On review from the Court of Appeals.*fn1 CC 07-2707-E2; CA A139430;
The opinion of the court was delivered by: Balmer, C. J.
Argued and submitted March 5, 2012, at Lewis and Clark Law School.
Before Balmer, Chief Justice, and Durham, De Muniz, Kistler, Walters, and Linder, Justices.*fn2
The decision of the Court of Appeals is affirmed. The judgment of the circuit court is reversed, and the case is remanded to the circuit court for entry of a judgment in favor of Presbyterian Church (U.S.A.).
This case requires us to decide whether a local church or the national church from which it seeks to separate owns certain church property. Hope Presbyterian Church of Rogue River (Hope Presbyterian) is the name of a church congregation and a related nonprofit corporation. The congregation has been affiliated with a national Presbyterian Church organization since its founding in 1901, most recently affiliating with the Presbyterian Church (U.S.A.) (PCUSA), and its regional presbytery, the Presbytery of the Cascades. In 2007, the congregation voted to disaffiliate from PCUSA. The corporation then initiated this lawsuit, seeking to quiet title to certain church property and to obtain a declaration that PCUSA and the Presbytery of the Cascades have no claim or interest in any of the real and personal property in Hope Presbyterian's possession. On cross-motions for summary judgment, the trial court quieted title in favor of Hope Presbyterian and declared that PCUSA and the Presbytery of the Cascades had no beneficial interest in any of Hope Presbyterian's property. The Court of Appeals reversed, holding that Hope Presbyterian held the property in trust for PCUSA. Hope Presbyterian v. Presbyterian Church (USA), 242 Or App 485, 255 P3d 645 (2011). For the reasons that follow, we affirm the decision of the Court of Appeals.
The Court of Appeals described in detail the relevant history of both Hope Presbyterian, the local congregation,*fn3 and PCUSA, the national denomination. We take the facts necessary to our decision from the Court of Appeals' opinion and the summary judgment record. Hope Presbyterian was established as a congregation in 1901 and was affiliated with predecessor organizations to PCUSA from that time until 1983, when it began over 20 years of affiliation with PCUSA. In 1930, Hope Presbyterian formally incorporated as "Hope Presbyterian Church of Rogue River." In the 1950s, Hope Presbyterian moved to its current location in Rogue River and began to use property that is now disputed. The Trustees of the Presbytery of Southwest Oregon, the regional presbytery of which Hope Presbyterian was a part at the time -- and which was, in turn, a part of a predecessor to PCUSA -- had acquired legal title to the property in 1955. In 1961, the Trustees of the Presbytery of Southwest Oregon transferred title to "The Hope Community Presbyterian Church, Rogue River, Ore[.]" by warranty deed. The deed makes no reference to the property being held in trust for PCUSA or its predecessor. Hope Presbyterian acquired an additional parcel of real property from a third party in 2001 by warranty deed. As with the first deed, the deed to the property acquired in 2001 makes no reference to PCUSA or to the property being held in trust. PCUSA does not dispute that Hope Presbyterian holds legal title to the property at issue.
PCUSA is the largest Presbyterian denomination in the United States and was formed in 1983 when the Presbyterian Church in the United States and the United Presbyterian Church in the United States of America (UPCUSA) merged. Similarly to its predecessors, PCUSA is organized hierarchically, with an individual local church being governed in ascending order by the "session," composed of leaders from the local church; the regional "presbytery," which oversees local churches in the same geographical area; the "synod," which oversees presbyteries within a geographic region; and ultimately, by the "General Assembly," the national governing body.
The Book of Confessions and the Book of Order are the governing documents that form the constitution of PCUSA. The Book of Order addresses, among other topics, how real and personal property are held within the organization. Chapter VIII, section G-8.0201, of the Book of Order provides:
"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.)."
That provision of the Book of Order is almost identical to a provision in the constitution of one of PCUSA's predecessors, UPCUSA, with which Hope Presbyterian was affiliated before joining PCUSA. UPCUSA had amended its constitution in 1981 to include an express trust provision, and the Presbytery of the Cascades, which Hope Presbyterian belonged to at the time, was one of the presbyteries that approved that amendment.
When PCUSA was formed in 1983, two members of Hope Presbyterian were present at the meeting approving the merger of UPCUSA with another Presbyterian denomination and adopting the PCUSA Book of Order, which included the express trust provision. Soon after the merger, Hope Presbyterian amended the congregation's bylaws to state:
"This church being a part of the Presbytery of the Cascades, the Synod of the Pacific, and the Presbyterian Church, U.S.A., is governed in all its provisions by the Constitution of the Presbyterian Church, U.S.A." (Underscoring in original.) Around the same time as that amendment to the congregation's bylaws, the president and secretary of the corporation, as well as a third person, signed an amendment to the articles of incorporation of "Hope 'Community' or 'United' Presbyterian Church." The document states:
"This corporation is a church congregation of and holds all property as trustee for the Presbyterian Church (U.S.A.)."
