terms say. It is for this reason that the Statute of Frauds require that the terms of the trust be spelled out in writing; otherwise, there would be endless disputes over what the settlor of the trust (the original owner who agreed to place the property in trust) intended.

As equitable owners of the property, the beneficiaries may use and enjoy the property to the fullest extent permitted by the trust document, but they cannot convey legal title to it, or encumber or alienate it in any way -- those powers may be exercised only by the holder of the legal title, the trustee (again, if so authorized by the trust document). The Dennis Canon, and PCUSA's trust clause in its Book of Order, create an analytical problem because it is precisely the beneficiaries of the trust they declare who are attempting to create the trust in the first place.

It is common sense (and common law) that they could do so only if they had the full consent of the property owner to act in the owner's place. So the cases which we will be looking at go through various steps of analysis to determine just how, and when, this consent was given -- and whether it was an express consent, or only implied from the actions or conduct of the owner. And it is precisely in this process -- the steps in which a court looks at what constitutes the express or implied consent of the owner for the beneficiary to create a trust, acting for the owner and in his place, but in favor of the beneficiary -- that the civil courts have once again become ensnared in the convolutions of so-called "hierarchical" churches.

Some courts find that, by their very nature, hierarchical churches are so constituted that their members have consented in advance to every act that could be done in their name, just by virtue of belonging to the church and being a part of it. And other courts require more evidence of consent to this particular step of placing the member's property into a trust. The degree to which evidence of intent is required, rather than simply presumed from the hierarchical structure alone, is what analytically divides the cases and determines their ultimate outcomes.

It is also what determines (or should determine) their value as precedents for other courts approaching the same question. For it should be obvious, from what has already been said, that for a court to call a church "hierarchical", and then hold that by virtue of that name every member agreed to be bound by whatever the national church body enacted, including the placing of its property into a binding trust from which there is no escape, except if the national church allow it -- for a court to do such a thing, I say, borders on the nature of a "legal fiction".

A legal fiction is something the law simply presumes is the case, without being troubled by any evidence to the contrary, which is then used to apply a rule (such as the Statute of Frauds) which was not originally intended to be applied in that way. Thus, the legal fiction of a "hierarchical church" is used to imply the existence of a writing signed by the property owner which is sufficient to satisfy the Statute of Frauds. It sounds crazy, but that is where we are in many of the cases at which we will be looking. And literally millions and millions of dollars' worth of property has changed hands as a result.

In the next post, we will begin by looking at the sane approach to these questions adopted of late by the courts in Missouri. Then we will go on to consider how well the decisions from other states measure up to the standards of the Missouri decisions.

Wednesday, February 1, 2012

Diocese of Virginia Is an Emperor without Clothes

Thanks to BabyBlue, we learn that the Episcopal Diocese of Virginia, just five days before its Bishop held out the olive branch to the departed CANA parishes, had used his other hand to hit them with a sucker punch (that came to light only afterward): his attorneys filed a motion with Judge Randy Bellows for an award of prejudgment interest. (You can read the text of the motion and supporting memorandum at the link to BabyBlue's post.)

"Prejudgment interest" means just what the name says -- it is interest on an amount made payable for a time period before any actual judgment is entered. (After a judgment is entered against a defendant for a sum of money, postjudgment interest begins to accrue on the amount of the judgment, and continues to accrue until the judgment is paid in full.)

How can interest accrue on an amount before it is awarded? Well, first of all, the amount has to be known and certain -- that is, the claim against the defendant has to be for a specific sum of money which is already known, or is readily ascertainable. For example, if I offer you $10,000 to paint my house, but then delay paying you after you have finished the job, so that you eventually are forced to sue and get a judgment against me for the $10,000, then you could ask the court to award (prejudgment) interest on the unpaid amount from the day you finished the job until the day the court entered judgment. (Once the judgment is entered, postjudgment interest takes over from there.)

Presumably the fact that an audit will fix the sums that were in each of the many bank and investment accounts as of the filing of the diocesan lawsuits in January 2007 means that the first criterion can be satisfied in this case.

The second criterion for an award of prejudgment interest is that the money debt was clearly owed all along -- that is, there existed no good reason at the time for withholding payment of it. And that is where the nitty-gritty of Judge Bellows' comprehensive 113-page opinion will come into play, and be crucial.

The Diocese's memorandum in support of its motion quotes Judge Bellows' words back at him:
In concluding that the CANA Congregations do not possess either contractual or proprietary interests in the property of the seven Episcopal Churches, the Court noted the “pervasive control” exercised by The Episcopal Church and the Diocese over the churches. Op. at 101. The Court emphasized the hierarchical structure of the Church and referenced “the undeniable fact that these seven churches *were part of a hierarchical denomination for decades and, in some cases for centuries” and that the congregations’ claims of autonomy and independence were “contradicted by the overwhelming body of evidence before this Court.” Op. at 101. The Court said that applying neutral principles of law, as established by United States and Virginia Supreme Court precedents, it is “clear - indeed, to this Court, it is overwhelmingly evident- that TEC and the Diocese have contractual and proprietary interests in the real and personal property of each of these seven churches.” Op. at 104. The Court stressed that “whi1e the CANA Congregations had an absolute right to depart from TEC and the Diocese, they had no right to take these seven Episcopal churches with them.” Id. (emphasis in original) Given the “compelling” evidence and “clear” law presented, the ultimate conclusion reached by the Court, while disappointing to the CANA Congregations, could not have come as any surprise; and they presumably segregated such sums and can readily turn the accounts over with the accrued interest. See Op. at 102, 104. Moreover, that the CANA Congregations may have believed there was a bona ñde dispute as to ownership of the real and personal property has no bearing on the decision whether to award pre­judgment interest. See Gill v. Rollins Protective Servs. Co., 836 F.2d 194 (4th Cir. 1987) (neither Code 8.01-382 nor Virginia case law makes an exception to the general discretionary rule on pre-judgment interest for bona fide legal disputes).

Thus, because it was always so "clear" and "compelling", according to Judge Bellows, that the property belonged to the Diocese from the moment it filed its lawsuits to recover them, the CANA parishes should have handed over all their bank accounts right then and there. And since they did not do so, they now must turn over all the interest which that money could have earned in the five years of litigation until the entry of the judgment, according to the Diocese. (The prejudgment rate in Virginia is six percent per year, unless there is a contract or agreement between the parties for a lesser rate. Thus if there were $3 million in all of the parish bank accounts in January 2007, then interest would accrue at $180,000 per year, and over five years, the total would come to $900,000.)

There is one immediately perceivable flaw in the Diocese's argument, and it also casts doubt on the legitimacy of Judge Bellows' characterization of the evidence as "compelling" and "clear." For at the time of his first ruling in this matter in 2008, which told the CANA congregations that they could keep their properties under the terms of Virginia's Division Statute (§ 57-9), it was then "clear" to Judge Bellows that the Diocese did not have any entitlement to the parish properties or bank accounts.

The only thing that changed the Judge's view was the Virginia Supreme Court's quixotical decision, two years later, to read the statute in such a way that it could never apply to that sacred category of religious institutions defined as "hierarchical" by the courts. From that date on, perhaps, it was now "clear" in Virginia that the Diocese would prevail -- or was it? At any rate, the point is that all of the evidence which the Diocese (leaning on Judge Bellows, to be sure) now characterizes as "compelling" did not amount to anything approaching that description in 2008, and could have become so only after June 2010.

But the principal point here is that with this motion, the Diocese has revealed its truly impecunious state, and hence its inability to maintain and operate all of the properties it has won in the judicial jackpot. Moving for an award of prejudgment interest in these unique circumstances -- secular lawsuits between thousands and thousands of Christians on each side, contrary to the tenets of the Christian religion -- is to rub salt into a gaping wound in the body of Christ. For the Diocese to resort to such a tactic with its Bishop's blessing, as a  preliminary to Bishop Johnston's suggesting the possibility of arrangements to allow the CANA congregations to remain in their buildings, is a sign of desperation -- of applying maximum pressure on the congregations to give up and return, lest they be held liable for every last farthing which the Diocese could ostensibly claim.

And notice the inherent one-sidedness of any such award: it goes to the Diocese if it wins, but the congregations could have gotten nothing from the Diocese, had they been the victors, since they had possession of the funds all along. That is why prejudgment interest should be reserved for those cases in which there was literally no justification for withholding the payment due.

The move thus gives the lie to Bishop Johnston's brave words to his Diocesan council just one week ago, as quoted here earlier (H/T: BabyBlue again):
Nonetheless, we have reason to be more confident than ever that our properties will be returned. For nearly two years, we have considered and discussed such a positive outcome, and now we must move to put contingency plans in place. We will be fully prepared for any eventuality... I strongly believe that we will be able to do what it takes over the next months and years to be faithful to the Church’s mission with respect to each one of the properties involved. . . .
Yes, Bishop Johnston, certainly you are following those "contingency plans"; certainly you are "prepared for any eventuality." You just need the prejudgment interest to bolster the amounts you will have available to keep up these properties until you can turn them into more cash to pay back the line of credit you took out to finance the lawsuits; we see that. That is why you now really want to stick it to your fellow Christians, and make them atone with every last drop of their blood for the offense they gave the Diocese by having the temerity to seek what they thought were their rights under Virginia law at the time.

Like the fabled emperor, the Diocese of Virginia now stands bare and exposed, for all (and not just Christians) to see.