The amendment was approved at a congregational meeting on October 23, 1983, and at a meeting of the board of trustees on November 1, 1983. The amendment, however, was never filed with the Secretary of State.
In 2007, the members of Hope Presbyterian's congregation voted to disaffiliate from PCUSA. The Book of Order places the presbytery in control of the disaffiliation process: "The relationship to the Presbyterian Church (U.S.A.) of a particular church can be severed only by constitutional action on the part of the presbytery. (G-11.0103i)[.]" Book of Order §G-8.0601 (2007). In fact, the Book of Order lists the disaffiliation process, and actions involving real property, as part of the presbytery's key responsibilities:
"The presbytery is responsible for the mission and government of the church throughout its geographical district. It therefore has the responsibility and power "* * * * *
"i. to divide, dismiss, or dissolve churches in consultation with their members; [and] "* * * * *
"y. to consider and act upon requests from congregations for permission to take the actions regarding real property as described in G-8.0000[.]"
Id. § G-11.0103. In accordance with those provisions of the Book of Order, members of Hope Presbyterian met with representatives from the Presbytery of the Cascades regarding disaffiliation. Before the presbytery's disaffiliation process was complete, however, Hope Presbyterian brought this action to determine the ownership of the real and personal property in its possession, seeking to quiet title in its favor and to obtain a declaratory judgment that it is the sole owner of all real and personal property in its possession.
The Court of Appeals summarized the proceedings in the trial court: "Both sides moved for summary judgment. Defendants asserted that, under the First Amendment to the United States Constitution, civil courts are authorized to resolve disputes between churches and their denominations only in limited circumstances. According to defendants, long-standing United States Supreme Court case law -- coincidentally, involving the Presbyterian Church -- requires civil courts to defer to the determinations of the highest governing body of 'hierarchical' churches. In this case, defendants contended, because the PCUSA clearly is such a hierarchical church, this dispute is conclusively resolved by reference to the Book of Order, which unambiguously provides that all property is held in trust for the denomination. In response, Hope Presbyterian argued that the PCUSA is not actually 'hierarchical' in nature and so is not subject to the analysis for which defendants contended. In any event, it argued, under more recent case law, the preferred approach is to resolve disputes under 'neutral principles' of law, without regard to evidence relating to church doctrine or polity. Under those neutral principles, Hope Presbyterian argued, its title to the property in dispute is conclusive, as there is no evidence that a trust was created in accordance with the requirements of Oregon trust law.
"The trial court sided with Hope Presbyterian. The court explained that the case should be resolved on the basis of 'neutral secular principles' of law. The court then said:
"'My way of understanding the neutral secular principles doctrine is that this Court must look at legal documents and must disregard purely church documents such as the Constitution of the Presbyterian Church (USA), statements of ecclesiastical doctrine and church polity, and the Book of Order. That means this court's analysis of this civil dispute about ownership of property, in this civil law court, is based entirely upon legal documents such as deeds and any trust documents that have been appropriately executed according to Oregon law.'
"The trial court did not consider the Book of Order or Hope Presbyterian's amended articles of incorporation, both of which declare that the disputed property is held in trust for the PCUSA. Instead, the court based its decision exclusively on any documents of conveyance or title that the parties submitted to the court. Finding no documents of written conveyance to the PCUSA or any other evidence of a trust, the court concluded that Hope Presbyterian's title in the property was conclusive." 242 Or App at 492-93.
The Court of Appeals reversed. The court traced the United States Supreme Court's approach to church property disputes, in light of the provision of the First Amendment to the United States Constitution, which states that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof[.]" We discuss that case law in detail below, but for present purposes it is sufficient to note that the Supreme Court has stated that states may adopt any one of various approaches to resolving church property disputes, as long as the approach involves no consideration of doctrinal matters, and the Court expressly has approved two general approaches. In Watson v. Jones, 80 US 679, 20 L Ed 666 (1871), the Supreme Court adopted what is commonly known as the "hierarchical deference" approach. Under that approach, in disputes arising in churches with a hierarchical structure, "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. In contrast, when considering disputes arising in independent congregations, rather than hierarchically organized churches, the "hierarchical deference" approach applies "the ordinary principles which govern voluntary associations[,]" including the church's "principle[s] of government[,]" and upholds the actions of "congregation[al] officers * * * who adhere to the acknowledged organism by which the body is governed * * * ." Id. at 725. The Court also has held that states may adopt the "neutral principles" approach described in Jones v. Wolf, 443 US 595, 604, 99 S Ct 3020, 61 L Ed 2d 775 (1979). Under that approach, courts resolve church property disputes by examining "the language of the deeds, the terms of the local church charters, the state statutes governing the holding of church property, and the ...